SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
Registration No. 2-95237
Pre-Effective Amendment No.
Post-Effective Amendment No. 15
and/or
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1940
1940 Act File No. 811-4202
Amendment No. 18
(Check appropriate box or boxes.)
IDEX FUND
(Exact Name of Registrant as Specified in Charter)
201 HIGHLAND AVENUE, LARGO, FLORIDA 34640
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, including Area Code: (813) 585-6565
G. JOHN HURLEY, P.O. BOX 9015, CLEARWATER, FLORIDA 34618-9015
(Name and Address of Agent for Service)
Approximate date of proposed public offering: As soon as practicable after this
registration statement becomes effective:
[ ] 60 days after filing pursuant to paragraph (a) (1) of Rule 485.
[ ] 75 days after filing pursuant to paragraph (a) (2) of Rule 485.
[X] On March 1, 1996 pursuant to paragraph (a) (1) of Rule 485.
[ ] On (date) pursuant to paragraph (a) (2) of Rule 485.
[ ] Immediately upon filing pursuant to paragraph (b) of Rule 485.
[ ] On (date) pursuant to paragraph (b) of Rule 485.
If appropriate, check the following box:
[ ] This post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
_________________________________________
Registrant has registered an indefinite number of shares under the
Securities Act of 1933 pursuant to Rule 24f-2(a) and filed a Rule 24f-2 Notice
on December 26, 1995 for the fiscal year ended October 31, 1995.
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IDEX FUND
Cross Reference Sheet
Between Prospectus and Statement of
Additional Information and Form N-1A Item
FORM N-1A ITEM CAPTION
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PART A PROSPECTUS
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1. Cover Page Cover Page
2. Synopsis Summary of Expenses
3. Condensed Financial Information Financial Highlights
4. General Description of Registrant The Fund: A Summary of Its Objective,
Investment Practices and Risks; Securities in
Which the Fund Invests; How the Fund
Invests; Additional Risk Factors; Miscellaneous
Information
5. Management of Fund Investment Advisory and Other Services;
Miscellaneous Information
5A. Management's Discussion of Not Applicable
Fund Performance
6. Capital Stock and Other Securities Shareholder Information and Instructions - How
to Buy Shares; Distributions and Taxes;
Miscellaneous Information
7. Purchase of Securities Being Alternative Purchase Arrangements;
Offered Shareholder Information and Instructions -
Opening an Account;
Shareholder Information and
Instructions - How to Buy
Shares; Shareholder
Information and Instructions
How to Exchange Shares;
Shareholder Information and
Instructions - Other
Information; Investment
Advisory and Other Services
8. Redemption or Repurchase Shareholder Information and Instructions -
How to Redeem (Sell) Shares
9. Pending Legal Proceedings Not Applicable
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PART B STATEMENT OF ADDITIONAL INFORMATION
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10. Cover Page Cover Page
11. Table of Contents Table of Contents
12. General Information and History Miscellaneous Information
13. Investment Objectives and Policies Investment Objectives; Policies and Practices
Investment Restrictions
14. Management of the Fund Trustees and Officers
15. Control Persons and Principal Principal Shareholders
Holders of Securities
16. Investment Advisory and Investment Advisory and Other Services;
Other Services Administrative Services; Custodian, Transfer Agent and Other
Affiliates
17. Brokerage Allocation and Portfolio Transactions and Brokerage
Other Practices
18. Capital Stock and Other Securities Miscellaneous Information
19. Purchase, Redemption and Purchase of Shares; Net
Pricing of Securities Being Offered Asset Value Determination; Dividends and Other
Distributions; Shareholder Accounts; Retirement
Plans; Redemption of Shares
20. Tax Status Taxes
21. Underwriter Distributor
22. Calculation of Performance Data Performance Information
23. Financial Statements Financial Statements
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IDEX FUND
201 Highland Avenue, Largo, FL 34640
Customer Service: (800) 851-9777
Prospectus dated March 1, 1996
This Prospectus is a legal document provided to you, the investor, and sets
forth concise information about the Fund that should be considered carefully
before you invest. Additional and more detailed information is contained in the
Statement of Additional Information (the "SAI"), which is incorporated by
reference in this Prospectus. You may obtain a copy of the current SAI, dated
March 1, 1996, at no charge by calling or writing IDEX. You should retain this
Prospectus for future reference.
IDEX Fund (the "Fund") is a diversified open-end management investment company
whose investment objective is growth of capital. Idex Management, Inc. serves as
investment adviser and Janus Capital Corporation serves as investment
sub-adviser to the Fund. The Fund pursues its objective by investing primarily
in common stocks listed on a national securities exchange or on NASDAQ and which
the Fund's sub-adviser believes have a good potential for capital growth. There
can be, of course, no assurance that the Fund will achieve its investment
objective. For further information, please read The Fund: A Summary of Its
Objective, Investment Practices, and Risks; Securities in Which the Fund
Invests; How the Fund Invests; and Additional Risk Factors.
FUND SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR ENDORSED BY,
THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD, OR ANY
OTHER AGENCY.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION ("SEC") OR ANY STATE SECURITIES COMMISSION, NOR HAS THE
COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
This Prospectus does not constitute an offer to sell securities in any state to
any person to whom it is unlawful to make an offer in such state.
TABLE OF CONTENTS
SUMMARY OF EXPENSES............................................................1
FINANCIAL HIGHLIGHTS...........................................................2
THE FUND: A SUMMARY OF ITS OBJECTIVE, INVESTMENT PRACTICES, AND RISKS.........4
INTRODUCTION TO THE FUND.......................................................4
SECURITIES IN WHICH THE FUND INVESTS...........................................4
HOW THE FUND INVESTS...........................................................6
ADDITIONAL RISK FACTORS........................................................7
INVESTMENT ADVISORY AND OTHER SERVICES.........................................9
ADMINISTRATOR AND DISTRIBUTOR.................................................10
MISCELLANEOUS INFORMATION.....................................................10
DISTRIBUTIONS AND TAXES.......................................................11
SHAREHOLDER INFORMATION AND INSTRUCTIONS......................................12
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SUMMARY OF EXPENSES
Before investing in the IDEX Fund, please read this section carefully to
understand the cost of investing. When you buy shares of the Fund, you will
incur certain expenses. The section titled Shareholder Transaction Expenses
shows the expenses involved in owning shares of the Fund. The section titled
Examples of Expenses shows the expenses you might pay when making a hypothetical
$1,000 investment.
SHAREHOLDER TRANSACTION EXPENSES IDEX FUND
Maximum Sales Load Imposed on Purchases
(as percentage of offering price) (1)...................... 8.50%
Exchange Fees (2) ........................................... None
Redemption Fees (3).......................................... None
Deferred Sales Charge (as a percentage of
original purchase price or redemption
proceeds, whichever is lower).............................. None
ANNUAL OPERATING EXPENSES
(as a percentage of average net assets)
Management Fees.............................................. 1.00%
12b-1 Service and Distribution Fees.......................... None
Other Expenses (net of expense reimbursements
and/or fee waivers, if any) (4)............................ .39%
Total Operating Expenses (net of expense
reimbursements and/or fee waivers, if any) (4)............. 1.39%
EXAMPLES OF EXPENSES: (5)
You would pay the following expenses on a $1,000 investment, assuming (1) a 5%
annual return, and (2) redemption at the end of each period:
1 year..................................................... $ 98
3 years.................................................... $ 125
5 years.................................................... $ 155
10 years................................................... $ 238
(1) On certain purchases, the sales load may be reduced or waived. (See also
Shareholder Information and Instructions - Sales Charges, Available
Discounts and Dealer Reallowances.)
(2) Exchanges must be made in amounts of $500 or more. No service fees are
currently charged for exchanges.
(3) A $20 service fee is charged for each redemption transaction paid by
Federal funds bank wire or for overnight mail delivery of check redemptions.
(See Shareholder Information and Instructions - How to Redeem (Sell)
Shares.)
(4) Other Expenses and Total Operating Expenses are based on actual expenses
for the fiscal year ended October 31, 1995. For the period ended
October 31, 1995, the annualized expense ratios would be 1.36% after
reduction in expenses by affiliated brokerage and custody earnings credits.
(5) The Examples assume all dividends and distributions are paid in additional
shares and no payment of exchange or redemption fees.
The purpose of the preceding table is to help you understand the various costs
and expenses you might bear, directly or indirectly, if you invest in the Fund.
For more information about these expenses, please read Investment Advisory and
Other Services and Shareholder Information and Instructions.
THE EXPENSES SHOWN IN EXAMPLES OF EXPENSES ARE HYPOTHETICAL. THEY DO NOT
REPRESENT ACTUAL PAST OR FUTURE EXPENSES. ACTUAL EXPENSES MAY BE GREATER OR LESS
THAN THOSE SHOWN. THE ASSUMED 5% ANNUAL RETURN IS ALSO HYPOTHETICAL. IT SHOULD
NOT BE CONSIDERED A REPRESENTATION OR PREDICTION OF PAST OR FUTURE ANNUAL
RETURNS, WHICH MAY BE GREATER OR LESS THAN 5%.
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FINANCIAL HIGHLIGHTS
The table below shows the actual earnings, capital gains or losses, and expenses
of a share of the Fund.
The information contained in the table for each fiscal year and for other
periods shown through October 31, 1995 has been audited by Price Waterhouse LLP,
independent accountants, whose report is incorporated by reference into the SAI.
The SAI is incorporated by reference in this Prospectus. You may obtain it
without charge by calling or writing to the Fund. Further information about the
performance of the Fund is contained in the Fund's Annual Report to
shareholders, which you may also obtain without charge by calling or writing to
the Fund.
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YEARS ENDED OCTOBER 31,
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1995 1994 1993 1992 1991 1990 1989 1988
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Net asset value at beginning of period $ 18.25 $ 19.77 $ 18.54 $ 18.73 $ 13.81 $ 17.32 $ 12.25 $12.19
Net investment income .05 .08 .11 .15 .17 .18 .07 .29
Net realized and unrealized gain (loss)
on investments and foreign currency 5.98 (.55) 2.44 .42 6.84 (1.57) 5.22 1.36
Total income (loss) from investment
operations 6.03 (.47) 2.55 .57 7.01 (1.39) 5.29 1.65
Dividends from net investment income (.13) (.04) (.14) (.11) (.17) (.10) (.22) (.22)
Distributions from realized net
capital gains and foreign currency (.22) (1.01) (1.18) (.65) (1.92) (2.02) - (1.37)
Total distributions (.35) (1.05) (1.32) (.76) (2.09) (2.12) (.22) (1.59)
Net asset value at end of period $23.93 $18.25 $19.77 $18.54 $18.73 $13.81 $17.32 $12.25
Total return (3) 33.72% (2.42)% 14.2% 3.2% 57.5% (8.9)% 43.8% 15.6%
Net assets at end of period (000's) $327,185 $287,078 $354,601 $294,798 $215,856 $90,027 $84,683 $67,459
Ratio of expenses to average net
assets (4) 1.39% 1.29% 1.28% 1.28% 1.32% 1.39% 1.40% 1.49%
Ratio of net investment income
to average net assets .19% .38% .61% .82% .88% 1.23% 0.49% 2.61%
Portfolio turnover rate (5) 125.64% 77.23% 104.16% 62.73% 83.92% 158.76% 96.86% 111.10%
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PERIOD
EIGHT FROM
MONTHS YEAR JUNE 4,
ENDED ENDED 1985(1) to
10/31/87(2) 2/28/87 2/28/86
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Net asset value at beginning of period $14.88 $11.92 $10.00
Net investment income .06 .40 .33
Net realized and unrealized gain (loss)
on investments and foreign currency (1.65) 3.33 1.63
Total income (loss) from investment
operations (1.59) 3.73 1.96
Dividends from net investment income (.18) (.29) (.04)
Distributions from realized net
capital gains and foreign currency (.92) (.48) -
Total distributions (1.10) (.77) (.04)
Net asset value at end of period $12.19 $14.88 $11.92
Total return (3) (11.6)% 32.8% 19.7%
Net assets at end of period (000's) $66,944 $75,935 $38,549
Ratio of expenses to average net
assets (4) 1.22% 1.32% 1.73%
Ratio of net investment income
to average net assets .55% 3.14% 4.50%
Portfolio turnover rate (5) 184.96% 149.36% 90.61%
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(1) Commencement of operations.
(2) In order to facilitate compliance with the Tax Reform Act of 1986, in June
1987 the Fund changed its fiscal year end from February 28 to October 31.
(3) Total return figures do not reflect any sales charge and assume that all
dividends and distributions are paid in additional shares. Short periods are
not annualized.
(4) Net of expense reimbursements and/or management fee waivers in 1987 and
1986, without which the ratio of expenses to average net assets would be
1.34% for the period ended October 31, 1987, 1.50% for the year ended
February 28, 1987, and 1.75% for the period ended February 28, 1986. The
expense ratio reduced by custody earnings credits would have been 1.36% for
the year ended October 31, 1995. Short periods have been annualized.
(5) This rate is calculated by dividing the average value of the fund's
long-term investments during the period into the lesser of its long-term
purchases or sales in the period. Short periods have been annualized.
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PERFORMANCE/TOTAL RETURN
Mutual fund performance is most often stated as "total return." Total return,
expressed as a percentage, shows the change in value of fund shares, plus its
income and capital gain distributions, net of expenses or sales charges, from
the beginning of a period to the end of a period. Total return may be annual --
the return achieved in a year -- or cumulative, over a period of several years.
You may also see a Fund's performance described in terms of "average annual
total return." This rate shows the hypothetical annual compounded return that
would have produced the same cumulative return if performance had been constant
over the entire period. Because average annual returns for more than one year
tend to smooth out variations in performance, such figures are not the same as
actual year-by-year results.
The SAI contains a more detailed description of the method used to calculate
average annual total return for the Fund.
PERFORMANCE SHOWN IN ADVERTISING
The Fund may advertise its return in non-standard ways, or for periods in
addition to those the National Association of Securities Dealers, Inc. ("NASD")
and SEC require to be shown. The Fund may also advertise return without
deducting sales charges; such return would appear higher than an actual return
which reflect sale charges.
COMMERCIAL PERFORMANCE RANKINGS AND COMPARISONS TO STANDARD INVESTING INDEXES
The Fund may sometimes advertise its "Lipper Rankings" or "Morningstar Ratings,"
or other ratings or rankings published by business magazines or newspapers such
as Forbes, Money, The Wall Street Journal, Business Week, Barron's, Changing
Times, Fortune or Institutional Investor. These rankings or ratings may include
criteria relating to Fund characteristics, as well as to performance.
When the Fund advertises such rankings or ratings relating to performance,
information will be included about the ranking category, the number of funds in
the category, the period and criteria on which the ranking is based and the
effect of sales charges, fee waivers and/or expense reimbursements.
The Fund may also compare its performance to other selected funds or to
recognized market indexes, such as the Standard & Poor's 500 Stock Index (the
"S&P 500") and the Dow Jones Industrial Average.
In addition, the Fund may make appropriate comparisons of its performance to the
performance of other types of investments, including certificates of deposit,
savings accounts and U.S. Treasury securities, or of certain interest rate and
inflation indexes, such as the Consumer Price Index.
All performance figures are based on historical results and are not intended to
predict future performance. The investment return and principal value of an
investment will fluctuate so that an investor's shares, when sold, may be worth
more or less than their original cost.
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THE FUND: A SUMMARY OF ITS OBJECTIVE, INVESTMENT PRACTICES AND RISKS
/bullet/ THIS SECTION PROVIDES A DESCRIPTION OF THE IDEX FUND. THIS SUMMARY
SHOULD BE READ IN CONJUNCTION WITH THE SECTIONS CALLED: SECURITIES
IN WHICH THE FUND INVESTS; HOW THE FUND INVESTS; AND ADDITIONAL RISK
FACTORS, WHICH PROVIDE MORE INFORMATION ABOUT THE FUND'S INVESTMENTS,
PRACTICES AND RISKS.
INTRODUCTION TO THE FUND
The Fund is a diversified open-end management investment company registered
under the Investment Company Act of 1940 (the "1940 Act").
The investment objective of the Fund is growth of capital.
The Fund may change its investment objective without shareholder approval. You
will be notified 30 days before any such change. Unless otherwise noted, the
Fund may also change its investment policies without shareholder approval.
If the Fund changes its investment objective, its new objective may not suit
your needs. You will be allowed 30 days after notice of an investment objective
change to sell or exchange your Fund shares without paying a sales or exchange
fee. If you sell or exchange your shares, you may, however, realize a taxable
gain or loss.
There can be no assurance that the Fund will achieve its investment objective.
IDEX FUND
OBJECTIVE: Growth of capital.
INVESTMENT FOCUS: The Fund invests primarily in common stocks listed on a
national securities exchange or on NASDAQ, which the Fund's sub-adviser believes
have a good potential for capital growth. Investment analysis focuses on stocks
with earnings growth potential that may not be recognized by the market. These
securities are selected solely for their growth potential; investment income is
not a consideration.
INVESTOR PROFILE: For the investor who wants capital growth in a broadly
diversified stock portfolio, and who can tolerate significant fluctuations in
value.
PRIMARY INVESTMENT PRACTICES: The Fund seeks to invest substantially all of its
assets in common stocks when its sub-adviser believes that the relevant market
environment favors such investing. Common stock investments are selected from
industries and companies that the portfolio manager believes are experiencing
favorable demand for their products and services, and which operate in a
favorable competitive environment and regulatory climate.
SECURITIES IN WHICH THE FUND INVESTS
The Fund's potential risks and rewards are achieved fundamentally from the
investments it makes. This section discusses those securities with special
risk/reward considerations. This section should be read together with the
section called Additional Risk Factors.
FOREIGN SECURITIES
The Fund may invest up to 25% of its assets directly or indirectly in foreign
securities denominated in a foreign currency. Foreign securities may not be
publicly traded in the United States.
The Fund may indirectly invest in foreign securities through American Depositary
Receipts ("ADRs") or American Depositary Shares ("ADSs"), which are
dollar-denominated receipts issued by domestic banks or securities firms. ADRs
and ADSs are publicly traded on U.S. exchanges, and may not involve the same
risks as securities denominated in foreign currency.
The Fund may also indirectly invest in foreign securities through European
Depositary Receipts ("EDRs"), which are typically issued by European banks; in
Global Depositary Receipts ("GDRs"), which may be issued by domestic or foreign
banks; and in other types of receipts evidencing ownership of foreign
securities.
Investments in foreign securities involve different risks from investing in
domestic securities. See Additional Risk Factors.
FUTURES, OPTIONS AND OTHER DERIVATIVE INSTRUMENTS
The Fund may write and purchase options on securities, as well as engage in
transactions involving options on securities or foreign currencies, futures
contracts, options on futures contracts, forward currency contracts, and
interest rate swaps, caps and floors. These instruments are commonly called
derivatives, because their price is derived from an underlying index, security
or other measure of value.
The Fund uses derivatives primarily as a hedge -- that is, to protect portfolio
positions against market or currency swings.
Futures contracts and related options may be used to attempt to enhance profit,
but the Fund limits non-hedging use of such instruments by requiring that the
aggregate initial margin and premiums required to establish non-hedging
positions will not exceed 5% of the fair market value of its net assets.
The Fund's futures contracts activities are limited in such a manner as to
qualify for certain exemptions from registration with the Commodity Futures
Trading Commission.
There can be no assurance that the use of derivatives will help the Fund achieve
its investment objective. Derivatives involve special risks. See Additional Risk
Factors.
For more information about derivatives and their risks, see the SAI.
MORTGAGE AND OTHER ASSET-BACKED SECURITIES
The Fund may invest up to 25% of its net assets in mortgage- and other
asset-backed securities. These are subject to prepayment risk -- the possibility
that early payoffs of underlying mortgages or other loans will cause the
principal and
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interest on the security to be paid before its stated maturity.
These early payments are more likely during periods when long-term interest
rates decline. In the event of such a prepayment during an interest rate
decline, the Fund may be required to invest the unanticipated proceeds at a
lower interest rate. Prepayments during such periods will also limit the Fund's
ability to participate in the kind of market gains possible with comparable
government securities not subject to prepayment.
CONVERTIBLE SECURITIES
The Fund may invest in convertible securities, which may include corporate notes
or preferred stock, but ordinarily are long-term debt obligations which are
convertible at a stated rate and time into common stock of the issuer.
As with all debt securities, the market value of convertibles tends to decline
as interest rates rise and to increase as interest rates fall. Convertible
securities generally offer lower interest rates or dividend yields than
non-convertible securities of similar quality. However, when the market price of
the common stock underlying a convertible exceeds the conversion price, the
price of the convertible tends to rise like the common stock price. When the
price of the underlying stock declines, the convertible tends to trade
increasingly on a yield basis; therefore, its price may not fall as much as the
price of the common stock.
Convertible securities generally rank senior to common stocks in an issuer's
capital structure. That means convertible obligations are supposed to be paid
off before common stock obligations. Consequently, most convertibles are of
higher quality and entail less risk of decline in market value than the issuer's
common stock. However, the extent to which such risk is reduced depends largely
on the market value of the convertible as a debt security -- i.e., if compared
to other debt securities, the convertible pays a competitive rate and is in
demand, its price will hold up.
The Fund will evaluate convertibles for potential investment using the same
ratings criteria as for investments in non-convertible debt securities.
WHEN-ISSUED, DELAYED DELIVERY AND FORWARD TRANSACTIONS
The Fund may buy securities on a when-issued or delayed delivery basis. It may
also enter into contracts to buy securities for a fixed price at a future date
beyond normal settlement time ("forward commitments").
The Fund bears the risk that the value of such securities may change before
delivery and the risk that the seller may not complete the transaction.
ILLIQUID SECURITIES
The Fund may invest as much as 15% of its net assets in securities that are
considered illiquid.
Securities are considered illiquid if there is no readily available market for
them, or because they carry legal or contractual restrictions on resale. It
often takes more time to sell illiquid securities, and costs more in brokerage
or dealer discounts or other expenses than does the sale of exchange-listed
securities or securities traded over-the-counter. As a result, the Fund may not
be able to sell such securities readily when the sub-adviser thinks it proper to
do so. The sub-adviser may have to sell an alternative security in order to meet
short-term needs for cash such as shareholder redemption requests at a time that
may not be advantageous.
Certain securities, called Rule 144A securities, are not registered for sale to
the public, but may be sold to certain institutional investors. Rule 144A
securities may be considered liquid if a dealer or an institutional market
exists for them. Procedures have been established by the Fund's sub-adviser and
Board of Trustees to determine if certain Rule 144A securities and other
securities, including commercial paper, are liquid. Securities purchased under
these rules may later become illiquid.
ZERO COUPON BONDS AND OTHER SECURITIES
The Fund may invest as much as 10% of its assets in zero coupon bonds, step
coupon bonds, pay-in-kind securities or strips.
/bullet/ Zero coupon bonds do not make regular interest payments. They are
sold at a discount from face value. Principal and accreted discount
(representing interest accrued but not paid) are paid at maturity.
/bullet/ Step coupon bonds sell at a discount and pay a low coupon rate for an
initial period, then pay a higher coupon rate thereafter.
/bullet/ Pay-in-kind securities may pay interest in cash or in the form of a
similar bond or other asset.
/bullet/ Strips are debt securities that are stripped of their interest after
the securities are issued, but are comparable to zero coupon bonds.
The market value of these four kinds of securities generally fluctuates more in
response to interest rate changes than does the market value of interest-paying
securities of comparable quality and term. The Fund may realize greater gains or
losses as a result of such fluctuations.
To pay cash distributions from income earned on these kinds of securities, the
Fund may sell certain securities and may incur a capital gain or loss on the
sale.
REPURCHASE AND REVERSE REPURCHASE AGREEMENTS
The Fund may invest in repurchase and reverse repurchase agreements. In a
repurchase agreement, the Fund buys a security and simultaneously agrees to
resell it to the seller, generally a bank or broker-dealer who agrees to
repurchase the security, at a specified price and date or on demand. This
technique is a method of earning income on idle cash. The repurchase agreement
is effectively secured by the value of the underlying security.
If a seller fails to repurchase the security as agreed, the Fund may suffer a
loss if the security's value declines before it can be sold on the open market.
If the seller goes bankrupt, the Fund may encounter delays and increased costs
in selling the underlying security.
Repurchase agreements maturing in more than seven days are subject to the limits
described above on illiquid securities.
In a reverse repurchase agreement, the Fund sells a security to another party
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such as a bank or broker-dealer in return for cash and the Fund agrees to buy
the security back at a future date and price. These agreements may provide cash
to satisfy unusually heavy redemption requests or for other temporary or
emergency purposes without actually selling portfolio securities. They also may
help earn additional income on securities like treasury bills and notes.
U.S. GOVERNMENT SECURITIES
The Fund may invest in U.S. government securities, which are debt securities
backed either by the credit of the U.S. government as a whole or only by the
credit of the issuing agency or instrumentality. Securities issued by the
Federal Home Loan Banks and the Federal National Mortgage Association (FNMA) are
supported by the agency's right to borrow money from the U.S. Treasury under
certain circumstances. U.S. Treasury bonds, notes and bills, and some agency
securities, such as those issued by the Government National Mortgage Association
(GNMA), are backed by the full faith and credit of the U.S. government as to
payment of principal and interest and are the highest quality U.S. government
securities.
The Fund itself, and its share prices and yields, are not guaranteed by the U.S.
government.
DEBT SECURITIES
The Fund may not invest more than 5% of its net assets in bonds rated below
investment grade. Bonds rated below investment grade are commonly known as "junk
bonds" and normally involve greater risk than investment grade securities. Junk
bonds involve significant quality and liquidity concerns. Their yields
fluctuate. In addition, lower-rated bonds carry substantial default risk - the
risk that the issuer will not make interest or principal payments when due. A
bond default could cause losses to the Fund.
The Fund may also buy unrated securities that, in the sub-adviser's opinion, are
equal in quality to the Fund's rated debt securities.
Unrated debt securities are not necessarily of lower grade than rated
securities, but they may not be as attractive to some buyers. The Fund relies on
the credit analysis of its sub-adviser when investing in unrated debt
securities.
HOW THE FUND INVESTS
The Fund's potential risks and rewards are affected by its investment
techniques. This section discusses investing techniques with special risk/reward
considerations.
DIVERSIFICATION
Diversification is the practice of spreading a portfolio's assets over a number
of investments, investment types, industries or countries to reduce risk.
The Fund is diversified as a matter of fundamental policy, and is defined as a
diversified investment company under the 1940 Act. A diversified company must
have at least 75% of the value of its total assets in cash and cash items
(including receivables), government securities, securities of other investment
companies and other securities. For purposes of this calculation, the company
may not count securities of a single issuer that account for more than 5% of the
company's assets or that constitute more than 10% of the issuer's voting
securities.
As a fundamental policy governing concentration, the Fund will not invest more
than 25% of its assets in any one particular industry, other than U.S.
government securities.
PORTFOLIO TURNOVER
Although it is the policy of the Fund to buy and hold securities for its stated
investment objective, changes in these holdings will be made whenever the
portfolio manager believes they are advisable. Such changes may result from:
/bullet/ liquidity needs;
/bullet/ securities having reached a price or yield objective;
/bullet/ anticipated changes in interest rates or the credit standing of an
issuer; or
/bullet/ developments not foreseen at the time of the investment decision.
To a limited extent, the Fund may engage in a significant number of short-term
transactions if such investing serves its objective. The rate of portfolio
turnover will not be a limiting factor when such short-term investing is
considered appropriate.
Turnover rate will not limit the manager's ability to buy or sell securities for
the Fund. Certain tax rules may restrict the Fund's ability to sell securities
when the security has been held for less than three months.
Increased turnover results in higher brokerage costs for the Fund; these charges
are ultimately borne by shareholders. Short-term trading may also result in
short-term capital gains, which are taxed as ordinary income for the Fund's
shareholders.
For historical turnover rates, see Financial Highlights. For more discussion of
portfolio turnover, see the SAI.
CASH POSITIONS AND DEBT INVESTING
The portfolio manager of the Fund may at times choose to hold some portion of
net assets in cash, or to invest that cash in a variety of debt securities. This
may be done as a defensive measure at times when desirable risk/reward
characteristics are not available in stocks or to earn income from otherwise
uninvested cash. When the Fund increases its cash or debt investment position,
its income may increase while its ability decreases to participate in stock
market declines or advances.
SHORT SALES
The Fund may sell securities "short against the box." A short sale is a sale of
a security that the Fund does not own. A short sale is "against the box" if, at
all times when the short sale is open, the Fund owns an equal amount of the
securities sold short or convertible into those same securities, or exchangeable
without further consideration for, securities of the same issue as the
securities sold short.
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BORROWING AND LENDING
The Fund may borrow money from banks for temporary or emergency purposes. The
amount borrowed shall not exceed 25% of its total assets.
To secure borrowings, the Fund may not mortgage or pledge its securities in
amounts that exceed 15% of its net assets.
The Fund may borrow money from or lend money to other funds that permit such
transactions and that are advised or sub-advised by Janus Capital Corporation
("Janus Capital"). The Fund must seek and obtain permission to do so from the
SEC. There is no assurance that such permission will be granted.
State law and regulations may impose additional limits on the Fund's borrowing.
For more information about borrowing and lending, see the SAI.
LENDING PORTFOLIO SECURITIES
The Fund may lend securities to broker-dealers and financial institutions to
realize additional income. As a fundamental policy, the Fund will not lend
securities or other assets if, as a result, more than 25% of its total assets
would be lent to other parties. In practice, at this time, the Fund does not
intend to lend securities or make any other loans valued at more than 5% of its
total assets.
If the borrower of a security defaults, the Fund may be delayed or prevented
from recovering collateral, or may be otherwise required to cover a transaction
in the security loaned.
If portfolio securities are loaned, collateral values must be continuously
maintained at no less than 100% by pricing both the securities loaned and the
collateral daily.
If a material event is to be voted upon affecting the Fund's investment in
securities which are on loan, the Fund will take such actions as may be
appropriate in order to vote its shares.
For more information about lending securities, see the SAI.
MASTER FUND/FEEDER FUND OPTION
The Fund may in the future seek to achieve its investment objective by investing
all of its assets in another investment company having the same objective and
substantially the same investment policies and restrictions.
Such an investment would be made only if the Board of Trustees of the Fund
determines it would be in the best interests of the Fund and its shareholders.
In making this determination, the Board will consider benefits to shareholders
and the opportunities to reduce costs and increase efficiency, among other
things. Should such a determination be made, shareholders will be given at least
30 days notice.
CHANGES IN INVESTMENT POLICIES AND RULES
The Fund is subject to investment restrictions, certain of which are fundamental
policies of the Fund. As such, they may not be changed without shareholder
approval. Non-fundamental investment restrictions and operating policies may be
changed by the Board of Trustees without shareholder approval.
The investment restrictions of the Fund are described in the SAI.
NEW INVESTMENT INSTRUMENTS
The sub-adviser reserves the right to evaluate new financial instruments as they
are developed and become actively traded. Subject to any applicable investment
restriction, the Fund may invest in any such investment products that its
manager believes will further the Fund's investment objective.
ADDITIONAL RISK FACTORS
All investments involve risks. Some securities and some investment practices
involve taking special or additional risks. This section describes a number of
those risk factors.
FOREIGN SECURITIES
Investments in foreign securities involve risks that are different in some
respects from investments in securities of U.S. issuers. These risks include:
CURRENCY VALUE. Changes in currency exchange rates may affect the value of
foreign securities and the value of their dividend or interest payments and,
therefore, the Fund's share price and returns. Currency exchange rates are
affected by numerous factors, including relative interest rates, balances of
trade, levels of foreign investment and manipulation by central banks. The
foreign currency market is essentially unregulated and can be subject to
speculative trading. From time to time, many countries impose exchange controls
which limit or prohibit trading in certain currencies.
CURRENCY TRADING COSTS. ADRs do not involve the same direct currency and
liquidity risks as securities denominated in foreign currencies. However, the
value of the currency in which the foreign security represented by the ADR is
denominated may affect the value of the ADR.
To the extent that the Fund invests in foreign securities denominated in foreign
currencies, its share price reflects the price movements both of its securities
and of the currencies in which they are denominated. The share price of a Fund
that invests in both U.S. and foreign securities may have a low correlation with
movements in the U.S. markets. If most of the securities in a Fund are
denominated in foreign currencies or depend on the value of foreign currencies,
the relative strength of the U.S. dollar against those foreign currencies may be
an important factor in that Fund's performance.
The Fund incurs costs in converting foreign currencies into U.S. dollars, and
vice versa.
DIFFERENT ACCOUNTING AND REPORTING PRACTICES. Foreign companies are generally
subject to tax laws and to accounting, auditing and financial reporting
standards, practices and requirements different from those that apply in the
U.S.
LESS INFORMATION AVAILABLE. There is generally less public
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<PAGE>
information available about foreign companies.
LESS REGULATION. Many foreign countries have less stringent securities
regulations than the U.S.
MORE DIFFICULT BUSINESS NEGOTIATIONS. The Fund may find it difficult to enforce
obligations in foreign countries or to negotiate favorable brokerage commission
rates.
REDUCED LIQUIDITY/INCREASED VOLATILITY. Some foreign securities are less liquid,
and their prices more volatile, than securities of comparable U.S. companies.
SETTLEMENT DELAYS. Settling foreign securities transactions may take longer than
settlements in the U.S.
HIGHER CUSTODY CHARGES. Custodianship of shares may cost more for foreign
securities than it does for U.S. securities.
ASSET VULNERABILITY. In some foreign countries, there is a risk of direct
seizure or appropriation through taxation of assets of the Fund. Certain
countries may also impose limits on the removal of securities or other assets of
the Fund. Interest, dividends and capital gains on foreign securities held by
the Fund may be subject to foreign withholding taxes.
POLITICAL INSTABILITY. In some countries, political instability, war or
diplomatic developments could affect investments.
These risks may be greater in developing countries or in countries with limited
or developing capital markets. In particular, developing countries may have
relatively unstable governments, economies based on only a few industries, and
securities markets that trade only a small number of securities. As a result,
securities of issuers located in developing countries may have limited
marketability and may be subject to abrupt or erratic price fluctuations.
At times, the Fund's foreign securities may be listed on exchanges or traded in
markets which are open on days (such as Saturday) when the Fund does not compute
a price or accept orders for purchase, sale or exchange of shares. As a result,
the net asset value of the Fund may be significantly affected by trading on days
when shareholders cannot make transactions.
HEDGING FOREIGN CURRENCY TRANSACTIONS. The Fund may hedge some or all of its
investments denominated in a foreign currency against a decline in the value of
that currency. For example, the Fund may buy or sell securities while using
forward currency contracts to fix a price in U.S. dollars for securities it has
agreed to buy or sell ("transaction hedge"). The Fund may enter into contracts
to sell a foreign currency for U.S. dollars (not exceeding the value of the
Fund's assets denominated in that currency) or by participation in options or
futures contracts with respect to a currency ("position hedge").
The Fund could hedge a position by selling a second currency, which is expected
to perform similarly to the currency in which portfolio investments are
denominated, for U.S. dollars ("proxy hedge"). Or it may enter into a forward
contract to sell the currency in which the security is denominated for a second
currency that is expected to perform better relative to a given currency, if the
portfolio manager believes there is a reasonable degree of correlation between
movements in the two currencies ("cross-hedge").
As an operating policy, the Fund will not commit more than 10% of its assets to
the consummation of cross-hedge contracts, and will either cover such
transactions with liquid portfolio securities denominated in the applicable
currency or segregate high-grade, liquid assets in the amount of such
commitments. In addition, when the Fund anticipates buying securities
denominated in a particular currency, it may enter into a forward contract to
purchase such currency in exchange for the U.S. dollar or another currency
("anticipatory hedge").
These strategies seek to minimize the effect of currency appreciation as well as
depreciation, but do not protect against a decline in the underlying value of
the hedged security. In addition, such strategies may reduce or eliminate the
opportunity to profit from increases in the value of the original currency, and
may adversely affect the Fund's performance if the manager's projection of
future exchange rates is wrong.
FUTURES, OPTIONS AND OTHER DERIVATIVE INSTRUMENTS
Generally, options, futures contracts, forward contracts and swap-related
products ("derivative instruments") involve additional investment risks and
transaction costs, and draw upon skills and experience which are different from
those needed to pick the other securities or instruments in which the Fund
invests. Special risks of derivatives' use include:
INACCURATE MARKET PREDICTIONS. If interest rates, securities prices or currency
markets do not move in the directions expected by a portfolio manager who uses
derivatives based on those measures, these instruments may fail in their
intended purpose and result in losses to the Fund.
IMPERFECT CORRELATION. Derivatives' prices may be imperfectly correlated with
the prices of the securities, interest rates or currencies being hedged. When
this happens, the expected benefits may be diminished.
ILLIQUIDITY. A liquid secondary market may not be available for a particular
instrument at a particular time. The Fund may therefore be unable to control
losses by closing out a derivative position.
TAX CONSIDERATIONS. The Fund may have to delay closing out certain derivative
positions to avoid adverse tax consequences.
The risk of loss from investing in derivative instruments is potentially
unlimited. See the SAI for more information about derivatives.
SPECIAL SITUATIONS
The Fund may invest in "special situations" from time to time. Special
situations arise when, in the opinion of the portfolio manager, a company's
securities may be recognized, then increase considerably in price, due to:
/bullet/ a new product or process;
/bullet/ a management change;
/bullet/ a technological breakthrough;
/bullet/ an extraordinary corporate event; or
/bullet/ a temporary imbalance in the supply of, and demand for, the securities
of an issuer.
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<PAGE>
Investing in a special situation carries an additional risk of loss if the
expected development does not happen or does not attract the expected attention.
The impact of special situation investing to the Fund will depend on the size of
the Fund's investment in a situation.
INVESTMENT ADVISORY AND OTHER SERVICES
The Fund is run by a Board of Trustees. Subject to the supervision of the Board
of Trustees, its assets are managed by an investment adviser and sub-adviser,
and by a portfolio manager. This section describes IDEX Fund's ownership,
organization and management.
TRUSTEES
The Board of Trustees is responsible for managing the business and affairs of
IDEX Fund. It oversees the operation of the Fund by its officers. It also
reviews the management of the Fund's assets by the investment adviser and
sub-adviser. Information about the Trustees and officers of the Fund is
contained in the SAI.
INVESTMENT ADVISER
The Fund has entered into a Management and Investment Advisory Agreement
("Advisory Agreement") with Idex Management, Inc. ("IMI"), whose address is 201
Highland Avenue, Largo, Florida 34640, to act as its investment adviser. IMI has
served as investment adviser to IDEX Fund, IDEX II Series Fund Growth, Global,
Flexible Income (and its predecessor, IDEX Total Income Trust), Balanced and
Capital Appreciation Portfolios and IDEX Fund 3 since the inception of each Fund
or Portfolio.
ADVISORY FEES PAID BY THE FUND
IMI is responsible for furnishing or causing to be furnished to the Fund
investment advice and recommendations, and for supervising the purchase and sale
of securities as directed by appropriate Fund officers. In addition, IMI is
responsible for the administration of the Fund.
The Fund pays IMI an annual fee, computed daily and paid monthly, based on its
average daily net assets, as shown in the Advisory Fee Schedule.
The investment advisory fees paid by the Fund are higher than those paid by many
other funds.
ADVISORY FEE REIMBURSEMENT
IMI will reimburse the Fund or waive fees, or both, to the extent that the
Fund's normal net operating expenses, including advisory fees but excluding
interest, taxes and brokerage commissions, exceed on an annual basis the lesser
of the most restrictive expense limitation imposed by any state in which its
shares are offered, or 1.50% of the Fund's average daily net assets.
BUSINESS EXPENSES BORNE BY THE FUND
In addition to the investment advisory fee, under its Advisory Agreement, the
Fund pays most of its operating costs, including administrative, bookkeeping and
clerical expenses, legal fees, auditing and accounting fees, shareholder
services and transfer agent fees, custodian fees, costs of complying with
federal and state regulations, preparing, printing and distributing reports to
shareholders, non-interested trustees' fees and expenses, interest, insurance,
dues for trade associations and taxes. The Fund also pays all brokerage
commissions in connection with portfolio transactions.
OWNERSHIP OF IDEX MANAGEMENT, INC. AND INTERSECURITIES, INC.
Fifty percent (50%) of the outstanding stock of IMI and 100% of the outstanding
stock of InterSecurities, Inc. ("ISI"), principal underwriter of the Fund's
shares, is owned by AUSA Holding Company ("AUSA"). AUSA is a holding company
which is wholly owned by AEGON USA, Inc. ("AEGON USA"), a financial services
holding company whose primary emphasis is on life and health insurance and
annuity and investment products. AEGON USA is a wholly owned indirect subsidiary
of AEGON nv, a Netherlands corporation and publicly traded international
insurance group. Janus Capital, the Fund's sub-adviser, owns the remaining 50%
of the outstanding shares of IMI. Kansas City Southern Industries, Inc., a
publicly owned holding company whose primary subsidiaries are engaged in
transportation and financial services, owns approximately 83% of Janus Capital.
SUB-ADVISER
Janus Capital, whose functions in managing the Fund are described below, is
described in this Prospectus as the "sub-adviser".
IMI has entered into an Investment Counsel Agreement with Janus Capital, 100
Fillmore Street, Denver, Colorado 80206. Janus Capital is a registered
investment adviser which serves as the investment adviser or sub-adviser to
other mutual funds and private accounts. Janus Capital is also sub-adviser to
IDEX II Series Fund Growth,
ACTUAL ADVISORY FEE RATIOS
FOR THE FISCAL YEAR ENDED
OCTOBER 31, 1995
--------------------------
PERCENTAGE OF
AVERAGE DAILY
NET ASSETS
IDEX Fund 1.00%
* Net of fees waived by IMI.
TOTAL ACTUAL EXPENSE RATIOS FOR THE
FISCAL YEAR ENDED OCTOBER 31, 1995,
INCLUDING THE INVESTMENT
ADVISORY FEE.
-----------------------------------
PERCENTAGE OF
AVERAGE DAILY
NET ASSETS
IDEX Fund 1.39%
* Net of fees waived by IMI.
ADVISORY FEE SCHEDULE
---------------------------
AVERAGE DAILY
NET ASSETS FUND
First $750 million 1.00%
the next $250 million 0.90%
over $1 billion 0.85%
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<PAGE>
Global, Flexible Income, Balanced and Capital Appreciation Portfolios and IDEX
Fund 3 and to certain Portfolios of the WRL Series Fund, Inc.
Janus Capital provides IMI with investment advice and recommendations for the
Fund consistent with its investment objective, policies and restrictions, and
supervises all security purchases and sales on behalf of the Fund, including the
negotiation of commissions and the allocation of principal business and
portfolio brokerage. In allocating such portfolio transactions, Janus Capital
may consider research and other services furnished to it and may place portfolio
transactions with broker-dealers that are affiliated with IMI or Janus Capital.
In placing portfolio business with all dealers, Janus Capital seeks the best
execution of each transaction, and all brokerage placement must be consistent
with the Rules of Fair Practice of the NASD.
While Janus Capital provides portfolio management services, IMI retains
responsibility for the performance of such functions. For its services, Janus
Capital receives 50% of the fees received by IMI under the Fund's Advisory
Agreement less 50% of any amount reimbursed to the Fund or waived by IMI
pursuant to the Fund's expense limitation. IMI may pay additional compensation
to Janus Capital under certain circumstances depending on the level of the
aggregate net assets of certain mutual funds in the IDEX Group of Mutual Funds,
as described in the SAI.
PORTFOLIO MANAGER:
Scott W. Shoelzel has served as co-portfolio manager of the Fund since 1995 and
as portfolio manager since January, 1996. Mr. Schoelzel also serves as
co-portfolio manager of other mutual funds in the IDEX group: IDEX II Series
Fund Growth Portfolio and IDEX Fund 3. Mr. Schoelzel is Vice President of Janus
Capital, where he has been employed since 1994. From 1991 to 1993, Mr. Schoelzel
was a portfolio manager with Founders Asset Management, Denver, Colorado.
ADMINISTRATOR AND DISTRIBUTOR
ADMINISTRATOR
IMI has entered into an Administrative Services Agreement ("Administrative
Agreement") pursuant to which ISI serves as administrator to the Fund.
Under the Administrative Agreement, ISI provides all services required to carry
on the general administrative and corporate affairs of the Fund. These services
include furnishing all executive and managerial personnel, office space and
equipment, arrangements for and supervision of all shareholder services, federal
and state regulatory compliance, and responsibility for accounting and record
keeping.
For its services under the Administrative Agreement, ISI receives 50% of the
fees received by IMI under the Advisory Agreement. Under certain circumstances,
the amounts payable to ISI under the Administrative Agreement will be reduced by
any additional compensation payable by IMI to Janus Capital, as described in the
SAI.
UNDERWRITING AGREEMENT
The Fund has entered into an Underwriting Agreement with ISI pursuant to which
ISI serves as principal underwriter and performs services and bears expenses
relating to the offering of Fund shares for sale to the public. ISI also serves
as principal underwriter of IDEX II Series Fund and IDEX Fund 3.
ISI is compensated by the Fund for services as distributor and principal
underwriter of Fund shares.
MISCELLANEOUS INFORMATION
ORGANIZATION OF THE FUND
The Fund is the sole series of IDEX Fund ("the Fund"), a Massachusetts business
trust that was formed by a Declaration of Trust dated April 25, 1986 and whose
operations are governed by a Restatement of Declaration of Trust dated as of
August 30, 1991 ("Declaration of Trust"). A copy of the Declaration of Trust is
on file with the Secretary of the Commonwealth of Massachusetts. The Fund was
originally formed as a Maryland corporation and reorganized on September 30,
1986 as a business trust under the laws of Massachusetts. The Fund currently is
the only series of the trust.
Under Massachusetts law, shareholders of a Massachusetts business trust could,
under certain circumstances, be held personally liable for acts or obligations
of the Fund. The Declaration of Trust contains an express disclaimer of
shareholder liability for acts, obligations or affairs of the Fund. The
Declaration of Trust also provides for indemnification out of Fund assets for
all loss and expense of any shareholder held personally liable by reason of
being or having been a shareholder. Liability is limited to circumstances in
which the Fund itself would be unable to meet its obligations, a possibility
that IDEX believes is remote.
The Fund is managed by its Board of Trustees pursuant to the Declaration of
Trust. The Declaration of Trust permits the Board of Trustees to issue an
unlimited number of shares of beneficial interest in the Fund. Each share of the
Fund has equal voting, dividend, liquidation and redemption rights.
PERSONAL SECURITIES TRADING
The Fund permits "Access Persons" as defined by Rule 17j-1 of the 1940 Act to
engage in personal securities transactions, subject to the terms of the Code of
Ethics and Insider Trading Policy ("the Policy") which has been adopted by the
Board of Trustees of the Fund pursuant to Rule 17j-1 and other applicable laws.
Pursuant to the Policy, Access Persons must generally pre-clear all personal
securities transactions before trading, and are subject to certain prohibitions
on personal trading.
SHAREHOLDER MEETINGS
The Fund does not intend to hold annual meetings of shareholders, unless
required to do so by the 1940 Act or by the Declaration of Trust. A
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<PAGE>
DISTRIBUTION SCHEDULE
INCOME CAPITAL GAINS
DISTRIBUTIONS DISTRIBUTIONS
MADE MADE*
IDEX Fund Semi-annually Annually
* Capital gain distributions realized during each fiscal year, ending
October 31, normally will be declared and paid in the following fiscal year.
To avoid a 4% excise tax on undistributed amounts of ordinary income and
capital gains, as described in the SAI, the Fund may, to the extent permitted
by the SEC, pay additional distributions of capital gain in any year and make
additional dividend distributions.
meeting will be called for the election of trustees upon the written request of
holders of 10% of the outstanding shares of the Fund. Shareholders have neither
preemptive nor cumulative voting rights.
THE TRANSFER AGENT
Idex Investor Services, Inc., P.O. Box 9015, Clearwater, Florida 34618-9015, an
affiliate of IMI and ISI, is the Fund's transfer agent, withholding agent and
dividend paying agent.
THE CUSTODIAN
Investors Fiduciary Trust Company, 127 West 10th Street, Kansas City, Missouri
64105, is custodian of the Fund's assets and serves as custodian for qualified
retirement plans and individual retirement plan accounts investing in the Fund.
However, all correspondence about a shareholder's account should be sent to
IDEX.
SHAREHOLDER INQUIRIES
Inquiries by shareholders about the Fund or requests for forms for opening or
changing accounts or plans should be made by writing IDEX at P.O. Box 9015,
Clearwater, Florida 34618-9015 or calling IDEX at (800) 851-9777.
SHAREHOLDER REPORTS, PROSPECTUSES AND CONSOLIDATED STATEMENTS
The Fund sends annual and semi-annual reports and updated prospectuses to
shareholders. The annual reports contain audited financial statements. To reduce
costs, the Fund will send only one copy of certain mailings to a shareholder who
has more than one account (each with the same taxpayer ID number). Further, two
or more shareholders may elect to receive a consolidated statement and only one
copy of certain mailings for their accounts so long as they share the same
surname and address. Select this option on the New Account Application or by
written request to IDEX.
Additional copies of shareholder reports and prospectuses may be obtained by
calling IDEX.
DISTRIBUTIONS AND TAXES
This section discusses how and when the Fund makes distributions to you from its
net earnings and profits, and some of your tax responsibilities related to such
distributions.
INCOME AND CAPITAL GAINS DISTRIBUTIONS
The Fund pays two kinds of distributions. Ordinary income distributions are made
from fund earnings from interest paid on taxable bonds, dividends paid on
stocks, and other kinds of securities income. Capital gains distributions are
made from gains realized when securities owned for more than one year are sold
at an amount greater than their cost. Short-term capital gain distributions
(related to securities sold which have been owned one year or less) are ordinary
income, not capital gain, to shareholders.
NOTE: The Fund may also realize capital losses.
Income distributions are made semi-annually; capital gains distributions are
generally made once a year.
If you buy shares in a non-retirement account on or shortly before the record
date for a dividend or other taxable distribution, you will pay full price for
the shares, then receive some portion of what you paid as a taxable
distribution.
HOW YOU RECEIVE YOUR DISTRIBUTIONS
The Fund will automatically reinvest your dividend and capital gain
distributions in additional shares of the Fund, unless you specify another
payment method. See Shareholder Information and Instructions for complete
information about how to receive your distributions.
Requested cash distributions will be paid by direct deposit (via Automated
Clearing House electronic funds transfer ("ACH")), or by check, whichever you
choose on your New Account Application. Dividend checks are usually mailed,
along with a confirmation, on the payable date. The dividend checks will be made
out to the shareholder of record and sent to the address of record. You may
request a different payee or address on the New Account Application. To do so on
an existing account, send a signature guarantee to IDEX.
Any checks which cannot be delivered and are returned to IDEX will be reinvested
in full or fractional shares in your account at the net asset value next
computed after the check has been received by IDEX. To reduce costs to the Fund,
checks outstanding and uncashed for over 180 days may be "stop-paid" and
reinvested back into the shareholder/payee's account at the discretion of IDEX.
Cash distributions that total less than $5.00 will be reinvested into the
account.
Shareholders may obtain further information or change their dividend or
distribution options any time before the record date of any dividend or
distribution by calling IDEX at (800) 851-9777or writing to P.O. Box 9015,
Clearwater, FL 34618-9015.
TAX INFORMATION
The Fund is a regulated investment company, as defined by Subchapter M of the
Internal Revenue Code of 1986, as amended (the "Code").
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<PAGE>
If the Fund meets certain requirements of the Code for each fiscal period, it
does not pay taxes on net income realized from investment operations to the
extent earnings and profits are distributed to shareholders. Shareholders are
responsible for any taxes related to distributions. See the SAI for a complete
discussion of a mutual fund as a regulated investment company.
If the Fund declares a dividend or other distribution in October, November or
December payable to shareholders of record on a specified date in such a month,
and if the Fund pays the distribution to the shareholders during January of the
following year, then each shareholder will be treated as receiving the
distribution on December 31 of the first year, and the Fund will be treated as
having paid the distribution on that date.
"TAXABLE EVENTS"--WHEN AND HOW YOU OWE TAX RELATED TO YOUR PORTFOLIO INVESTMENT
SELLING OR EXCHANGING SHARES
When you sell shares, whether you take cash or exchange the shares for shares in
another Portfolio or Fund, it is a "taxable event." For non-retirement plan
accounts, you will owe tax if you realize a taxable gain on the sale or
exchange. On the other hand, if you realize a loss based on your tax basis in
the shares, you may be able to offset that capital loss against capital gain
income you have. If there were any capital gains distributions on the shares,
the loss that is allowed will be treated as a long-term capital loss, to the
extent of the capital gains distributions.
For tax purposes, the cost of a share is generally the per-share price you paid
for your shares (which may include sales charges). As a general rule, your gain
or loss on a sale or exchange will be a long-term capital gain or loss if the
shares have been held for more than one year and a short-term capital gain or
loss if held for one year or less. Under current tax law, individuals are
subject to a maximum federal tax rate of 28% on net capital gain.
For most accounts (other than retirement plan accounts which will receive Form
1099-R), IDEX will provide you with your "cost basis" when you sell shares. This
cost basis figure is important. It is figured on the single category average
cost method, and will allow you to determine whether you have gained or lost on
your sale.
You are not required to use this method; in fact, if you have previously sold
shares and did not use this method to report gain or loss, it is not available
to you. To determine which method is most suitable for you, please consult your
tax adviser.
NOTE: Please keep all regular account statements to use in conjunction with
average cost information (if received) in order to determine tax gain or loss on
the sale of Fund shares.
INCOME TAX OWED ON INCOME DISTRIBUTIONS
Ordinary income distributions, whether received in cash or reinvested, are
subject to ordinary income tax rates.
INCOME TAX OWED ON CAPITAL GAIN DISTRIBUTIONS
As explained above, the Fund generally distributes net realized capital gains,
to the extent available, to shareholders once a year. These capital gains
distributions, whether paid in cash or reinvested, are subject to the maximum
capital gains tax rate of 28%-- the same tax rate as if you sell shares and
realize a gain.
If you sell shares of the Fund, then buy shares again under the reinvestment
privilege described in Shareholder Information and Instructions, the cost of
shares sold may need to be reduced related to any front-end sales charges you
may have initially paid. See the SAI and consult your tax adviser about these
rules, as well as wash sale provisions of the Internal Revenue Code.
SOME STATE TAX EXEMPTIONS
In some states, shareholders are not subject to state taxation on distributions
made by a registered investment company that were derived from interest on or
portions of their account value attributed to direct or indirect obligations of
the U.S. government. This exemption generally does not apply to dividends
derived from interest on obligations issued by agencies or instrumentalities of
the U.S. government, or interest earned on repurchase obligations secured by
such obligations or direct obligations of the U.S. government. See Securities in
Which the Fund Invests for an explanation of these securities and transactions.
Since state and local tax rules vary, please consult your tax adviser.
TAX STATEMENTS
Tax forms related to dividends and other distributions paid by the Fund are
mailed annually. For most types of accounts, IDEX will report the proceeds of
redemptions to shareholders and the Internal Revenue Service ("IRS") annually.
Average cost basis information on non-retirement plan account redemptions is not
currently reported to the IRS.
TAX WITHHOLDING
The Fund is required to withhold 31% of all dividends, capital gains
distributions and redemption proceeds paid on behalf of any individuals and
certain other noncorporate shareholders who do not furnish the Fund with a
correct taxpayer identification number. Withholding from income distributions
and capital gain distributions also is required for shareholders who otherwise
are subject to backup withholding according to the IRS.
NOTE: The foregoing is only a general summary of some of the important federal
tax considerations under current law generally affecting the Fund and its
shareholders; see the SAI for further discussion. Because there may be other
federal, state or local tax considerations applicable to a particular
shareholder, shareholders are urged to consult their own tax advisers.
SHAREHOLDER INFORMATION AND INSTRUCTIONS
This section discusses buying, selling, and exchanging shares of the Fund; sales
charges and possible waivers and discounts; and general shareholder account
information.
12
<PAGE>
If you need help or additional forms, call IDEX at (800) 851-9777 M-F, 8 a.m-7
p.m. ET, or contact your representative.
HOW TO BUY SHARES
1. OPEN AN ACCOUNT
Fill out the New Account Application form included with this
prospectus and send it to IDEX. IRAs require a different
application. To open an IRA, call or write your registered
representative or IDEX for an IRA application. If you already have
an account in an IDEX Fund or Portfolio, you may open an account in
another Portfolio of IDEX II Series Fund with the same account
features by calling or writing to IDEX.
NOTE: You must include your Social Security or other Taxpayer
Identification Number with your application, or your account may
be subject to backup withholding or to involuntary termination.
The Fund reserves the right to reject any purchase.
2. PAY FOR YOUR SHARES
You may buy shares in the following ways:
/bullet/ By check, by mail
Make your check payable to IDEX Mutual Funds and send it to
Idex Investor Services, Inc.
P.O. Box 9015
Clearwater, FL 34618-9015 or
201 Highland Avenue
Largo, FL 34640.
/bullet/ By automatic investment plan
With an automatic investment plan, you choose to invest a regular
dollar amount, and have that amount deducted from a bank account
on any day between the 3rd and 28th day of each month. Your
moneys will be transferred via ACH. To set up, change or
discontinue an automatic investment plan, call or write IDEX.
/bullet/ By telephone
Telephone purchases may be set up by calling or writing IDEX, or
you may select telephone purchases on your New Account
Application. Funds to pay for telephone orders will be
transferred electronically from your bank account via ACH.
See also Other Information - Telephone Transactions.
/bullet/ Through authorized dealers
Orders of at least $1,000 ("confirmed purchases") may be issued
through authorized dealers. If you open a new account through a
dealer, the dealer is responsible for opening your account and
providing your taxpayer ID number. If you already have an IDEX
account, no additional documentation is needed. Dealers may pay for
share orders with Federal funds bank wires by instructing their
banks to wire Federal funds as follows:
NATIONSBANK, N.A.
TAMPA, FLORIDA
ABA #063100277
DDA #3601194554
ATTN: IDEX INVESTOR SERVICES, INC.
CONFIRMED PURCHASE ORDER NUMBER(S)
SHAREHOLDER'S ACCOUNT NAME(S)
The dealer's bank may charge for a wire transfer. IDEX currently does not charge
for this service.
The Fund generally will not accept initial purchases for less than $500 worth of
shares (including the sales charge). Purchases through certain plans for regular
investment, like the automatic investment plan described above, do not require a
minimum initial investment. If you already own Fund shares and are buying more,
the minimum amount is usually $50.
Purchases of shares generally must be "settled" (payment received by the Fund
and shares credited to your account) within three business days from when the
Fund gets your purchase order. Therefore, the Fund must receive your payment
within that time.
PER-SHARE PUBLIC OFFERING PRICE AND NET ASSET VALUE
Net assets of the Fund are determined by adding the value of all securities,
receivables and other assets of the Fund, and subtracting liabilities. However,
for purposes of shareholder communication, public offering price and net asset
value ("NAV") per share usually refer to the purchase price and value of one
share of the Fund. The public offering price of a share of the Fund is its per
share NAV, plus the sales charge.
The number of shares that you buy is determined by the next NAV per share
calculated after IDEX receives and accepts your order to purchase shares.
The NAV per share is determined by the Fund's custodian on each day that the New
York Stock Exchange (the "Exchange") is open, as of the close of the regular
session of business on the Exchange. The Exchange currently closes at 4:00 p.m.
Eastern time each day it is open.
In determining total net assets and thus, NAV per share, securities and other
portfolio investments are valued at market value. Investments for which
quotations are not readily available are valued at fair value determined in good
faith by the sub-adviser under the supervision of the Board of Trustees.
SALES CHARGES, AVAILABLE DISCOUNTS AND DEALER REALLOWANCES
When you buy shares, you generally pay an up-front sales charge. You can reduce
the up-front sales charge in four ways:
/bullet/ By investing larger amounts;
/bullet/ By investing under a "right of accumulation," which credits your
account for shares you already own in various IDEX portfolios and
helps you earn discounts on new investments;
/bullet/ By filing a "letter of intention" to buy enough shares within a
13 month period to qualify for a reduced sales charge; or
/bullet/ By investing as part of a qualified group.
You generally pay no sales charge upon redemption of shares. However, if you pay
no up-front sales charge because you are purchasing $1 million or more of
shares, you will pay a deferred sales charge of 1% if you redeem any of those
shares within the first 12 months
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<PAGE>
after buying them. The charge is assessed on an amount equal to the lesser of
the then current market value or the original cost of the shares being redeemed.
No sales charge is imposed on increases in net asset value above the initial
purchase price.
WHAT IS A "DEALER REALLOWANCE"?
IDEX sells its funds both directly and through authorized dealers in the United
States and its territories. The Fund receives the entire NAV of shares sold. ISI
retains the sales charge, then reallows uniform discounts from the applicable
public offering price to all of its dealers-- this is how dealers are
compensated.
From time to time, ISI will create special promotions with dealers, in which
dealers earn larger reallowances in return for selling significant amounts of
shares or in return for certain training services. Sometimes, these dealers may
earn virtually the entire sales charge; at those times, they may be deemed
underwriters as described in the Securities Act of 1933.
Promotions may also involve non-cash incentives such as prizes or merchandise.
Non-cash compensation may also be in the form of attendance at seminars
conducted by ISI, including lodging and travel expenses.
Reallowances may also be given to banks or other financial institutions to
compensate them for their services in connection with share sales and servicing
of shareholder accounts.
ISI may also pay dealers, banks or other institutions from its own funds for
administrative services in connection with larger accounts.
DISCOUNTS THROUGH A RIGHT OF ACCUMULATION
If you already own shares of certain IDEX Funds or Portfolios, you may be able
to get a sales charge discount when you buy new shares of the Fund or certain
Portfolios of IDEX II Series Fund on which an initial sales charge is imposed.
The value of the shares you already own may be "accumulated" -- i.e., counted
together with the value of the new shares you plan to buy -- to achieve
quantities eligible for discount. Ask your sales representative for information,
or call IDEX.
DISCOUNTS THROUGH A LETTER OF INTENTION
You may also earn a sales charge discount on shares by making a written
commitment to invest, within a 13-month period, an amount which qualifies for
discount. This written commitment, called a Letter of Intention ("LOI"), is not
a binding legal obligation.
Shares purchased under the terms of an LOI will be sold at the public offering
price -- NAV plus discounted sales charge -- which applies to the total value of
the shares you commit to buy during the period of the LOI. During this period,
your share purchases are subject to the following rules:
/bullet/ The first 5% of the amount that you agree to invest will be
placed in escrow until the LOI is fulfilled or 13 months has
expired.
/bullet/ Future changes in quantity discounts (breakpoints) will apply
to purchases under the LOI.
/bullet/ Sales charge adjustments will be made if you actually buy more
or less than you commit to buy during the period of your LOI.
/bullet/ Shares bought up to 90 days before an LOI may be included in your
LOI. The LOI, however, will start on the day of the first
purchase that is included under the LOI.
<TABLE>
<CAPTION>
QUANTITY DISCOUNTS
SALES CHARGE REALLOWANCE SALES CHARGE
AS % OF TO DEALERS AS A % AS % OF
AMOUNT OF PURCHASE OFFERING PRICE OF OFFERING PRICE AMOUNT INVESTED
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Less than $25,000 8.50% 7.00% 9.29%
$25,000 but less than $50,000 7.50% 6.00% 8.11%
$50,000 but less than $75,000 6.50% 5.75% 6.95%
$75,000 but less than $100,000 5.50% 4.75% 5.82%
$100,000 but less than $250,000 4.25% 3.75% 4.44%
$250,000 but less than $500,000 3.00% 2.50% 3.19%
$500,000 but less than 1,000,000 1.25% 1.00% 1.27%
$1,000,000 or more 0.00% 0.25%* 0.00%
</TABLE>
* This amount is not a charge incurred by shareholders. ISI, at its own
expense, may make such a payment in accordance with its
procedures as may be in effect from time to time. ISI's procedures
currently provide for payment in the amount shown.
14
<PAGE>
/bullet/ Right of accumulation can apply to an LOI. That is, the current
value of all previous purchases of shares that paid a sales
charge can be counted towards fulfillment of the LOI, but the
sales charges on these previous purchases will not be adjusted.
/bullet/ Each LOI investment must be at least 5% of the total commitment.
/bullet/ Dividends and capital gains must be reinvested in additional
shares. No cash distributions are allowed under an LOI.
You may elect to invest under an LOI on your New Account Application. For more
information about an LOI, consult your registered representative or call IDEX at
(800) 851-9777.
DISCOUNTS AS A QUALIFIED GROUP
Members of a qualified group may purchase shares at a reduced sales charge
applicable to the group within a specified period. IDEX takes into account the
anticipated aggregate amount of purchases by the group of shares and shares of
other IDEX Funds with a front-end sales charge. A "qualified group" is one which
(i) has been in existence for more than six months, (ii) has a purpose other
than to acquire shares of the Fund or similar investments and (iii) satisfies
uniform criteria that allows IDEX and other dealers offering Fund shares to
realize economies of scale. Pension or other employee benefit plan participants
may qualify for group purchases. The Fund reserves the right to modify or
terminate this privilege at any time. For information about qualifying groups,
call IDEX.
WAIVER OF SALES CHARGES FOR CERTAIN INDIVIDUALS
Shares of the Fund may be sold without sales charges to:
/bullet/ Current or former trustees, trustees emeriti, directors, officers,
full-time employees or sales representatives of the Fund, IMI,
Janus Capital, ISI, or any of their affiliates;
/bullet/ Directors, officers, full-time employees and sales representatives
of any dealer having a sales agreement with ISI;
/bullet/ Any trust, pension, profit-sharing or other benefit plan for any
of the foregoing persons;
/bullet/ Any members of the family of any of the foregoing persons; or
/bullet/ "Wrap" accounts for the benefit of clients of certain broker-
dealers, financial institutions or financial planners, who have
entered into arrangements with the Fund or ISI.
Persons eligible to buy shares at NAV may not impose a sales charge when they
re-sell those shares.
HOW TO REDEEM (SELL) SHARES
GENERAL INFORMATION.
You may redeem (sell) your shares at any time at the next determined NAV after
IDEX receives your redemption request. For information about how NAV is
determined, see Per-Share Public Offering Price and Net Asset Value under How to
Buy Shares.
IDEX will normally pay you for your shares within three days of receiving a
valid redemption request. However, if you have purchased the shares by check or
ACH, IDEX must first be sure your payment has cleared. It will, therefore, not
pay for redemptions of this kind until you have owned these shares for at least
15 days.
Your check will be sent by first-class mail. You can pay $20 (by check or
deduction from your account) for overnight delivery, if you wish, and if the
service is available to your account address.
Redemption and repurchase of shares may be suspended or payment postponed during
any period when the Exchange is closed (other then on weekends or customary
holidays) or trading on the Exchanges is restricted, or during a period of an
emergency or other periods during which the SEC permits such suspension.
This section describes selling shares for cash. For other circumstances, see
Redemption of Shares in the SAI.
As described under How to Buy Shares, certain share sales will be charged the
appropriate contingent deferred sales charge applicable to certain redemptions.
TO REDEEM SHARES BY MAIL.
Send your redemption request to:
IDEX INVESTOR SERVICES, INC.
ATTENTION: REDEMPTIONS
P.O. BOX 9015
CLEARWATER, FL 34618-9015.
Your redemption request must be signed by the owner(s) of the account, or by a
person authorized to act for the owner(s).
/bullet/ Include the name of the Fund, the number of shares or dollar
amount of shares to be sold, the account number, and the name(s)
on the account.
/bullet/ If you have previously requested share certificates, they must be
returned if you wish to redeem these shares.
/bullet/ Your signature may have to be guaranteed. See Signature
Guarantees below.
Evidence of the authority of the person seeking a redemption is required for all
redemptions of shares held in the name of a corporation, a partnership, trust or
fiduciary.
SIGNATURE GUARANTEES.
For your protection, a signature guarantee will be required for the following
transactions:
/bullet/ redemption requests larger than $100,000 by check, or larger
than $50,000 by ACH;
/bullet/ redemption requests of any size made in an account where the
registration and/or address has been changed in the last 10 days;
/bullet/ redemptions by check made payable to someone other than the name
on the account, and/or sent to an address other than the address
of record;
/bullet/ redemptions by Federal funds bank wire to a bank that is not
pre-designated on your account;
/bullet/ certain requests to change the registered owners of an account; or
15
<PAGE>
/bullet/ to change certain arrangements in your existing systematic
withdrawal plan.
This guarantee must be made by a national or state bank, a member firm of a
national stock exchange, or any other eligible guarantor as defined by the SEC.
Notarization is not an acceptable substitute. IDEX may require signature
guarantee for certain other circumstances from time to time.
TO REDEEM SHARES BY TELEPHONE AND RECEIVE YOUR MONEY BY CHECK.
You may redeem shares in amounts up to $50,000 by phone and receive your money
by check unless you have declined this privilege on the New Account Application.
Call (800) 851-9777 to order a phone redemption.
Telephone redemption with payment by check is not allowed:
/bullet/ For shares purchased within the past 15 days;
/bullet/ For retirement accounts;
/bullet/ For shares represented by certificates;
/bullet/ In amounts of $50,000 and over; or
/bullet/ In accounts where the registration and/or address has been changed
within the past 10 days.
If the account is held in more than one name, IDEX may accept the telephone sale
order of any one account holder. Your registered representative may redeem
shares on your behalf by telephone unless you have declined this privilege on
your New Account Application.
The Fund reserves the right to alter or modify the telephone redemption
privilege. See Other Information -- Telephone Transactions for further
information.
TO REDEEM SHARES BY TELEPHONE AND RECEIVE YOUR MONEY ELECTRONICALLY BY ACH OR
BANK WIRE.
You may sell up to $50,000 worth of shares by phone and receive your money by
ACH or Federal funds bank wire to a pre-authorized bank account. To receive this
privilege, complete the appropriate section of the New Account Application. If
you already have an account, and wish to add the electronic payment privilege,
mail a signature guaranteed letter and bank information (usually a voided check)
to IDEX. ACH transfers usually take three banking days. No fee is currently
charged for this service.
Funds sent via Federal funds bank wire usually arrive on the next business day.
Each time you have money wired to your bank account via a Federal funds wire, a
$20 fee will be charged. This amount will be deducted from your account by the
sale of shares. The receiving bank may also charge you a fee. Federal funds wire
transfers require a minimum sale of $1,000.
If you do not have the wire transfer privilege, and do not want to establish it
as a standing privilege on your account, you may still redeem shares and receive
funds to a U.S. bank via Federal funds wire by writing a letter of instruction
to IDEX. A Federal funds wire redemption generally requires a signature
guarantee.
TO REDEEM SHARES THROUGH A REGISTERED DEALER.
You may also place confirmed redemption requests through registered securities
dealers. Some of these dealers use the National Securities Clearing Corporation
("NSCC") electronic order system. It is the responsibility of such dealers to
transmit your sell orders promptly. Payment for these redemption requests will
be made to the dealer within three days after IDEX receives your order, properly
signed, including share certificates and appropriate signature guarantees where
necessary. IDEX reviews all such orders.
TO REDEEM SHARES AUTOMATICALLY, AT REGULAR INTERVALS.
You may establish a systematic withdrawal plan ("SWP") on your New Account
Application or by calling Customer Service and obtaining the forms to do so. To
set up an SWP, you must:
/bullet/ Have an account worth at least $10,000;
/bullet/ Withdraw at least $50 with each sale.
You may receive your money via ACH to your bank account or by check to your
address of record.
Withdrawals are normally made seven to 10 days before the first of the month,
although the Fund cannot guarantee that you will receive your money exactly by
the date you select. You may make withdrawals monthly, quarterly, or annually.
Special considerations in using an SWP:
/bullet/ If an SWP is established on a new account, the initial disbursement
will not be made within 15 days of the date of your initial
purchase.
/bullet/ Dividends and capital gains distributions on accounts with an active
SWP are usually paid in additional shares of the Fund.
/bullet/ If the requested payments under an SWP require sale of more shares
than have been credited through the payment of dividends and
capital gains distributions in additional shares, your original
investment may be depleted and ultimately exhausted.
/bullet/ Payments under an SWP probably will include some amount of your
original investment and are taxable events.
/bullet/ An SWP may not be advantageous to maintain while you simultaneously
buy additional shares; you'll pay more in sales charges than you
have to.
/bullet/ You can change or cancel an SWP at any time by writing or calling
IDEX. An SWP will be terminated when all shares in an account have
been redeemed, or when IDEX receives notice of the account holder's
death.
REINVESTMENT PRIVILEGE
If you sell shares, you may repurchase shares of the Fund or any Class A
Portfolio shares of IDEX II Series Fund, in an amount not more than the amount
16
<PAGE>
you sold, without incurring a new sales charge. To do this, you must send a
written request to IDEX within 90 days after you sell your shares. IDEX reserves
the right to modify or eliminate this reinvestment privilege at any time.
Exchanging shares is allowed any time, generally without new sales charges. See
How to Exchange Shares, below.
When you exercise this reinvestment privilege:
/bullet/ You may reinvest the proceeds of a share sale in shares without
paying the up-front commission;
/bullet/ The contingent deferred sales charge you paid, if any, when you
sold your shares will also be reinvested in new shares.
NOTE: Certain distributions from qualified plans are not eligible for this
privilege.
HOW TO EXCHANGE SHARES
GENERAL INFORMATION.
You may exchange shares of the Fund for shares of other Funds or Portfolios in
the IDEX Group on which an initial sales charge is imposed. No sales charges are
imposed at the time of an exchange; exchanges must be made in amounts of $500 or
more.
In addition, you may exchange shares for any of the three portfolios of the Cash
Equivalent Fund or the California Tax-Exempt Money Market Fund. See Money Market
Fund Exchange Privilege, below.
You automatically have the telephone exchange privilege unless you decline it on
your New Account Application.
Exchanges may be made by mail or by phone. Write or call IDEX Customer Service.
You may exchange all the shares in one account for shares in another account.
All special account features present in the old account, such as Automatic
Investment Plan, Letter of Intention, or Systematic Withdrawal/Exchange Plan,
will be transferred to the new account, unless IDEX is otherwise instructed.
You may exchange part of the shares in one account and open a new account for
new shares in another Fund or Portfolio. In partial exchanges, all special
account features except Automatic Investment Plan and Systematic
Withdrawal/Exchange Plan will be transferred to the new account, unless IDEX is
otherwise instructed.
Before making an exchange into a fund or portfolio which is new to you, read the
prospectus carefully. Obtain prospectuses by calling or writing IDEX.
The Fund reserves the right to limit exchanges or modify or terminate the
exchange privilege at any time.
TELEPHONE EXCHANGES
Call IDEX at (800) 851-9777 to make a telephone exchange. New shares acquired by
phone exchange must be registered in exactly the same name as the shares sold by
phone exchange. No share certificates are available for shares acquired through
a phone exchange. See Other Information -- Telephone Transactions for more
information.
SYSTEMATIC EXCHANGES
You may choose, either on your New Account Application, or by writing IDEX, to
exchange shares automatically at regular intervals from one IDEX Fund or
Portfolio on which an initial sales charge is imposed to another. All conditions
described above under General Information also apply to systematic exchanges.
New shares acquired by systematic exchange must be registered in exactly the
same name as the shares sold in a systematic exchange. No share certificates are
available for shares acquired through a systematic exchange.
MONEY MARKET FUND EXCHANGE PRIVILEGE
You may make sales charge-free exchanges of at least $500 at NAV of Fund shares
to any of the three portfolios of the Cash Equivalent Fund or the California
Tax-Exempt Money Market Fund.
You may also sell your shares of any of the Money Market Funds in minimum
amounts of $500 and invest the proceeds in another IDEX Fund or Portfolio on
which an initial sales charge is imposed.
Sales charges will be made on exchanges from Money Market Funds when you have
originally invested in these Money Market Funds, then subsequently decided to
purchase shares in the Fund.
Systematic exchanges may also be made between the Money Market Funds and the
Fund. See Systematic Exchanges, above, for conditions.
These Funds (the "Money Market Funds"), which are separately managed by Kemper
Financial Services, Inc., are open-end, diversified money market mutual funds.
Sales of shares in connection with Money Market Fund exchanges will be effected
as of the end of the day when your exchange request is received, if it is
received before 4:00 p.m. Eastern time.
This exchange privilege does not constitute an offering or recommendation of
Money Market Fund shares by the Fund. Before making a Money Market Fund
exchange, you should consider the investment objective of the Money Market Fund
and read its current Prospectus.
You may request a Money Market Fund exchange by writing or calling IDEX.
OTHER INFORMATION
MINIMUM ACCOUNT BALANCE.
The Fund may redeem any account in which the balance has fallen below $500 and
there are no share purchases within the past 60 days, unless the account is less
than 24 months old.
The Fund will notify the holder of such an account 60 days before closing it.
After being notified, the account holder may make share purchases to bring the
account above the $500 minimum.
REPURCHASE ARRANGEMENTS.
For the convenience of its shareholders, the Fund has authorized ISI to act as
its agent in the repurchase of Fund shares. This procedure may be terminated at
any time. If you sell your shares to ISI through a dealer, your dealer may
charge you an additional fee.
RETIREMENT PLANS.
Fund shares may be purchased in qualified retirement plans, including
17
<PAGE>
individual retirement accounts (IRAs), 401(k)s, Simplified Employee Pension
Plans (SEP-IRAs), corporate and self-employed pension and profit sharing plans
(Keoghs) and 403(b)(7) programs.
Do not try to open a retirement plan with the application in this prospectus.
These plans require a different application. Call or write IDEX to obtain the
application.
Retirement plan accounts are ordinarily charged a $12 per year maintenance fee,
with a maximum of $24 a year per taxpayer ID number. However, if your retirement
plan is under custody of Investors Fiduciary Trust Company and your combined
retirement account balances per taxpayer ID number are more than $50,000, there
is generally no fee.
The SAI contains more information about retirement plans. Investors should
consult with their tax advisers about tax-deferral issues in such plans.
TELEPHONE TRANSACTIONS.
The Fund, ISI and IDEX will not be liable for complying with telephone
instructions, and investors will bear the risk of loss. The Fund, ISI and/or
IDEX will employ reasonable procedures to make sure telephone instructions are
genuine. These procedures may include, among others, requiring forms of personal
identification, providing written confirmation of telephone transactions and/or
tape recording telephone orders. If the Fund, ISI and/or IDEX do not employ such
reasonable procedures, they may be held liable for loss due to fraudulent or
unauthorized telephone instructions.
HOW TRANSACTIONS ARE CONFIRMED.
After most every account transaction, except when shares are bought with
reinvested dividends and capital gains distributions and except for automatic
redemptions or purchases via ACH, you will receive a statement. This statement
will show the details of the transaction, the number of shares held in your
account and the transactions since the beginning of the year. You will receive a
quarterly statement which details your dividend reinvestments and capital gain
distributions, as well as your ACH transactions, unless you request otherwise.
HISTORICAL STATEMENTS.
You may order a historical statement covering years before the current year. The
Fund does not charge for this research; however, IDEX reserves the right to make
certain charges to investors to cover administrative costs.
SHARE CERTIFICATES.
Account holders ordinarily do not want share certificates. Shares are normally
recorded on the Fund's books and no certificates are issued. You may, however,
obtain certificates for your shares, with these limitations:
/bullet/ No certificates will be issued for fractional shares;
/bullet/ No certificates will be issued for accounts holding less than
30 shares, except in connection with sales or transfers of shares
from other funds when you already hold certificates;
/bullet/ Certificates are issued only in the same name as your account;
/bullet/ Certificates are not issued for retirements plan accounts with
IFTC as custodian.
If you want certificates representing your shares, you must write to IDEX to
request them. You may return share certificates to IDEX at any time. There may
be a charge for cancelling and replacing lost or stolen share certificates.
Notify IDEX immediately if your THE FUND: A SUMMARY OF ITS OBJECTIVE, INVESTMENT
PRACTICES AND RISKStificate for your shares, you will not be able to redeem or
exchange your shares by telephone. Also, you will have to send your share
certificate to us when you want to redeem or exchange those shares.
18
<PAGE>
APPENDIX A
GLOSSARY OF INVESTMENT TERMS
This glossary provides a more detailed description of the types of securities in
which the Fund may invest. The Fund may invest in these securities to the extent
permitted by its investment objective and policies. The Fund is not limited by
this discussion and may invest in ANY type of security unless precluded by the
policies discussed elsewhere in this Prospectus or in the SAI.
I. EQUITY AND DEBT SECURITIES
BONDS ARE DEBT SECURITIES issued by a company, municipality or government
agency. The issuer of a bond is required to pay the holder the amount of the
loan (or par value) at a specified maturity and to make scheduled interest
payments.
CERTIFICATES OF PARTICIPATION ("COPS") are certificates representing an interest
in a pool of securities. Holders are entitled to a proportionate interest in the
underlying securities. Municipal lease obligations are often sold in the form of
COPs. See "Municipal lease obligations" below.
COMMERCIAL PAPER is a short-term debt obligation with a maturity ranging from 1
to 270 days issued by banks, corporations and other borrowers to investors
seeking to invest idle cash. The Fund may purchase commercial paper issued under
Section 4(2) of the Securities Act of 1933. The Fund may determine that such
securities are liquid under guidelines established by the Trustees.
COMMON STOCK represents a share of ownership in a company and usually carries
voting rights and earns dividends. Unlike preferred stock, dividends on common
stock are not fixed but are declared at the discretion of the issuer's board of
directors.
CONVERTIBLE SECURITIES are preferred stocks or bonds that pay a fixed dividend
or interest payment and are convertible into common stock at a specified price
or conversion ratio.
DEPOSITARY RECEIPTS are receipts for shares of a foreign-based corporation that
entitle the holder to dividends and capital gains on the underlying security.
Receipts include those issued by domestic banks (American Depositary Receipts),
foreign banks (Global or European Depositary Receipts) and broker-dealers
(depositary shares).
HIGH-YIELD/HIGH-RISK BONDS are securities that are rated below investment grade
by the primary rating agencies (BB or lower by Standard & Poor's and Ba or lower
by Moody's). Other terms commonly used to describe such securities include
"lower rated bonds," "non-investment grade bonds" and "junk bonds."
INDUSTRIAL DEVELOPMENT BONDS are revenue bonds that are issued by a public
authority but which may be backed only by the credit and security of a private
issuer and may involve greater credit risk. See "Municipal securities" below.
MORTGAGE- AND ASSET-BACKED SECURITIES are shares in an organized pool of
mortgages or other debt. These securities are generally pass-through securities,
which means that principal and interest payments on the underlying securities
(less servicing fees) are passed through to shareholders on a pro rata basis.
These securities involve prepayment risk, which is the risk that the underlying
mortgages or other debt may be refinanced or paid off prior to their maturities
during periods of declining interest rates. In that case, a portfolio manager
may have to reinvest the proceeds from the securities at a lower rate. Potential
market gains on a security subject to prepayment risk may be more limited than
potential market gains on a comparable security that is not subject to
prepayment risk.
MUNICIPAL LEASE OBLIGATIONS are revenue bonds backed by leases or installment
purchase contracts for property or equipment. Lease obligations may not be
backed by the issuing municipality's credit and may involve risks not normally
associated with general obligation bonds and other revenue bonds. For example,
their interest may become taxable if the lease is assigned and the holders may
incur losses if the issuer does not appropriate funds for the lease payments on
an annual basis, which may result in termination of the lease and possible
default.
MUNICIPAL SECURITIES are bonds or notes issued by a U.S. state or political
subdivision. A municipal security may be a general obligation backed by the full
faith and credit (i.e., the borrowing and taxing power) of a municipality or a
revenue obligation paid out of the revenues of a designated project, facility or
revenue source.
PASSIVE FOREIGN INVESTMENT COMPANIES (PFICS) are foreign investment funds or
trusts. In addition to bearing their proportionate share of a Portfolio's
expenses, shareholders may indirectly bear similar expenses of PFICs and similar
trusts.
PREFERRED STOCK is a class of stock that generally pays dividends at a specified
rate and has preference over common stock in the payment of dividends and
liquidation. Preferred stock generally does not carry voting rights.
REPURCHASE AGREEMENTS involve the purchase of a security by the Fund and a
simultaneous agreement by a bank or dealer to repurchase the security from the
Fund at a specified date or upon demand. This technique offers a method of
earning income on idle cash. These securities involve the risk that the seller
will fail to repurchase the security, as agreed. In that case, the Fund will
bear the risk of market value fluctuations until the security can be sold and
may encounter delays and incur costs in liquidating the security.
REVERSE REPURCHASE agreements involve the sale of a security by the Fund to
another party (generally a bank or dealer) in return for cash and an agreement
by the Fund to buy the security back at a specified price and time. This
technique may be used to provide cash to satisfy unusually high redemption
requests or for other temporary or emergency purposes.
STANDBY COMMITMENTS are obligations purchased by the Fund from a dealer that
give the Fund the option to
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sell a security to the dealer at a specified price.
TENDER OPTION BONDS are generally long-term securities that have been coupled
with an option to tender the securities to a bank, broker-dealer or other
financial institution at periodic intervals and receive the face value of the
bond. This type of security is commonly used as a means of enhancing the
liquidity of municipal securities.
U.S. GOVERNMENT SECURITIES include direct obligations of the U.S. government
that are supported by its full faith and credit. Treasury bills have initial
maturities of less than one year, Treasury notes have initial maturities of one
to ten years and Treasury bonds may be issued with any maturity but generally
have maturities of at least ten years. U.S. government securities also include
indirect obligations of the U.S. government that are issued by federal agencies
and government sponsored entities. Unlike Treasury securities, agency securities
generally are not backed by the full faith and credit of the U.S. government.
Some agency securities are supported by the right of the issuer to borrow from
the Treasury, others are supported by the discretionary authority of the U.S.
government to purchase the agency's obligations and others are supported only by
the credit of the sponsoring agency.
WARRANTS are securities, typically issued with preferred stock or bonds, that
give the holder the right to buy a proportionate amount of common stock at a
specified price, usually at a price that is higher than the market price at the
time of issuance of the warrant. The right may last for a period of years or
indefinitely.
WHEN-ISSUED, DELAYED DELIVERY AND FORWARD TRANSACTIONS generally involve the
purchase of a security with payment and delivery due at some time in the future
(i.e., beyond normal settlement). The Fund does not earn interest on such
securities until settlement and bear the risk of market value fluctuations in
between the purchase and settlement dates. New issues of stocks and bonds,
private placements and U.S. government securities may be sold in this manner.
ZERO COUPON BONDS are debt securities that do not pay regular interest at
regular intervals, but are issued at a significant discount from face value. The
discount approximates the total amount of interest the security will accrue from
the date of issuance to maturity. Strips are debt securities that are stripped
of their interest (usually by a financial intermediary) after the securities are
issued. The market value of these securities generally fluctuates more in
response to changes in interest rates than interest-paying securities of
comparable maturity.
II. FUTURES, OPTIONS AND OTHER DERIVATIVES
FUTURES CONTRACTS are contracts that obligate the buyer to receive and the
seller to deliver an instrument or money at a specified price on a specified
date. The Fund may buy and sell futures contracts on foreign currencies,
securities and financial indices including interest rates or an index of U.S.
government, foreign government, equity or fixed-income securities. An option on
a futures contract gives the buyer the right, but not the obligation, to buy or
sell a futures contract at a specified price on or before a specified date.
Futures contracts and options on futures are standardized and traded on
designated exchanges.
INDEXED/STRUCTURED SECURITIES are typically short- to intermediate-term debt
securities whose value at maturity or interest rate is linked to currencies,
interest rates, equity securities, indices or other financial indicators. Such
securities may be positively or negatively indexed (i.e. their value may
increase or decrease if the reference index or instrument appreciates). Indexed/
structured securities may have return characteristics similar to direct
investments in the underlying instruments and may be more volatile than the
underlying instruments. The Fund bears the market risk of an investment in the
underlying instruments, as well as the credit risk of the issuer.
INVERSE FLOATERS are debt instruments whose interest rate bears an inverse
relationship to the interest rate on another instrument.
OPTIONS are the right, but not the obligation, to buy or sell a specified amount
of securities or other assets on or before a fixed date at a predetermined
price. The Fund may purchase and write put and call options on securities,
securities indices and foreign currencies. A put option gives the holder the
right, upon payment of a premium, to deliver a specified amount of a security to
the writer of the option on or before a fixed date at a predetermined price. A
call option gives the holder the right, upon payment of a premium, to call upon
the writer to deliver a specified amount of a security on or before a fixed date
at a predetermined price.
FORWARD CONTRACTS are contracts to purchase or sell a specified amount of
property for an agreed upon price at a specified time. Forward contracts are not
currently exchange traded and are typically negotiated on an individual basis.
The Fund may enter into forward currency contracts to hedge against declines in
the value of non-dollar denominated securities or to reduce the impact of
currency appreciation on purchases of nondollar denominated securities. They may
also enter into forward contracts to purchase or sell securities or other
financial indices.
INTEREST RATE SWAPS involve the exchange by two parties of their respective
commitments to pay or receive interest (e.g., an exchange of floating rate
payments for fixed rate payments).
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STATEMENT OF ADDITIONAL INFORMATION
March 1, 1996
IDEX FUND
201 Highland Avenue
Largo, Florida 34640
Customer Service (800) 851-9777
IDEX Fund (the "Fund") is a diversified open-end management investment
company that seeks growth of capital. The Fund pursues its objective primarily
by investing in common stocks listed on a national securities exchange or on
NASDAQ and which the Fund's sub-adviser believes have a good potential for
capital growth.
This Statement of Additional Information is not a Prospectus, and
should be read in conjunction with the Prospectus dated March 1, 1996 which may
be obtained free of charge by writing or calling the Fund at the above address
or telephone number. This Statement of Additional Information contains
additional and more detailed information about the Fund's operations and
activities than that set forth in the Prospectus.
<PAGE>
<TABLE>
<CAPTION>
IDEX FUND
STATEMENT OF ADDITIONAL INFORMATION
TABLE OF CONTENTS
<S> <C>
INVESTMENT OBJECTIVE...............................................................................................................1
INVESTMENT RESTRICTIONS, POLICIES AND PRACTICES....................................................................................1
OTHER POLICIES AND PRACTICES OF THE FUND ..........................................................................................3
Futures, Options and Other Derivative Instruments.........................................................................3
Futures Contracts................................................................................................3
Options on Futures Contracts.....................................................................................6
Options on Securities............................................................................................6
Options on Foreign Currencies...................................................................................10
Forward Contracts...............................................................................................11
Swaps and Swap-Related Products.................................................................................12
Eurodollar Instruments..........................................................................................13
Special Investment Considerations and Risks.....................................................................13
Additional Risks of Options on Foreign Currencies, Forward Contracts and Foreign Instruments....................14
Zero Coupon, Pay-In-Kind and Step Coupon Securities.............................................................15
Income Producing Securities..............................................................................................15
Lending of Fund Securities...............................................................................................16
Joint Accounts...........................................................................................................16
Illiquid Securities......................................................................................................16
Repurchase and Reverse Repurchase Agreements.............................................................................16
Pass-through Securities..................................................................................................17
Warrants and Rights......................................................................................................18
U.S. Government Securities...............................................................................................18
PORTFOLIO TURNOVER................................................................................................................19
INVESTMENT ADVISORY AND OTHER SERVICES............................................................................................19
DISTRIBUTOR.......................................................................................................................22
ADMINISTRATIVE SERVICES...........................................................................................................22
CUSTODIAN, TRANSFER AGENT AND OTHER AFFILIATES....................................................................................22
PORTFOLIO TRANSACTIONS AND BROKERAGE..............................................................................................23
TRUSTEES AND OFFICERS.............................................................................................................24
PURCHASE OF SHARES................................................................................................................29
NET ASSET VALUE DETERMINATION.....................................................................................................29
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DIVIDENDS AND OTHER DISTRIBUTIONS.................................................................................................30
SHAREHOLDER ACCOUNTS..............................................................................................................30
RETIREMENT PLANS..................................................................................................................30
REDEMPTION OF SHARES..............................................................................................................30
TAXES .........................................................................................................................31
PRINCIPAL SHAREHOLDERS............................................................................................................32
MISCELLANEOUS INFORMATION.........................................................................................................32
Organization.............................................................................................................32
Shares of Beneficial Interest............................................................................................33
Legal Counsel and Auditors...............................................................................................33
Registration Statement...................................................................................................33
PERFORMANCE INFORMATION...........................................................................................................33
FINANCIAL STATEMENTS..............................................................................................................34
</TABLE>
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INVESTMENT OBJECTIVE
The Prospectus discusses the types of securities in which the Fund will
invest and the portfolio policies and practices. The following discussion of
Investment Restrictions, Policies and Practices supplements that set forth in
the Prospectus.
As stated in the Prospectus, the Fund's investment objective is growth of
capital. The Fund pursues its objective primarily by investing in common stocks
listed on a national securities exchange or on NASDAQ and which the Fund's
sub-adviser believes have a good potential for capital growth. There can be no
assurance that the Fund will, in fact, achieve its objective. The Fund's
investment objective may be changed by the Board of Trustees without shareholder
approval. A change in the investment objective of the Fund may result in the
Fund having an investment objective different from that which the shareholder
deemed appropriate at the time of investment. The Fund will not change its
objective without 30 days prior notice to its shareholders nor will it charge
shareholders an exchange fee or redemption fee after such notice and prior to
the expiration of such 30 day notice period. However, should a shareholder
decide to redeem Fund shares because of a change in the objective, the
shareholder may realize a taxable gain or loss.
INVESTMENT RESTRICTIONS, POLICIES AND PRACTICES
As indicated in the Prospectus, the Fund is subject to certain
fundamental policies and restrictions which as such may not be changed without
shareholder approval. Shareholder approval would be the approval by the lesser
of (i) more than 50% of the outstanding voting securities of the Fund, or (ii)
67% or more of the voting securities present at a meeting if the holders of more
than 50% of the outstanding voting securities of the Fund are present or
represented by proxy.
The Fund may not, as a matter of fundamental policy:
1. With respect to 75% of the Fund's total assets, purchase the securities
of any one issuer (other than cash items and "government securities" as defined
under the Investment Company Act of 1940, as amended (the "1940 Act")), if
immediately after and as a result of such purchase (a) the value of the holdings
of the Fund in the securities of such issuer exceeds 5% of the value of the
Fund's total assets, or (b) the Fund owns more than 10% of the outstanding
voting securities of such issuer;
2. Invest more than 25% of the value of its assets in any particular
industry (other than government securities);
3. Purchase or sell physical commodities other than foreign
currencies unless acquired as a result of ownership of securities (but this
restriction shall not prevent the Fund from purchasing or selling options,
futures contracts, caps, floors and other derivative instruments, engaging in
swap transactions or investing in securities or other instruments backed by
physical commodities);
4. Invest directly in real estate or interests in real estate,
including limited partnership interests; however, the Fund may own debt or
equity securities issued by companies engaged in those businesses;
5. Act as underwriter of securities issued by others, except to the
extent that it may be deemed an underwriter in connection with the disposition
of portfolio securities of the Fund; and
6. Lend any security or make any other loan if, as a result, more
than 25% of its total assets would be lent to other parties (but this
limitation does not apply to purchases of commercial paper, debt securities or
to repurchase agreements).
In addition to the above, as a fundamental policy, the Fund may,
notwithstanding any other investment policy or restriction (whether or not
fundamental), invest all of its assets in the securities of a single open-end
management investment company with substantially the same fundamental investment
objective, policies and restrictions as the Fund.
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Furthermore, the Fund has adopted the following non-fundamental
investment restrictions which may be changed by the Board of Trustees without
shareholder approval:
(A) The Fund may not: (i) enter into any futures contracts or options on
futures contracts for purposes other than bona fide hedging transactions within
the meaning of Commodity Futures Commission regulations if the aggregate initial
margin deposits and premiums required to establish positions in futures
contracts and related options that do not fall within the definition of bona
fide hedging transactions would exceed 5% of the fair market value of the Fund's
net assets, after taking into account unrealized profits and losses on such
contracts it has entered into; and (ii) enter into any futures contracts or
options on futures contracts if the aggregate amount of the Fund's commitments
under outstanding futures contracts positions and options on futures contracts
would exceed the market value of its total assets;
(B) The Fund may not mortgage or pledge any securities owned or held by the
Fund in amounts that exceed, in the aggregate, 15% of the Fund's net assets,
provided that this limitation does not apply to reverse repurchase agreements or
in the case of assets deposited to provide margin or guarantee positions in
options, futures contracts, swaps, forward contracts or other derivative
instruments or the segregation of assets in connection with such transactions;
(C) The Fund may not sell securities short, unless it owns or has the right
to obtain securities equivalent in kind and amount to the securities sold short,
and provided that transactions in options, futures contracts, swaps, forward
contracts, and other derivative instruments are not deemed to constitute selling
securities short;
(D) The Fund may not purchase securities on margin, except that the Fund
may obtain such short-term credits as are necessary for the clearance of
transactions, and provided that margin payments and other deposits made in
connection with transactions in options, futures contracts, swaps, forward
contracts, and other derivative instruments shall not be deemed to constitute
purchasing securities on margin;
(E) The Fund may borrow money only for temporary or emergency purposes (not
for leveraging or investment) in an amount not exceeding 25% of the value of the
Fund's total assets (including the amount borrowed) less liabilities (other than
borrowings). Any borrowings that exceed 25% of the value of the Fund's total
assets by reason of a decline in net assets will be reduced within three
business days to the extent necessary to comply with the 25% limitation. This
policy shall not prohibit reverse repurchase agreements or deposits of assets to
provide margin or guarantee positions in connection with transactions in
options, future contracts, swaps, forward contracts, and other derivative
instruments or the segregation of assets in connection with such transactions;
(F) The Fund may not invest more than 15% of its assets in illiquid
securities. This does not include securities eligible for resale pursuant to
Rule 144A under the Securities Act of 1933, or any successor to such Rule,
Section 4(2) commercial paper or any securities which the Board of Trustees or
the investment sub-adviser, as appropriate, has made a determination of
liquidity, as permitted under the 1940 Act;
(G) The Fund may not invest in companies for the purpose of
exercising control or management;
(H) The Fund may not (i) purchase securities of other investment companies,
except in the open market where no commission except the ordinary broker's
commission is paid, or (ii) purchase or retain securities issued by other
open-end investment companies. Restrictions (i) and (ii) do not apply to money
market funds or to securities received as dividends, through offers to exchange,
or as a result of reorganization, consolidation, or merger. If the Fund invests
in a money market fund, the investment advisers will reduce their advisory fees
by the amount of any investment advisory or administrative service fees paid to
the investment manager of the money market fund;
(I) The Fund may not invest directly in oil, gas or other mineral
development or exploration programs or leases; however, the Fund may own debt or
equity securities of companies engaged in those businesses;
2
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(J) The Fund may not purchase the securities of any issuer (other than U.S.
government agencies and instrumentalities or instruments guaranteed by an entity
with a record of more than three years' continuous operation, including that of
predecessors) with a record of less than three years' continuous operation
(including that of predecessors) if such purchase would cause the value of the
Fund's investments in all such issuers to exceed 5% of the Fund's total assets
taken at market value at the time of such purchase; and
(K) The Fund may not invest in warrants valued at the lower of cost or
market value, if such value exceeds 5% of the Fund's net assets, provided that
no more than 2% of the Fund's net assets may be invested in warrants which are
not listed on the New York or American Stock Exchange. Warrants acquired by the
Fund in units or attached to securities may be deemed to be without value.
Except with respect to borrowing money, if a percentage limitation set
forth above is complied with at the time of the investment, a subsequent change
in the percentage resulting from any change in value of the Fund's net assets
will not result in a violation of such restriction.
OTHER POLICIES AND PRACTICES OF THE FUND
FUTURES, OPTIONS AND OTHER DERIVATIVE INSTRUMENTS.
A. FUTURES CONTRACTS. The Fund may enter into contracts for the purchase
or sale for future delivery of fixed-income securities, foreign
currencies or contracts based on financial indices including indices of
U.S. government securities, foreign government securities, equity or
fixed-income securities ("futures contracts"). U.S. futures contracts
are traded on exchanges which have been designated "contract markets"
by the Commodity Futures Trading Commission ("CFTC") and must be
executed through a futures commission merchant ("FCM"), or brokerage
firm, which is a member of the relevant contract market. Through their
clearing corporations, the exchanges guarantee performance of the
contracts as between the clearing members of the exchange.
When the Fund buys or sells a futures contract it incurs a contractual
obligation to receive or deliver the underlying instrument (or a cash
payment based on the difference between the underlying instrument's
closing price and the price at which the contract was entered into) at
a specified price on a specified date. Transactions in futures
contracts may be made to attempt to hedge against potential changes in
interest or currency exchange rates or the price of a security or a
securities index which might correlate with or otherwise adversely
affect either the value of the Fund's securities or the prices of
securities which the Fund is considering buying at a later date.
The buyer or seller of a futures contract is not required to deliver or
pay for the underlying instrument unless the contract is held until the
delivery date. However, both the buyer and seller are required to
deposit "initial margin" for the benefit of the FCM when the contract
is entered into. Initial margin deposits are equal to a percentage of
the contract's value, as set by the exchange on which the contract is
traded, and may be maintained in cash or certain high-grade liquid
assets by the Fund's custodian for the benefit of the FCM. Initial
margin payments are similar to good faith deposits or performance
bonds. Unlike margin extended by a securities broker, initial margin
payments do not constitute purchasing securities on margin for purposes
of a Fund's investment limitations. If the value of either party's
position declines, that party will be required to make additional
"variation margin" payments with the FCM to settle the change in value
on a daily basis. The party that has a gain may be entitled to receive
all or a portion of this amount. In the event of the bankruptcy of the
FCM that holds margin on behalf of a Fund, that Fund may be entitled to
return of the margin owed to such Fund only in proportion to the amount
received by the FCM's other customers. The portfolio manager will
attempt to minimize the risk by careful monitoring of the
creditworthiness of the FCMs with which a Fund does business and by
segregating margin payments with the custodian.
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<PAGE>
Although the Fund would segregate cash and liquid assets in an amount
sufficient to cover its open futures obligations, the segregated assets
would be available to that Fund immediately upon closing out the
futures position, while settlement of securities transactions could
take several days. However, because the Fund's cash that may otherwise
be invested would be held uninvested or invested in high-grade liquid
assets so long as the futures position remains open, such Fund's return
could be diminished due to the opportunity losses of foregoing other
potential investments.
The acquisition or sale of a futures contract may occur, for example,
when the Fund holds or is considering purchasing equity or debt
securities and seeks to protect itself from fluctuations in prices or
interest rates without buying or selling those securities. For example,
if stock or debt prices were expected to decrease, the Fund might sell
equity index futures contracts, thereby hoping to offset a potential
decline in the value of equity securities in the Fund by a
corresponding increase in the value of the futures contract position
held by that Fund and thereby preventing the Fund's net asset value
from declining as much as it otherwise would have. Similarly, if
interest rates were expected to rise, the Fund might sell bond index
futures contracts, thereby hoping to offset a potential decline in the
value of debt securities in the portfolio by a corresponding increase
in the value of the futures contract position held by the Fund. The
Fund also could seek to protect against potential price declines by
selling portfolio securities and investing in money market instruments.
However, since the futures market is more liquid than the cash market,
the use of futures contracts as an investment technique allows the Fund
to maintain a defensive position without having to sell portfolio
securities.
Similarly, when prices of equity securities are expected to increase,
or interest rates are expected to fall, futures contracts may be bought
to attempt to hedge against the possibility of having to buy equity
securities at higher prices. This technique is sometimes known as an
anticipatory hedge. Since the fluctuations in the value of futures
contracts should be similar to those of equity securities, the Fund
could take advantage of the potential rise in the value of equity or
debt securities without buying them until the market has stabilized. At
that time, the futures contracts could be liquidated and such Fund
could buy equity or debt securities on the cash market. To the extent
the Fund enters into futures contracts for this purpose, the segregated
assets maintained to cover such Fund's obligations with respect to
futures contracts will consist of high-grade liquid assets from its
portfolio in an amount equal to the difference between the contract
price and the aggregate value of the initial and variation margin
payments made by that Fund with respect to the futures contracts.
The ordinary spreads between prices in the cash and futures markets,
due to differences in the nature of those markets, are subject to
distortions. First, all participants in the futures market are subject
to initial margin and variation margin requirements. Rather than
meeting additional variation margin requirements, investors may close
out futures contracts through offsetting transactions which could
distort the normal price relationship between the cash and futures
markets. Second, the liquidity of the futures market depends on
participants entering into offsetting transactions rather than making
or taking delivery. To the extent participants decide to make or take
delivery, liquidity in the futures market could be reduced and prices
in the futures market distorted. Third, from the point of view of
speculators, the margin deposit requirements in the futures market are
less onerous than margin requirements in the securities market.
Therefore, increased participation by speculators in the futures market
may cause temporary price distortions. Due to the possibility of the
foregoing distortions, a correct forecast of general price trends by
the portfolio manager still may not result in a successful use of
futures contracts.
Futures contracts entail risks. Although the use of futures contracts
is believed to benefit the Fund, if the portfolio manager's investment
judgment proves incorrect, the Fund's overall performance could be
worse than if the Fund had not entered into futures contracts. For
example, if the Fund has hedged against the effects of a possible
decrease in prices of securities held in its portfolio and prices
increase instead, that Fund may lose part or all of the benefit of the
increased value of the securities because of offsetting losses in the
Fund's futures positions. In addition, if the Fund has insufficient
cash, it may have to sell securities from its portfolio to meet daily
variation margin
4
<PAGE>
requirements. Those sales may, but will not necessarily, be at
increased prices which reflect the rising market and may occur at a
time when the sales are disadvantageous to the Fund.
The prices of futures contracts depend primarily on the value of their
underlying instruments. Because there are a limited number of types of
futures contracts, it is possible that the standardized futures
contracts available to the Fund will not match exactly such Fund's
current or potential investments. The Fund may buy and sell futures
contracts based on underlying instruments with different
characteristics from the securities in which it typically invests --
for example, by hedging investments in portfolio securities with a
futures contract based on a broad index of securities --which involves
a risk that the futures position will not correlate precisely with such
performance of the Fund's investments.
Futures prices can also diverge from the prices of their underlying
instruments, even if the underlying instruments correlate with the
Fund's investments. Futures prices are affected by factors such as
current and anticipated short-term interest rates, changes in
volatility of the underlying instruments, and the time remaining until
expiration of the contract. Those factors may affect securities prices
differently from futures prices. Imperfect correlations between the
Fund's investments and its futures positions may also result from
differing levels of demand in the futures markets and the securities
markets, from structural differences in how futures and securities are
traded, and from imposition of daily price fluctuation limits for
futures contracts. The Fund may buy or sell futures contracts with a
greater or lesser value than the securities it wishes to hedge or is
considering purchasing in order to attempt to compensate for
differences in historical volatility between the futures contract and
the securities, although this may not be successful in all cases. If
price changes in the Fund's futures positions are poorly correlated
with its other investments, its futures positions may fail to produce
desired gains or may result in losses that are not offset by the gains
in that Fund's other investments.
Because futures contracts are generally settled within a day from the
date they are closed out, compared with a settlement period of seven
days for some types of securities, the futures markets can provide
superior liquidity to the securities markets. Nevertheless, there is no
assurance a liquid secondary market will exist for any particular
futures contract at any particular time. In addition, futures exchanges
may establish daily price fluctuation limits for futures contracts and
may halt trading if a contract's price moves upward or downward more
than the limit in a given day. On volatile trading days when the price
fluctuation limit is reached, it may be impossible for the Fund to
enter into new positions or close out existing positions. If the
secondary market for a futures contract is not liquid because of price
fluctuation limits or otherwise, the Fund may not be able to promptly
liquidate unfavorable futures positions and potentially could be
required to continue to hold a futures position until the delivery
date, regardless of changes in its value. As a result, such Fund's
access to other assets held to cover its futures positions also could
be impaired.
Although futures contracts by their terms call for the delivery or
acquisition of the underlying commodities or a cash payment based on
the value of the underlying commodities, in most cases the contractual
obligation is offset before the delivery date of the contract by
buying, in the case of a contractual obligation to sell, or selling, in
the case of a contractual obligation to buy, an identical futures
contract on a commodities exchange. Such a transaction cancels the
obligation to make or take delivery of the commodities.
The Fund intends to comply with guidelines of eligibility for exclusion
from the definition of the term "commodity pool operator" with the CFTC
and the National Futures Association, which regulate trading in the
futures markets. The Fund will use futures contracts and related
options primarily for bona fide hedging purposes within the meaning of
CFTC regulations; except that, in addition, the Fund may hold positions
in futures contracts and related options that do not fall within the
definition of bona fide hedging transactions, provided that the
aggregate initial margin and premiums required to establish such
positions will not exceed 5% of the fair market value of the Fund's net
assets, after taking into account unrealized profits and unrealized
losses on any such contracts it has entered into.
5
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B. OPTIONS ON FUTURES CONTRACTS. The Fund may buy and write put and call
options on futures contracts. An option on a future gives the Fund the
right (but not the obligation) to buy or sell a futures contract at a
specified price on or before a specified date. Transactions in options
on futures contracts may be made to attempt to hedge against potential
changes in interest rates or currency exchange rates or the price of a
security or a securities index which might correlate with or otherwise
adversely affect either the value of the Fund's securities or the
prices of securities which the Fund is considering buying at a later
date. Transactions in options on future contracts will not be made for
speculation.
The purchase of a call option on a futures contract is similar in some
respects to the purchase of a call option on an individual security.
Depending on the pricing of the option compared to either the price of
the futures contract upon which it is based or the price of the
underlying instrument, ownership of the option may or may not be less
risky than ownership of the futures contract or the underlying
instrument. As with the purchase of futures contracts, when the Fund is
not fully invested it may buy a call option on a futures contract to
hedge against a market advance.
The writing of a call option on a futures contract constitutes a
partial hedge against declining prices of the security or foreign
currency which is deliverable under, or of the index comprising, the
futures contract. If the futures price at the expiration of the option
is below the exercise price, the Fund will retain the full amount of
the option premium which provides a partial hedge against any decline
that may have occurred in such Fund's holdings. The writing of a put
option on a futures contract constitutes a partial hedge against
increasing prices of the security or foreign currency which is
deliverable under, or of the index comprising, the futures contract. If
the futures price at expiration of the option is higher than the
exercise price, the Fund will retain the full amount of the option
premium which provides a partial hedge against any increase in the
price of securities which that Fund is considering buying. If a call or
put option the Fund has written is exercised, such Fund will incur a
loss which will be reduced by the amount of the premium it received.
Depending on the degree of correlation between the change in the value
of its portfolio securities and changes in the value of the futures
positions, that Fund's losses from existing options on futures may to
some extent be reduced or increased by changes in the value of
portfolio securities.
The purchase of a put option on a futures contract is similar in some
respects to the purchase of protective put options on portfolio
securities. For example, the Fund may buy a put option on a futures
contract to hedge its portfolio securities against the risk of falling
prices or rising interest rates.
The amount of risk the Fund assumes when it buys an option on a futures
contract is the premium paid for the option plus related transaction
costs. In addition to the correlation risks discussed above, the
purchase of an option also entails the risk that changes in the value
of the underlying futures contract will not be fully reflected in the
value of the options bought.
C. OPTIONS ON SECURITIES. In an effort to increase current income and to
reduce fluctuations in net asset value, the Fund may write covered put
and call options and buy put and call options on securities that are
traded on United States and foreign securities exchanges and
over-the-counter. The Fund also may write call options that are not
covered for cross-hedging purposes. The Fund may write and buy options
on the same types of securities that the Fund may purchase directly.
There are no specific limitations on the Funds' writing and buying of
options on securities.
A put option gives the holder the right, upon payment of a premium, to
deliver a specified amount of a security to the writer of the option on
or before a fixed date at a predetermined price. A call option gives
the holder the right, upon payment of a premium, to call upon the
writer to deliver a specified amount of a security on or before a fixed
date at a predetermined price.
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A put option written by the Fund is "covered" if the Fund (i)
segregates cash not available for investment or high-grade liquid
assets with a value equal to the exercise price with its custodian or
(ii) holds a put on the same security and in the same principal amount
as the put written and the exercise price of the put held is equal to
or greater than the exercise price of the put written. The premium paid
by the buyer of an option will reflect, among other things, the
relationship of the exercise price to the market price and the
volatility of the underlying security, the remaining term of the
option, supply and demand and interest rates.
A call option written by the Fund is "covered" if the Fund owns the
underlying security covered by the call or has an absolute and
immediate right to acquire that security without additional cash
consideration (or has segregated additional cash with its custodian)
upon conversion or exchange of other securities held in its portfolio.
A call option written by the Fund is also deemed to be covered if that
Fund holds a call on the same security and in the same principal amount
as the call written and the exercise price of the call held (i) is
equal to or less than the exercise price of the call written or (ii) is
greater than the exercise price of the call written if the difference
is segregated with its custodian.
The Fund may also write call options that are not covered for cross
hedging purposes. The Fund collateralizes its obligation under a
written call option for cross-hedging purposes by segregating cash or
high-grade liquid assets in an amount not less than the market value of
the underlying security, marked-to-market daily. The Fund would write a
call option for cross-hedging purposes, instead of writing a covered
call option, when the premium to be received from the cross-hedge
transaction would exceed that which would be received from writing a
covered call option and the portfolio manager believes that writing the
option would achieve the desired hedge.
If a put or call option written by the Fund were exercised, the Fund
would be obligated to buy or sell the underlying security at the
exercise price. Writing a put option involves the risk of a decrease in
the market value of the underlying security, in which case the option
could be exercised and the underlying security would then be sold by
the option holder to the Fund at a higher price than its current market
value. Writing a call option involves the risk of an increase in the
market value of the underlying security, in which case the option could
be exercised and the underlying security would then be sold by the Fund
to the option holder at a lower price than its current market value.
Those risks could be reduced by entering into an offsetting
transaction. The Fund retains the premium received from writing a put
or call option whether or not the option is exercised.
The writer of an option may have no control when the underlying
security must be sold, in the case of a call option, or bought, in the
case of a put option, since with regard to certain options, the writer
may be assigned an exercise notice at any time prior to the termination
of the obligation. Whether or not an option expires unexercised, the
writer retains the amount of the premium. This amount, of course, may,
in the case of a covered call option, be offset by a decline in the
market value of the underlying security during the option period. If a
call option is exercised, the writer experiences a profit or loss from
the sale of the underlying security. If a put option is exercised, the
writer must fulfill the obligation to buy the underlying security at
the exercise price, which will usually exceed the then market value of
the underlying security.
The writer of an option that wishes to terminate its obligation may
effect a "closing purchase transaction." This is accomplished by buying
an option of the same series as the option previously written. The
effect of the purchase is that the writer's position will be canceled
by the clearing corporation. However, a writer may not effect a closing
purchase transaction after being notified of the exercise of an option.
Likewise, an investor who is the holder of an option may liquidate its
position by effecting a "closing sale transaction." This is
accomplished by selling an option of the same series as the option
previously bought. There is no guarantee that either a closing purchase
or a closing sale transaction can be effected.
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In the case of a written call option, effecting a closing transaction
will permit the Fund to write another call option on the underlying
security with either a different exercise price or expiration date or
both. In the case of a written put option, such transaction will permit
the Fund to write another put option to the extent that the exercise
price thereof is secured by deposited high-grade liquid assets.
Effecting a closing transaction also will permit the cash or proceeds
from the concurrent sale of any securities subject to the option to be
used for other Fund investments. If the Fund desires to sell a
particular security on which it has written a call option, such Fund
will effect a closing transaction prior to or concurrent with the sale
of the security.
The Fund will realize a profit from a closing transaction if the price
of a purchase transaction is less than the premium received from
writing the option or the price received from a sale transaction is
more than the premium paid to buy the option. The Fund will realize a
loss from a closing transaction if the price of the purchase
transaction is more than the premium received from writing the option
or the price received from a sale transaction is less than the premium
paid to buy the option. Because increases in the market price of a call
option will generally reflect increases in the market price of the
underlying security, any loss resulting from the repurchase of a call
option is likely to be offset in whole or in part by appreciation of
the underlying security owned by the Fund.
An option position may be closed out only where a secondary market for
an option of the same series exists. If a secondary market does not
exist, the Fund may not be able to effect closing transactions in
particular options and that Fund would have to exercise the options in
order to realize any profit. If the Fund is unable to effect a closing
purchase transaction in a secondary market, it will not be able to sell
the underlying security until the option expires or it delivers the
underlying security upon exercise. Reasons for the absence of a liquid
secondary market may include the following: (i) there may be
insufficient trading interest in certain options, (ii) restrictions may
be imposed by a national securities exchange on which the option is
traded ("Exchange") on opening or closing transactions or both, (iii)
trading halts, suspensions or other restrictions may be imposed with
respect to particular classes or series of options or underlying
securities, (iv) unusual or unforeseen circumstances may interrupt
normal operations on an Exchange, (v) the facilities of an Exchange or
the Options Clearing Corporation ("OCC") may not at all times be
adequate to handle current trading volume, or (vi) one or more
Exchanges could, for economic or other reasons, decide or be compelled
at some future date to discontinue the trading of options (or a
particular class or series of options), in which event the secondary
market on that Exchange (or in that class or series of options) would
cease to exist, although outstanding options on that Exchange that had
been issued by the OCC as a result of trades on that Exchange would
continue to be exercisable in accordance with their terms.
The Fund may write options in connection with buy-and-write
transactions. In other words, the Fund may buy a security and then
write a call option against that security. The exercise price of such
call will depend upon the expected price movement of the underlying
security. The exercise price of a call option may be below
("in-the-money"), equal to ("at-the-money") or above
("out-of-the-money") the current value of the underlying security at
the time the option is written. Buy-and-write transactions using
in-the-money call options may be used when it is expected that the
price of the underlying security will remain flat or decline moderately
during the option period. Buy-and-write transactions using at-the-money
call options may be used when it is expected that the price of the
underlying security will remain fixed or advance moderately during the
option period. Buy-and-write transactions using out-of-the-money call
options may be used when it is expected that the premiums received from
writing the call option plus the appreciation in the market price of
the underlying security up to the exercise price will be greater than
the appreciation in the price of the underlying security alone. If the
call options are exercised in such transactions, the Fund's maximum
gain will be the premium received by it for writing the option,
adjusted upwards or downwards by the difference between that Fund's
purchase price of the security and the exercise price. If the options
are not exercised and the price of the underlying security declines,
the amount of such decline will be offset by the amount of premium
received.
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The writing of covered put options is similar in terms of risk and
return characteristics to buy-and-write transactions. If the market
price of the underlying security rises or otherwise is above the
exercise price, the put option will expire worthless and the Fund's
gain will be limited to the premium received. If the market price of
the underlying security declines or otherwise is below the exercise
price, the Fund may elect to close the position or take delivery of the
security at the exercise price and that Fund's return will be the
premium received from the put options minus the amount by which the
market price of the security is below the exercise price.
The Fund may buy put options to hedge against a decline in the value of
its securities. By using put options in this way, the Fund will reduce
any profit it might otherwise have realized in the underlying security
by the amount of the premium paid for the put option and by transaction
costs.
The Fund may buy call options to hedge against an increase in the price
of securities that it may buy in the future. The premium paid for the
call option plus any transaction costs will reduce the benefit, if any,
realized by such Fund upon exercise of the option, and, unless the
price of the underlying security rises sufficiently, the option may
expire worthless to that Fund.
In purchasing an option, the Fund would be in a position to realize a
gain if, during the option period, the price of the underlying security
increased (in the case of a call) or decreased (in the case of a put)
by an amount in excess of the premium paid and would realize a loss if
the price of the underlying security did not increase (in the case of a
call) or decrease (in the case of a put) during the period by more than
the amount of the premium. If a put or call option purchased by the
Fund were permitted to expire without being sold or exercised, the Fund
would lose the amount of the premium.
Although they entitle the holder to buy equity securities, warrants on
and options to purchase equity securities do not entitle the holder to
dividends or voting rights with respect to the underlying securities,
nor do they represent any rights in the assets of the issuer of those
securities.
In addition to options on securities, the Fund may also purchase and
sell call and put options on securities indexes. A stock index reflects
in a single number the market value of many different stocks. Relative
values are assigned to the stocks included in an index and the index
fluctuates with changes in the market values of the stocks. The options
give the holder the right to receive a cash settlement during the term
of the option based on the difference between the exercise price and
the value of the index. By writing a put or call option on a securities
index, the Fund is obligated, in return for the premium received, to
make delivery of this amount. The Fund may offset its position in stock
index options prior to expiration by entering into a closing
transaction on an exchange or it may let the option expire unexercised.
Use of options on securities indexes entails the risk that trading in
the options may be interrupted if trading in certain securities
included in the index is interrupted. The Fund will not purchase these
options unless the sub-adviser is satisfied with the development, depth
and liquidity of the market and believes the options can be closed out.
Price movements in the Fund's securities may not correlate precisely
with movements in the level of an index and, therefore, the use of
options on indexes cannot serve as a complete hedge and will depend, in
part, on the ability of its portfolio manager to predict correctly
movements in the direction of the stock market generally or of a
particular industry. Because options on securities indexes require
settlement in cash, the portfolio manager may be forced to liquidate
portfolio securities to meet settlement obligations.
The amount of risk the Fund assumes when it buys an option on a futures
contract is the premium paid for the option plus related transaction
costs. In addition to the correlation risks discussed above, the
purchase of an option also
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<PAGE>
entails the risk that changes in the value of the underlying futures
contract will not be fully reflected in the value of the options
bought.
D. OPTIONS ON FOREIGN CURRENCIES. The Fund may buy and write options on
foreign currencies in a manner similar to that in which futures
contracts or forward contracts on foreign currencies will be utilized.
For example, a decline in the U.S. dollar value of a foreign currency
in which portfolio securities are denominated will reduce the U.S.
dollar value of such securities, even if their value in the foreign
currency remains constant. In order to protect against such diminutions
in the value of portfolio securities, the Fund may buy put options on
the foreign currency. If the value of the currency declines, such Fund
will have the right to sell such currency for a fixed amount in U.S.
dollars and will offset, in whole or in part, the adverse effect on its
portfolio.
Conversely, when a rise in the U.S. dollar value of a currency in which
securities to be acquired are denominated is projected, thereby
increasing the cost of such securities, the Fund may buy call options
thereon. The purchase of such options could offset, at least partially,
the effects of the adverse movements in exchange rates. As in the case
of other types of options, however, the benefit to the Fund from
purchases of foreign currency options will be reduced by the amount of
the premium and related transaction costs. In addition, if currency
exchange rates do not move in the direction or to the extent desired,
the Fund could sustain losses on transactions in foreign currency
options that would require such Fund to forego a portion or all of the
benefits of advantageous changes in those rates. In addition, in the
case of other types of options, the benefit to the Fund from purchases
of foreign currency options will be reduced by the amount of the
premium and related transaction costs.
The Fund may also write options on foreign currencies. For example, in
attempting to hedge against a potential decline in the U.S. dollar
value of foreign currency denominated securities due to adverse
fluctuations in exchange rates, the Fund could, instead of purchasing a
put option, write a call option on the relevant currency. If the
expected decline occurs, the option will most likely not be exercised
and the diminution in value of portfolio securities will be offset by
the amount of the premium received.
Similarly, instead of purchasing a call option to attempt to hedge
against a potential increase in the U.S. dollar cost of securities to
be acquired, the Fund could write a put option on the relevant currency
which, if rates move in the manner projected, will expire unexercised
and allow that Fund to hedge the increased cost up to the amount of
premium. As in the case of other types of options, however, the writing
of a foreign currency option will constitute only a partial hedge up to
the amount of the premium. If exchange rates do not move in the
expected direction, the option may be exercised and the Fund would be
required to buy or sell the underlying currency at a loss which may not
be offset by the amount of the premium. Through the writing of options
on foreign currencies, the Fund also may lose all or a portion of the
benefits which might otherwise have been obtained from favorable
movements in exchange rates.
The Fund may write covered call options on foreign currencies. A call
option written on a foreign currency by the Fund is "covered" if that
Fund owns the underlying foreign currency covered by the call or has an
absolute and immediate right to acquire that foreign currency without
additional cash consideration (or for additional cash consideration
that is segregated by its custodian) upon conversion or exchange of
other foreign currency held in its portfolio. A call option is also
covered if the Fund has a call on the same foreign currency and in the
same principal amount as the call written if the exercise price of the
call held (i) is equal to or less than the exercise price of the call
written or (ii) is greater than the exercise price of the call written,
if the difference is maintained by such Fund in cash or high-grade
liquid assets that are segregated with the Fund's custodian.
The Fund may write call options on foreign currencies for cross-hedging
purposes that would not be deemed to be covered. A call option on a
foreign currency is for cross-hedging purposes if it is not covered but
is designed to provide a hedge against a decline due to an adverse
change in the exchange rate in the U.S. dollar value of a security
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which the Fund owns or has the right to acquire and which is
denominated in the currency underlying the option. In such
circumstances, the Fund collateralizes the option by segregating cash
or high-grade liquid assets in an amount not less than the value of the
underlying foreign currency in U.S. dollars marked-to-market daily.
E. FORWARD CONTRACTS. A forward contract is an agreement between two
parties in which one party is obligated to deliver a stated amount of a
stated asset at a specified time in the future and the other party is
obligated to pay a specified invoice amount for the assets at the time
of delivery. The Fund may enter into forward contracts to purchase and
sell government securities, foreign currencies or other financial
instruments. Forward contracts generally are traded in an interbank
market conducted directly between traders (usually large commercial
banks) and their customers. Unlike futures contracts, which are
standardized contracts, forward contracts can be specifically drawn to
meet the needs of the parties that enter into them. The parties to a
forward contract may agree to offset or terminate the contract before
its maturity, or may hold the contract to maturity and complete the
contemplated exchange.
The following discussion summarizes the Fund's principal uses of
forward foreign currency exchange contracts ("forward currency
contracts"). The Fund may enter into forward currency contracts with
stated contract values of up to the value of that Fund's assets. A
forward currency contract is an obligation to buy or sell an amount of
a specified currency for an agreed price (which may be in U.S. dollars
or another foreign currency). The Fund will exchange foreign currencies
for U.S. dollars and for other foreign currencies in the normal course
of business and may buy and sell currencies through forward currency
contracts in order to fix a price for securities it has agreed to buy
or sell ("transaction hedge"). The Fund also may hedge some or all of
its investments denominated in foreign currency against a decline in
the value of that currency relative to the U.S. dollar by entering into
forward currency contracts to sell an amount of that currency (or a
proxy currency whose performance is expected to replicate or exceed the
performance of that currency relative to the U.S. dollar) approximating
the value of some or all of its portfolio securities denominated in
that currency ("position hedge") or by participating in options or
futures contracts with respect to the currency. The Fund also may enter
into a forward currency contract with respect to a currency where such
Fund is considering the purchase or sale of investments denominated in
that currency but has not yet selected the specific investments
("anticipatory hedge"). In any of these circumstances the Fund may,
alternatively, enter into a forward currency contract to purchase or
sell one foreign currency for a second currency that is expected to
perform more favorably relative to the U.S. dollar if the portfolio
manager believes there is a reasonable degree of correlation between
movements in the two currencies ("cross-hedge").
These types of hedging seek to minimize the effect of currency
appreciation as well as depreciation, but do not eliminate fluctuations
in the underlying U.S. dollar equivalent value of the proceeds of or
rates of return on the Fund's foreign currency denominated portfolio
securities. The matching of the increase in value of a forward contract
and the decline in the U.S. dollar equivalent value of the foreign
currency denominated asset that is the subject of the hedge generally
will not be precise. Shifting the Fund's currency exposure from one
foreign currency to another removes that Fund's opportunity to profit
from increases in the value of the original currency and involves a
risk of increased losses to such Fund if its portfolio manager's
position projection of future exchange rates is inaccurate. Proxy
hedges and cross-hedges may result in losses if the currency used to
hedge does not perform similarly to the currency in which hedged
securities are denominated. Unforeseen changes in currency prices may
result in poorer overall performance for the Fund than if it had not
entered into such contracts.
The Fund will cover outstanding forward currency contracts by
maintaining liquid portfolio securities denominated in the currency
underlying the forward contract or the currency being hedged. To the
extent that the Fund is not able to cover its forward currency
positions with underlying portfolio securities, its custodian will
segregate cash or high-grade liquid assets having a value equal to the
aggregate amount of such Fund's commitments under forward contracts
entered into with respect to position hedges, cross-hedges and
anticipatory hedges. If the value of the securities used to cover a
position or the value of segregated assets declines, the Fund will find
alternative cover or segregate additional cash or high-grade liquid
assets on a daily basis so that the value of the covered and segregated
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assets will be equal to the amount of the Fund's commitments with
respect to such contracts. As an alternative to segregating assets, the
Fund may buy call options permitting such Fund to buy the amount of
foreign currency being hedged by a forward sale contract or the Fund
may buy put options permitting it to sell the amount of foreign
currency subject to a forward buy contract.
While forward contracts are not currently regulated by the CFTC, the
CFTC may in the future assert authority to regulate forward contracts.
In such event, the Fund's ability to utilize forward contracts may be
restricted. In addition, the Fund may not always be able to enter into
forward contracts at attractive prices and may be limited in its
ability to use these contracts to hedge its assets.
F. SWAPS AND SWAP-RELATED PRODUCTS. In order to attempt to protect the
value of its investments from interest rate or currency exchange rate
fluctuations, the Fund may enter into interest rate and currency
exchange rate swaps, and may buy or sell interest rate and currency
exchange rate caps and floors. The portfolio manager expects to enter
into these transactions primarily to attempt to preserve a return or
spread on a particular investment or portion of its portfolio. The Fund
also may enter into these transactions to attempt to protect against
any increase in the price of securities it may consider buying at a
later date.
The Fund does not intend to use these transactions as a speculative
investment. Interest rate swaps involve the exchange by the Fund with
another party of their respective commitments to pay or receive
interest, E.G., an exchange of floating rate payments for fixed rate
payments. The exchange commitments can involve payments to be made in
the same currency or in different currencies. The purchase of an
interest rate cap entitles the purchaser, to the extent that a
specified index exceeds a predetermined interest rate, to receive
payments of interest on a contractually based principal amount from the
party selling the interest rate cap. The purchase of an interest rate
floor entitles the purchaser, to the extent that a specified index
falls below a predetermined interest rate, to receive payments of
interest on a contractually based principal amount from the party
selling the interest rate floor.
The Fund may enter into interest rate swaps, caps and floors on either
an asset-based or liability-based basis, depending upon whether it is
hedging its assets or its liabilities, and will usually enter into
interest rate swaps on a net basis (i.e., the two payment streams are
netted out, with the Fund receiving or paying, as the case may be, only
the net amount of the two payments). The net amount of the excess, if
any, of the Fund's obligations over its entitlements with respect to
each interest rate swap will be calculated on a daily basis and an
amount of cash or high-grade liquid assets having an aggregate net
asset at least equal to the accrued excess will be segregated by its
custodian. If the Fund enters into an interest rate swap on other than
a net basis, it will maintain a segregated account in the full amount
accrued on a daily basis of its obligations with respect to the swap.
The Fund will not enter into any interest rate swap, cap or floor
transaction unless the unsecured senior debt or the claims-paying
ability of the other party thereto is rated in one of the three highest
rating categories of at least one nationally recognized statistical
rating organization at the time of entering into such transaction. The
portfolio manager will monitor the creditworthiness of all
counterparties on an ongoing basis. If there is a default by the other
party to such a transaction, the Fund will have contractual remedies
pursuant to the agreements related to the transaction.
The swap market has grown substantially in recent years with a large
number of banks and investment banking firms acting both as principals
and as agents utilizing standardized swap documentation. The
sub-advisers have determined that, as a result, the swap market has
become relatively liquid. Caps and floors are more recent innovations
for which standardized documentation has not yet been developed and,
accordingly, they are less liquid than swaps. To the extent the Fund
sells (i.e., writes) caps and floors, it will segregate cash or
high-grade liquid assets having an aggregate net asset value at least
equal to the full amount, accrued on a daily basis, of its obligations
with respect to any caps or floors.
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There is no limit on the amount of interest rate swap transactions that
may be entered into by the Fund, although the Fund does not presently
intend to engage in such transactions in excess of 5% of its total
assets. These transactions may in some instances involve the delivery
of securities or other underlying assets by the Fund or its
counterparty to collateralize obligations under the swap. Under the
documentation currently used in those markets, the risk of loss with
respect to interest rate swaps is limited to the net amount of the
interest payments that the Fund is contractually obligated to make. If
the other party to an interest rate swap that is not collateralized
defaults, the Fund would risk the loss of the net amount of the
payments that it contractually is entitled to receive. The Fund may buy
and sell (i.e., write) caps and floors without limitation, subject to
the segregation requirement described above.
In addition to the instruments, strategies and risks described in this
Statement of Additional Information and in the Prospectus, there may be
additional opportunities in connection with options, futures contracts,
forward currency contracts and other hedging techniques, that become
available as the portfolio managers develop new techniques, as
regulatory authorities broaden the range of permitted transactions and
as new instruments are developed. The portfolio managers may use these
opportunities to the extent they are consistent with the Fund's
investment objective and are permitted by the Fund's investment
limitations and applicable regulatory requirements.
G. EURODOLLAR INSTRUMENTS. The Fund may make investments in Eurodollar
instruments. Eurodollar instruments are U.S. dollar-denominated futures
contracts or options thereon which are linked to the London Interbank
Offered Rate (the "LIBOR"), although foreign currency-denominated
instruments are available from time to time. Eurodollar futures
contracts enable purchasers to obtain a fixed rate for the lending of
funds and sellers to obtain a fixed rate for borrowings. The Fund might
use Eurodollar futures contracts and options thereon to hedge against
changes in LIBOR, to which many interest rate swaps and fixed income
instruments are linked.
H. SPECIAL INVESTMENT CONSIDERATIONS AND RISKS. The successful use of
the investment practices described above with respect to futures
contracts, options on futures contracts, forward contracts, options on
securities and on foreign currencies, and swaps and swap-related
products draws upon skills and experience which are different from
those needed to select the other instruments in which the Fund invests.
Should interest or exchange rates or the prices of securities or
financial indices move in an unexpected manner, the Fund may not
achieve the desired benefits of the foregoing instruments or may
realize losses and thus be in a worse position than if such strategies
had not been used. Unlike many exchange-traded futures contracts and
options on futures contracts, there are no daily price fluctuation
limits with respect to options on currencies, forward contracts and
other negotiated or over-the-counter instruments, and adverse market
movements could therefore continue to an unlimited extent over a period
of time. In addition, the correlation between movements in the price of
the securities and currencies hedged or used for cover will not be
perfect and could produce unanticipated losses.
The Fund's ability to dispose of its positions in the foregoing
instruments will depend on the availability of liquid markets in the
instruments. Markets in a number of the instruments are relatively new
and still developing, and it is impossible to predict the amount of
trading interest that may exist in those instruments in the future.
Particular risks exist with respect to the use of each of the foregoing
instruments and could result in such adverse consequences to the Fund
as the possible loss of the entire premium paid for an option bought by
the Fund, the inability of the Fund, as the writer of a covered call
option, to benefit from the appreciation of the underlying securities
above the exercise price of the option and the possible need to defer
closing out positions in certain instruments to avoid adverse tax
consequences. As a result, no assurance can be given that the Fund will
be able to use those instruments effectively for their intended
purposes.
In connection with certain of its hedging transactions, the Fund must
segregate assets with its custodian bank to ensure that such Fund will
be able to meet its obligations pursuant to these instruments.
Segregated assets generally may be not be disposed of for so long as
the Fund maintains the positions giving rise to the segregation
requirement.
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Segregation of a large percentage of the Fund's assets could impede
implementation of that Fund's investment policies or its ability to
meet redemption requests or other current obligations.
I. ADDITIONAL RISKS OF OPTIONS ON FOREIGN CURRENCIES, FORWARD CONTRACTS
AND FOREIGN INSTRUMENTS. Unlike transactions entered into by the Fund
in futures contracts, options on foreign currencies and forward
contracts are not traded on contract markets regulated by the CFTC or
(with the exception of certain foreign currency options) by the SEC. To
the contrary, such instruments are traded through financial
institutions acting as market-makers, although foreign currency options
are also traded on certain national securities exchanges, such as the
Philadelphia Stock Exchange and the Chicago Board Options Exchange,
subject to SEC regulation. Options on currencies may be traded
over-the- counter. In an over-the-counter trading environment, many of
the protections afforded to exchange participants will not be
available. For example, there are no daily price fluctuation limits,
and adverse market movements could therefore continue to an unlimited
extent over a period of time. Although the buyer of an option cannot
lose more than the amount of the premium plus related transaction
costs, this entire amount could be lost. Moreover, an option writer and
a buyer or seller of futures or forward contracts could lose amounts
substantially in excess of any premium received or initial margin or
collateral posted due to the potential additional margin and collateral
requirements associated with such positions.
Options on foreign currencies traded on national securities exchanges
are within the jurisdiction of the SEC, as are other securities traded
on such exchanges. As a result, many of the protections provided to
traders on organized exchanges will be available with respect to such
transactions. In particular, all foreign currency option positions
entered into on a national securities exchange are cleared and
guaranteed by the OCC, thereby reducing the risk of counterparty
default. Further, a liquid secondary market in options traded on a
national securities exchange may be more readily available than in the
over-the-counter market, potentially permitting the Fund to liquidate
open positions at a profit prior to exercise or expiration, or to limit
losses in the event of adverse market movements.
The purchase and sale of exchange-traded foreign currency options,
however, is subject to the risks of the availability of a liquid
secondary market described above, as well as the risks regarding
adverse market movements, margining of options written, the nature of
the foreign currency market, possible intervention by governmental
authorities and the effects of other political and economic events. In
addition, exchange-traded options on foreign currencies involve certain
risks not presented by the over-the-counter market. For example,
exercise and settlement of such options must be made exclusively
through the OCC, which has established banking relationships in
applicable foreign countries for this purpose. As a result, the OCC
may, if it determines that foreign government restrictions or taxes
would prevent the orderly settlement of foreign currency option
exercises, or would result in undue burdens on the OCC or its clearing
member, impose special procedures on exercise and settlement, such as
technical changes in the mechanics of delivery of currency, the fixing
of dollar settlement prices or prohibitions on exercise.
In addition, options on U.S. government securities, futures contracts,
options on futures contracts, forward contracts and options on foreign
currencies may be traded on foreign exchanges and over-the-counter in
foreign countries. Such transactions are subject to the risk of
governmental actions affecting trading in or the prices of foreign
currencies or securities. The value of such positions also could be
adversely affected by (i) other complex foreign political and economic
factors, (ii) lesser availability than in the United States of data on
which to make trading decisions, (iii) delays in the Fund's ability to
act upon economic events occurring in foreign markets during
nonbusiness hours in the United States, (iv) the imposition of
different exercise and settlement terms and procedures and margin
requirements than in the United States, and (v) low trading volume.
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<PAGE>
ZERO COUPON, PAY-IN-KIND AND STEP COUPON SECURITIES.
The Fund may invest up to 10% of its assets in zero coupon, pay-in-kind
and step-coupon securities. Zero-coupon bonds are issued and traded at a
discount from their face value. They do not entitle the holder to any periodic
payment of interest prior to maturity. Step coupon bonds trade at a discount
from their face value and pay coupon interest. The coupon rate is low for an
initial period and then increases to a higher coupon rate thereafter. The
discount from the face amount or par value depends on the time remaining until
cash payments begin, prevailing interest rates, liquidity of the security and
the perceived credit quality of the issuer. Pay-in-kind bonds give the issuer an
option to pay cash at a coupon payment date or give the holder of the security a
similar bond with the same coupon rate and a face value equal to the amount of
the coupon payment that would have been made.
Current federal income tax law requires holders of zero-coupon
securities and step-coupon securities to report the portion of the original
issue discount on such securities that accrues that year as interest income,
even though the holders receive no cash payments of interest during the year. In
order to qualify as a "regulated investment company" under the Internal Revenue
Code of 1986 ("Code"), a Fund must distribute its investment company taxable
income, including the original issue discount accrued on zero-coupon or
step-coupon bonds. Because it will not receive cash payments on a current basis
in respect of accrued original-issue discount on zero-coupon bonds or
step-coupon bonds during the period before interest payments begin, in some
years a Fund may have to distribute cash obtained from other sources in order to
satisfy the distribution requirements under the Code. A Fund might obtain such
cash from selling other portfolio holdings. These actions may reduce the assets
to which Fund expenses could be allocated and may reduce the rate of return for
such Fund. In some circumstances, such sales might be necessary in order to
satisfy cash distribution requirements even though investment considerations
might otherwise make it undesirable for a Fund to sell the securities at the
time.
Generally, the market prices of zero-coupon bonds and strip securities
are more volatile than the prices of securities that pay interest periodically
and in cash and are likely to respond to changes in interest rates to a greater
degree than other types of debt securities having similar maturities and credit
quality.
INCOME PRODUCING SECURITIES.
The Fund may invest in certain types of income producing securities,
which include securities that make periodic income payments, as well as those
that make interest payments on a deferred basis, or pay interest at maturity (as
in the case with treasury bills or zero-coupon bonds).
Other types of income producing securities that the Fund may purchase
include, but are not limited to, the following types of securities:
VARIABLE AND FLOATING RATE OBLIGATIONS. These types of securities are
relatively long-term instruments that often carry demand features
permitting the holder to demand payment of principal at any time or at
specified intervals prior to maturity.
STANDBY COMMITMENTS. These instruments, which are similar to a put,
give the Fund the option to obligate a broker, dealer or bank to
repurchase a security held by the Fund at a specified price.
TENDER OPTION BONDS. Tender option bonds are relatively long-term bonds
that are coupled with the agreement of a third party (such as a broker,
dealer or bank) to grant the holders of such securities the option to
tender the securities to the institution at periodic intervals.
INVERSE FLOATERS. Inverse floaters are instruments whose interest bears
an inverse relationship to the interest rate on another security. The
Fund will not invest more than 5% of its assets in inverse floaters.
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<PAGE>
The Fund will purchase instruments with demand features, standby
commitments and tender option bonds primarily for the purpose of increasing
liquidity.
LENDING OF FUND SECURITIES.
Subject to its investment restriction relating to lending, the Fund may
lend securities from its portfolio. Under applicable regulatory requirements
(which are subject to change), the following conditions apply to securities
loans: a) the loan must be continuously secured by liquid assets maintained on a
current basis in an amount at least equal to the market value of the securities
loaned; b) the Fund must receive any dividends or interest paid by the issuer on
such securities; c) the Fund must have the right to call the loan and obtain the
securities loaned at any time upon notice of not more than five business days,
including the right to call the loan to permit voting of the securities; and d)
the Fund must receive either interest from the investment of collateral or a
fixed fee from the borrower. Securities loaned by the Fund remain subject to
fluctuations in market value. The Fund may pay reasonable finders, custodian and
administrative fees in connection with a loan. Securities lending, as with other
extensions of credit, involves the risk that the borrower may default. Although
securities loans will be fully collateralized at all times, the Fund may
experience delays in, or be prevented from, recovering the collateral. During
the period that the Fund seeks to enforce its rights against the borrower, the
collateral and the securities loaned remain subject to fluctuations in market
value. The Fund may also incur expenses in enforcing its rights. If the Fund has
sold the loaned security, it may not be able to settle the sale of the security
and may incur potential liability to the buyer of the security on loan for its
costs to cover the purchase. The Fund will not lend securities to any adviser or
sub-adviser to the Fund or their affiliates. By lending its securities, the Fund
can increase its income by continuing to receive interest or dividends on the
loaned securities as well as by either investing the cash collateral in
short-term securities or by earning income in the form of interest paid by the
borrower when U.S. government securities are used as collateral.
JOINT ACCOUNTS.
Janus Capital, the sub-adviser to the Fund, has received exemptive
relief from the SEC to permit any funds advised or sub-advised by Janus Capital
to invest in certain money market instruments through a joint account.
Accordingly, the Fund may purchase such instruments through a joint account.
ILLIQUID SECURITIES.
The Fund may invest up to 15% of its net assets in illiquid securities
(i.e., securities that are not readily marketable). The Board of Trustees has
authorized the sub-adviser to make liquidity determinations with respect to its
securities, including Rule 144A securities, commercial paper and municipal lease
obligations in accordance with the guidelines established by the Board of
Trustees. Under the guidelines, the portfolio manager will consider the
following factors in determining whether a Rule 144A security is liquid: 1) the
frequency of trades and quoted prices for the security; 2) the number of dealers
willing to purchase or sell the security and the number of other potential
purchasers; 3) the willingness of dealers to undertake to make a market in the
security; and 4) the nature of the marketplace trades, including the time needed
to dispose of the security, the method of soliciting offers and the mechanics of
the transfer. The sale of illiquid securities often requires more time and
results in higher brokerage charges or dealer discounts and other selling
expenses than does the sale of securities eligible for trading on national
securities exchanges or in the over-the-counter markets. The Fund may be
restricted in its ability to sell such securities at a time when the sub-advisor
deems it advisable to do so. In addition, in order to meet redemption requests,
the Fund may have to sell other assets, rather than such illiquid securities, at
a time which is not advantageous.
REPURCHASE AND REVERSE REPURCHASE AGREEMENTS.
Although it may enter into repurchase and reverse repurchase
agreements, the Fund does not intend to invest more than 5% of its assets in
either repurchase or reverse repurchase agreements. In a repurchase agreement,
the Fund purchases
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<PAGE>
a security and simultaneously commits to resell that security to the seller at
an agreed upon price on an agreed upon date within a number of days (usually not
more than seven) from the date of purchase. The resale price reflects the
purchase price plus an agreed upon incremental amount which is unrelated to the
coupon rate or maturity of the purchased security. A repurchase agreement
involves the obligation of the seller to pay the agreed upon price, which
obligation is in effect secured by the value (at least equal to the amount of
the agreed upon resale price and marked-to-market daily) of the underlying
security or "collateral". The Fund may engage in a repurchase agreement with
respect to any security in which it is authorized to invest. While it does not
presently appear possible to eliminate all risks from these transactions
(particularly the possibility of a decline in the market value of the underlying
securities, as well as delays and costs to the Fund in connection with
bankruptcy proceedings), it is the policy of the Fund to limit repurchase
agreements to those parties whose creditworthiness has been reviewed and found
satisfactory by the investment sub-adviser and approved by the Board of Trustees
of the Fund. In addition, the Fund currently intends to invest primarily in
repurchase agreements collateralized by U.S. government securities whose value
equals at least 100% of the repurchase price, marked-to-market daily.
In a reverse repurchase agreement, the Fund sells a portfolio
instrument to another party, such as a bank or broker-dealer, in return for cash
and agrees to repurchase the instrument at a particular price and time. While a
reverse repurchase agreement is outstanding, the Fund will segregate cash and
appropriate liquid assets with the Fund's custodian to cover its obligation
under the agreement. The Fund will enter into reverse repurchase agreements only
with parties the investment sub-adviser deems creditworthy and that have been
reviewed by the Board of Trustees of the Fund.
PASS-THROUGH SECURITIES.
The Fund may invest in various types of pass-through securities, such
as mortgage-backed securities, asset-backed securities and participation
interests. A pass-through security is a share or certificate of interest in a
pool of debt obligations that have been repackaged by an intermediary, such as a
bank or broker-dealer. The purchaser receives an undivided interest in the
underlying pool of securities. The issuers of the underlying securities make
interest and principal payments to the intermediary which are passed through to
purchasers, such as the Fund. The most common type of pass-through securities
are mortgage-backed securities. Government National Mortgage Association
("GNMA") Certificates are mortgage-backed securities that evidence an undivided
interest in a pool of mortgage loans. GNMA Certificates differ from traditional
bonds in that principal is paid back monthly by the borrowers over the term of
the loan rather than returned in a lump sum at maturity. The Fund will generally
purchase "modified pass-through" GNMA Certificates, which entitle the holder to
receive a share of all interest and principal payments paid and owned on the
mortgage pool, net of fees paid to the "issuer" and GNMA, regardless of whether
or not the mortgagor actually makes the payment. GNMA Certificates are backed as
to the timely payment of principal and interest by the full faith and credit of
the U.S. government.
The Federal Home Loan Mortgage Corporation ("FHLMC") issues two types
of mortgage pass-through securities: mortgage participation certificates ("PCs")
and guaranteed mortgage certificates ("GMCs"). PCs resemble GNMA Certificates in
that each PC represents a pro rata share of all interest and principal payments
made and owned on the underlying pool. FHLMC guarantees timely payments of
interest on PCs and the full return of principal. GMCs also represent a pro rata
interest in a pool of mortgages. However, these instruments pay interest
semi-annually and return principal once a year in guaranteed minimum payments.
This type of security is guaranteed by FHLMC as to timely payment of principal
and interest, but is not backed by the full faith and credit of the U.S.
government.
The Federal National Mortgage Association ("FNMA") issues guaranteed
mortgage pass-through certificates ("FNMA Certificates"). FNMA Certificates
resemble GNMA Certificates in that each FNMA Certificate represents a pro rata
share of all interest and principal payments made and owned on the underlying
pool. This type of security is guaranteed by FNMA as to timely payment of
principal and interest, but is not backed by the full faith and credit of the
U.S. government.
Each of the mortgage-backed securities described above is characterized
by monthly payments to the holder, reflecting the monthly payments made by the
borrowers who received the underlying mortgage loans. The payments to the
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<PAGE>
security holders (such as the Fund), like the payments on the underlying loans,
represent both principal and interest. Although the underlying mortgage loans
are for specified periods of time, such as 20 or 30 years, the borrowers can,
and typically do, pay them off sooner. Thus, the security holders frequently
receive prepayments of principal in addition to the principal that is part of
the regular monthly payments. A borrower is more likely to prepay a mortgage
that bears a relatively high rate of interest. This means that in times of
declining interest rates, some of the Fund's higher yielding mortgage-backed
securities might be converted to cash and it will be forced to accept lower
interest rates when that cash is used to purchase additional securities in the
mortgage-backed securities sector or in other investment sectors. Mortgage and
asset-backed securities may have periodic income payments or may pay interest at
maturity (as is the case with Treasury bills or zero-coupon bonds).
Asset-backed securities represent interests in pools of consumer loans
and are backed by paper or accounts receivables originated by banks, credit card
companies or other providers of credit. Generally, the originating bank or
credit provider is neither the obliger or guarantor of the security and interest
and principal payments ultimately depend upon payment of the underlying loans by
individuals. Tax-exempt asset-backed securities include units of beneficial
interests in pools of purchase contracts, financing leases, and sales agreements
that may be created when a municipality enters into an installment purchase
contract or lease with a vendor. Such securities may be secured by the assets
purchased or leased by the municipality; however, if the municipality stops
making payments, there generally will be no recourse against the vendor. The
market for tax-exempt asset-backed securities is still relatively new. These
obligations are likely to involve unscheduled prepayments of principal.
WARRANTS AND RIGHTS.
The Fund may invest in warrants and rights. A warrant is a type of
security that entitles the holder to buy a proportionate amount of common stock
at a specified price, usually higher than the market price at the time of
issuance, for a period of years or to perpetuity. In contrast, rights, which
also represent the right to buy common shares, normally have a subscription
price lower than the current market value of the common stock and a life of two
to four weeks. The Fund intends to invest in warrants valued at the lower of
cost or market value not exceeding 5% of the value of their net assets, and that
are freely transferrable and traded on the major securities exchanges.
U.S. GOVERNMENT SECURITIES.
Examples of the types of U.S. government securities that the Fund may
hold include, in addition to those described in the Prospectus and direct
obligations of the U.S. Treasury, the obligations of the Federal Housing
Administration, Farmers Home Administration, Small Business Administration,
General Services Administration, Central Bank for Cooperatives, Federal Farm
Credit Banks, Federal Home Loan Bank, Federal Intermediate Credit Banks, Federal
Land Banks and Maritime Administration. U.S. government securities may be
supported by the full faith and credit of the U.S. government (such as
securities of the Small Business Administration); by the right of the issuer to
borrow from the Treasury (such as securities of the Federal Home Loan Bank); by
the discretionary authority of the U.S. government to purchase the agency's
obligations (such as securities of the Federal National Mortgage Association);
or only by the credit of the issuing agency.
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<PAGE>
PORTFOLIO TURNOVER
As stated in the Prospectus, the Fund generally intends to purchase and
sell securities as deemed appropriate by its portfolio manager to further the
Fund's stated investment objective, and the rate of portfolio turnover is not
expected to be a limiting factor when changes are deemed to be appropriate. For
the fiscal years ended October 31, 1995, 1994 and 1993, the Fund's portfolio
turnover rate was 125.64%, 77.23% and 104.16%, respectively.
These percentages are calculated by dividing the lesser of purchases or
sales of portfolio securities during the fiscal year by the monthly average of
the value of such securities (excluding from the computation all securities,
including options, with maturities at the time of acquisition of one year or
less). For example, a portfolio turnover rate of 100% would mean that all of the
Fund's securities (except those excluded from the calculation) were replaced
once in a period of one year. A high rate of portfolio turnover generally
involves correspondingly greater brokerage commission expenses. Turnover rates
may vary greatly from year to year as well as within a particular year and may
also be affected by cash requirements for redemptions of the Fund's shares and
by requirements, the satisfaction of which enable the Fund to receive favorable
tax treatment. Because the rate of portfolio turnover is not a limiting factor;
however, particular holdings may be sold at any time, if investment judgement or
portfolio operations make a sale advisable. As a result, the annual portfolio
turnover rate in future years may exceed the percentage shown above.
INVESTMENT ADVISORY AND OTHER SERVICES
The Fund has entered into a Management and Investment Advisory
Agreement (the "Advisory Agreement") with Idex Management, Inc. ("IMI"), 201
Highland Avenue, Largo, Florida 34640. IMI supervises the Fund's investments and
conducts its investment program. The Advisory Agreement provides that IMI will
perform the following services or cause them to be performed by others: (i)
furnish to the Fund investment advice and recommendations, (ii) supervise the
purchase and sale of securities as directed by appropriate Fund officers, and
(iii) be responsible for the administration of the Fund. For its services, IMI
receives an annual fee, computed daily and paid monthly, equal to 1.00% of the
first $750 million of the Fund's average daily net assets, 0.9% of the next $250
million of the Fund's average daily net assets and 0.85% of the average daily
net assets of the Fund in excess of $1 billion. This fee is higher than that
paid by many other funds. For the fiscal years ended October 31, 1995, 1994 and
1993, the Fund incurred investment advisory fees of $2,832,400, $3,146,851 and
$3,418,380, respectively.
The duties and responsibilities of the investment adviser are specified
in the Advisory Agreement, which became effective on April 22, 1991. The
Agreement was approved by the Board of Trustees of the Fund (including a
majority of trustees who are not parties to the Agreement or interested persons,
as defined by the 1940 Act, of any such party.) The Agreement is not assignable
and may be terminated without penalty upon 60 days written notice at the option
of either the Fund or IMI or by a vote of shareholders of the Fund. The
Agreement provides that it can be continued from year to year so long as such
continuance is specifically approved annually (a) by the Board of Trustees of
the Fund or by a majority of the outstanding shares of the Fund and (b) by a
majority vote of the Trustees who are not parties to the Agreement or interested
persons of any such party cast in person at a meeting.
The Agreement also provides that IMI shall not be liable to the Fund or
to any shareholder for any error of judgment or mistake of law or for any loss
suffered by the Fund or by any shareholder in connection with matters to which
the Agreement relates, except for a breach of fiduciary duty or a loss resulting
from willful misfeasance, bad faith, gross negligence, or reckless disregard on
the part of IMI in the performance of its duties thereunder.
IMI supervises all of the administrative functions of the Fund,
provides office space, pays its allocable portion of the salaries, fees and
expenses of all Fund officers and of those trustees who are affiliated with IMI.
The costs and expenses, including legal and accounting fees, filing fees and
printing costs in connection with the formation of the Fund and the
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<PAGE>
preparation and filing of the Fund's initial registration statements under the
Securities Act of 1933 and the 1940 Act are paid by IMI.
The Fund pays fees and expenses of the Fund's non-interested trustees,
custodian and transfer agent fees, brokerage commissions and all other expenses
in connection with the execution of portfolio transactions, administrative,
clerical, recordkeeping, bookkeeping, legal, auditing and accounting expenses,
interest and taxes, expenses of preparing and filing tax returns, expenses of
shareholders' meetings and preparing, printing and mailing proxy statements
(unless otherwise agreed to by the Fund and IMI), expenses of preparing and
typesetting periodic reports to shareholders (except for those reports the Fund
permits to be used as sales literature), and all costs involved in the
registration or qualification of Fund shares under federal and state law.
Whenever, in any fiscal year, the total cost to the Fund of normal operating
expenses chargeable to its income account, including the investment advisory fee
but excluding brokerage commissions, interest and taxes, exceeds on an annual
basis the lesser of the most restrictive expense limitation imposed by any state
in which its shares are offered or 1.5% of the Fund's average daily net assets,
IMI will reimburse the Fund, or waive fees in an amount equal to that excess.
IMI has entered into an Investment Counsel Agreement with Janus Capital
Corporation ("Janus Capital") that became effective April 22, 1991. Further
discussions of the basic fee arrangements and allocation of responsibilities are
set forth in the Prospectus. The Fund incurred investment sub-advisory fees of
$1,416,200, $1,573,426 and $1,709,190 for the fiscal years ended October 31,
1995, 1994 and 1993, respectively.
The Investment Counsel Agreement provides for additional compensation
to be paid by IMI to Janus Capital as follows: If on December 31 of 1995 and
December 31 of each year thereafter ("Target Date") the aggregate actual net
assets on that date of the Fund and any other registered investment company
sponsored by IMI, containing the name IDEX or with respect to which IMI acts as
investment adviser or administrator, and to which Janus Capital provides
investment advice (the "Advised Funds") are less than the applicable Target Net
Assets specified in Table 1 below, then IMI shall pay to Janus Capital a
percentage, as specified in Table 2 below, of the Net Fee otherwise payable to
InterSecurities, Inc., or any other affiliate of IMI serving as administrator to
the Fund for the calendar year following such date (the "Administrator").
TABLE 1
TARGET DATE ADVISED FUNDS TARGET NET ASSETS
----------- -------------------------------
December 31, 1995 (and $950 million
December 31 of each
year thereafter)
The Net Fee of the Administrator shall be the fee received by the
Administrator from IMI less any reimbursement from the Administrator in
connection with any applicable Fund expense limitation. The percentage of the
Net Fee so payable to Janus Capital shall be determined by the percentage that
on the applicable Target Date the aggregate actual net assets of the Advised
Funds are less than the applicable Target Net Assets of the Advised Funds
("Shortfall of Target") in accordance with Table 2 below:
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TABLE 2
SHORTFALL OF TARGET PERCENTAGE OF NET FEE
------------------- ---------------------
5% - 10% 10%
Over 10% - 20% 20%
Over 20% - 30% 30%
Over 30% 40%
No additional fees shall be payable to Janus Capital for any year if,
for the five-year period ending December 31 of the preceding year, the
respective total returns of a majority of the Advised Funds that have the
objective of investing primarily in equity securities with such a five-year
record (and with respect to which Janus Capital shall have provided investment
advice for all of such five years and for the then current year), which in 1995
were the Fund, IDEX II Growth, Global, Flexible Income, Balanced and Capital
Appreciation Portfolios and IDEX Fund 3, are not in the top one-third of their
respective fund categories as determined by Lipper Analytical Services, Inc. or
its successor (or if no successor exists, by a mutually agreed upon statistical
service). No additional fees were payable by IMI to Janus Capital for 1995
because Advised Funds Target Net Assets exceeded $950 million on December 31,
1995.
IMI and Janus Capital also serve as investment adviser and sub-adviser,
respectively, to certain other portfolios and mutual funds in the IDEX Group of
Mutual Funds: IDEX II Growth, Global, Flexible Income, Balanced and Capital
Appreciation Portfolios and IDEX Fund 3. Janus Capital also serves as
sub-adviser to certain portfolios of WRL Series Fund, Inc., a registered
investment company. Janus Capital and its predecessor, Janus Management
Corporation, have served as investment adviser to Janus Fund since 1970 and
currently serves as investment adviser to each portfolio of the Janus Investment
Fund and Janus Aspen Series as well as sub-adviser to other mutual funds. Janus
Capital also serves as investment adviser to individual, corporate, charitable
and retirement accounts. Janus Capital managed over $29 billion in assets as of
September 30, 1995.
Janus Capital and AUSA Holding Company ("AUSA") each own 50% of the
outstanding stock of IMI. AUSA also owns 100% of the outstanding shares of the
Fund's distributor and transfer agent. AUSA is wholly-owned by AEGON USA, Inc.,
a financial services holding company located at 4333 Edgewood Road, N.E., Cedar
Rapids, Iowa 52499. AEGON USA, Inc. is a wholly-owned indirect subsidiary of
AEGON nv, a Netherlands corporation and publicly traded international insurance
group. Kansas City Southern Industries, Inc. ("KCSI") owns approximately 83% of
Janus Capital, most of which it acquired in 1984. Thomas H. Bailey, President
and Chairman of the Boards of Janus Capital and IMI, owns approximately 12% of
Janus Capital's voting stock and, by agreement with KCSI, selects a majority of
Janus Capital's Board. KCSI, whose address is 114 West 11th Street, Kansas City,
Missouri 64105-1804, is a publicly traded holding company whose primary
subsidiaries are engaged in transportation and financial services.
Janus Capital provides investment advisory services to IMI for the
Fund. Janus Capital also serves as investment adviser or sub-adviser to other
funds and/or private accounts which may have investment objectives identical or
similar to that of the Fund. Securities frequently meet the investment
objectives of the Fund, the other funds and the private accounts. In such cases,
Janus Capital's decision to recommend a purchase to one fund or account rather
than another is based on a number of factors. The determining factors in most
cases are the amounts available for investment by each fund or account, the
amount of securities of the issuer then outstanding, the value of those
securities and the market for them. Another factor considered in the investment
recommendations is other investments which each fund or account presently has in
a particular industry.
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It is possible that at times identical securities will be held by more
than one fund or account. However, positions in the same issue may vary and the
length of time that any fund or account may choose to hold its investment in the
same issue may likewise vary. To the extent that more than one of the funds or
private accounts served by Janus Capital seeks to acquire or sell the same
security at about the same time, either the price obtained by the Fund or the
amount of securities that may be purchased or sold by the Fund at one time may
be adversely affected. On the other hand, if the same securities are bought or
sold at the same time by more than one fund or account, the resulting
participation in volume transactions could produce better executions for the
Fund. In the event more than one fund or account purchases or sells the same
security on a given date, the purchases and sales transactions are allocated
among the Fund, the other funds and the private accounts in a manner believed by
Janus Capital to be equitable to each.
DISTRIBUTOR
The Fund has entered into an Underwriting Agreement with
InterSecurities, Inc. ("ISI") to act as the principal underwriter of Fund
shares. The Underwriting Agreement will continue from year to year so long as
its continuance is approved at least annually in the same manner as the Advisory
Agreement discussed above. A discussion of ISI's responsibilities and charges as
principal underwriter of Fund shares is set forth in the Prospectus.
For the fiscal years ended October 31, 1995, 1994 and 1993, ISI
received $842,362, $1,394,050 and $2,817,992, respectively, and retained
$146,305, $243,989 and $487,556, respectively, in underwriting commissions on
the sale of Fund shares.
ADMINISTRATIVE SERVICES
ISI also serves as administrator to the Fund. This is in addition to
ISI's responsibilities as principal underwriter and distributor of Fund shares.
IMI has entered into an Administrative Services Agreement ("Administrative
Agreement") with ISI. Under the Administrative Agreement, ISI carries out and
supervises all of the administrative functions of the Fund and incurs IMI's
expenses related to such functions. The basic fee arrangement and allocation of
responsibilities is set forth in the Prospectus. The amount payable to ISI under
the Administrative Agreement will be reduced to the extent that additional
compensation is paid by IMI to Janus Capital, as described above under
"Investment Advisory and Other Services."
The administrative duties of ISI include: providing the Fund with
office space, telephones, office equipment and supplies; paying the compensation
of the Fund's officers for services rendered as such; supervising and assisting
in preparation of annual and semi-annual reports to shareholders, notices of
dividends, capital gain distributions and tax information; supervising
compliance by the Fund with the recordkeeping requirements under the 1940 Act
and regulations thereunder and with state regulatory requirements; maintaining
books and records of the Fund (other than those maintained by the Fund's
custodian and transfer agent); preparing and filing the Fund's tax returns and
reports; monitoring and supervising relationships with the Fund's custodian and
transfer agent; monitoring the qualifications of tax deferred retirement plans
providing for investment in shares of the Fund; authorizing expenditures and
approving bills for payment on behalf of the Fund; and providing executive,
clerical and secretarial help needed to carry out its duties.
CUSTODIAN, TRANSFER AGENT AND OTHER AFFILIATES
Investors Fiduciary Trust Company ("IFTC"), 127 West 10th Street,
Kansas City, Missouri 64105, is Custodian for the Fund. The Custodian is in no
way responsible for any of the investment policies or decisions of the Fund, but
holds its assets in safekeeping and collects and remits the income thereon
subject to the instructions of the Fund. For the fiscal years ended October 31,
1995, 1994 and 1993, the Fund paid custodian fees of $26,264, $29,795 and
$56,527, net of earnings credits of $87,636, $70,747 and $34,803 for 1995, 1994
and 1993.
22
<PAGE>
Idex Investor Services, Inc., P. O. Box 9015, Clearwater, Florida
34618-9015, is the Fund's transfer agent, withholding agent and dividend
disbursing agent. Idex Investor Services, Inc. is a wholly-owned subsidiary of
AUSA Holding Company and thus is an affiliate of IMI and ISI. The Fund pays the
transfer agent a monthly per account charge of $1.185 for each of its
shareholder accounts in existence during the prior month, plus $2.48 for each
new account opened in the prior month. For the fiscal year ended October 31,
1995, the Fund paid transfer agency fees and expenses of $798,849.
DST, provider of data processing and recordkeeping services for the
Fund's transfer agent, is a wholly-owned subsidiary of KCSI and thus is an
affiliate of IMI and Janus Capital. The Fund may use another affiliate of DST as
introducing broker for certain Fund portfolio transactions as a means to reduce
expenses through a credit against transfer agency fees with regard to
commissions earned by such affiliate. (See "Portfolio Transactions and
Brokerage.")
PORTFOLIO TRANSACTIONS AND BROKERAGE
Decisions as to the assignment of portfolio business for the Fund and
negotiation of its commission rates are made by its sub-adviser, whose policy is
to obtain the "best execution" (prompt and reliable execution at the most
favorable security price) of all portfolio transactions. The Advisory Agreement
and Investment Counsel Agreement specifically provide that in placing portfolio
transactions for the Fund, the sub-adviser may agree to pay brokerage
commissions for effecting a securities transaction in an amount higher than
other brokers or dealers would have charged for effecting that transaction as
authorized, under certain circumstances, by the Securities Exchange Act of 1934.
In selecting brokers and dealers and in negotiating commissions, a
sub-adviser considers a number of factors, that may include but are not limited
to: the sub-adviser's knowledge of currently available negotiated commission
rates or prices of securities currently available and other current transaction
costs; the nature of the security being traded; the size and type of the
transaction; the nature and character of the markets for the security to be
purchased or sold; the desired timing of the trade; the activity existing and
expected in the market for the particular security; the quality of the
execution, clearance and settlement services; financial stability; the existence
of actual or apparent operational problems of a broker or dealer; and research
products and services provided. In recognition of the value of the foregoing
factors, the sub-adviser may place portfolio transactions with a broker with
whom it has negotiated a commission that is in excess of the commission another
broker would have charged for effecting that transaction if the sub-adviser
determines in good faith that such amount of commission was reasonable in
relation to the value of the brokerage and research provided by such broker
viewed in terms of either that particular transaction or of the overall
responsibilities of the sub-adviser. Research provided may include furnishing
advice, either directly or through publications or writings, as to the value of
securities, the advisability of purchasing or selling specific securities and
the availability of securities or purchasers or sellers of securities;
furnishing seminars, information, analyses and reports concerning issuers,
industries, securities, trading markets and methods, legislative developments,
changes in accounting practices, economic factors and trends and portfolio
strategy; access to research analysts, corporate management personnel, industry
experts, economists and government officials; comparative performance evaluation
and technical measurement services and quotation services, and products and
other services (such as third party publications, reports and analyses, and
computer and electronic access, equipment, software, information and accessories
that deliver, process or otherwise utilize information, including the research
described above) that assist the sub-adviser in carrying out its
responsibilities. Most brokers and dealers used by a sub-adviser provide
research and other services described above.
The sub-adviser may use research products and services in servicing
other accounts in addition to the Fund. If the sub-adviser determines that any
research product or service has a mixed use, such that it also serves functions
that do not assist in the investment decision-making process, the sub-adviser
may allocate the costs of such service or product accordingly. The portion of
the product or service that the sub-adviser determines will assist it in the
investment decision-making process may be paid for in brokerage commission
dollars. Such allocation may be a conflict of interest for the sub-adviser.
23
<PAGE>
When the Fund purchases or sells a security in the over-the-counter
market, the transaction takes place directly with a principal market-maker,
without the use of a broker, except in those circumstances where better prices
and executions will be achieved through the use of a broker.
The sub-adviser may also consider the sale or recommendation of Fund
shares by a broker or dealer to its customers as a factor in the selection of
brokers or dealers to execute portfolio transactions. In placing portfolio
business with broker or dealers, the sub-adviser will seek the best execution of
each transaction and all such brokerage placement must be consistent with the
Rules of Fair Practice of the National Association of Securities Dealers, Inc.
The sub-adviser may place transactions for the purchase or sale of
portfolio securities with affiliates of IMI, ISI or the sub-adviser, including
DST Securities, Inc. or ISI. The sub-adviser may place transactions if it
reasonably believes that the quality of the transaction and the associated
commission are fair and reasonable and if, overall, the associated transaction
costs, net of any credits described above under "Custodian, Transfer Agent and
Other Affiliates," are lower than those that would otherwise be incurred. Under
rules adopted by the Securities and Exchange Commission, the Fund's Board of
Trustees conducts periodic compliance reviews of such brokerage allocations and
reviews certain procedures adopted by the Board of Trustees to ensure compliance
with these rules as often as necessary to determine their continued
appropriateness.
No affiliated brokerage commissions were paid for the fiscal year ended
October 31, 1995. During the fiscal years ended October 31, 1994 and 1993 the
Fund paid brokerage commissions in the amount of $6,000 and $36,899,
respectively, to an affiliated broker. The Fund received transfer agency fee
credits of $4,500 and $27,674 for the fiscal years ended October 31, 1994 and
1993, respectively, as a result of such affiliated brokerage.
The total amount of brokerage commissions, including affiliated
brokerage commissions, paid by the Fund for the fiscal years ended October 31,
1995, 1994 and 1993 was $577,094, $442,315 and $455,380, respectively.
TRUSTEES AND OFFICERS
The following information includes the name, address1, date of birth,
relationship with the Fund and principal occupations of the trustees and
officers of the Fund during at least the last five years.
- ------------------
Peter R. Brown
1475 Belcher Road South
Largo, FL 34640
05/10/28
Trustee of IDEX Fund, IDEX II Series Fund and IDEX Fund 3; Director of WRL
Series Fund, Inc. (investment company); Chairman of the Board of Peter Brown
Construction Co., Largo, Florida (construction, contractors and engineers);
Rear Admiral (Retired), U.S. Navy Reserve, Civil Engineer Corps.
- --------
1 The principal business address of each person listed, unless otherwise
indicated, is P.O. Box 9015, Clearwater, FL 34618-9015.
24
<PAGE>
- --------------------
James L. Churchill
12 Lavington Road
Long Cove
Hilton Head, SC 29928
05/07/30
Trustee of IDEX Fund, IDEX II Series Fund and IDEX Fund 3; currently retired;
formerly, President (1981-1990) and Executive Vice President (1979-1981) of the
Avionics Group of Rockwell International Corporation, Cedar Rapids, Iowa
(supplier of aviation electronics).
- ------------------
Becky A. Ferrell2
12/10/60
Vice President (September, 1995-Present), Assistant Vice President (March,
1994-September, 1995), Counsel and Secretary (March, 1994-present) of IDEX Fund,
IDEX II Series Fund and IDEX Fund 3 (March, 1994 -present); Vice President
(September, 1995-Present), Assistant Vice President and Secretary (March,
1994-Present) of WRL Series Fund, Inc. (investment company); Assistant Vice
President, Counsel and Assistant Secretary of InterSecurities, Inc. (March, 1994
present) (broker-dealer); Attorney (August, 1993 - present), Western Reserve
Life Assurance Co. of Ohio (life insurance); Attorney, Hearne, Graziano, Nader &
Buhr, P.A. (September, 1992 - August, 1993) (law firm); Legal Writing
Instructor, Florida State University College of Law (August, 1991 - June, 1992)
(law school); Teaching Assistant, English, University of South Florida (August,
1990 - July, 1991) (university); Associate Attorney, Johnson, Blakely, Pope,
Bokor, Ruppel & Burns, P.A. (August, 1989 - July, 1990) (law firm); Attorney,
Schifino, Fleischer & Neal, P.A. (August, 1986 - August, 1989) (law firm);
Attorney, Trenam, Simmons, Kemker, Scharf, Barkin, Frye & O'Neill, P.A. (August,
1984 - August, 1986) (law firm).
- ------------------
Richard B. Franz II2
07/12/50
Treasurer of IDEX Fund, IDEX II Series Fund and IDEX Fund 3 (May 1988 to
present); Treasurer of WRL Series Fund, Inc. (May 1988 to present) (investment
company); Treasurer of InterSecurities, Inc. (May 1988 to present); Treasurer of
ISI Insurance Agency, Inc. (September 1992 to present); Treasurer of Idex
Management, Inc. (May 1988 to present); Treasurer of Idex Investor Services,
Inc. (May 1988 to present); Senior Vice President and Treasurer of Pioneer
Western Corporation and Treasurer of its subsidiaries (May 1988 to February
1991); Senior Vice President, Treasurer and Chief Financial Officer of Western
Reserve Life Assurance Co. of Ohio (November 1987 to present).
- ------------------
William H. Geiger2
06/01/47
Vice President (November 1990 to present), Secretary (June 1990 to March 1994)
and Assistant Secretary (March 1994 to present) of IDEX Fund, IDEX II Series
Fund and IDEX Fund 3; Secretary (June 1990 to March 1994) and Assistant
Secretary (March 1994 to present) of WRL Series Fund, Inc. (investment company);
Senior Vice President, Secretary and General Counsel (July 1990 to present) of
Western Reserve Life Assurance Co. of Ohio (life insurance); Secretary of Idex
Management, Inc. (November 1990 to present); Secretary (May 1990 to present) and
Director (April 1991 to present) of InterSecurities, Inc.; Secretary of ISI
Insurance Agency, Inc. (September 1992 to present); Secretary of Idex Investor
- --------
2 Interested Person (as defined in the Investment Company Act of 1940)
of the Fund.
25
<PAGE>
Services, Inc. (May 1990 to present); Vice President, Secretary and General
Counsel of Pioneer Western Corporation and Secretary of its subsidiaries (May
1990 to February 1991) (financial services); Secretary and General Counsel of
Orange State Life and Health Insurance Company and its affiliates (March 1980 to
April 1990) (life and health insurance).
- ------------------
Charles C. Harris
35 Winston Drive
Clearwater, FL 34616
07/15/30
Trustee of IDEX Fund, IDEX II Series Fund and IDEX Fund 3; Director of WRL
Series Fund, Inc. (investment company); currently retired (1988 - present);
Senior Vice President, Treasurer (1966 - 1988), Western Reserve Life Assurance
Co. of Ohio (life insurance); Vice President, Treasurer (1968 - 1988), Director
(1968 - 1987), Pioneer Western Corporation (financial services); Vice President
of WRL Series Fund, Inc. (1986 - December, 1990) (investment company).
- ------------------
G. John Hurley2
09/12/48
President and Chief Executive Officer (September 1990 to present), Trustee (June
1990 to present) and Executive Vice President (June 1988 to September 1990) of
IDEX Fund, IDEX II Series Fund and IDEX Fund 3; Executive Vice President (June
1993 to present) and Director (March, 1994 to present) of WRL Series Fund, Inc.
(investment company); President, Chief Executive Officer and Director of
InterSecurities, Inc. (May 1988 to present) (broker-dealer); President of ISI
Insurance Agency, Inc. (September 1992 to present); Executive Vice President of
Western Reserve Life Assurance Co. of Ohio (April 1993 to present) (life
insurance); President, Chief Executive Officer and Director of PW Securities,
Inc. (1983 to November 1990) (broker-dealer); President, Chief Executive Officer
and Director (September 1990 to present) and Executive Vice President and
Director (May 1988 to September 1990) of Idex Management, Inc.; President and
Director of Idex Investor Services, Inc. (May 1988 to present); Assistant Vice
President of AEGON USA Managed Portfolios, Inc. (September 1991 to September
1992) (financial services); Vice President of Pioneer Western Corporation (May
1988 to February 1991) (financial services). Mr. Hurley was employed by Pioneer
Western Corporation in various executive positions from 1972 until February,
1991.
- ------------------
John R. Kenney2
02/08/38
Trustee (1987 to present), Chairman (December 1989 to present) and President and
Chief Executive Officer (1987 to September 1990) of IDEX Fund, IDEX II Series
Fund and IDEX Fund 3; Chairman of the Board of WRL Series Fund, Inc. (1986 to
present) (investment company); President and Director (1985 to September 1990)
and Director (December 1990 to present) of Idex Management, Inc.; Chairman (1988
to present) and Director (1985 to present) of InterSecurities, Inc.
(broker-dealer); Director of ISI Insurance Agency, Inc. (October 1992 to
present); President and Chief Executive Officer, (1978 to 1987), Chairman and
Chief Executive Officer (1987 to 1992) and Chairman, President and Chief
Executive Officer (1992 to present) of Western Reserve Life Assurance Co. of
Ohio (life insurance); Senior Vice President of AEGON USA, Inc. (May 1992 to
present) (financial services holding company); Chairman and Chief Executive
Officer (1988 to February 1991), President and Chief Executive Officer (1988 to
1989), Executive Vice President (1972 to 1988) and Director (1976 to February
1991) of Pioneer Western Corporation (financial services). Mr. Kenney is also
the brother-in-law of Jack Zimmerman, a Trustee of the Fund.
26
<PAGE>
- ------------------
Leslie E. Martin2
09/19/55
Vice President and National Marketing Manager (January 1993 to present) of IDEX
Fund, IDEX II Series Fund and IDEX Fund 3; Vice President of Marketing (January
1992 to present) of InterSecurities, Inc. (broker-dealer); and Vice President of
Marketing of Social Responsibility Investment Group (April 1991 to January 1992)
(investment company); and Vice President of Regional Marketing of Calvert Group
(June 1988 to January 1991) (investment company).
- ------------------
Thomas R. Moriarty2
05/03/51
Senior Vice President (March 1995 to present), Vice President and Principal
Accounting Officer (November 1990 to March, 1995) and Principal Accounting
Officer (1988 to September 1990) of IDEX Fund, IDEX II Series Fund and IDEX Fund
3; Senior Vice President (June 1991 to present) and Vice President (1988 to June
1991) of InterSecurities, Inc. (broker-dealer); Senior Vice President of ISI
Insurance Agency, Inc. (September 1992 to present); President (November 1990 to
present) and Vice President (1988 to November 1990) of PW Securities, Inc.
(broker-dealer); Senior Vice President (June 1991 to present) and Vice President
(1988 to June 1991) of Idex Investor Services, Inc.; Vice President (November
1990 to present); Assistant Vice President (1988 to September 1990) of Idex
Management, Inc., Vice President of Western Reserve Life Assurance Co. of Ohio
(June 1993 to present) (life insurance); Assistant Vice President of AEGON USA
Managed Portfolios, Inc. (September 1991 to September 1992) (financial
services); President (November 1990 to December 1992) and Vice President (1988
to November 1990) of PW Securities, Inc. (broker-dealer). Mr. Moriarty was
employed by Pioneer Western Corporation in various executive positions from 1984
to February, 1991.
- ------------------
Christopher G. Roetzer2
01/11/63
Principal Accounting Officer (March 1995 to present), Assistant Vice President
(November 1990 to present) of IDEX Fund, IDEX II Series Fund and IDEX Fund 3;
Assistant Vice President and Controller (May 1988 to present) of
InterSecurities, Inc. (broker-dealer); Assistant Vice President of ISI Insurance
Agency, Inc. (September 1992 to present); Assistant Vice President and
Controller of Idex Investor Services, Inc. (May 1988 to present); Assistant Vice
President of Idex Management, Inc. (November 1990 to present); Assistant Vice
President and Assistant Controller (April 1988 to May 1988) and Accounting
Manager (June 1986 to April 1988) of Western Reserve Life Assurance Co. of Ohio
(life insurance); and Auditor (September 1984 to June 1986) of Peat, Marwick,
Mitchell & Co. (CPA firm).
- -----------------
William W. Short, Jr.
12420 73rd Court North
Largo, FL 34623
02/25/36
Trustee of IDEX Fund, and IDEX II Series Fund and IDEX Fund 3; President and
sole shareholder of Shorts, Inc. (men's retail apparel); Chairman of Southern
Apparel Corporation and S.A.C. Distributors (nationwide wholesale apparel
distributors), Largo, Florida; Director of Barnett Banks of Pinellas County;
Trustee of Morton Plant Hospital Foundation; former Chairman of Advisory Board
of First Florida Bank, Pinellas County, Florida.
27
<PAGE>
- ------------------
Jack E. Zimmerman
507 Saint Michel Circle
Kettering, OH 45429-1972
02/03/28
Trustee of IDEX Fund, IDEX II Series Fund and IDEX Fund 3; Director (1987 to
present), Western Reserve Life Assurance Co. of Ohio (life insurance); currently
retired; formerly, Director, Regional Marketing, Martin Marietta Corporation,
Dayton, Ohio (August 1986 to January 1993) (aerospace industry); Director of
Strategic Planning of Martin Marietta Baltimore Aerospace (January 1986 to
August 1986). Mr. Zimmerman is also the brother-in-law of John Kenney, Trustee
and Chairman of the Fund.
The Fund pays no salaries or compensation to any of its officers, all
of whom are officers or employees of either IMI or its affiliates. Disinterested
Trustees (i.e., trustees who are not affiliated with IMI, Janus Capital or ISI)
receive: (a) a total annual retainer fee of $13,000 from IDEX Fund, IDEX II
Series Fund and IDEX Fund 3, of which the Fund pays a pro rata share allocable
to the Fund based on its relative assets; plus (b) $500 and incidental expenses
per meeting attended. Three of the Disinterested Trustees have been elected to
serve on the Funds' Audit Committee, which meets twice annually. Each Audit
Committee member receives a total of $250 per Audit Committee meeting from IDEX
Fund, IDEX II Series Fund and IDEX Fund 3 in addition to the regular meetings
attended. Any fees and expenses paid to trustees who are affiliates of IMI or
ISI are paid by IMI or ISI. The Fund did not offer its Trustees or officers any
pension or retirement benefits during or prior to the fiscal year ended October
31, 1995. The following table provides compensation amounts paid to
Disinterested Trustees of the Fund for the fiscal year ended October 31, 1995.
<TABLE>
<CAPTION>
COMPENSATION TABLE
AGGREGATE TOTAL COMPENSATION PAID TO TRUSTEES FROM
NAME OF PERSON, POSITION COMPENSATION FROM IDEX FUND AND IDEX II SERIES FUND, IDEX
IDEX FUND FUND 3 AND WRL SERIES FUND, INC.
<S> <C> <C>
Peter R. Brown, Trustee $5,547 $22,250
James L. Churchill, Trustee $5,416 $21,750
Charles C. Harris, Trustee $5,416 $21,750
William W. Short, Jr.,Trustee $5,547 $22,250
Jack E. Zimmerman, Trustee $5,416 $21,750
</TABLE>
The Board of Trustees has adopted a policy whereby any Disinterested
Trustee of the Fund in office on September 1, 1990, and who has served at least
three years as a trustee may, subject to certain limitations, elect upon his
resignation to serve as a trustee emeritus for a period of two years. A trustee
emeritus has no authority, power or responsibility with respect to any Fund
matter. While serving as such, a trustee emeritus is entitled to receive from
the Fund an annual fee equal to one-half the fee then payable per annum to
Disinterested Trustees of the Fund, plus reimbursement of expenses incurred for
attendance at Board meetings.
28
<PAGE>
The Fund has an executive committee whose members currently are John
R. Kenney, G. John Hurley and Peter R. Brown. The executive committee may
perform all of the functions which may be performed by the Board of Trustees,
except as set forth in the Declaration of Trust and By-Laws of the Fund or as
prohibited by applicable law.
Commencing on January 1, 1996, a non-qualified deferred compensation
plan (the "Plan") became available to trustees who are not interested persons of
the Fund. Under the Plan, compensation may be deferred that would otherwise be
payable by the Fund, IDEX II Series Fund, IDEX Fund 3 and/or WRL Series Fund,
Inc., to a disinterested Trustee or Director on a current basis for services
rendered as trustee. Once any necessary regulatory approvals are obtained,
deferred compensation amounts will accumulate based on the value of Class A
shares of a portfolio of the IDEX II Series Fund (without imposition of sales
charge), as elected by the trustee. The Plan does not effect the amount of
compensation payable to disinterested trustees, and it is not anticipated that
the Plan will have any impact on the Fund.
During the fiscal year ended October 31, 1995, the Fund paid $34,752 in
trustees fees' and expenses, and no trustee emeritus fees. The trustees and
officers of the Fund held in the aggregate less than 1% of the Fund's
outstanding shares as of December 2, 1995.
PURCHASE OF SHARES
As stated in the Prospectus, shares of the Fund can be purchased
through ISI or through broker-dealers or other financial institutions that have
sales agreements with ISI. Shares of the Fund are sold at the net asset value
per share as determined at the close of the regular session of business on the
New York Stock Exchange next occurring after a purchase order is received and
accepted by the Fund plus the applicable sales charge. The Prospectus contains
detailed information about the purchase of shares.
NET ASSET VALUE DETERMINATION
As stated in the Prospectus, the net asset value of Fund shares is
determined once daily as of the close of the regular session of business on the
New York Stock Exchange (the "Exchange"), currently 4:00 p.m. Eastern time,
Monday through Friday, except on (i) days on which changes in value of the
Fund's portfolio securities will not materially affect the net asset value of
shares of the Fund, (ii) days during which no shares of the Fund are tendered
for redemption and no orders to purchase shares of the Fund are received; or
(iii) customary national holidays on which the Exchange is closed. The per share
net asset value of the Fund is determined by dividing the total value of the
securities and other assets, less liabilities, by the total number of shares
outstanding. Investment securities are valued at the closing price for
securities traded on a principal securities exchange (U.S. or foreign) or on the
NASDAQ National Market. Investment securities traded on the over-the-counter
market and listed securities for which no sales are reported for the trading
period immediately preceding the time of determination are valued at the last
bid price. Foreign currency denominated assets and liabilities are converted
into U.S. dollars at the closing exchange rate each day. Other securities for
which quotations are not readily available are valued at fair values determined
in such manner as the sub-adviser, under the supervision of the Board of
Trustees, determines in good faith.
29
<PAGE>
The offering price per share as of October 31, 1995 was calculated as
follows:
Net asset value per share
(net assets divided by shares outstanding) $23.93
Add maximum selling commissions
(8.5% of offering price per share) $ 2.22
------
Offering price per share $26.15
DIVIDENDS AND OTHER DISTRIBUTIONS
As indicated in the Prospectus, an investor may choose among several
options with respect to dividends and capital gain distributions payable to the
investor. Dividends or other distributions will be paid in full and fractional
shares at the net asset value determined as of the ex-dividend date, unless the
shareholder has elected another distribution option as described in the
Prospectus. Transaction confirmations and checks for payments designated to be
made in cash generally will be mailed on the payable date.
SHAREHOLDER ACCOUNTS
Detailed information about general procedures for Shareholder Accounts
and specific types of accounts is set forth in the Prospectus.
RETIREMENT PLANS
As stated in the Prospectus, the Fund offers several types of
retirement plans that an investor may establish to invest in Fund shares with
tax deductible dollars. Prototype retirement plans for both corporations and
self-employed individuals and for Individual Retirement Accounts, Code Section
401(k) Plans and Simplified Employee Pension Plans are available by calling or
writing ISI. These plans require the completion of separate applications which
are also available from ISI. Investors Fiduciary Trust Company, Kansas City,
Missouri, acts as the custodian or trustee under these plans for which it
charges an annual fee of up to $12.00 on each such account with a maximum of $24
per tax identification number. Shares of the Fund are also available for
investment by Code Section 403(b)(7) retirement plans for employees of
charities, schools and other qualifying employers.
To receive additional information or forms regarding these plans,
please call Customer Service at (800) 851-9777 or write the Transfer Agent at
P.O. Box 9015, Clearwater, Florida, 34618-9015. No contribution to a retirement
plan can be made until the appropriate forms to establish the plan have been
completed. It is advisable for an investor considering the funding of any
retirement plan to consult with an attorney, retirement plan consultant or
financial or tax adviser with respect to the requirements of such plans and the
tax aspects thereof.
REDEMPTION OF SHARES
Shareholders may redeem their shares at any time at a price equal to
the net asset value per share next determined following receipt of a valid
redemption request by the Transfer Agent, in proper form as prescribed in the
Prospectus. Payment will ordinarily be made within three business days of the
receipt of a valid redemption request. The value of shares on redemption may be
more or less than the shareholder's cost, depending upon the market value of the
Fund's net assets at
30
<PAGE>
the time of redemption. The Prospectus describes the requirements and
procedures for the redemption and repurchase of shares.
Shares will normally be redeemed for cash, although the Fund retains
the right to redeem its shares in kind under unusual circumstances, in order to
protect the interests of the remaining shareholders, by the delivery of
securities selected from the Fund's assets at its discretion. The Fund has,
however, elected to be governed by Rule 18f-1 under the 1940 Act pursuant to
which the Fund is obligated to redeem shares solely in cash up to the lesser of
$250,000 or 1% of the net asset value of the Fund during any 90-day period for
any one shareholder. Should redemptions by any shareholder exceed such
limitation, the Fund will have the option of redeeming the excess in cash or in
kind. If shares are redeemed in kind, the redeeming shareholder might incur
brokerage costs in converting the assets to cash. The method of valuing
securities used to make redemptions in kind will be the same as the method of
valuing portfolio securities described under "Net Asset Value Determination",
and such valuation will be made as of the same time the redemption price is
determined.
Redemption of shares may be suspended, or the date of payment may be
postponed, whenever (1) trading on the Exchange is restricted, as determined by
the Securities and Exchange Commission, or the Exchange is closed except for
holidays and weekends, (2) the Securities and Exchange Commission permits such
suspension and so orders, or (3) an emergency exists as determined by the
Securities and Exchange Commission so that disposal of securities and
determination of net asset value is not reasonably practicable.
TAXES
The Fund has, since inception, qualified and intends to
continue to qualify as a regulated investment company ("RIC") by satisfying
certain requirements prescribed by the Internal Revenue Code of 1986, as amended
(the "Code"). In order to qualify for that treatment the Fund must distribute to
its shareholders for each taxable year at least 90% of its investment company
taxable income (consisting generally of net investment income and net short-term
capital gain) and must meet several additional requirements. These requirements
include the following: (1) the Fund must derive at least 90% of its gross income
each taxable year from dividends, interest, payments with respect to securities
loans and gains from the sale or other disposition of securities, or other
income derived with respect to its business of investing in securities ("Income
Requirement"); (2) the Fund must derive less than 30% of its gross income each
taxable year from the sale or other disposition of securities that were held for
less than three months ("Short-Short Limitation"); (3) at the close of each
quarter of the Fund's taxable year, at least 50% of the value of its total
assets must be represented by cash and cash items, U.S. government securities,
securities of other RICs and other securities, with these other securities
limited, in respect of any one issuer, to an amount that does not exceed 5% of
the value of the Fund's total assets and that does not represent more than 10%
of the outstanding voting securities of the issuer; and (4) at the close of each
quarter of the Fund's taxable year, not more than 25% of the value of its total
assets may be invested in securities (other than U.S. government securities or
the securities of other RICs) of any one issuer.
The Fund will be subject to a nondeductible 4% excise tax to the extent
it fails to distribute by the end of any calendar year substantially all of its
ordinary income for that year and capital gain net income for the one-year
period ending on October 31 of that year, plus certain other amounts. The Fund
intends to distribute annually a sufficient amount of any income and capital
gains so as to avoid liability for this excise tax.
Dividends and interest received by the Fund may be subject to income,
withholding or other taxes imposed by foreign countries and U.S. possessions
that would reduce the yield on its securities. Tax conventions between certain
countries and the United States may reduce or eliminate these foreign taxes,
however, and foreign countries generally do not impose taxes on capital gains in
respect of investments by foreign investors. The Fund will report to its
shareholders shortly after each taxable year their respective shares of the
income from sources within, and taxes paid to, foreign countries and U.S.
possessions if it makes this election.
The Fund may invest in the stock of "passive foreign investment
companies" (PFICs"). A PFIC is a foreign corporation that, in general, meets
either of the following tests: (1) at least 75% of its gross income is passive
or (2) an
31
<PAGE>
average of at least 50% of its assets produce, or are held for the production
of, passive income. Under certain circumstances, the Fund will be subject to
federal income tax on a portion of any "excess distribution" received on the
stock of a PFIC or of any gain on disposition of that stock (collectively "PFIC
income"), plus interest thereon, even if the Fund distributes the PFIC income as
a taxable dividend to its shareholders. The balance of the PFIC income will be
included in the Fund's investment company taxable income and, accordingly, will
not be taxable to it to the extent that income is distributed to its
shareholders. If the Fund invests in a PFIC and elects to treat the PFIC as a
"qualified electing fund," then in lieu of the foregoing tax and interest
obligation, the Fund will be required to include in income each year its pro
rata share of the qualified electing fund's annual ordinary earnings and net
capital gain (the excess of net long-term capital gain over net short-term
capital loss), even if they are not distributed to the Fund; those amounts would
be subject to the distribution requirements described above. In most instances
it will be very difficult, if not impossible, to make this election because of
certain requirements thereof.
The use of hedging strategies, such as writing (selling) and purchasing
options and futures contracts and entering into forward contracts, involves
complex rules that will determine for income tax purposes the character and
timing of recognition of the income received in connection therewith by the
Fund. Income from foreign currencies (except certain gains therefrom that may be
excluded by future regulations), and income from transactions in options,
futures and forward contracts derived by the Fund with respect to its business
of investing in securities or foreign currencies, will qualify as permissible
income under the Income Requirement. However, income from the disposition of
foreign currencies, that are not directly related to the Fund's principal
business of investing in securities (or options and futures with respect
thereto) also will be subject to the Short-Short Limitation if the securities
are held for less than three months.
If the Fund satisfies certain requirements, any increase in value on a
position that is part of a "designated hedge" will be offset by any decrease in
value (whether realized or not) of the offsetting hedging position during the
period of the hedge for purposes of determining whether the Fund satisfies the
Short-Short Limitation. Thus, only the net gain (if any) from the designated
hedge will be included in gross income for purposes of that limitation. The Fund
intends that, when it engages in hedging transactions, they will qualify for
this treatment, but at the present time it is not clear whether this treatment
will be available for all of the Fund's hedging transactions. To the extent this
treatment is not available, the Fund may be forced to defer the closing out of
certain options and futures contracts beyond the time when it otherwise would be
advantageous to do so, in order for the Fund to continue to qualify as a RIC.
The treatment of income dividends and capital gain distributions by the
Fund to shareholders under the various state income tax laws may not parallel
that under the federal law. Qualification as a regulated investment company does
not involve supervision of the Fund's management or of its investment policies
and practices by any governmental authority.
Shareholders are urged to consult their own tax advisors with specific
reference to their own tax situations, including their state and local tax
liabilities.
PRINCIPAL SHAREHOLDERS
To the knowledge of the Fund, only The Northern Trust Company as
Trustee of the ConAgra Retirement Income Savings Plan, Chicago, Illinois
("ConAgra") owned beneficially or of record 5% or more of the outstanding shares
of beneficial interest of the Fund as of December 2, 1995. As of that date,
ConAgra owned of record 17% of the outstanding shares of the Fund.
MISCELLANEOUS INFORMATION
ORGANIZATION
The Fund was originally formed as a Maryland corporation, but was
reorganized as a Massachusetts business trust on September 30, 1986. The Fund is
a series of IDEX Fund, a Massachusetts business trust (the "Trust"), that was
formed
32
<PAGE>
by a Declaration of Trust dated April 25, 1986. The Fund currently is the only
series of the Trust and its operations are governed by a Restatement of
Declaration of Trust ("Declaration of Trust") dated as of August 30, 1991.
SHARES OF BENEFICIAL INTEREST
The Declaration of Trust permits the Fund to issue an unlimited number
of shares of beneficial interest. Shares of the Fund are fully paid and
nonassessable when issued. Shares of the Fund have no preemptive rights, and no
conversion or subscription rights. Shares of the Fund are fully transferable but
the Fund is not bound to recognize any transfer until it is recorded on its
books.
Shares of a series share equally with all other shares of the same
series in dividends and other distributions, and in the event of liquidation,
are entitled to receive equal shares of the net assets of that series. On any
matter submitted to a vote of shareholders of a series, each full issued and
outstanding share of that series has one vote.
The Declaration of Trust provides that each of the trustees will
continue in office until the termination of the Trust or his earlier death,
resignation, bankruptcy or removal. A meeting will be called for the election of
trustees upon the written request of holders of 10% or more of the outstanding
shares of the Trust. Vacancies may be filled by majority of the remaining
trustees, subject to certain limitations imposed by the 1940 Act. Therefore, it
is not anticipated that annual or regular meetings of shareholders normally will
be held, unless otherwise required by the Declaration of Trust or the 1940 Act.
Subject to the foregoing, shareholders have the power to vote for the election
and removal of trustees, to terminate or reorganize the Fund, to amend the
Declaration of Trust, on whether to bring certain derivative actions and on any
other matters on which a shareholder vote is required by the 1940 Act, the
Declaration of Trust, the Fund's bylaws or the trustees.
LEGAL COUNSEL AND AUDITORS
Sutherland, Asbill & Brennan, 1275 Pennsylvania Avenue, N.W.,
Washington, D.C. 20004, serves as counsel to the Fund and certain of its
affiliates.
Price Waterhouse, LLP, 1055 Broadway, Kansas City, Missouri 64105,
serves as independent accountants for the Fund.
REGISTRATION STATEMENT
This Statement of Additional Information and the Prospectus for the
Portfolios do not contain all the information set forth in the registration
statement and exhibits relating thereto, which the Fund has filed with the
Securities and Exchange Commission, Washington, D.C. under the Securities Act of
1933 and the 1940 Act, to which reference is hereby made.
PERFORMANCE INFORMATION
The Prospectus contains a brief description of how performance is
calculated.
Quotations of average annual total return for the Fund will be
expressed in terms of the average annual compounded rate of return of a
hypothetical investment in the Fund over periods of 1, 5, and 10 years. These
are the average annual compounded rates of return that would equate the initial
amount invested to the ending redeemable value. These rates of return are
calculated pursuant to the following formula:
T = ((ERV [DIVIDED BY] P)1/N)-1
(where P = a hypothetical initial investment of $1,000; T = the average annual
total return; N = the number of years; and ERV = the ending redeemable value of
a hypothetical $1,000 investment made at the beginning of the period). All
average annual total return figures reflect the deduction of a proportionate
share of Fund expenses on an annual basis, and assume that the
33
<PAGE>
maximum sales load is deducted from the initial $1,000 investment and all
dividends and distributions are paid in additional Fund shares.
For the fiscal year ended October 31, 1995, the five-year period ended
October 31, 1995, the ten-year period ended October 31, 1995 and the period from
inception (June 4, 1985) through October 31, 1995, the average annual total
return for the Fund was 22.32%, 17.24%, 16.59% and 16.08%, respectively,
assuming deduction of the maximum sales charge of 8.5% in effect since inception
and through the fiscal year ended October 31, 1995. Assuming no deduction of the
maximum sales charge of 8.5%, the average annual total return for the Fund was
33.72%, 19.34%, 17.64% and 17.07% , respectively, for those same periods.
For the fiscal year ended October 31, 1995, the five-year period ended
October 31, 1995, the ten-year period ended October 31, 1995 and the period from
inception (June 4, 1985) through October 31, 1995, the cumulative total return
for the Fund was 33.72%, 142.10%, 407.42% and 416.07%, respectively.
As stated in the Prospectus, from time to time in advertisements or
sales material, the Fund may present and discuss its performance rankings and/or
ratings or other information as published by recognized mutual fund statistical
services or by publications of general interest such as THE WALL STREET JOURNAL,
THE BOSTON GLOBE, THE NEW YORK TIMES, THE LOS ANGELES TIMES, CHRISTIAN SCIENCE
MONITOR, USA TODAY, THE TAMPA TRIBUNE, THE ST. PETERSBURG TIMES, FINANCIAL
TIMES, THE HARTFORD CURRANT, INTERNATIONAL HERALD TRIBUNE, INVESTOR'S BUSINESS
DAILY, THE BOSTON HERALD, THE WASHINGTON POST, KIPLINGER'S WASHINGTON LETTER,
KIPLINGER'S TAX REPORT, KIPLINGER'S PERSONAL FINANCE MAGAZINE, BARRON'S,
BUSINESS WEEK, FINANCIAL SERVICES WEEK, NATIONAL UNDERWRITER, TIME, NEWSWEEK,
PENSIONS & INVESTMENTS, U.S. NEWS AND WORLD REPORT, MORNINGSTAR MUTUAL FUND
VALUES, THE ECONOMIST, BANK LETTER, BOSTON BUSINESS JOURNAL, RESEARCH
RECOMMENDATIONS, FACS OF THE WEEK, MONEY, MODERN MATURITY, FORBES, FORTUNE,
FINANCIAL PLANNER, AMERICAN BANKER, U.S. BANKER, ABA BANKING JOURNAL,
INSTITUTIONAL INVESTOR (U.S./EUROPE), REGISTERED REPRESENTATIVE, INDEPENDENT
AGENT, AMERICAN DEMOGRAPHICS, TRUSTS & ESTATES, CREDIT UNION MANAGEMENT,
PERSONAL INVESTOR, NEW ENGLAND BUSINESS, BUSINESS MONTH, GENTLEMEN'S QUARTERLY,
EMPLOYEE RESEARCH REPORT, EMPLOYEE BENEFIT PLAN REVIEW, ICI MUTUAL FUND NEWS,
SUCCEED, JOHNSON CHARTS, WEISENBERGER INVESTMENT COMPANIES SERVICE, MUTUAL FUND
QUARTERLY, FINANCIAL WORLD MAGAZINE, CONSUMER REPORTS, BABSON-UNITED MUTUAL FUND
SELECTOR and MUTUAL FUND ENCYCLOPEDIA (DEARBORN FINANCIAL PUBLISHING). The Fund
may also advertise nonstandardized performance information which is for periods
in addition to those required to be presented or which provides actual
year-by-year return, or any combination thereof. In addition, the Fund may, as
appropriate, compare its performance to that of other types of investments such
as certificates of deposit, savings accounts and U.S. Treasury securities, or to
certain interest rate and inflation indices, such as the Consumer Price Index.
The Fund may also advertise various methods of investing including, among
others, dollar cost averaging, and may use compounding illustrations to show the
results of such investment methods.
FINANCIAL STATEMENTS
Audited Financial Statements for the year ended October 31, 1995 are
incorporated by reference from the Fund's Annual Report dated October 31, 1995.
34
<PAGE>
IDEX FUND
OTHER INFORMATION
PART C
- ------
ITEM 24 FINANCIAL STATEMENTS AND EXHIBITS
List all financial statements and exhibits filed as part of the
Registration Statement.
(a) Financial Statements:
(1) The audited financial statements of IDEX Fund for
the fiscal year ended October 31, 1995 included in
IDEX Fund's 1995 Annual Report to Shareholders are
incorporated by reference into the Statement of
Additional Information.
(2) Financial Highlights of IDEX Fund are included on
page 2 of the Prospectus.
(b) Exhibits:
Exhibit 1 Restatement of Declaration of Trust
Exhibit 2 Bylaws, as amended
Exhibit 3 Not Applicable
Exhibit 4 Specimen Share Certificate
Exhibit 5 (a) Management and Investment Advisory
Agreement
(b) Investment Counsel Agreement
(c) Administrative Services Agreement
Exhibit 6 (a) Underwriting Agreement
(b) Dealer Sales Agreement
(c) Service Agreement
(d) Wholesaler's Agreement
Exhibit 7 Trustees/Directors Deferred Compensation
Plan
Exhibit 8 Custody Agreement1
- --------
1 Filed previously with Post-Effective Amendment No. 7 to
Registration Statement (Registration No. 2-95237) on
Form N-1A on March 1, 1989.
C-1
<PAGE>
Exhibit 9 Transfer Agency Agreement with Idex
Investor Services, Inc.
Exhibit 10 Opinion of Counsel
Exhibit 11 (a) Consent of Price Waterhouse
(b) Consent of Sutherland Asbill & Brennan
Exhibit 12 Not Applicable
Exhibit 13 Investment Letter from Sole Shareholder2
Exhibit 14 (a) Model Individual Retirement Plan3
(b) Prototype Money Purchase Pension and
Profit Sharing Plan4
(c) Model Section 403(b)(7) Plan3
(d) Model 401(k) Plan5
Exhibit 15 Not Applicable
Exhibit 16 Computation of Performance Quotation6
Exhibit 18 Powers of Attorney
Exhibit 27 Financial Data Schedule
ITEM 25 PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT
To the knowledge of the Registrant, IDEX Fund is not controlled by or
under common control with any other person. The Registrant has no subsidiaries.
- ---------------
2 Filed previously with Post-Effective Amendment No. 2 to Registration
Statement (Registration No. 2-95237) on Form N-1A on May 2, 1985.
3 Filed previously with Post-Effective Amendment No. 14 to Registration
Statement (Registration No. 2-95237) on Form N-1A on February 28, 1995.
4 Filed previously with Post-Effective Amendment No. 9 to Registration
Statement (Registration No. 2-95237) on Form N-1A on March 1, 1991.
5 Filed previously with Post-Effective Amendment No. 10 to Registration
Statement (Registration No. 2-95237) on Form N-1A on December 30, 1991.
6 Filed previously with Post-Effective Amendment No. 11 to Registration
Statement (Registration No. 2-95237) on Form N-1A on February 28, 1992.
C-2
<PAGE>
ITEM 26 NUMBER OF HOLDERS OF SECURITIES
The number of record holders of shares of beneficial interest of the
Registrant (the only class of securities outstanding) as of December 15, 1995,
was as follows:
NUMBER OF RECORD HOLDERS
Shares of Beneficial Interest...........................27,666
ITEM 27 INDEMNIFICATION
Provisions relating to indemnification of the Registrant's Trustees and
employees are included in Registrant's Restatement of Declaration of Trust and
Bylaws which are incorporated herein by reference.
ITEM 28 BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER
The only business of Idex Management, Inc. is to serve as the
investment adviser of IDEX Fund; IDEX II Growth Portfolio, IDEX II Global
Portfolio, IDEX II Flexible Income Portfolio, IDEX II Balanced Portfolio and
IDEX II Capital Appreciation Portfolio of IDEX II Series Fund; and IDEX Fund 3.
Janus Capital Corporation ("Janus Capital") serves as sub-adviser to
certain portfolios and mutual funds in the IDEX Group of Funds and as investment
adviser to each portfolio of Janus Investment Fund and Janus Aspen Series and as
adviser or sub-adviser to several other mutual funds and private and retirement
accounts. Janus Capital also serves as sub-adviser to certain portfolios of the
WRL Series Fund, Inc. Thomas H. Bailey, Chairman, President, Director and Chief
Executive Officer of Janus Capital and Chairman of the Board of Directors of
Idex Management, Inc., has no business, profession, vocation or employment of a
substantial nature other than his positions with Idex Management, Inc., Janus
Investment Fund, Janus Aspen Series and Janus Capital. Steven R. Goodbarn, Vice
President of Finance, Treasurer and Chief Financial Officer of Janus Capital,
Treasurer and Chief Financial Officer of Janus Investment Fund and Janus Aspen
Series and Director of Idex Management, Inc., has no substantial business,
profession, vocation or employment other than his positions with Janus Capital,
Janus Investment Fund, Janus Aspen Series and Idex Management, Inc. James P.
Craig, James P. Goff, Scott W. Schoelzel, Ronald V. Speaker and Helen Y. Hayes
are Vice Presidents of Janus Capital, and have no substantial business,
profession, vocation or employment other than their positions with Janus
Capital, Janus Investment Fund and Janus Aspen Series. David C. Tucker is Vice
President, Secretary and General Counsel of Janus Capital, and Vice President
and General Counsel of Janus Investment Fund and Janus Aspen Series; he has no
substantial business, profession, vocation or employment other than his
positions with Janus Capital, Janus Investment Fund and Janus Aspen Series.
Michael N. Stolper, a director of Janus Capital, is President of Stolper &
Company, Inc., 525 "B" Street, Suite 1080, San Diego, CA 92101, an investment
performance consultant. Michael E. Herman, a director of Janus Capital, is
Chairman of the Finance Committee of Ewing Marion Kauffman Foundation, 4900 Oak,
Kansas City, MO 64112. Thomas A. McDonnell, a director of Janus Capital, is
President, Chief Executive Officer and a director of DST Systems, Inc., 1004
Baltimore Avenue, Kansas City, MO 64105, a provider of data processing and
recordkeeping services for various mutual funds (including the IDEX Funds), and
Executive Vice President and a director of Kansas City Southern Industries,
Inc., 114 W. 11th Street, Kansas City, MO, 64105, a
C-3
<PAGE>
publicly traded holding company whose primary subsidiaries are engaged in
transportation, information processing and financial services. The only
business, professions, vocations or employments of a substantial nature of
Messrs. Kenney, Hurley, Moriarty, Geiger, Franz and Ms. Ferrell, the remaining
officers and directors of Idex Management, Inc., are described under "Trustees
and Officers" in the Statement of Additional Information included in this
Registration Statement.
ITEM 29 PRINCIPAL UNDERWRITER
(a) The Registrant has entered into an Underwriting Agreement with
InterSecurities, Inc. ("ISI"), whose address is P.O. Box 9015, Clearwater, FL
34618-9015, to act as the principal underwriter of Fund shares. ISI also serves
as the principal underwriter to IDEX II Series Fund, IDEX Fund 3 and WRL Series
Fund, Inc., each a registered investment company within the Fund complex.
(b) Directors and Officers of Principal Underwriter
<TABLE>
<CAPTION>
NAME POSITIONS AND OFFICES WITH UNDERWRITER POSITIONS AND OFFICES WITH REGISTRANT
- ---- -------------------------------------- -------------------------------------
<S> <C> <C>
John R. Kenney Chairman and Director Chairman and Trustee
G. John Hurley President, Chief Executive Officer President, Chief Executive
and Director Officer and Trustee
J. Will Paull Director N/A
William H. Geiger Director and Secretary Vice President and Assistant
Secretary
Thomas R. Moriarty Senior Vice President Senior Vice President
Donald L. Cudney Senior Vice President N/A
Becky A. Ferrell Assistant Vice President, Counsel Vice President, Counsel
and Assistant Secretary and Secretary
Richard B. Franz II Treasurer Treasurer
Christopher G. Roetzer Assistant Vice President Assistant Vice President
and Principal Accounting Officer
Cynthia L. Remley Vice President, Counsel and N/A
Assistant Secretary
Terry L. Garvin Vice President N/A
C-4
<PAGE>
Gordon E. Hippner Vice President N/A
Gerard P. Kirk Vice President N/A
Leslie E. Martin, III Vice President Vice President
Stanley R. Orr Vice President N/A
William G. Cummings Vice President N/A
Pamela C. Dils Assistant Vice President and N/A
Assistant Secretary
Kristy L. Dowd Assistant Vice President N/A
Diane Rogers Assistant Vice President N/A
Sammie Jo McClintick Assistant Vice President N/A
Ronald J. Klimas Assistant Vice President N/A
Russell W. Crooks Assistant Vice President N/A
Greg Limardi Assistant Vice President N/A
Laura Schneider Assistant Secretary N/A
Stuart Walsky Assistant Vice President N/A
</TABLE>
ITEM 30 LOCATION OF ACCOUNTS AND RECORDS
The accounts, books and other documents required to be maintained by
Section 31(a) of the 1940 Act and the rules promulgated thereunder are
maintained as follows:
(a) Shareholder records are maintained by the Registrant's transfer
agent, Idex Investor Services, Inc., P.O. Box 9015, Clearwater, FL 34618-9015.
(b) All other accounting records of the Registrant are maintained at
the offices of the Registrant at 201 Highland Avenue, Largo, FL, 34640 or 33 N.
Garden Avenue, Suites 1000 & 1100, Clearwater, FL 34615, and are in the physical
possession of the officers of the Fund, or at the offices of the Custodian,
Investors Fiduciary Trust Company, 127 West 10th Street, Kansas City, MO 64105.
C-5
<PAGE>
ITEM 31 MANAGEMENT SERVICES
The Registrant has no management-related service contract which is not
discussed in Parts A and B of this form. See the sections of the Prospectus and
Statement of Additional Information entitled "Investment Advisory and Other
Services" for a discussion of the management and advisory services furnished by
Idex Management, Inc., Janus Capital Corporation and InterSecurities, Inc.
pursuant to the Management and Investment Advisory Agreement, the Investment
Counsel Agreement, the Administrative Services Agreement and the Underwriting
Agreement.
ITEM 32 UNDERTAKINGS
(a) Not applicable
(b) Not applicable
(c) Registrant hereby undertakes to furnish each person to
whom a prospectus is delivered a copy of its latest annual
report to shareholders, upon request and without charge.
C-6
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant has duly caused this
Post-Effective Amendment to its Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized in the City of Largo and
State of Florida, on the 27th day of December, 1995.
IDEX Fund
By: /S/ G. JOHN HURLEY
-------------------------------------
G. John Hurley
President and
Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933 and
Investment Company Act of 1940, this Post-Effective Amendment to its
Registration Statement has been signed below by the following persons in the
capacities and on the dates indicated:
<TABLE>
<S> <C> <C>
/S/ JOHN R. KENNEY Chairman and Trustee December 27, 1995
- ----------------------------
John R. Kenney
/S/ G. JOHN HURLEY President and Trustee December 27, 1995
- ---------------------------- (Principal Executive
G. John Hurley Officer)
/S/ RICHARD B. FRANZ II Treasurer and December 27, 1995
- ---------------------------- Principal Financial
Richard B. Franz II Officer
/S/ CHRISTOPHER G. ROETZER Assistant Vice President and December 27, 1995
- ----------------------------- Principal Accounting
Christopher G. Roetzer Officer
/S/ PETER R. BROWN * Trustee December 27, 1995
- ----------------------------
Peter R. Brown *
/S/ JAMES L. CHURCHILL * Trustee December 27, 1995
- ---------------------------
James L. Churchill *
<PAGE>
/S/ CHARLES C. HARRIS * Trustee December 27, 1995
- ---------------------------
Charles C. Harris
/S/ WILLIAM W. SHORT, JR. * Trustee December 27, 1995
- ----------------------------
William W. Short, Jr. *
/S/ JACK E. ZIMMERMAN * Trustee December 27, 1995
- ------------------------
Jack E. Zimmerman *
/S/ G. JOHN HURLEY
- ------------------------------------------
*Signed by G. John Hurley
Attorney in Fact
</TABLE>
EXHIBIT 1
IDEX FUND
RESTATEMENT OF
DECLARATION OF TRUST
DATED APRIL 25, 1986, AS AMENDED
This restatement is as of August 30, 1991. It sets forth the Declaration of
Trust dated April 25, 1986, as amended, and reflects the amendments approved by
shareholders on April 16, 1991.
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
<S> <C>
ARTICLE I - NAME AND DEFINITIONS..................................................................................2
Section 1.1. Name...............................................................................2
Section 1.2. Definitions........................................................................2
ARTICLE II - TRUSTEES.............................................................................................3
Section 2.1. Powers.............................................................................3
Section 2.2. Legal Title........................................................................7
Section 2.3. Number of Trustees; Term of Office.................................................7
Section 2.4. Qualification of Trustees..........................................................7
Section 2.5. Election of Trustees...............................................................7
Section 2.6. Resignation and Removal............................................................8
Section 2.7. Vacancies..........................................................................8
Section 2.8. Committees; Delegation.............................................................8
Section 2.9. Action Without a Meeting; Participation by Conference Telephone....................9
Section 2.10. By-Laws............................................................................9
Section 2.11. No Bond Required...................................................................9
Section 2.12. Reliance on Experts, Etc...........................................................9
ARTICLE III - CONTRACTS..........................................................................................10
Section 3.1. Distribution Contract.............................................................10
Section 3.2. Advisory or Management Contract...................................................10
Section 3.3. Affiliations of Trustees or Officers, Etc.........................................10
ARTICLE IV - LIMITATION OF LIABILITY; INDEMNIFICATION............................................................11
Section 4.1. No Personal Liability of Shareholders, Trustees, Etc..............................11
Section 4.2. Execution of Documents; Notice; Apparent Authority................................11
Section 4.3. Indemnification of Trustees, Officers, Etc........................................11
Section 4.4. Indemnification of Shareholders...................................................12
ARTICLE V - SHARES OF BENEFICIAL INTEREST........................................................................13
Section 5.1. Beneficial Interest...............................................................13
Section 5.2. Rights of Shareholders............................................................13
Section 5.3. Trust Only........................................................................13
Section 5.4. Issuance of Shares................................................................13
Section 5.4.1. General...........................................................................13
Section 5.4.2. Price.............................................................................14
Section 5.4.3. On Merger or Consolidation........................................................14
Section 5.4.4. Fractional Shares.................................................................14
Section 5.5. Series or Class...................................................................14
Section 5.5.1. Establishment of Series or Class..................................................14
Section 5.5.2. Assets and Liabilities of Series..................................................14
Section 5.6. Register of Shares................................................................15
i
<PAGE>
Section 5.7. Share Certificates................................................................15
Section 5.7.1. General...........................................................................15
Section 5.7.2. Loss of Certificates..............................................................15
Section 5.7.3. Issuance of New Certificates to Pledgee...........................................15
Section 5.7.4. Discontinuance of Issuance of Certificates........................................15
Section 5.8. Transfer of Shares................................................................15
Section 5.9. Voting Powers.....................................................................16
Section 5.10. Meetings of Shareholders..........................................................16
Section 5.11. Action Without a Meeting..........................................................17
ARTICLE VI - REDEMPTION AND REPURCHASE OF SHARES.................................................................17
Section 6.1. Redemption of Shares..............................................................17
Section 6.2. Price.............................................................................17
Section 6.3. Payment...........................................................................17
Section 6.4. Effect of Suspension of Right of Redemption.......................................17
Section 6.5. Repurchase by Agreement...........................................................17
Section 6.6. Suspension of Right of Redemption.................................................18
Section 6.7. Involuntary Redemption of Shares; Disclosure of Holding...........................18
ARTICLE VII - DETERMINATION OF NET ASSET VALUE; DISTRIBUTIONS....................................................19
Section 7.1. By Whom Determined................................................................19
Section 7.2. When Determined...................................................................19
Section 7.3. Computation of Per Share Net Asset Value..........................................19
Section 7.3.1. Net Asset Value Per Share.........................................................19
Section 7.3.2. Value of the Net Assets of the Trust..............................................19
Section 7.4. Interim Determinations............................................................20
Section 7.5. Outstanding Shares................................................................20
Section 7.6. Distributions to Shareholders.....................................................21
Section 7.7. Power to Modify Foregoing Procedures..............................................21
ARTICLE VIII - CUSTODIAN.........................................................................................21
Section 8.1. Appointment and Duties............................................................21
Section 8.2. Action Upon Termination of Custodian Agreement....................................22
Section 8.3. Central Certificate System, Etc...................................................22
Section 8.4. Acceptance of Receipts in Lieu of Certificates....................................22
ARTICLE IX - DURATION; TERMINATION OF TRUST; AMENDMENT; MERGERS;
OFFICES, ETC.....................................................................................................23
Section 9.1. Duration and Termination..........................................................23
Section 9.2. Amendment Procedure...............................................................24
Section 9.3. Merger, Consolidation and Sale of Assets..........................................24
Section 9.4. Incorporation.....................................................................24
Section 9.5. Principal Office..................................................................24
Section 9.6. Registered Office.................................................................25
Section 9.7. Other Offices.....................................................................25
ARTICLE X - REPORTS TO SHAREHOLDERS..............................................................................25
ii
<PAGE>
ARTICLE XI - MISCELLANEOUS.......................................................................................25
Section 11.1. Filing............................................................................25
Section 11.2. Governing Law.....................................................................25
Section 11.3. Counterparts......................................................................25
Section 11.4. Reliance by Third Parties.........................................................25
Section 11.5. Provisions in Conflict with Law or Regulations....................................26
Section 11.6. Section Headings; Interpretation..................................................26
</TABLE>
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RESTATEMENT OF
DECLARATION OF TRUST
OF
IDEX FUND
RESTATEMENT OF DECLARATION OF TRUST made this 30th day of August, 1991 by
Peter R. Brown, James L. Churchill, G. John Hurley, John R. Kenney, Robert F.
McGrath, William W. Short, Jr., Truman H. Sims and Jack E. Zimmerman
("Trustees").
WHEREAS, the Trustees desire to establish a trust for the investment and
reinvestment of funds contributed thereto; and
WHEREAS, the Trustees desire that the beneficial interest in the trust
assets be divided in transferable shares of beneficial interest, as hereinafter
provided;
NOW, THEREFORE, the Trustees hereby declare that all money and property
contributed to the trust established hereunder and all proceeds thereof shall be
held and managed in trust for the benefit of the holders, from time to time, of
the shares of beneficial interest issued hereunder and subject to the provisions
hereof.
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ARTICLE I
NAME AND DEFINITIONS
Section 1.1. NAME. The name of the trust is "IDEX FUND", and as far as
may be practicable the Trustees shall conduct the business and activities of the
trust created hereby and execute all documents and take all actions under that
name or any other name they may from time to time determine, which name (and the
word "Trust" whenever used in the Declaration, except where the context requires
otherwise) shall refer to the Trustees in their capacity as Trustees, and not
individually or personally and shall not refer to the officers, agents,
employees or shareholders of the trust created hereby or of such Trustees.
Section 1.2. DEFINITIONS. Wherever they are used herein, the following
terms have the following meanings:
"Affiliated Person" shall have the meaning set forth in Section 2(a)(3)
of the 1940 Act.
"By-Laws" shall mean the By-Laws, if any, adopted pursuant to Section
2.10 hereof, as from time to time amended.
"Class" shall mean the Class of Shares of a Series of the Trust
established in accordance with the provisions of Article V hereof.
"Commission" shall mean the Securities and Exchange Commission.
"Custodian" shall mean any Person other than the Trustees who has
custody of any Trust Property as required by Section 17(f) of the 1940 Act.
"Declaration" shall mean this Declaration of Trust as amended from time
to time.
Distributor shall have the meaning set forth in Section 3.1 hereof.
"Interested Person" shall have the meaning set forth in Section
2(a)(19) of the 1940 Act.
"Investment Adviser" shall have the meaning set forth in Section 3.2
hereof.
"Investment Sub-Adviser" shall have the meaning set forth in Section
3.2 hereof.
"Majority Shareholder Vote" shall mean the vote of a majority of the
outstanding voting securities, as defined in Section 2(a)(42) of the 1940 Act.
"1940 Act" shall mean the Investment Company Act of 1940, as amended,
from time to time.
"Person" shall mean an individual, a company, a corporation,
partnership, trust or association, a joint venture, an organization, a business,
a firm or other entity, whether or not a legal entity, or a country, state,
municipality or other political subdivision or any governmental agency or
instrumentality.
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"Principal Underwriter" shall have the meaning set forth in Section
2(a)(29) of the 1940 Act.
"Series" shall mean the Series of Shares of the Trust established in
accordance with the provisions of Article V hereof.
"Shareholder" shall mean a record owner of Shares.
"Shares" shall mean the units of interest into which the beneficial
interest of each Series or Class thereof shall be divided from time to time and
includes fractions of Shares as well as whole Shares (all of the units of
interest of a Series or of a single Class may be referred to as "shares" as the
context may require).
"Transfer Agent" shall mean any Person other than the Trustees who
maintains the Shareholder records of the Trust, such as the list of
Shareholders, the number of Shares credited to each account, and the like.
"Trust" shall mean the Massachusetts business trust (the "IDEX FUND")
established by this Declaration of Trust, as from time to time amended.
"Trust Property" shall mean any and all property, real or personal,
tangible or intangible, which is owned or held by or for the account of the
Trust or the Trustees.
"Trustees" shall mean the individuals who have signed this Declaration
of Trust, so long as they shall continue in office in accordance with the terms
hereof, and all other individuals who may from time to time be duly elected or
appointed, qualified and serving as Trustees in accordance with the provisions
of Article II hereof, and reference herein to a Trustee or the Trustees shall
refer to such person or persons in his or her capacity or their capacities as
trustees hereunder.
ARTICLE II
TRUSTEES
Section 2.1. POWERS. The Trustees, subject only to the specific
limitations contained in this Declaration, shall have exclusive and absolute
power, control and authority over the Trust Property and over the business of
the Trust to the same extent as if the Trustees were the sole owners of the
Trust Property and business in their own right, including such power, control
and authority to do all such acts and things as in their sole judgment and
discretion are necessary, incidental, convenient or desirable for the carrying
out of or conducting of the business of the Trust or in order to promote the
interests of the Trust, but with such powers of delegation as may be permitted
by this Declaration. The enumeration of any specific power, control or authority
herein shall not be construed as limiting the aforesaid power, control and
authority or any other specific power, control, or authority. The trustees shall
have power to conduct and carry on the offices and to exercise any or all of its
trust powers and rights, in the Commonwealth of Massachusetts, in the State of
Florida, in any other states, territories, districts, colonies and dependencies
of the United States and in any foreign countries. In construing the provisions
of this Declaration, the presumption shall be in favor of a grant of power to
the Trustees. Such power of the Trustees may be exercised without order of or
resort to any court.
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Without limiting the foregoing, the Trustees shall have the power:
(a) To operate as and to carry on the business of an investment
company, and to exercise all the powers necessary and appropriate to
the conduct of such operations.
(b) To subscribe for and to invest and reinvest funds in, and hold for
investment, the securities (including by not limited to bonds,
debentures, time notes, certificates of deposit, commercial paper,
bankers' acceptances and all other evidences of indebtedness and
shares, stock, subscription rights, warrants, profit-sharing interests
or participations and all other contracts for or evidences of equity
interests) of any Person and to hold cash uninvested.
(c) To acquire (by purchase, subscription or otherwise), to trade in
and deal in, to sell or otherwise dispose of, to enter into repurchase
agreements and firm commitment agreements with respect to, and to lend
and to pledge any such securities.
(d) To acquire (by purchase, subscription or otherwise), to trade in
and deal in, to sell or otherwise dispose of, options or futures.
(e) To exercise all rights, powers and privileges of ownership or
interest in all securities included in the Trust Property, including
the right to vote, give assent, execute and deliver proxies or powers
of attorney to such person or persons as the Trustees shall deem proper
and otherwise act with respect thereto and to do all acts for the
preservation, protection, improvement and enhancement in value of all
such securities and to delegate, assign, waive or otherwise dispose of
any such rights, powers or privileges.
(f) To exercise powers and rights of subscription or otherwise which
in any manner arise out of the Trust's ownership of securities.
(g) To declare (from interest, dividends or other income received or
accrued, from accruals of original issue or other discounts on
obligations held, from capital or other profits whether realized or
unrealized and from any other lawful sources) dividends and
distributions on the Shares and to credit the same to the account of
Shareholders, or at the election of the Trustees to accrue income to
the account of Shareholders, on such dates (which may be as frequently
as every day) as the Trustees may determine. Such dividends,
distributions or accruals shall be payable in cash, property or Shares
at such intervals as the Trustees may determine at any time in advance
of such payment, whether or not the amount of such dividend,
distribution or accrual can at the time of declaration or accrual be
determined or must be calculated subsequent to declaration or accrual
and prior to payment by reference to amounts or other factors not yet
determined at the time of declaration or accrual (including but not
limited to the amount of a dividend or distribution to be determined by
reference to what is sufficient to enable the Trust to qualify as a
regulated investment company under the United States Internal Revenue
Code or to avoid liability for Federal income tax).
The power granted by this Subsection (g) shall include, without
limitation, and if otherwise lawful, the power (A) to declare dividends
or distributions or to accrue income to the account of Shareholders by
means of a formula or other similar method of determination whether or
not the amount of such dividend or distribution can be calculated at
the time of such
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declaration; (B) to establish record or payment dates for dividends or
distributions on any basis, including the power to establish a number
of record or payment dates subsequent to the declaration of any
dividend or distribution; (C) to establish the same payment date for
any number of dividends or distributions declared prior to such date;
(D) to provide for payment of dividends or distributions declared and
as yet unpaid, or unpaid accrued income, to Shareholders redeeming
Shares prior to the payment advance for conditions under which any
dividend or distribution may be payable in Shares to all or less than
all of the Shareholders.
(h) To acquire (by purchase, lease or otherwise) and to hold, use,
maintain, develop and dispose of (by sale, lease or otherwise) any
property, real, or personal and any interest therein.
(i) To borrow money, and in this connection to issue notes or other
evidences of indebtedness; to secure borrowings by mortgaging, pledging
or otherwise subjecting to security interests the Trust Property; and
to lend Trust Property.
(j) To aid by further investment any Person, if any obligation of or
interest in such Person is included in the Trust Property or if the
Trustees have any direct or indirect interest in the affairs of such
Person; to do anything designed to preserve, protect, improve or
enhance the value of such obligation or interest; and to endorse or
guarantee or become surety on any or all of the contracts, stock,
bonds, notes, debentures and other obligations of any such Person; and
to mortgage the Trust property or any part thereof to secure any of or
all such obligations.
(k) To promote or aid the incorporation of any organization or
enterprise under the law of any country, state, municipality or other
political subdivision, and to cause the same to be dissolved, wound up,
liquidated, merged or consolidated.
(l) To enter into joint ventures, general or limited partnerships and
any other combinations or associations.
(m) To purchase and pay for entirely out of Trust Property insurance
policies insuring the Shareholders, Trustees, officers, employees and
agents of the Trust, the Investment Adviser, the Distributor and
dealers or independent contractors of the Trust against all claims and
liabilities of every nature arising by reason of holding or having held
any such position or by reason of any action taken or omitted by such
Person in such capacity, whether or not constituting negligence, to the
extent the Trust would have the power, under provisions or applicable
law, to indemnify such Person against such liability.
(n) To establish and carry out pension, profit-sharing, share purchase,
share bonus, savings, thrift and other retirement, incentive and
benefit plans for any Trustees, officers, employees or agents of the
Trust.
(o) To the extent permitted by law and determined by the Trustees, to
indemnify any Person with whom the Trust has dealings, including,
without limitation, the Shareholders, the Trustees, the officers,
employees and agents of the Trust, the Investment Adviser, the
Distributor, the Transfer Agent, the Custodian and dealers.
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(p) To incur and pay any charges, taxes and expenses which in the
opinion of the Trustees are necessary or incidental to or proper for
carrying out any of the purposes of this Declaration, and to pay from
the funds of the Trust Property to themselves as Trustees reasonable
compensation and reimbursement for expenses.
(q) To prosecute or abandon and to compromise, arbitrate or otherwise
adjust claims in favor of or against the Trust or any matter in
controversy, including but not limited to claims for taxes.
(r) To foreclose any security interest securing any obligations owed
to the Trust.
(s) To exercise the right to consent, and to enter into releases,
agreements and other instruments, including, but not limited to, the
right to consent or participate in any plan for the reorganization,
consolidation or merger of any corporation or issuer any security of
which is or was held by the Trust; to consent to any contract, lease,
mortgage, purchase or sale of such property by said corporation or
issuer, and to pay calls or subscriptions with respect to securities
held by the Trust.
(t) To employ or contract with such Persons as the Trustees may deem
desirable for the transaction of the business of the Trust.
(u) To determine and change the fiscal year of the Trust and the
method in which its accounts shall be kept.
(v) To adopt a seal for the Trust, but the absence of such seal shall
not impair the validity of any instrument executed on behalf of the
Trust.
(w) To take such actions as are authorized or required to be taken by
the Trustees pursuant to other provisions of this Declaration.
(x) In general to carry on any other business in connection with or
incidental to any of the objectives and purposes of the Trust, to do
everything necessary, suitable or proper for the accomplishment of any
purpose or the attainment of any object or the furtherance of any power
herein set forth, either alone or in association with others, and to
take any action incidental or appurtenant to or growing out of or
connected with the business, purposes, objects or powers of the
Trustees.
(y) To establish separate and distinct Series with separately defined
investment objectives and policies and distinct investment purposes in
accordance with the provisions of Article V hereof.
(z) To allocate assets, liabilities and expenses of the Trust to a
particular Series and liabilities and expenses to a particular Class
thereof, or to apportion the same among two or more Series or Classes,
as applicable, provided that any liabilities or expenses incurred by a
particular Series or Class shall be payable solely by that Series or
Class as provided for in Article V hereof.
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The foregoing clauses shall be construed both as objects and as powers,
and the foregoing enumeration of specific powers shall not be held to limit or
restrict in any manner the general powers of the Trustees.
The Trustees shall not be limited by any law now or hereafter in effect
limiting the investments which may be made or retained by fiduciaries, but they
shall have full power and authority to make any and all investment within the
limitation of this Declaration that they, in their sole and absolute discretion,
shall determine, and without liability for loss even though such investments do
not or may not produce income or are of a character or in an amount not
considered proper for the investment of trust funds.
Section 2.2. LEGAL TITLE. Legal title to all the Trust Property shall
as far as may be practicable be vested in the name of the Trust, which name
shall refer to the Trustees in their capacity as Trustees, and not individually
or personally, and shall not refer to the officers, agents, employees or
Shareholders of the Trust or of the Trustees, PROVIDED that the Trustees shall
have power to cause legal title to any Trust Property to be held by or in the
name of one or more of the Trustees with suitable reference to their trustee
status, or in the name of the Trust, or in a form not indicating any trust,
whether in bearer, unregistered or other negotiable form, or in the name of a
custodian or sub-custodian or a nominee or nominees or otherwise. The right,
title and interest of the Trustees in the Trust Property shall vest
automatically in each Person who may hereafter become a Trustee. Upon the
termination of the term of office of a Trustee, whether upon such Trustee's
resignation or removal, or upon the due election and qualification of his
successor or upon the occurrence of any of the events specified in the first
sentence of Section 2.7 hereof or otherwise, such Trustee shall automatically
cease to have any right, title or interest in any of the Trust Property, and the
right, title and interest of such Trustee in the Trust Property shall vest
automatically in the remaining Trustees. Such vesting and cessation of title
shall be effective whether or not conveyancing documents have been executed and
delivered.
Section 2.3. NUMBER OF TRUSTEES; TERM OF OFFICE. The number of Trustees
shall be two, which number may be increased and thereafter decreased from time
to time by a written instrument signed by a majority of the Trustees, PROVIDED
that the number of Trustees shall not be fewer than two nor more than 15. The
initial Trustees named in Section 2.5 hereof and each Trustee elected (whenever
such election occurs) shall hold office until his successor is elected and
qualified or until the earlier occurrence of any of the events specified in the
first sentence of Section 2.7 hereof.
Section 2.4. QUALIFICATION OF TRUSTEES. Of the total number of
Trustees, unless they continue to be limited to the two initial trustees named
in Section 2.5 hereof, at least 40% shall be persons who are not Interested
Persons of the Trust or of the Distributor, PROVIDED that, in the event the
Investment Company Act of 1940 requires that a greater percentage of the
Trustees not be Interested Persons of the Trust or Distributor, such provision
shall apply.
Section 2.5. ELECTION OF TRUSTEES. The initial Trustees shall be Ellen
F. Stoutamire and Peter D. Jones, both of whose business address was Suite 800,
600 Cleveland Street, Clearwater, Florida. Trustees may succeed themselves in
office. Trustees may be elected at a Shareholders' meeting. At such a
Shareholders' meeting, trustees shall be elected by a plurality of the votes
validly cast. The election of any Trustee immediately prior thereto shall not
become effective, however, until the individual named shall have accepted in
writing such election and agreed in writing to be bound by the terms of this
Declaration. Trustees need not own Shares.
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Section 2.6. RESIGNATION AND REMOVAL. Any Trustee may resign his trust
(without need for prior or subsequent accounting) by an instrument in writing
signed by him and delivered to the Chairman of the Board, or the Secretary or
any Assistant Secretary, and such resignation shall be effective upon such
delivery, or at any later date specified in the instrument. Any of the Trustees
may be removed (provided the aggregate number of Trustees after such removal
shall not be less than two) with cause by the affirmative vote of two-thirds of
the remaining Trustees. Upon the resignation or removal of a Trustee, or his
otherwise ceasing to be a Trustee, he shall execute and deliver such documents
as the remaining Trustees shall require for the purpose of conveying to the
Trust or the remaining Trustees any Trust Property held in the name of the
resigning or removed Trustee. Upon the incapacity or death of any Trustee, his
legal representative shall execute and deliver on his behalf such documents as
the remaining Trustees shall require as provided in the preceding sentence.
Section 2.7. VACANCIES. The term of office of a Trustee shall terminate
and a vacancy shall occur in the event of the death, retirement, resignation or
removal (whether pursuant to Section 2.6 hereof or otherwise), bankruptcy,
adjudicated incompetence or other incapacity to perform the duties of the office
of a Trustee. A vacancy shall also occur upon an increase in the number of
Trustees in accordance with Section 2.3 hereof. No vacancy shall operate to
annul this Declaration or to revoke any existing agency created pursuant to the
terms of the Declaration. In the case of an existing vacancy, including a
vacancy existing by reason of an increase in the authorized number of Trustees,
the remaining Trustees shall, subject to the requirements of Section 2.4 hereof,
fill such vacancy by the appointment of such individual as they in their sole
and absolute discretion shall see fit, made by a written instrument signed by a
majority of the Trustees then in office, PROVIDED that immediately after filling
any such vacancy (except during the period preceding the initial meeting of
Shareholders) at least two-thirds of the Trustees then holding office shall have
been elected to such office by the Shareholders. In the event that at any time,
other than the time preceding the first Shareholders' meeting, less than a
majority of the Trustees holding office at that time were elected by the
Shareholders, a meeting of the Shareholders shall be held promptly and in any
event within 60 days (unless the Commission shall by order extend such period)
for the purpose of electing Trustees to fill any existing vacancies. No such
appointment or election shall become effective, however, until the person named
shall have accepted in writing such appointment or election and agreed in
writing to be bound by the terms of this Declaration. Whenever a vacancy in the
number of Trustees shall occur, until such vacancy is filled as provided in this
Section 2.7, the Trustees in office, regardless of their number, shall have all
the powers granted to the Trustees and shall discharge all the duties imposed
upon the Trustees by the Declaration.
Section 2.8. COMMITTEES; DELEGATION. The Trustees shall have the power
to appoint from their own number, and terminate, any one or more committees
consisting of two or more Trustees, including an executive committee which may
exercise some or all of the power and authority of the Trustees as the Trustees
may determine (including but not limited to the power to determine net asset
value and net income), subject to any limitations contained in the By-Laws, and
in general to delegate from time to time to one or more of their number or to
officers, employees or agents of the Trust such power and authority and the
doing of such things and the execution of such instruments, either in the name
of the Trust or the names of the Trustees or otherwise, as the Trustees may deem
expedient, PROVIDED that no committee shall have the power:
(a) to change the principal office of the Trust;
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(b) to amend the By-Laws;
(c) to issue Shares;
(d) to elect or remove from office any Trustee or the Chairman
of the Board, the President, the Treasurer or the Secretary
of the Trust;
(e) to increase or decrease the number of Trustees;
(f) to declare a dividend or other distribution on the Shares;
(g) to authorize the repurchase of Shares; or
(h) to authorize any merger, consolidation or sale, lease or
exchange of all or substantially all of the Trust Property.
Section 2.9. ACTION WITHOUT A MEETING; PARTICIPATION BY CONFERENCE
TELEPHONE. Unless the 1940 Act requires that a particular action must be taken
only at a meeting of Trustees, any action required or permitted to be taken at
any meeting of the Trustees (or of any committee of the Trustees) may be taken
without a meeting if written consent thereto are signed by a majority of the
Trustees then in office (or by a majority of the members of such committee) and
such written consents are filed with the records of the meetings. Trustees may
participate in a meeting of the Trustees (or of any committee of the Trustees)
by means of a conference telephone or similar communications equipment if all
individuals participating can hear each other at the same time. Participation in
a meeting by these means shall constitute presence in person at the meeting.
Section 2.10. BY-LAWS. The Trustees may adopt By-Laws not
inconsistent with this Declaration or law to provide for the conduct of the
business of the Trust, and may amend or repeal such By-Laws.
Section 2.11. NO BOND REQUIRED. No Trustee shall be obligated to
give any bond or other security for the performance of any of his duties
hereunder.
Section 2.12. RELIANCE ON EXPERTS, ETC. Each Trustee, officer, agent
and employee of the Trust shall, in the performance of his duties, be fully and
completely justified and protected in relying in good faith upon the books of
account or other records of the Trust, or upon reports made to the Trustees (a)
by any of the officers or employees of the Trust, (b) by the Investment Adviser,
the Investment Sub-Adviser, the Distributor, the Custodian or the Transfer
Agent, or (c) by any accountants, selected dealers or appraisers or other
agents, experts or consultants selected with reasonable care by the Trustees,
regardless of whether such agent, expert or consultant may also be a Trustee.
The Trustees, officers, agents and employees of the Trust may take advice of
counsel with respect to the meaning and operation of this Declaration, and shall
be under no liability for any act or omission in accordance with such advice or
for failing to follow such advice. The exercise by the Trustees of their powers
and discretion hereunder and the construction in good faith by the Trustees of
the meaning or effect of any provision of this Declaration shall be binding upon
everyone interested. A Trustee, officer, agent or employee shall be liable for
his own willful misfeasance, bad faith, gross negligence or reckless disregard
of the duties involved in the conduct
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of his office, and for nothing else, and shall not be liable for errors of
judgment or mistakes of fact or law.
ARTICLE III
CONTRACTS
Section 3.1. DISTRIBUTION CONTRACT. The Trustees may from time to time
enter into a distribution contract with another Person (the "Distributor")
providing for the sale of Shares, pursuant to which the Trustees may agree to
sell the Shares to the Distributor or appoint the Distributor their sales agent
for the Shares. Such contract may provide that the Distributor may enter into
contracts with other Persons to sell the Shares on behalf of the Distributor and
the Trust. Such contract may also provide for the repurchase of Shares by the
Distributor as agent of the Trustees and shall contain such terms and
conditions, if any, as may be prescribed in the By-Laws and such further terms
and conditions not inconsistent with the provisions of this Article III or of
the By-Laws as the Trustees may in their discretion determine.
Section 3.2. ADVISORY OR MANAGEMENT CONTRACT. Subject to approval by a
Majority Shareholder Vote, the Trustees may from time to time enter into
investment advisory or management contracts with other Persons ("Investment
Advisers") pursuant to which such Investment Advisers shall agree to furnish to
the Trustees management, investment advisory, statistical and research
facilities and services with respect to the Trust or any Series thereof, such
contract to contain such other terms and conditions, if any, as may be
prescribed in the By-Laws and such further terms and conditions not inconsistent
with the provisions of this Article III, the By-Laws or applicable law as the
Trustees may in their discretion determine, including the grant of authority to
the Investment Adviser to determine what securities shall be purchased or sold
by the Trust and what portion of its assets shall be uninvested and to implement
its determinations by making changes in the Trust's investments. Such contracts
may also provide for the Trust and such Investment Advisers to enter into
contracts with Persons ("Investment Sub-Advisers"), pursuant to which
management, investment advisory, statistical and research facilities may be
supplied to the Trust or any Series thereof and Investment Adviser.
Section 3.3. AFFILIATIONS OF TRUSTEES OR OFFICERS, ETC. The fact that
any Shareholder, trustee, officer, agent or employee of the Trust is a
shareholder, member, director, officer, partner, trustee, employee, manager,
adviser or distributor of or for any Person of or for any parent or affiliate of
any Person with which an investment advisory or management contract, principal
underwriter or distributor contract or custodian, transfer agent, disbursing
agent or similar agency contract may have been or may hereafter be made, or that
any such Person, or any parent or affiliate thereof, is a Shareholder of or has
any other interest in the Trust, or that any such Person also has any one or
more similar contracts with one or more other such Persons, or has other
businesses or interests, shall not affect the validity of any such contract made
or that may hereafter be made with the Trustees or disqualify any Shareholder,
Trustee, officer, agent or employee of the Trust from voting upon or executing
the same or create any liability or accountability to the Trustees, the Trust,
any Series or the Shareholders.
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ARTICLE IV
LIMITATION OF LIABILITY; INDEMNIFICATION
Section 4.1. NO PERSONAL LIABILITY OF SHAREHOLDERS, TRUSTEES, ETC. No
Shareholder shall be subject to any personal liability whatsoever in connection
with Trust Property or the acts, obligations or affairs of the Trust or a
particular Series. All Persons extending credit to, contracting with or having
any claim against the Trust or a particular Series shall look only to the assets
of the Trust or such Series for payment under such credit, contract or claim,
and neither the Shareholders nor the Trustees, nor any of the Trust's officers,
employees or agents, whether past, present or future, nor any other Series shall
be personally liable therefor. The Trustees shall not be responsible or liable
in any event for any neglect or wrong doing of any officer, employee or agent
(including, without limitation, the Investment Adviser, any Investment
Sub-Adviser, the Distributor, the Custodian and the Transfer Agent) of the
Trust, nor shall any Trustee be responsible or liable for the act or omission of
any other Trustee. Nothing in this Declaration shall, however, protect any
Trustee, officer, employee or agent of the Trust against any liability to which
such Person would otherwise be subject by reason of willful misfeasance, bad
faith, gross negligence or reckless disregard of the duties involved in the
conduct of his or her office.
Section 4.2. EXECUTION OF DOCUMENTS; NOTICE; APPARENT AUTHORITY. Every
note, bond, contract, instrument, certificate or undertaking and every other act
or thing whatsoever executed or done by or on behalf of the Trust, any Series or
the Trustees or any of them in connection with the Trust shall be conclusively
deemed to have been executed or done only in or with respect to their or his or
her capacity as Trustees or Trustee, and such Trustees or Trustee shall not be
personally liable thereon. Every note, bond, contract, instrument, certificate
or undertaking made or issued by the Trustees or by any officers or officer
shall give notice that this Declaration of Trust is on file with the Secretary
of State of the Commonwealth of Massachusetts and shall recite that the
obligations of such instruments are binding only upon the assets and property of
the Trust or the particular Series in question, but the omission thereof shall
not operate to bind any Trustees, Shareholders or officers, employees and agents
of the Trust individually. No purchaser, lender, Transfer Agent or other Person
dealing with the Trustees or any officer, employee or agent of the Trust shall
be bound to make any inquiry concerning the validity of any transaction
purporting to be made by the Trustees or by such officer, employee or agent or
make inquiry concerning or be liable for the application of money or property
paid, loaned or delivered to or on the order of the Trustees or of such officer,
employee or agent.
Section 4.3. INDEMNIFICATION OF TRUSTEES, OFFICERS, ETC. The Trust
shall indemnify each of its Trustees, officers, employees and agents (including
any individual who serves at its request as director, officer, partner, trustee
or the like of another organization in which it has any interest as a
shareholder, creditor or otherwise) against all liabilities and expenses,
including but not limited to amounts paid in satisfaction of judgments, in
compromise or as fines and penalties, and counsel fees reasonably incurred by
him or her in connection with the defense or disposition of any action, suit or
other proceeding, whether civil or criminal, before any court or administrative
or legislative body in which he or she may be or may have been involved as a
party or otherwise or with which he or she may be or may have been threatened,
while acting as Trustee or as an officer, employee or agent of the Trust or the
Trustees, as the case may be, or thereafter, by reason of his or her being or
having been such a Trustee, officer, employee or agent, except with respect to
any matter as to which he or she shall have been adjudicated not to have acted
in good faith in the reasonable belief
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that his or her action was in the best interests of the Trust, PROVIDED that no
individual shall be indemnified hereunder against any liability to the Trust or
the Shareholders by reason of willful misfeasance, bad faith, gross negligence
or reckless disregard of the duties involved in the conduct of his or her
office, and PROVIDED FURTHER that as to any matter disposed of by settlement or
a compromise payment by such Trustee, officer, employee or agent, pursuant to a
consent decree or otherwise, no indemnification either for said payment or for
any other expenses shall be provided unless there has been a determination that
such compromise is in the best interests of the Trust and that such Person
appears to have acted in good faith in the reasonable belief that his or her
action was in the best interests of the Trust and did not engage in willful
misfeasance, bad faith, gross negligence or reckless disregard of the duties
involved in the conduct of his or her office. All determinations that the
applicable standards of conduct have been met for indemnification hereunder
shall be made by (a) a majority vote of a quorum consisting of disinterested
Trustees who are not parties to the proceeding relating to the indemnification,
or (b) if such a quorum is not obtainable or, even if obtainable, if a majority
vote of such quorum so directs, by independent legal counsel in a written
opinion, or (c) a Majority Shareholder Vote (excluding Shares owned of record or
beneficially by such individual); and PROVIDED that as to any matter disposed of
without a court determination (i) on the merits that such Trustee, officer,
employee or agent was not liable or (ii) that such Person was not guilty of
willful misfeasance, bad faith, gross negligence or reckless disregard of the
duties involved in the conduct of his or her office, no indemnification shall be
provided hereunder unless there has been a determination by independent legal
counsel in a written opinion that such Person did not engage in willful
misfeasance, bad faith, gross negligence or reckless disregard of the duties
involved in the conduct of his or her office. The Trustees may make advance
payments out of the assets belonging to the applicable Series in connection with
the expense of defending any action with respect to which indemnification might
be sought under this Section 4.3, PROVIDED that the indemnified Trustee,
officer, employee or agent shall have given a written undertaking to reimburse
the applicable Series in the event it is subsequently determined that he or she
is not entitled to such indemnification and PROVIDED FURTHER that (a) the
indemnified Trustee, officer, employee or agent shall provide security for his
or her undertaking or (b) the Trust shall be insured against losses arising by
reason of lawful advances or (c) a majority of a quorum of disinterested
Trustees or an independent legal counsel in a written opinion shall determine,
based on a review of readily available facts (as opposed to a full trial-type
inquiry), that there is reason to believe that an indemnitee ultimately will be
found entitled to indemnification. The rights accruing to any Trustee, officer,
employee or agent under these provisions shall not exclude any other right to
which he or she may be lawfully entitled and shall inure to the benefit of his
or her heirs, executors, administrators or other legal representatives.
Section 4.4. INDEMNIFICATION OF SHAREHOLDERS. In case any Shareholder
or former Shareholder of any Series of the Trust shall be held personally liable
solely by reason of his or her being or having been a Shareholder and not
because of acts or omission or for some other reason, the Shareholder or former
Shareholder (or his or her heirs, executors, administrators or other legal
representative or in the case of a corporation or other entity, its corporate or
other general successor) shall be entitled out of the assets belonging to the
applicable Series of the Trust to be held harmless from and indemnified against
all loss and expense, including legal expenses reasonably incurred, arising from
such liability. The rights accruing to a Shareholder under this Section 4.4
shall not exclude any other right to which such Shareholder may be lawfully
entitled, nor shall anything contained herein restrict the right of the Trust to
indemnify or reimburse a Shareholder in any appropriate situation even though
not specifically provided herein out of the assets belonging to the applicable
Series of the Trust.
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ARTICLE V
SHARES OF BENEFICIAL INTEREST
Section 5.1. BENEFICIAL INTEREST. The interest of the beneficiaries
hereunder shall be divided into transferable Shares of one or more distinct
Series or Classes thereof, without par value. The number of shares of beneficial
interest authorized hereunder is unlimited.
Section 5.2. RIGHTS OF SHAREHOLDERS. Shares shall be deemed to be
personal property giving only the rights provided in this Declaration. Every
Shareholder by virtue of having become a Shareholder shall be held to have
expressly assented and agreed to the terms hereof and to have become a party
hereto. The ownership of the Trust Property and the right to conduct any
business herein before described are vested exclusively in the Trustees, and the
Shareholders shall have no interest therein other than the beneficial interest
conferred by their Shares, and they shall have no right to call for any
partition or division of any property, profits, rights or interest of the Trust
nor can they be called upon to share or assume any losses of the Trust or suffer
an assessment of any kind by virtue of their ownership of Shares. The death of a
Shareholder during the continuance of the Trust shall not operate to terminate
the same nor to entitle the legal representative of such Shareholder to an
accounting or to take any action in any court or otherwise against other
Shareholders or the Trustees or the Trust Property, but only to the rights of
such Shareholder hereunder. The Shares shall not entitle the holder to
preference, preemptive, appraisal, conversion or exchange rights.
Section 5.3. TRUST ONLY. The Trust shall be of the type commonly termed
a Massachusetts business trust. It is the intention of the Trustees to create
only the relationship of the Trustee and beneficiary between the Trustees and
each Shareholder from time to time. It is not the intention of the Trustees to
create a general partnership, limited partnership, joint stock association,
corporation, bailment or any form of legal relationship other than a trust.
Nothing in this Declaration shall be construed to make the Shareholders, either
by themselves or with the Trustees, partners or members of a joint stock
association.
Section 5.4. ISSUANCE OF SHARES.
Section 5.4.1. GENERAL. The Trustees may from time to time without vote
of the Shareholders issue and sell or cause to be issued and sold Shares, except
that only Shares previously contracted to be sold may be issued during any
period when the right of redemption is suspended pursuant to the provision of
Section 6.6 hereof. The Trustees shall have full power and authority without
obtaining prior authorization or vote of the Shareholders to classify or
reclassify any unissued Shares into one or more Series or Classes of Shares, to
abolish any one or more Series or Classes of Shares or to divide the Shares of
any Series into Classes. If the Shares of a Series are divided into Classes,
each such Class shall represent interests in the assets of a Series and have
identical voting, dividend, liquidation and other rights and the same terms and
conditions, except that expenses allocated to that Class of a Series may be
borne solely by such Class as shall be determined by the Trustees and a Class of
a Series may have exclusive voting rights with respect to matters affecting only
that Class. All such Shares, when issued in accordance with the terms of this
Section 5.4, shall be fully paid and nonassessable. Without limiting the
authority of the Trustees set forth herein to establish and designate any
further Series, the Trustees hereby establish and designate one Series of
Shares, IDEX Fund, to be known as the "Initial Series".
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Section 5.4.2. PRICE. No Shares shall be issued or sold by the Trustees
for less than an amount which would result in the proceeds to the applicable
Series, before taxes and other expenses payable by the Trust in connection with
such transaction, of at least the net asset value per share of the applicable
Series or Class next determined as set forth in Article VII hereof after receipt
of a purchase order for such Shares. For this purpose, the time of receipt of an
order shall be the time it is first received in proper form at such office or
agency as may be designated for the purpose.
Section 5.4.3. ON MERGER OR CONSOLIDATION. In connection with the
acquisition of assets (including the acquisition of assets subject to, and in
connection with the assumption of, liabilities), businesses or stock of another
Person, the Trustees may issue or cause to be issued Shares of a Series and
accept in payment therefor, in lieu of cash, such assets or businesses at their
market value (as determined by the Trustees) or such stock at the market value
(as determined by the Trustees) of the assets held by such other Person, either
with or without adjustment for contingent costs or liabilities PROVIDED that the
funds of the applicable Series are permitted by law to be invested in such
assets, businesses or stock.
Section 5.4.4. FRACTIONAL SHARES. The Trustees may issue and sell
fractions of Shares, to two decimal places, having pro rata all the rights of
full Shares, including, without limitation, the right to vote and to receive
dividends and distributions.
Section 5.5. SERIES OR CLASS.
Section 5.5.1. ESTABLISHMENT OF SERIES OR CLASS. The establishment of
any Series or Class in addition to those set forth in Section 5.4 shall be
effective upon adoption of a resolution by a majority of the then Trustees
setting forth such establishment and designation and the relative rights and
preferences of the Shares of such Series or Class thereof. At any time that
there are no Shares outstanding of any particular Series or Class previously
established and designated, the Trustees may by majority vote abolish that
Series or Class and the establishment and designation thereof.
Section 5.5.2. ASSETS AND LIABILITIES OF SERIES. All consideration
received by the Trust for the issue or sale of Shares of a particular Series,
together with all assets in which such consideration is invested or reinvested,
all income, earnings, profits, and proceeds thereof, including any proceeds
derived from the sale, exchange or liquidation of such assets, and any funds or
payments derived from any reinvestment of such proceeds in whatever form the
same may be, shall be referred to as "assets belonging to" that Series. In
addition, any assets, income, earnings, profits, and proceeds thereof, funds, or
payments which are not readily identifiable as belonging to any particular
Series shall be allocated by the Trustees between and among one or more of the
Series in such manner as they, in their sole discretion, deem fair and
equitable. Each such allocation shall be conclusive and binding upon the
Shareholders of all Series for all purposes, and shall be referred to as assets
belonging to that Series. The assets belonging to a particular Series shall be
so recorded upon the books of the Trust, and shall be held by the Trustees in
Trust for the benefit of the holders of Shares of the Series. The assets
belonging to each particular Series shall be charged with the liabilities of the
Series and all expenses, costs, charges and reserves attributable to that
Series, except that expenses allocated solely to a particular Class shall be
borne by that Class. Any general liabilities, expenses, costs, charges or
reserves of the Trust or Series which are not readily indentifiable as belonging
to any particular Series or Class shall be allocated and charged by the Trustees
between or among any one or more of the Series or Classes in such manner as the
Trustees in their sole discretion deem fair and equitable. Each such allocation
shall be conclusive and binding upon the
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Shareholders of all Series or Classes for all purposes. Any creditor of any
Series may look only to the assets of that Series to satisfy such creditor's
debt.
Section 5.6. REGISTER OF SHARES. A register shall be kept at the
principal office of the Trust or an office of the Transfer Agent which shall
contain the name and addresses of the Shareholders and the number of Shares held
by them respectively and a record of all transfers thereof. Such register shall
be conclusive as to who are the holders of the Shares and who shall be entitled
to receive dividends or distributions or otherwise to exercise or enjoy the
rights of Shareholders. No Shareholder shall be entitled to receive payment of
any dividend or distribution, nor to have notice given to him as herein or in
the By-Laws provided, until he has given his address to the Transfer Agent or
such other officer or agent of the Trust as shall keep the said register for
entry thereon.
Section 5.7. SHARE CERTIFICATES.
Section 5.7.1. GENERAL. Each shareholder shall be entitled to a
certificate stating the number of Shares he or she owns, in such form as shall
be prescribed from time to time by the Trustees. Such certificates shall be
signed by the Chairman of the Board, President or Vice President and by the
Treasurer or Assistant Treasurer. Such signatures may be facsimile if the
certificate is signed by a transfer agent, or by a registrar, other than a
Trustee, officer or employee of the Trust. In case any officer who has signed or
whose facsimile signature has been placed on such certificate shall cease to be
such officer before such certificate is issued, it may be issued by the Trust
with the same effect as if he or she were such officer at the time of its issue.
In lieu of issuing certificates for shares, the Trustees or the
transfer agent may either issue receipts therefor or may keep accounts upon the
books of the Trust for the record holders of such shares, who shall in either
case be deemed, for all purposes hereunder, to be the holders of certificates
for such shares as if they had accepted such certificates and shall be held to
have expressly assented and agreed to the terms hereof.
Section 5.7.2. LOSS OF CERTIFICATES. In case of the alleged loss or
destruction or the mutilation of a share certificate, a duplicate certificate
may be issued in place thereof, upon such terms as the Trustees shall prescribe.
Section 5.7.3. ISSUANCE OF NEW CERTIFICATES TO PLEDGEE. A pledgee of
shares transferred as collateral security shall be entitled to a new certificate
if the instrument of transfer substantially describes the debt or duty that is
intended to be secured thereby. Such new certificate shall express on its face
that it is held as collateral security, and the name of the pledge or shall be
stated thereon, who alone shall be liable as a shareholder and entitled to vote
thereon.
Section 5.7.4. DISCONTINUANCE OF ISSUANCE OF CERTIFICATES. The Trustees
may at any time discontinue the issuance of share certificates and may, by
written notice to each shareholder, require the surrender of share certificates
to the Trust for cancellation. Such surrender and cancellation shall not affect
the ownership of shares in the Trust.
Section 5.8. TRANSFER OF SHARES. Shares shall be transferable on the
records of the Trust upon delivery to the Trust or the Transfer Agent or Agents
of appropriate evidence of assignment, transfer, succession or authority to
transfer accompanied by any certificate or certificates representing such shares
previously issued the transferor. Upon such delivery the transfers shall be
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recorded on the register of the Trust. Until such record is made, the Trustees,
the Transfer Agent, and the officers, employees and agents of the Trust shall
not be entitled or required to treat the assignee or transferee of any share as
the absolute owner thereof for any purpose, and accordingly shall not be bound
to recognize any legal, equitable or other claim or interest in such Share on
the part of any Person, other than the holder of record, whether or not any of
them shall have express or other notice of such claim or interest.
Section 5.9. VOTING POWERS. The Shareholders shall have power to vote
only: (a) for the election of Trustees as provided in Section 2.5 and 2.7
hereof; (b) with respect to any investment advisory or management contract
entered into pursuant to Section 3.2 hereof; (c) with respect to any termination
of the Trust, as provided in Section 9.1 hereof; (d) with respect to any
amendment of this Declaration to the extent as provided in Section 9.2 hereof;
(e) with respect to any merger, consolidation or sale of assets of the Trust as
provided in Section 9.3 hereof; (f) with respect to incorporation of the Trust
to the extent and as provided in Section 9.4 hereof; (g) to the same extent as
the stockholders of a Massachusetts business corporation as to whether or not a
court action, proceeding or claim should or should not be brought or maintained
derivatively or as a class action on behalf of the Trust or the Shareholders,
provided, however, that a Shareholder of a particular Series or Class shall not
be entitled to bring any derivative or class action on behalf of any other
Series or Class, of the Trust; and (h) with respect to such additional matters
relating to the Trust as may be required by this Declaration or the By-Laws or
by reason of the registration of the Trust or the Shares with the Commission or
any State or by an applicable law or any regulation or order of the Commission
or any State or as the Trustees may consider necessary or desirable. On any
matter submitted to a vote of the Shareholders, all Shares shall be voted by
individual Series, except (i) when required by the 1940 Act, Shares shall be
voted in the aggregate and not by individual Series and (ii) when the Trustees
have determined that the matter affects only the interests of one or more Series
or one or more Classes, then only the Shareholders of such Series or Class shall
be entitled to vote thereon. Each whole Share shall be entitled to one vote as
to any matter on which Shareholders are entitled to vote and each fractional
Share shall be entitled to a proportionate fractional vote. A Majority of the
Shares voted shall decide any question, except when a different vote is
specified by applicable law, any provision of the By-Laws or this Declaration.
There shall be no cumulative voting in the election of Trustees. Shares may be
voted in person or by Proxy. Until Shares are issued, the Trustees may exercise
all rights of Shareholders (including the right to authorize an amendment to
this Declaration under Section 9.2 hereof) and may take any action required by
law, the By-Laws or this Declaration to be taken by Shareholders. The By-Laws
may include further provisions for Shareholders' votes and related matters.
Section 5.10. MEETINGS OF SHAREHOLDERS. Meetings of the Shareholders of
any Series or Class thereof may be called at any time by the Chairman of the
Board, the President or any Vice President of the Trust, or by a majority of the
Trustees for the purpose of taking action upon any matter requiring the vote or
authority of such Shareholders as herein provided or upon any other matters
deemed to be necessary or desirable. A meeting of Shareholders of any Series or
Class thereof may also be called at any time upon the written request of a
holder or the holders of not less than 25% of all of the Shares entitled to be
voted at such meeting, PROVIDED that the Shareholder or Shareholders requesting
such meeting shall have paid to the Trust the reasonably estimated cost of
preparing and mailing the notice thereof, which the Secretary shall determine
and specify to such Shareholder or Shareholders.
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Section 5.11. ACTION WITHOUT A MEETING. Any action which may be taken
by Shareholders may be taken without a meeting if such proportion of
Shareholders as is required to vote for approval of the matter by law, the
Declaration or the By-Laws consents to the action in writing and the written
consents are filed with the records of Shareholders' meetings. Such consents
shall be treated for all purposes as a vote taken at a Shareholders' meeting.
ARTICLE VI
REDEMPTION AND REPURCHASE OF SHARES
Section 6.1. REDEMPTION OF SHARES. The Trustees shall redeem Shares of
a particular Series or Class thereof, subject to the conditions and at the price
determined as herein set forth, upon proper application of the record holder
thereof at such office or agency as may be designated from time to time for that
purpose by the Trustees. The Trustees shall have power to determine from time to
time the form and the other accompanying documents which shall be necessary to
constitute a proper application for redemption.
Section 6.2. PRICE. Such Shares shall be redeemed for an amount not
exceeding the net asset value of Shares of the applicable Series or Class
thereof next determined as set forth in Article VII hereof after receipt of a
proper application for redemption.
Section 6.3. PAYMENT. Payment for such Shares redeemed shall be made to
the Shareholders of record within 7 days after the date upon which proper
application is received, subject to the Trustees or their designated agent being
satisfied that the purchase price of such Shares has been collected and to the
provisions of Section 6.4 hereof. Such payment shall be made in cash or other
assets of the applicable Series or both, as the Trustees shall prescribe. For
the purposes of such payment for Shares redeemed, the value of assets delivered
shall be determined as set forth in Article VII hereof as of the same time as of
which the per share net asset value of such Shares is determined.
Section 6.4. EFFECT OF SUSPENSION OF RIGHT OF REDEMPTION. If, pursuant
to Section 6.6 hereof, the Trustees shall declare a suspension of the right of
redemption of Shares of a particular Series or Class thereof, the rights of
Shareholders (including those who shall have applied for redemption pursuant to
Section 6.2 hereof but who shall not yet have received payment) to have such
Shares redeemed and paid for by the applicable Series shall be suspended until
the time specified in Section 6.6. Any record holder who shall have his
redemption right so suspended may, during the period of such suspension, by
appropriate written notice of revocation at the office or agency where
application was made, revoke any application for redemption not honored. The
redemption price of Shares for which redemption applications have not been
revoked shall not exceed the net asset value of such Shares next determined as
set forth in Article VII hereof after the termination of such suspension, and
payment shall be made within 7 days after the date upon which the application
was made plus the period after such application during which the determination
of net asset value was suspended.
Section 6.5. REPURCHASE BY AGREEMENT. A Series may repurchase Shares
directly, or through the Distributor or another agent designated for the
purpose, by agreement with the owner thereof at a price not exceeding the net
asset value per Share of such Series or the applicable Class thereof next
determined as set forth in Article VII hereof after the time when the contract
of purchase is made.
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Section 6.6. SUSPENSION OF RIGHT OF REDEMPTION. The Trustees may with
respect to the Series or Class thereof declare a suspension of the right of
redemption or postpone the date of payment or redemption for the whole or any
part of any period (a) during which the New York Stock Exchange is closed, other
than customary weekend and holiday closings, (b) during which trading on the New
York Stock Exchange is restricted, (c) during which an emergency exists as a
result of which disposal by the Trustees of securities owned by them is not
reasonably practicable or it is not reasonably practicable for the Trustees
fairly to determine the value of the net assets of such Series or Class thereof,
or (d) during which the Commission may for the protection of security holders of
such Series or Class thereof by order permit suspension of the right of
redemption or postponement of the date of payment or redemption. Such suspension
shall take effect at such time as the Trustees shall specify, which shall not be
later than the close of business on the business day next following the
declaration, and thereafter there shall be no determination of net asset value
until the Trustees shall declare the suspension at an end, except that the
suspension shall terminate in any event on the first day on which (i) the
condition giving rise to the suspension shall have ceased to exist and (ii) no
other condition exists under which suspension is authorized under this Section
6.6. Each declaration by the Trustees pursuant to this Section 6.6 shall be
consistent with such applicable rules and regulations, if any, relating to the
subject matter thereof as shall have been promulgated by the Commission or any
other governmental body having jurisdiction over the Trust and as shall be in
effect at the time. To the extent not inconsistent with such rules and
regulations, the determination of the Trustees shall be conclusive.
Section 6.7. INVOLUNTARY REDEMPTION OF SHARES; DISCLOSURE OF HOLDING.
(a) If the Trustees shall, at any time and in good faith, be of the opinion that
direct or indirect ownership of Shares or other securities of a particular
Series or Class thereof has or may become concentrated in any person to an
extent which would disqualify a Series as a regulated investment company under
the United States Internal Revenue Code, then the Trustees shall have the power
by lot or other means deemed equitable by them
(i) to call for redemption a number, or principal amount, of
Shares sufficient in the opinion of the Trustees to maintain
or bring the direct or indirect ownership of Shares into
conformity with the requirements for such qualification and
(ii) to refuse to transfer or issue Shares to any Person whose
acquisition of the Shares in question would in the opinion of
the Trustees result in such disqualification.
Any redemption pursuant to this Section 6.7(a) shall be effected at a
redemption price determined in accordance with Section 6.2 hereof.
(b) The holders of Shares shall upon request disclose to the Trustees
in writing such information with respect to direct and indirect ownership of
Shares as the Trustees deem necessary to comply with the provisions of the
United States Internal Revenue Code, or to comply with the requirements of any
other taxing authority.
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ARTICLE VII
DETERMINATION OF NET ASSET VALUE; DISTRIBUTIONS
Section 7.1. BY WHOM DETERMINED. The Trustees shall have the power and
duty to determine from time to time the net asset value per share of the Shares
of each Series or of each Class of a Series. They may appoint one or more
Persons to assist them in the determination of the value of securities in the
portfolio of each Series and to make the actual calculations pursuant to their
directions. Any determination made pursuant to this Article VII shall be binding
on all parties concerned.
Section 7.2. WHEN DETERMINED. The net asset value shall be determined
at such times as the Trustees shall prescribe in accordance with the applicable
provisions of the 1940 Act and regulations and orders from time to time in
effect thereunder. The Trustees may suspend the daily determination of net asset
value to the extent permitted by the 1940 Act or the regulations and order from
time to time in effect thereunder.
Section 7.3. COMPUTATION OF PER SHARE NET ASSET VALUE.
Section 7.3.1. NET ASSET VALUE PER SHARE. The net asset value of each
Share of a Series or of each Class of a Series as of any particular time shall
be the quotient obtained by dividing the value of the net assets of that Series
(determined in accordance with Section 7.3.2) by the total number of outstanding
Shares of that Series or Class thereof. The determination of net asset value
shall be made on a Series by Series or Class by Class basis, as appropriate, and
shall include any expense allocated to a specific Series or Class thereof.
Section 7.3.2. VALUE OF THE NET ASSETS OF THE TRUST. The value of the
net assets of a Series or Class thereof as of any particular time shall be the
value of the assets of that Series or Class thereof less the liabilities of that
Series or Class thereof, determined and computed as follows:
(1) ASSETS. The assets of a Series or Class shall be deemed to include
with respect to that Series or Class: (A) all cash on hand or on deposit,
including any interest accrued thereon, (B) all bills and demand notes and
accounts receivable, (C) all securities owned or contracted for by the
Trustees, (D) all stock and cash dividends and cash distributions payable
to but not yet received by the Trustees (when the valuation of the
underlying security is being determined ex-dividend), (E) all interest
accrued on any interest-bearing securities owned by the Trustees (except
accrued interest included in the valuation of the underlying security) and
(F) all other property of every kind and nature, including prepaid
expenses.
(2) VALUATION OF ASSETS. The value of such assets is to be
determined as follows:
(i) CASH AND PREPAID EXPENSES. The value of any cash on
hand and of any prepaid expenses shall be deemed to be
their full amount.
(ii) OTHER CURRENT ASSETS. The value of any accounts
receivable and cash dividends and interest declared or
accrued as aforesaid and not yet received shall be
deemed to be the full amount thereof, unless the
Trustees shall determine that
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any such item is not worth its full amount. In such
case the value of the item shall be deemed to be its
reasonable value, as determined by the Trustees.
(iii) SECURITIES AND OTHER PROPERTY. A security
for which market quotations are readily available which
is not subject to restrictions against sale and has a
remaining maturity of more than 60 days from the date
of valuation shall be valued on the basis of such
quotations. Any security which has a remaining maturity
of 60 days or less may be valued on the basis of market
quotations or may be valued at cost plus earned
discount; if such security was acquired with a
remaining maturity of more than 60 days, the cost
thereof for purposes of such valuation shall be deemed
to be the value on the sixty-first day prior to
maturity. Any security for which market quotations are
not readily available and any other property the
valuation of which is not provided for above, shall be
valued at its fair market value as determined in such
manner as the Trustees shall from time to time
prescribe by resolution. For the purposes of this
Article VII, market quotations shall not be deemed to
be readily available if in the judgment of the Trustees
such quotations, if any, do not afford a fair and
adequate basis for valuing holdings of securities of a
size normally held by the Trust, whether due to the
infrequency or size of the transactions represented by
such quotations or otherwise.
(3) LIABILITIES. The liabilities of a Series or Class thereof shall not
be deemed to include any Shares and surplus, but they shall be deemed to
include with respect to that Series or Class: (A) all bills and accounts
payable, (B) all administrative expenses accrued and unpaid, (C) all
contractual obligations for the payment of money or property, including the
amount of any declared but unpaid dividends upon Shares and the amount of
all income accrued but not paid to Shareholders, (D) all reserves
authorized or approved by the Trustees for taxes or contingencies and (E)
all other liabilities of whatsoever kind and nature except any liabilities
represented by Shares and surplus.
Section 7.4. INTERIM DETERMINATIONS. Any determination of net asset
value other than as of the close of trading on the New York Stock Exchange may
be made either by appraisal or by calculation or estimate. Any such calculation
or estimate shall be based on changes in the market value of representative or
selected securities or on changes in recognized market averages since the last
closing appraisal and made in a manner which in the opinion of the Trustees will
fairly reflect the changes in the net asset value.
Section 7.5. OUTSTANDING SHARES. For the purposes of this Article VII,
outstanding Shares of a Series or Class shall mean those Shares shown from time
to time on the books of the Trust or the Transfer Agent with respect to that
Series or Class as then issued and outstanding, adjusted as follows:
(a) Shares sold shall be deemed to be outstanding Shares from the time
when the sale is reported to the Trustees or their agents for determining
net asset value, but not before (i) an unconditional purchase order
therefor has been received by the Trustees (directly or through one of
their agents) or by the Principal Underwriter of the Shares and the sale
price in currency has been determined and (ii) receipt by the Trustees
(directly or through one of their agents) of
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federal funds in the amount of the sale price; and such sale price (net of
commission, if any, and any stamp or other tax payable by the Trust in
connection with the issue and sale of the Share sold) shall be thereupon
deemed to be an asset of the Trust.
(b) Shares distributed pursuant to Section 7.6 shall be deemed to be
outstanding as of the time that Shareholders who shall receive the
distribution are determined.
(c) Shares for which a proper application for redemption has been made
or which are subject to repurchase by the Trustees shall be deemed to be
outstanding Shares up to and including the time as of which the redemption
or repurchase price is determined. After such time, they shall be deemed to
be no longer outstanding Shares and the redemption or purchase price until
paid shall be deemed to be a liability of the applicable Series or Class
thereof.
Section 7.6. DISTRIBUTIONS TO SHAREHOLDERS. Without limiting the powers
of the Trustees under Subsection (g) of Section 2.1 of Article II hereof, the
Trustees may at any time and from time to time, as they may determine, allocate
or distribute to Shareholders of a particular Series such income and capital
gains, accrued or realized, as the Trustees may determine, after providing for
actual, accrued or estimated expenses and liabilities (including such reserves
as the Trustees may establish) determined in accordance with generally accepted
accounting practices. The Trustees shall have full discretion to determine which
items shall be treated as income and which items as capital and their
determination shall be binding upon the Shareholders. Such distributions shall
be made in cash or property belonging to the applicable Series or in Shares of
the applicable Series or Class thereof or any combination thereof as determined
by the Trustees. Any such distribution paid in Shares shall be paid at the net
asset value thereof as determined pursuant to this Article VII. The Trustees may
adopt and offer to Shareholders such dividend reinvestment plans, cash dividend
payout plans or related plans as the Trustees shall deem appropriate. Inasmuch
as the computation of net income and gains for Federal income tax purposes may
vary from the computation thereof on the books of the Trust, the above
provisions shall be interpreted to give the Trustees the power in their
discretion to allocate or distribute for any fiscal years as ordinary dividends
and as capital gains distributions, respectively, additional amounts sufficient
to enable the Trust to avoid or reduce liability for taxes.
Section 7.7. POWER TO MODIFY FOREGOING PROCEDURES. Notwithstanding any
of the foregoing provisions of this Article VII, the Trustees may prescribe, in
their absolute discretion, such other bases and times for the determination of
the per share net asset value of Shares as may be permitted by, or as they may
deem necessary or desirable to enable the Trust to comply with, any provision of
the 1940 Act, any rule or regulation thereunder (including any rule or
regulation adopted pursuant to Section 22 of the 1940 Act by the Commission or
any securities association or exchange registered under the Securities Exchange
Act of 1934, as amended) or any order of exemption issued by the Commission, all
as in effect now or as hereafter amended or modified.
ARTICLE VIII
CUSTODIAN
Section 8.1. APPOINTMENT AND DUTIES. Subject to the 1940 Act and such
rules, regulations and orders as the Commission may adopt, the Trustees shall
employ a bank or trust company having a capital, surplus and undivided profits
of at least $2,000,000 as custodian with authority as the
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agent of the Trust, but subject to such restrictions, limitations and other
requirements, if any, as may be contained in the By-Laws of the Trust:
(a) to hold the securities owned by the Trust and deliver the
same upon written order;
(b) to receive and receipt for any moneys due to the Trust and
deposit the same in its own banking department or elsewhere as the
Trustees may direct; and
(c) to disburse such funds upon orders or vouchers.
The Trustees may also authorize such custodian as the agent of the Trust (x) to
keep the books and accounts of the Trust and of each Series and Class and
furnish clerical and accounting services and (y) to compute the net income and
the value of the net assets of each Series and Class.
The acts and services of the custodian shall be performed upon such
basis of compensation as may be agreed upon by the Trustees and the custodian.
If so directed by a Majority Shareholder Vote, the custodian shall deliver and
pay over all property of the Trust held by it as specified in such vote.
The Trustees also authorize the custodian to employ one or more
sub-custodians from time to time to perform such of the acts and services of the
custodian and upon such terms and conditions, as may be agreed upon between the
custodian and such sub-custodian and approved by the Trustees, PROVIDED that in
every case such sub-custodian shall be a bank or trust company organized under
the laws of the United States or one of the states thereof and having capital,
surplus and undivided profits of at least $2,000,000.
Section 8.2. ACTION UPON TERMINATION OF CUSTODIAN AGREEMENT. Upon
termination of a custodian agreement or inability of any custodian to continue
agreement or inability of any custodian to continue to serve, the Trustees shall
promptly appoint a successor custodian, but in the event that no successor
custodian can be found who has the required qualifications and is willing to
serve, the Trustees shall call as promptly as possible a special Shareholders'
meeting to determine whether the Trust shall function without a custodian or
shall be liquidated. If so directed by vote of the holders of a majority of the
Shares outstanding and entitled to vote, the custodian shall deliver and pay
over all Trust Property held by it as specified in such vote.
Section 8.3. CENTRAL CERTIFICATE SYSTEM, ETC. Subject to such rules,
regulations and order as the Commission may adopt, the Trustees may direct the
custodian to deposit all or any part of the securities owned by the Trust in a
system for the central handling of securities established by a national
securities exchange or a national securities association registered with the
Commission under the Securities Exchange Act of 1934, or such other person as
may be permitted by the Commission, or otherwise in accordance with 1940 Act,
pursuant to which system all securities of any particular class or series of any
issuer deposited within the system are treated as fungible and may be
transferred or pledged by bookkeeping entry without physical delivery of such
securities, provided that all such deposits shall be subject to withdrawal only
upon the order of the Trust.
Section 8.4. ACCEPTANCE OF RECEIPTS IN LIEU OF CERTIFICATES. Subject to
such rules, regulations and orders as the Commission may adopt, the Trustees may
direct the custodian to accept written receipts or other written evidences
indicating purchases of securities held in book-entry for
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in the Federal Reserve System in accordance with regulations promulgated by the
Board of Governors of the Federal Reserve System and the local Federal Reserve
Banks in lieu of receipt of certificates representing such securities.
ARTICLE IX
DURATION; TERMINATION OF TRUST;
AMENDMENT; MERGERS; OFFICES, ETC.
Section 9.1. DURATION AND TERMINATION. (a) Unless terminated as
provided herein, the Trust shall continue without limitation of time. The Trust
or any Series thereof may be terminated by the affirmative vote of a least 66
2/3% of the Shares outstanding of each Series affected by the matter or, when
authorized by a Majority Shareholder Vote of each Series affected by the matter
or, if applicable, to a Majority Shareholders Vote of the Trust, by an
instrument in writing signed by a majority of the Trustees. Upon the termination
of the Trust,
(i) The Trust or any affected Series shall carry on no
business except for the purpose of winding up its
affairs.
(ii) The Trustees shall proceed to wind up the affairs of
the Trust or any affected Series and all of the powers
of the Trustees under this Declaration shall continue
until the affairs of the Trust or any affected Series
shall have been wound up, including the power to
fulfill or discharge the contracts of the Trust or any
affected Series, collect its assets, sell, convey,
assign, exchange, transfer or otherwise dispose of all
or any part of the remaining Trust Property or property
of the affected Series to one or more persons at public
or private sale for consideration which may consist in
whole or in part of cash, securities or other property
of any kind, discharge or pay its liabilities, and do
all other acts appropriate to liquidate its business,
PROVIDED that any sale, conveyance, assignment,
exchange, transfer or other disposition of all or
substantially all the Trust Property or property
belonging to the affected Series that requires
Shareholder approval under Section 9.3 hereof shall
receive the approval so required.
(iii) After paying or adequately providing for the payment of
all liabilities, and upon receipt of such releases,
indemnities and refunding agreements as they deem
necessary for their protection, the Trustees may
distribute the remaining Trust Property or property
belonging to the affected Series, in cash or in kind or
partly each, among the Shareholders according to their
respective rights.
(b) After termination of the Trust or any Series and distribution to
the Shareholders as herein provided, a majority of the Trustees shall
execute and lodge among the records of the Trust an instrument in writing
setting forth the fact of such termination, and the Trustees shall
thereupon be discharged from all further liabilities and duties hereunder
with respect to the Series affected, and the rights and interests of all
Shareholders of the Series affected shall thereupon cease.
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Section 9.2. AMENDMENT PROCEDURE. (a) This Declaration may be amended
from time to time by an instrument in writing signed by a majority of the
Trustees when authorized by a Majority Shareholder Vote, PROVIDED that any
amendment having the purpose of changing the name of the Trust or of a Series or
Class thereof, establishing any Series or Class or of supplying any omission,
curing any ambiguity or curing, correction or supplementing any defective or
inconsistent provision shall not require authorization by the Shareholders.
Nothing contained in this Declaration shall permit the amendment of this
Declaration to impair the exemption from personal liability of the Shareholders,
Trustees, officers, employees and agents of the Trust or to permit assessments
upon Shareholders.
(b) a certificate signed by a majority of the Trustees setting forth an
amendment and reciting that it was duly adopted as aforesaid, or a copy of
this Declaration as amended, executed by a majority of the Trustees, shall
be conclusive evidence of such amendment when lodged among the records of
the Trust.
(c) Notwithstanding any other provision hereof, until such time as a
Registration Statement under the Securities Act of 1933, as amended,
covering the first public offering of securities of the Trust shall become
effective, this Declaration may be terminated or amended in any respect by
the affirmative vote of a majority of the Trustees or by an instrument
signed by a majority of the Trustees.
Section 9.3. MERGER, CONSOLIDATION AND SALE OF ASSETS. The Trust or any
Series may merge or consolidate with any other corporation, association, trust
or other organization or may sell, lease or exchange all or substantially all of
the Trust Property or property belonging to the applicable Series, including its
good will, upon such terms and conditions and for such consideration when and as
authorized at any Shareholders' meeting called for the purpose by a Majority
Shareholder Vote.
Section 9.4. INCORPORATION. With the approval of a Majority Shareholder
Vote, the Trustees may cause to be organized or assist in organizing under the
laws of any jurisdiction a corporation or corporations or any other trust,
partnership, association or other organization to take over all of the Trust
Property or property belonging to a particular Series or to carry on any
business in which the Trust or applicable Series shall directly or indirectly
have any interest, and may sell, convey and transfer the Trust Property or
property belonging to a particular Series to any such corporation, trust,
partnership, association or other organization in exchange for the shares or
securities thereof or otherwise, and may lend money to, subscribe for the shares
or securities of, and enter into any contracts with any such corporation, trust,
partnership, association or other organization, or any corporation, partnership,
trust, association or other organization in which the Trust or applicable Series
holds or is about to acquire shares or any other interest. The Trustees may also
cause a merger or consolidation between the Trust or any successor thereto and
any such corporation, trust, partnership, association, or other organization.
Nothing contained herein shall be construed as requiring approval of
Shareholders for the Trustees to organize or assist in organizing one or more
corporations, trust, partnerships, associations or other organizations and
selling, conveying or transferring less than all or substantially all of the
Trust Property or property belonging to a particular Series to such organization
or entities.
Section 9.5. PRINCIPAL OFFICE. The principal office of the Trust
shall be located at 201 Highland Avenue, Largo, Florida or such other address
as the Trustees shall designate.
24
<PAGE>
Section 9.6. REGISTERED OFFICE. The Trust's registered office shall be
CT Corporation Systems, 2 Oliver Street, Boston, Massachusetts, or such other
place as the Trustees shall designate.
Section 9.7. OTHER OFFICES. The Trust may establish and maintain such
other offices and places of business within or without the Commonwealth of
Massachusetts as the Trustees may from time to time determine.
ARTICLE X
REPORTS TO SHAREHOLDERS
The Trustees shall at least semi-annually submit to the Shareholders of
a particular Series a written financial report of the transactions of the Trust
with respect to that Series, including financial statements which shall at least
annually be accompanied by a report thereon of independent public accountants.
ARTICLE XI
MISCELLANEOUS
Section 11.1. FILING. This Declaration and any amendment hereto shall
be filed with the Secretary of the Commonwealth of Massachusetts and in other
places as may be required under the laws of the Commonwealth of Massachusetts
and may also be filed or recorded in such other places as the Trustees deem
appropriate. Unless any such amendment sets forth some later time for the
effectiveness of such amendment, such amendment shall be effective upon its
filing with the Secretary of the Commonwealth of Massachusetts. A restated
Declaration, integrating in a single instrument all of the provisions of the
Declaration which are then in effect and operative, may be executed from time to
time by a majority of the Trustees and shall, upon filing with the Secretary of
the Commonwealth of Massachusetts, be conclusive evidence of all amendment
contained therein and may hereafter be referred to in lieu of the original
Declaration and the various amendments thereto.
Section 11.2. GOVERNING LAW. This Declaration is executed by the
Trustees and delivered in the Commonwealth of Massachusetts and with reference
to the laws thereof, and the rights of all parties and the validity and
construction of every provision hereof shall be subject to and construed
according to the laws of said Commonwealth.
Section 11.3. COUNTERPARTS. This Declaration may be simultaneously
executed in several counterparts, each of which shall be deemed to be an
original, and such counterparts, together, shall constitute one and the same
instrument, which shall be sufficiently evidenced by any such original
counterpart.
Section 11.4. RELIANCE BY THIRD PARTIES. Any certificate executed by an
individual who, according to the record of the Trust, appears to be a Trustee
hereunder, certifying to: (a) the number or identity of Trustees or
Shareholders, (b) the due authorization of the execution of any instrument or
writing, (c) the form of any vote passed at a meeting of Trustees or
Shareholders, (d) the fact that the number of Trustees or Shareholders present
at any meeting or executing any written instrument satisfies the requirements of
this Declaration, (e) the form of any By-Laws adopted by or the identity
25
<PAGE>
of any officers elected by the Trustees or (f) the existence of any fact or
facts which in any manner relate to the affairs of the Trust, shall be
conclusive evidence as to the matter so certified in favor of any Person dealing
with the Trustees and their successors.
Section 11.5. PROVISIONS IN CONFLICT WITH LAW OR REGULATIONS. (a) The
provisions of this Declaration are severable, and if the Trustees shall
determine, with the advise of counsel, that any of such provisions is in
conflict with requirements of the 1940 Act, would be inconsistent with any of
the conditions necessary for qualification of the Trust as a regulated
investment company under the United States Internal Revenue Code or is
inconsistent with other applicable laws and regulations, such provision shall be
deemed never to have constituted a part of this Declaration, PROVIDED that such
determination shall not affect any of the remaining provisions of the
Declaration or render invalid or improper any action taken or omitted prior to
such determination.
(b) If any provision of this Declaration shall be held invalid or
unenforceable in any jurisdiction, such invalidity or unenforceability
shall attach only to such provision in such jurisdiction and shall not in
any manner affect such provision in any other jurisdiction or any other
provision of this Declaration in any jurisdiction.
Section 11.6. SECTION HEADINGS; INTERPRETATION. Section headings in
this Declaration are for convenience of reference only, and shall not limit or
otherwise affect the meaning hereof. References in this Declaration to "this
Declaration" shall be deemed to refer to this Declaration as from time to time
amended, and all expressions such as "hereof", "herein" and "hereunder" shall be
deemed to refer to this Declaration and not exclusively to the article or
section in which such words appear.
IN WITNESS WHEREOF, the undersigned have executed this instrument this 30th
day of August, 1991.
/S/ Peter R. Brown /S/ James L. Churchill
- --------------------- -------------------------------
Peter R. Brown James L. Churchill
/S/ G. John Hurley /S/ John R. Kenney
- --------------------- -------------------------------
G. John Hurley John R. Kenney
/S/ Robert F. McGrath /S/ William W. Short, Jr.
- --------------------- -------------------------------
Robert F. McGrath William W. Short, Jr.
/S/ Truman H. Sims /S/ Jack E. Zimmerman
- --------------------- -------------------------------
Truman H. Sims Jack E. Zimmerman
26
EXHIBIT 2
IDEX FUND
CERTIFICATE OF
AMENDMENT TO BYLAWS
I, Pamela C. Dils, Secretary of IDEX Fund (the "Fund"), hereby certify
that the following amendment to the Fund's bylaws was duly adopted by the Board
of Trustees of the Fund on March 22, 1993 and that effective March 22, 1993,
Sections 3.3 and 3.9 of the Fund's bylaws are hereby amended in their entirety
to read as follows:
Section 3.3. NOTICE OF MEETINGS. Notice of all Shareholders'
meetings, stating the time, place and purpose of the meeting,
shall be given by the Secretary or an Assistant Secretary of
the Trust by mail to each Shareholder entitled to notice of
and to vote at such meeting at his address as recorded on the
register of the Trust mailed at least 10 days and not more
than 90 days before the meeting. Such notice shall be deemed
to be given when deposited in the United States mail, with
postage thereon prepaid. Any adjourned meeting may be held as
adjourned without further notice. No notice need be given (a)
to any Shareholder if a written waiver of notice, executed
before or after the meeting by such Shareholder or his
attorney thereunto duly authorized, is filed with the records
of the meeting, or (b) to any Shareholder who attends the
meeting without protesting prior thereto or at its
commencement the lack of notice to him. A waiver of notice
need not specify the purposes of the meeting.
Section 3.9. RECORD DATES. The Trustees may fix in advance a
date as a record date for the purpose of determining the
Shareholders who are entitled to notice of and to vote at any
meeting or any adjournment thereof, or to express consent in
writing without a meeting to any action of the Trustees, or
who shall receive payment of any dividend or of any other
distribution, or for the purpose of any other lawful action,
provided that such record date shall be not more than 90 days
before the date on which the particular action requiring such
determination of Shareholders is to be taken. In such case,
subject to the provisions of Section 3.4, each eligible
Shareholder of record on such record date shall be entitled to
notice of, and to vote at, such meeting or adjournment, or to
express such consent, or to receive payment of such dividend
or distribution or to take such other action, as the case may
be, notwithstanding any transfer of Shares on the register of
the Trust after the record date.
<PAGE>
Dated this 22nd day of March, 1993.
By: /S/ PAMELA C. DILS
------------------------------------
Pamela C. Dils
Secretary
<PAGE>
AMENDED AND RESTATED BY-LAWS
OF IDEX FUND
As adopted as of July 29, 1986, and amended
on October 2, 1988
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
<S> <C>
ARTICLE I - Definitions...........................................................................................1
ARTICLE II - Offices and Seal.....................................................................................1
Section 2.1 Principal Office............................................................................1
Section 2.2 Registered Office...........................................................................1
Section 2.3 Other Offices...............................................................................1
Section 2.4 Seal........................................................................................1
ARTICLE III - Shareholders........................................................................................2
Section 3.1. Meetings...................................................................................2
Section 3.2. Place of Meeting...........................................................................2
Section 3.3. Notice of Meetings.........................................................................2
Section 3.4. Shareholders Entitled to Vote..............................................................2
Section 3.5 Quorum.....................................................................................2
Section 3.6. Adjournment................................................................................3
Section 3.7. Proxies....................................................................................3
Section 3.8. Inspection of Records......................................................................3
Section 3.9. Record Dates...............................................................................3
ARTICLE IV - Meetings of Trustees.................................................................................4
Section 4.1. Regular Meetings...........................................................................4
Section 4.2. Special Meetings...........................................................................4
Section 4.3. Notice.....................................................................................4
Section 4.4. Waiver of Notice...........................................................................4
Section 4.5. Quorum, Adjournment and Voting.............................................................4
Section 4.6. Compensation...............................................................................5
ARTICLE V - Executive Committee and Other Committees..............................................................5
Section 5.1. How Constituted............................................................................5
Section 5.2. Powers of the Executive Committee..........................................................5
Section 5.3. Other Committees of Trustees...............................................................5
Section 5.4. Proceedings, Quorum and Manner of Acting...................................................5
Section 5.5. Other Committees...........................................................................5
ARTICLE VI - Officers.............................................................................................6
Section 6.1. General...................................................................................6
Section 6.2. Election, Term of Office and Qualifications...............................................6
Section 6.3. Resignations and Removals.................................................................6
Section 6.4. Vacancies and Newly Created Offices.......................................................6
Section 6.5. Chairman of the Board.....................................................................7
Section 6.6. President.................................................................................7
Section 6.7. Vice President............................................................................7
Section 6.8. Treasurer and Assistant Treasurers........................................................7
Section 6.9. Secretary and Assistant Secretaries.......................................................8
i
<PAGE>
Section 6.10. Subordinate Officers.......................................................................8
Section 6.11. Remuneration...............................................................................8
Section 6.12. Surety Bonds...............................................................................8
ARTICLE VII - Execution of Instruments, Voting of Securities......................................................9
Section 7.1. Execution of Instruments...................................................................9
Section 7.2. Voting of Securities.......................................................................9
ARTICLE VIII - Fiscal Year, Accountants...........................................................................9
Section 8.1. Fiscal Year................................................................................9
Section 8.2. Accountants................................................................................9
ARTICLE IX - Amendments..........................................................................................10
Section 9.1. General...................................................................................10
</TABLE>
ii
<PAGE>
AMENDED AND RESTATED BY-LAWS
OF IDEX FUND
ARTICLE I
DEFINITIONS
The terms "Affiliated Person", Commission", "Declaration", "Interested
Person", "Investment Adviser", "Majority Shareholder Vote","1940 Act",
"Principal Underwriter", "Shareholder", "Shares", "Trust", "Trust Property" and
"Trustees" have the meanings given them in the Declaration of Trust (the
"Declaration") of IDEX Fund dated April 25, 1986, as amended from time to time.
ARTICLE II
OFFICES AND SEAL
Section 2.1 PRINCIPAL OFFICE. The principal office of the Trust
shall be located in the City of Clearwater, State of Florida.
Section 2.2 REGISTERED OFFICE. The Trust shall maintain a registered
office in the City of Boston, Commonwealth of Massachusetts.
Section 2.3 OTHER OFFICES. The Trust may establish and maintain such
other offices and places of business within or without the Commonwealth of
Massachusetts as the Trustees may from time to time determine.
Section 2.4 SEAL. The seal of the Trust shall be circular in form and
shall bear the name of the Trust, the year of its organization, and the words
"Common Seal" and "A Massachusetts Voluntary Association." The form of the seal
shall be subject to alteration by the Trustees and the seal may be used by
causing it or a facsimile to be impressed or affixed or printed or otherwise
reproduced. Any officer or Trustee of the Trust shall have authority to affix
the seal of the Trust to any document requiring the same but, unless otherwise
required by the Trustees, the seal shall not be necessary to be placed on, and
its absence shall not impair the validity, of any document, instrument or other
paper executed and delivered by or on behalf of the Trust.
1
<PAGE>
ARTICLE III
SHAREHOLDERS
Section 3.1. MEETINGS. A Shareholders' meeting for the election of
Trustees and the transaction of other proper business shall be held when
authorized under or required by the Declaration.
Section 3.2. PLACE OF MEETING. All Shareholders' meetings shall be
held at such place within or without the Commonwealth of Massachusetts as the
Trustees shall designate.
Section 3.3. NOTICE OF MEETINGS. Notice of all Shareholders' meetings,
stating the time, place and purpose of the meeting, shall be given by the
Secretary or an Assistant Secretary of the Trust by mail to each Shareholder
entitled to notice of and to vote at such meeting at his address as recorded on
the register of the Trust mailed at least 10 days and not more than 60 days
before the meeting. Such notice shall be deemed to be given when deposited in
the United States mail, with postage thereon prepaid. Any adjourned meeting may
be held as adjourned without further notice. No notice need be given (a) to any
Shareholder if a written waiver of notice, executed before or after the meeting
by such Shareholder or his attorney thereunto duly authorized, is filed with the
records of the meeting, or (b) to any Shareholder who attends the meeting
without protesting prior thereto or at its commencement the lack of notice to
him. A waiver of notice need not specify the purposes of the meeting.
Section 3.4. SHAREHOLDERS ENTITLED TO VOTE. If, pursuant to Section 3.9
hereof, a record date has been fixed for the determination of Shareholders
entitled to notice of and to vote at any Shareholders' meeting, each Shareholder
of the Trust shall be entitled to vote, in person or by proxy, each Share or
fraction thereof standing in his name on the register of the Trust at the time
of determining net asset value on such record date. If no record date has been
fixed for the determination of Shareholders so entitled, the record date for the
determination of Shareholders entitled to notice of and to vote at a
Shareholders' meeting shall be at the close of business on the day on which
notice of the meeting is mailed, or if notice is waived by all Shareholders, at
the close of business on the tenth day next preceding the day in which the
meeting is held.
Section 3.5 QUORUM. The presence at any Shareholders' meeting, in
person or by proxy, of Shareholders entitled to cast a majority of the votes
thereat shall be a quorum for the transaction of business.
2
<PAGE>
Section 3.6. ADJOURNMENT. The holders of a majority of the Shares
entitled to vote at the meeting and present thereat in person or by proxy,
whether or not constituting a quorum, or, if no Shareholder entitled to vote is
present thereat in person or by proxy, any Trustee or officer present thereat
entitled to preside or act as Secretary of such meeting, may adjourn the meeting
SINE DIE or from time to time. Any business that might have been transacted at
the meeting originally called may be transacted at any such adjourned meeting at
which a quorum is present.
Section 3.7. PROXIES. Shares may be voted in person or by proxy. When
any Share is held jointly by several persons, any one of them may vote at any
meeting in person or by proxy in respect of such Share unless at or prior to
exercise of the vote the Trustees receive a specific written notice to the
contrary from any one of them, but if more than one of them shall be present at
such meeting in person or by proxy, and such joint owners or their proxies so
present disagree as to any vote cast, such vote shall not be received in respect
of such share. A proxy purporting to be executed by or on behalf of a
Shareholder shall be deemed valid unless challenged at or prior to its exercise
and the burden of proving invalidity shall rest on the challenger.
Section 3.8. INSPECTION OF RECORDS. The records of the Trust shall
be open to inspection by Shareholders to the same extent as is permitted
shareholders of a Massachusetts business corporation.
Section 3.9. RECORD DATES. The Trustees may fix in advance a date as a
record date for the purpose of determining the Shareholders who are entitled to
notice of and to vote at any meeting or any adjournment thereof, or to express
consent in writing without a meeting to any action of the Trustees, or who shall
receive payment of any dividend or of any other distribution, or for the purpose
of any other lawful action, PROVIDED that such record date shall be not more
than 60 days before the date on which the particular action requiring such
determination of Shareholders is to be taken. In such case, subject to the
provisions of Section 3.4, each eligible Shareholder of record on such record
date shall be entitled to notice of, and to vote at, such meeting or
adjournment, or to express such consent, or to receive payment of such dividend
or distribution or to take such other action, as the case may be,
notwithstanding any transfer of Shares on the register of the Trust after the
record date.
3
<PAGE>
ARTICLE IV
MEETINGS OF TRUSTEES
Section 4.1. REGULAR MEETINGS. The Trustees from time to time shall
provide by resolution for the holding of regular meetings for the election of
officers and the transaction of other proper business and fix their time and
place within or without the Commonwealth of Massachusetts.
Section 4.2. SPECIAL MEETINGS. Special meetings of the Trustees shall
be held whenever called by the Chairman of the Board, the President (or, in the
absence or disability of the President, by any Vice President), the Treasurer,
the Secretary or two or more Trustees, at the time and place within or without
the Commonwealth of Massachusetts specified in the respective notices or waivers
of notice of such meetings.
Section 4.3. NOTICE. Notice of regular and special meetings, stating
the time and place, shall be (a) mailed to each Trustee at his residence or
regular place of business at least five days before the day on which the meeting
is to be held or (b) caused to be delivered to him personally or to be
transmitted to him by telegraph, cable or wireless at least two days before the
day on which the meeting is to be held. Unless otherwise required by law, such
notice need not include a statement of the business to be transacted at, or the
purpose of, the meeting. No notice of adjournment of a meeting or the Trustees
to another time or place need be given if such time and place are announced at
such meeting.
Section 4.4. WAIVER OF NOTICE. Notice of a meeting need not be given to
any Trustee if a written waiver of notice, executed by him before or after the
meeting, is filed with the records of the meeting, or to any Trustee who attends
the meeting without protesting prior thereto or at its commencement the lack of
notice to him. A waiver of notice need not specify the purposes of the meeting.
Section 4.5. QUORUM, ADJOURNMENT AND VOTING. At all meetings of the
Trustees, the presence of a majority of the total number of Trustees authorized,
but not less than two, shall constitute a quorum for the transaction of
business. A majority of the Trustees present, whether or not constituting a
quorum, may adjourn the meeting, from time to time. The action of a majority of
the Trustees present at a meeting at which a quorum is present shall be the
action of the Trustees unless the concurrence of a greater proportion is
required for such action by law, by the Declaration or by these By-laws.
4
<PAGE>
Section 4.6. COMPENSATION. Each Trustee may receive such
remuneration for his services as such as shall be fixed from time to time by
resolution of the Trustees.
ARTICLE V
EXECUTIVE COMMITTEE AND OTHER COMMITTEES
Section 5.1. HOW CONSTITUTED. The Trustees may, by resolution,
designate one or more committees, including an Executive Committee, an Audit
Committee and a Committee on Administration, each consisting of at least two
Trustees. The Trustees may, by resolution, designate one or more alternate
members of any committee to serve in the absence of any member or other
alternate member of such committee. Each member and alternate member of a
committee shall be a Trustee and shall hold office at the pleasure of the
Trustees. The Chairman of the Board and the President shall be members of the
Executive Committee.
Section 5.2. POWERS OF THE EXECUTIVE COMMITTEE. Unless otherwise
provided by resolution of the Trustees, the Executive Committee shall have and
may exercise all of the power and authority of the Trustees, PROVIDED that the
power and authority of the Executive Committee shall be subject to the
limitations contained in the Declaration.
Section 5.3. OTHER COMMITTEES OF TRUSTEES. To the extent provided by
resolution of the Trustees, other committees shall have and may exercise any of
the power and authority that may lawfully be granted to the Executive Committee.
Section 5.4. PROCEEDINGS, QUORUM AND MANNER OF ACTING. In the absence
of appropriate resolution of the Trustees, each committee may adopt such rules
and regulations governing its proceedings, quorum and manner of acting as it
shall deem proper and desirable, PROVIDED that the quorum shall not be less than
two trustees. In the absence of any member or alternate member of any such
committee, the members thereof present at any meeting, whether or not they
constitute a quorum, may appoint a Trustee to act in the place of such absent
member or alternate member. Members and alternate members of a committee may
participate in a meeting of such committee by means of a conference telephone or
similar communications equipment if all persons participating in the meeting can
hear each other at the same time. Participation in a meeting by these means
shall constitute presence in person at the meeting.
Section 5.5. OTHER COMMITTEES. The Trustees may appoint other
committees, each consisting of one or more persons who need not be Trustees.
Each such committee shall have such powers and perform such duties as may be
assigned to it from time to time by the Trustees, but shall
5
<PAGE>
not exercise any power which may lawfully be exercised only by the Trustees or
a committee thereof.
ARTICLE VI
OFFICERS
Section 6.1. GENERAL. The officers of the Trust shall be a Chairman of
the Board, a President, a Secretary, and a Treasurer, and may include one or
more Vice Presidents, one or more Assistant Secretaries, one or more Assistant
Treasurers, and such other officers as may be appointed in accordance with the
provisions of Section 6.10 of this Article VI.
Section 6.2. ELECTION, TERM OF OFFICE AND QUALIFICATIONS. The officers
of the Trust (except those appointed pursuant to Section 6.10) shall be elected
by the Trustees at their first meeting. If an officer or officers are not
elected at any such meeting, such officer or officers may be elected at any
subsequent regular or special meeting of the Trustees. Each officer elected by
the Trustees shall hold office subject to Section 6.3 and 6.4 of this Article VI
and until his successor shall have been chosen and qualified. No person shall
hold more than one office of the Trust, except that the President may hold the
office of Chairman of the Board and any Treasurer, Assistant Treasurer,
Secretary or Assistant Secretary of the Trust may also hold the office of Vice
President. The Chairman of the Board and the President shall be selected from
among the Trustees of the Trust and may hold such offices only so long as they
continue to be Trustees. Any Trustee or officer may be but need not be a
Shareholder of the Trust.
Section 6.3. RESIGNATIONS AND REMOVALS. Any officer may resign his
office at any time by delivering a written resignation to the Trustees, the
President, the Secretary or any Assistant Secretary. Unless otherwise specified
therein, such resignation shall take effect upon delivery. Any officer may be
removed from office with or without cause by the vote of a majority of the
Trustees at any regular meeting or any special meeting. Except to the extent
expressly provided in a written agreement with the Trust, no officer resigning
and no officer removed shall have any right to any compensation for any period
following his resignation or removal, or any right to damages on account of such
removal.
Section 6.4. VACANCIES AND NEWLY CREATED OFFICES. If any vacancy
shall occur in any office by reason of death, resignation, removal,
disqualification or other cause, or if any new office shall be created, such
vacancies or newly created offices may be filled by the Trustees at any
regular or
6
<PAGE>
special meeting or, in the case of any office created pursuant to Section 6.10
of this Article VI, by any officer upon whom such power shall have been
conferred by the Trustees.
Section 6.5. CHAIRMAN OF THE BOARD. The Chairman of the Board shall
preside at all Shareholders' meetings and at all meetings of the Trustees. He
shall have such other powers and perform such other duties as may be assigned to
him from time to time by the Trustees.
Section 6.6. PRESIDENT. The President shall be the chief executive and
operating officer of the Trust and, at the request of or in the absence or
disability of the Chairman of the Board, he shall preside at all Shareholders'
meetings and at all meetings of the Trustees and shall in general, exercise the
powers and perform the duties of the Chairman of the Board. Subject to the
supervision of the Trustees, he shall have general charge of the operations of
the Trust and its officers, employees and agents. He shall exercise such other
powers and perform such other duties as from time to time may be assigned to him
by the Trustees.
Section 6.7. VICE PRESIDENT. The Trustees may, from time to time,
designate and elect one or more Vice Presidents who shall have such powers and
perform such duties as from time to time may be assigned to them by the Trustees
or the President. At the request or in the absence or disability of the
President, the Vice President (or, if there are two or more Vice Presidents, the
Vice President designated by the Trustees) may perform all the duties of the
President and, when so acting, shall have all the powers of and be subject to
all the restrictions upon the President.
Section 6.8. TREASURER AND ASSISTANT TREASURERS. The Treasurer shall be
the principal financial and accounting officer of the Trust and shall have
general charge of the finances and books of account of the Trust. Except as
otherwise provided by the Trustees, he shall have general supervision of the
funds and property of the Trust and of the performance by the Custodian
appointed pursuant to Section 8.1 of the Declaration of its duties with respect
thereto. The Treasurer shall render a statement of condition of the finances of
the Trust to the Trustees as often as they shall require the same and he shall
in general perform all the duties incident to the office of Treasurer and such
other duties as from time to time may be assigned to him by the Trustees.
Any Assistant Treasurer may perform such duties of the Treasurer as the
Treasurer or the Trustees may assign, and, in the absence of the Treasurer, he
may perform all the duties of the Treasurer.
Section 6.9. SECRETARY AND ASSISTANT SECRETARIES. The Secretary shall
attend to the giving and serving of all notices of the Trust and shall record
all proceedings of the meetings of the
7
<PAGE>
Shareholders and Trustees in one or more books to be kept for that purpose.
He shall keep in safe custody the seal of the Trust, and shall have charge
of the records of the Trust, including the register of shares and such other
books and papers as the Trustees may direct and such books, reports,
certificates and other documents required by law to be kept, all of which shall
at all reasonable times be open to inspection by any Trustee. He shall perform
such other duties as appertain to his office or as may be required by the
Trustees.
Any Assistant Secretary may perform such duties of the Secretary as the
Secretary or the Trustee may assign, and, in the absence of the Secretary, he
may perform all the duties of the Secretary.
Section 6.10. SUBORDINATE OFFICERS. The Trustees from time to time may
appoint such other subordinate officers or agents as they may deem advisable,
each of whom shall have such title, hold office for such period, have such
authority and perform such duties as the Trustees may determine. The Trustees
from time to time may delegate to one or more officers or agents the power to
appoint any such subordinate officers or agents and to prescribe their
respective rights, terms of office, authorities and duties.
Section 6.11. REMUNERATION. The salaries or other compensation of the
officers of the Trust shall be fixed from time to time by resolution of the
Trustees, except that the Trustees may by resolution delegate to any person or
group of persons the power to fix the salaries or other compensation of any
subordinate officers or agents appointed in accordance with the provisions of
Section 6.10 hereof.
Section 6.12. SURETY BONDS. The Trustees may require any officer or
agent of the Trust to execute a bond (including, without limitation, any bond
required by the 1940 Act and the rules and regulations of the Commission) to the
Trustees in such sum and with such surety or sureties as the Trustees may
determine, conditioned upon the faithful performance of his duties to the Trust,
including responsibility for negligence and for the accounting of any of the
Trust Property that may come into his hands. In any such case, a new bond of
like character shall be given at least every six years, so that the date of the
new bond shall not be more than six years subsequent to the date of the bond
immediately preceding.
8
<PAGE>
ARTICLE VII
EXECUTION OF INSTRUMENTS, VOTING OF SECURITIES
Section 7.1. EXECUTION OF INSTRUMENTS. All deeds, documents, transfers,
contracts, agreements, requisitions or orders, promissory notes, assignments,
endorsements, checks and drafts for the payment of money by the Trust, and other
instruments requiring execution either in the name of the Trust or the names of
the Trustees or otherwise may be signed by the Chairman, the President, a Vice
President or the Secretary and by the Treasurer or an Assistant Treasurer, or as
the Trustees may otherwise, from time to time, authorize, PROVIDED that
instructions in connection with the execution of portfolio securities
transactions may be signed by one such officer. Any such authorization may be
general or confined to specific instances.
Section 7.2. VOTING OF SECURITIES. Unless otherwise ordered by the
Trustees, the Chairman, the President or any Vice President shall have full
power and authority on behalf of the Trustees to attend and to act and to vote,
or in the name of the Trustees to execute proxies to vote, at any meeting of
stockholders of any company in which the Trust may hold stock. At any such
meeting such officer shall possess and may exercise (in person or by proxy) any
and all rights, powers and privileges incident to the ownership of such stock.
The Trustees may by resolution from time to time confer like powers upon any
other person or persons.
ARTICLE VIII
FISCAL YEAR, ACCOUNTANTS
Section 8.1. FISCAL YEAR. The fiscal year of the Trust shall be
established by resolution of the Trustees.
Section 8.2. ACCOUNTANTS.
(a) The Trustees shall employ an independent public accountant or firm
of independent public accountants as their accountant to examine the accounts of
the Trust and to sign and certify at least annually financial statements filed
by the Trust. The accountant's certificates and reports shall be addressed both
to the Trustees and to the Shareholders.
(b) A majority of the Trustees who are not Interested Persons of the
Trust shall select the accountant at any meeting held before the first
Shareholders' meeting, and thereafter shall select the accountant annually by
votes, cast in person, at a meeting held within 30 days before or after the
beginning of the fiscal year of the Trust. Such selection shall be submitted for
ratification or rejection at the next succeeding Shareholders' meeting. If such
meeting shall reject such selection,
9
<PAGE>
the accountant shall be selected by a Majority Shareholder Vote, either at the
meeting at which the rejection occurred or at a subsequent Shareholders'
meeting called for the purpose.
(c) Any vacancy occurring due to the death or resignation of the
accountant, may be filled at a meeting called for the purpose by the vote, cast
in person, of a majority of those Trustees who are not Interested Persons of the
Trust.
ARTICLE IX
AMENDMENTS
Section 9.1. GENERAL. These By-Laws may be amended or repealed, in
whole or in part, by a majority of the Trustees then in office at any meeting
of the Trustees, or by one or more writings signed by such a majority.
10
Exhibit 4
The Initial Series of Shares
Of
IDEX FUND
(A Massachusetts Business Trust)
SHARES OF BENEFICIAL INTEREST
THIS CERTIFIES that is the owner of ACCOUNT NO. ALPHA CODE
*See Reverse For Certain Definitions
CUSIP 451678 10 6
fully paid and non-assessable shares (without par value) of the initial series
of IDEX Fund, a Massachusetts business trust (the "Trust"), which shares are
established and designated under the Declaration of Trust dated April 25, 1986,
and restated as of August 30, 1991, as amended from time to time (the "Trust
Agreement"). The terms of the Trust Agreement, a copy of which is on file with
the Secretary of the Commonwealth of Massachusetts, are hereby incorporated by
reference as fully as if set down herein in their entirety. As provided in the
Trust Agreement, the beneficial interest in the Series has been divided
intoShares, and the Shares evidenced hereby represent the beneficial interest in
an undivided proportionate part of the assets belonging to the Series subject to
the liabilities belonging to the Series. Such Shares have the rights and
preferences set forth in the Trust Agreement and the Trust will furnish the
holder of this certificate upon written request and without charge a statement
of such rights and preferences. THE SHARES EVIDENCED HEREBY ARE SUBJECT TO
REDEMPTION BY THE TRUST pursuant to the procedures that may be determined by the
Trustees in accordance with the Trust Agreement. This certificate is issued by
the Trustees of the Trust not individually but as Trustees under the Trust
Agreement, and represents shares of beneficial interest in the Series and does
not bind any of the Trustees, shareholders, officers, employees or agents of the
Trust personally but only the assets and property of the Series. Subject to the
provisions of the Trust Agreement, the shares represented by this certificate
are transferable upon the books of the Trust by the registered holder hereof in
person or by its duly authorized attorney upon surrender of this certificate.
Witness the facsimile signature of the President and Treasurer of the Trust and
the signature of its duly authorized agent.
VOID IF NOT COUNTERSIGNED
COUNTERSIGNED by Idex Investor Services, Inc.
P.O. Box 9015, Clearwater, FL 34618-9015
BY TRANSFER AGENT
-----------------------------------------
Authorized Signature
Dated
/s/ Richard B. Franz /s/ G. John Hurley
Treasurer President
- --------------------------------------------------------------------------------
PLEASE DETACH AND DISCARD UNLESS CHANGES ARE REQUIRED
THE INITIAL SERIES OF IDEX FUND
NUMBER IM SHARES
ACCOUNT NO. ALPHA CODE DEALER NO. CONFIRM NO.
TRADE DATE CONFIRM DATE BATCH ID. NO.
CHANGE NOTICE: IF THE ABOVE INFORMATION IS INCORRECT OR MISSING. PLEASE
PRINT THE CORRECT INFORMATION BELOW, AND RETURN TO:
IDEX INVESTOR SERVICES, INC.
P.O. BOX 9015
CLEARWATER, FL 34618-9015
TAX IDENT. OR SOC. SEC. NO.
<PAGE>
The following abbreviations, when used in the inscription on the face of this
certificate, shall be construed as though they were written out in full,
according to the applicable laws or regulations:
<TABLE>
<S> <C>
TEN COM - as tenants in common UNIF GIFTS/TRANSFERS MIN ACT - Custodian
TEN ENT - as tenants by the entireties ------------------------
JT TEN - as joint tenants with right of survivorship (Cust) (Minor)
and not as tenants in common under Uniform Gifts/Transfers to Minors
Act ______________________
(State)
</TABLE>
Additional abbreviations may also be used though not in the above list.
FOR VALUE RECEIVED, ___________ HEREBY SELL, ASSIGN AND TRANSFER UNTO
PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE
____________________________
____________________________
________________________________________________________________________________
(PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS, INCLUDING ZIP CODE, OF ASSIGNEE)
________________________________________________________________________________
_________________________________________________________________________ SHARES
OF THE SHARES REPRESENTED BY THE WITHIN CERTIFICATE, AND DO HEREBY IRREVOCABLY
CONSTITUTE AND APPOINT
________________________________________________________________________________
_______________________________________________________________________ ATTORNEY
TO TRANSFER THE SAID STOCK ON THE BOOKS OF THE WITHIN-NAMED ISSUER WITH FULL
POWER OF SUBSTITUTION IN THE PREMISES
DATED, _____________________
__________________________________
OWNER
__________________________________
SIGNATURE OF CO-OWNER, IF ANY
IMPORTANT (BEFORE SIGNING, READ AND COMPLY CAREFULLY WITH NOTICE PRINTED ABOVE)
SIGNATURE(S) GUARANTEED BY:
___________________________________________
NAME OF INSTITUTION
___________________________________________
AUTHORIZED SIGNATURE
(GUARANTEE STAMP MUST BE INCLUDED)
NOTICE THE SIGNATURE TO THIS ASSIGNMENT MUST CORRESPOND WITH THE NAME AS
WRITTEN UPON THE FACE OF THE CERTIFICATE IN EVERY PARTICULAR, WITHOUT ALTERATION
OR ENLARGEMENT OR ANY CHANGE WHATEVER.
THIS SIGNATURE(S) MUST BE GUARANTEED BY AN ELIGIBLE GUARANTOR INSTITUTION
WHO MEETS THE STANDARDS AND PROCEDURES OF THE TRANSFER AGENT.
Exhibit 5(a)
IDEX FUND
MANAGEMENT AND INVESTMENT ADVISORY AGREEMENT
This Agreement, entered into as of April 22, 1991, is between IDEX FUND,
a Massachusetts business trust (referred to herein as the "Fund"), and IDEX
MANAGEMENT, INC., a Delaware corporation (referred to herein as "Idex
Management").
The Fund is registered as an open-end investment company under the
Investment Company Act of 1940, as amended, and as such will maintain and manage
a portfolio of investments. In managing its portfolio, as well as in the conduct
of certain of its affairs, it wishes to have the benefit of the investment
advisory services of Idex Management and its assistance in performing certain
management, administrative and promotional functions. Idex Management desires to
furnish such services and to perform the functions assigned to it under this
Agreement for the considerations provided. Accordingly, the parties have agreed
as follows:
1. INVESTMENT ADVISORY SERVICES. In its capacity as investment adviser
to the Fund, Idex Management shall have the following responsibilities:
(a) to furnish continuous advice and recommendations to the Fund
as to the acquisition, holding or disposition of any or all of the securities or
other assets which the Fund may own or contemplate acquiring from time to time;
(b) to cause its officers to attend meetings and furnish oral or
written reports, as the Fund may reasonably require, in order to keep the
Trustees and appropriate officers of the Fund fully informed as to the condition
of the investment portfolio of the Fund, the investment recommendations of Idex
Management, and the investment considerations which have given rise to those
recommendations;
(c) to supervise the purchase and sale of securities as directed
by the appropriate officers of the Fund.
It is understood and agreed that Idex Management intends to enter into an
Investment Counsel Agreement with Janus Capital Corporation ("Janus Capital"), a
Colorado corporation, under which Janus Capital will furnish investment
information and advice to assist Idex Management in carrying out its
responsibilities under this Section 1. The compensation to be paid to Janus
Capital for such services and the other terms and conditions under which the
services shall be rendered by Janus Capital shall be set forth in the Investment
Counsel Agreement; provided, however, that such Agreement shall be approved by
the Trustees and by the holders of the outstanding voting securities of the Fund
in accordance with the requirements of Section 15 of the Investment Company Act
of 1940, and shall otherwise be subject to, and contain such provisions as shall
be required by, the Investment Company Act of 1940.
2. MANAGEMENT AND ADMINISTRATIVE SERVICES. Idex Management shall furnish
or make available to the Fund the services of executive and management personnel
to supervise the performance of all administrative, recordkeeping, shareholder
relations, regulatory reporting and compliance, and all other functions of the
Fund (other than the investment advisory services provided for in Section 1),
including to supervise and coordinate the services of the Fund's custodian and
transfer agent. Idex Management shall also assist in the preparation of reports
to shareholders of the Fund and prepare sales literature promoting sale of the
Fund shares as requested by the Fund. Upon the request of the Trustees of the
Fund, Idex Management shall also perform such administrative and clerical
functions, including recordkeeping and bookkeeping functions, daily pricing of
the Fund shares and preparation of reports and returns, as the Trustees of the
Fund reasonably requests; provided that the Fund shall reimburse Idex Management
at least monthly for all costs and expenses reasonably incurred by Idex
Management in connection with the performance of such functions.
It is understood and agreed that Idex Management intends to enter into
an Administrative Services Agreement with InterSecurities, Inc. (formerly known
as Idex Distributors, Inc.) (the "Distributor"), a Delaware corporation, under
which the Distributor will furnish management and administrative personnel and
services to assist Idex Management in carrying out its responsibilities under
this Section 2, which agreement may also provide that the Distributor will
provide administrative and clerical services for the Fund and be reimbursed the
cost of such services by Idex Management. The compensation to be paid to the
Distributor for such services and the other terms and conditions under which the
services shall be rendered by the Distributor shall be set forth in the
Administrative Services Agreement; provided, however, that such Agreement shall
be approved by the Trustees and shall otherwise be subject to, and contain such
provisions as shall be required by, the Investment Company Act of 1940.
<PAGE>
3. IDEX MANAGEMENT EXPENSES. In addition to the expenses which Idex
Management may incur in the performance of its services pursuant to Sections 1
and 2 above, Idex Management shall incur and pay the following expenses relating
to the Fund's organization and operations:
(a) All costs and expenses, including legal and accounting fees,
incurred in connection with the formation and organization of the Fund,
including the preparation (and filing, when necessary) of the Fund's Declaration
of Trust, Bylaws, contracts, plan and documents; conducting meetings of
organizers, trustees and shareholders, planning and conducting the Fund's
initial private offering, and all other matters relating to the formation and
organization of the Fund and the preparation for offering its stock to the
public. The organization of the Fund for all of the foregoing purposes will be
considered completed when the Fund's initial registration statement under the
Securities Act of 1933 becomes effective;
(b) All costs and expenses, including legal and accounting fees,
filing fees and printing costs, in connection with the preparation and filing of
the Fund's initial registration statements under the Securities Act of 1933 and
the Investment Company Act of 1940 (including all amendments thereto prior to
the effectiveness of the registration statements under the Securities Act of
1933);
(c) Reasonable compensation, fees and related expenses of the
officers and Trustees of the Fund except for such Trustees who are not
interested persons (as that term is defined in Section 2(a)(19) of the
Investment Company Act of 1940, as amended) of Idex Management; and
(d) Rental of offices of the Fund.
4. OBLIGATIONS OF FUND. The Fund shall have the following obligations
under this Agreement:
(a) to keep Idex Management continuously and fully informed as to
the composition of its investment portfolio and the nature of all of its assets
and liabilities from time to time;
(b) to furnish Idex Management with a certified copy of any
financial statement or report prepared for it by certified or independent public
accountants, and with copies of any financial statements or reports made to its
shareholders or to any governmental body or securities exchange;
(c) to furnish Idex Management with any further materials or
information which Idex Management may reasonably request to enable it to perform
its functions under this Agreement; and
(d) to compensate Idex Management for its services in accordance
with the provisions of Section 5 hereof.
5. COMPENSATION. The Fund shall pay to Idex Management for its services
a monthly fee, payable on the last day of each month during which or part of
which this Agreement is in effect, of 1/12 of 1% of that part of the average
daily closing net asset value of the Fund for such month. For the month during
which this Agreement becomes effective and the month during which it terminates,
however, there shall be an appropriate proration of the fee payable for such
month based on the number of calendar days of such month during which this
Agreement is effective.
6. EXPENSES PAID BY FUND. Subject to the provisions of Section 7, below,
and except as provided in this paragraph, nothing in this Agreement shall be
construed to impose upon Idex Management the obligation to incur, pay, or
reimburse the Fund for any expenses not specifically assumed by Idex Management
under Sections 1, 2 and 3 above. The Fund shall pay all of its other expenses
including, but not limited to, investment adviser fees, any compensation, fees,
or reimbursements which the Fund pays to its Trustees who are not interested
persons (as that phrase is defined in Section 2(a)(19) of the Investment Act of
1940, as amended) of Idex Management, compensation of the Fund's custodian,
transfer agent, registrar and dividend disbursing agent, current legal,
accounting and printing expenses, administrative, clerical, recordkeeping and
bookkeeping expenses, brokerage commissions and all other expenses in connection
with execution of portfolio transactions, interest, all federal, state and local
taxes (including stamp, excise, income and franchise taxes), cost of share
certificates, expenses of delivering such certificates to the purchasers
thereof, expenses of local representation in Massachusetts, expenses of
shareholders' meetings and of preparing, printing and distributing proxy
statements, notices and reports to shareholders, expenses of preparing and
filing reports and tax returns with
2
<PAGE>
federal and state regulatory authorities, and all expenses incurred in complying
with all federal and state laws and the laws of any foreign country applicable
to the issue, offer, or sale of shares of the Fund, including, but not limited
to, all costs involved in the registration or qualification of shares of the
Fund for sale in any jurisdiction and all costs involved in preparing and
printing prospectuses of the Fund. Nothing in this Section 6 shall prohibit the
Fund from entering into other agreements or adopting plans which provide for the
allocation of expenses of the Fund to other entities, or the assumption of other
expenses by the Fund.
7. LIMITATION ON EXPENSES OF FUND. Whenever, for any fiscal year, the
total cost to the Fund for normal operating expenses chargeable to its income
account, including, but not limited to, the fees of the Fund's investment
adviser, the compensation of its custodian, transfer agent, registrar, auditors
and legal counsel, printing expenses, expenses incurred in complying with all
laws applicable to the sale of shares of the Fund and any compensation, fees, or
reimbursements which the Fund pays to its Trustees who are not interested
persons (as that phrase is defined in Section 2(a)(29) of the Investment Company
Act of 1940, as amended) of Idex Management, but excluding all interest and all
federal, state and local taxes (such as stamp, excise, income, franchise and
similar taxes), exceeds any applicable expense limitation imposed by state law,
Idex Management shall reimburse the Fund for the amount of said excess in the
manner and to the extent required by state law; provided, however, that IDEX
Management shall reimburse the Fund for the amount of such expenses which exceed
1-1/2% of the Fund's average daily net assets.
8. TREATMENT OF INVESTMENT ADVICE. The Fund shall treat the investment
advice and recommendations of Idex Management as being advisory only, and shall
retain full control over its own investment policies. However, the Trustees of
the Fund may delegate to the appropriate officers of the Fund, or to a committee
of Trustees, the power to authorize purchases, sales or other actions affecting
the portfolio of the Fund in the interim between meetings of the Trustees,
provided such action is consistent with the established investment policy of the
Trustees and is reported to the Trustees at their next meeting.
9. BROKERAGE COMMISSIONS. For purposes of this Agreement, brokerage
commissions paid by the Fund upon the purchase or sale of its portfolio
securities shall be considered a cost of securities of the Fund and shall be
paid by the Fund. Idex Management is authorized and directed to place Fund
portfolio transactions, or to delegate to Janus Capital the authority and
direction to place Fund portfolio transactions, only with brokers and dealers
who render satisfactory service in the execution of orders at the most favorable
prices and at reasonable commission rates; provided, however, that Idex
Management or Janus Capital may pay a broker or dealer an amount of commission
for effecting a securities transaction in excess of the amount of commission
another broker or dealer would have charged for effecting that transaction, if
Idex Management or Janus Capital determines in good faith that such amount of
commission was reasonable in relation to the value of the brokerage and research
services provided by such broker or dealer viewed in terms of either that
particular transaction or the overall responsibilities of Idex Management or
Janus Capital. Idex Management and Janus Capital are also authorized to consider
sales of Fund shares by a broker-dealer or the recommendation of a broker-dealer
to its customers that they purchase Fund shares as a factor in selecting
broker-dealers to execute Fund portfolio transactions, provided that in placing
portfolio business with such broker-dealers, Idex Management and Janus Capital
shall seek the best execution of each transaction and all such brokerage
placement shall be consistent with the Rules of Fair Practice of the National
Association of Securities Dealers, Inc. Notwithstanding the foregoing, the Fund
shall retain the right to direct the placement of all portfolio transactions,
and the Trustees may establish policies or guidelines to be followed by Idex
Management and Janus Capital in placing portfolio transactions for the Fund
pursuant to the foregoing provisions. Idex Management shall report on the
placement of portfolio transactions each quarter to the Trustees of the Fund.
10. PURCHASES BY AFFILIATES. Neither Idex Management nor any officer or
Director thereof shall take a long or short position in the securities issued by
the Fund. This prohibition, however, shall not prevent the purchase from the
Fund of shares issued by the Fund, by the officers or Directors of Idex
Management (or by deferred benefit plans established for their benefit) at the
current price available to the public, or at such price with reductions in sales
charge as may be permitted by the Fund's current prospectus, in accordance with
Section 22(d) of the Investment Company Act of 1940.
11. USE OF NAME. If this Agreement is terminated and Idex Management no
longer serves as investment adviser to the Fund, Idex Management reserves the
right to withdraw from the Fund the use of the name "IDEX" or any name
misleadingly implying a continuing relationship between the Fund and Idex
Management or any of its affiliates.
12. LIABILITY OF IDEX MANAGEMENT. Idex Management may rely on
information reasonably believed by it to be accurate and reliable. Except as may
otherwise be provided by the 1940 Act, neither Idex Management nor its officers,
directors, employees or agents shall be subject to any liability to the Fund or
any shareholder of the Fund for any error of judgment, mistake of law or
3
<PAGE>
any loss arising out of any investment or other act or omission in the course
of, connected with or arising out of any service to be rendered hereunder,
except by reason of willful misfeasance, bad faith or gross negligence in its
performance of its duties or by reason of reckless disregard of its obligations
and duties under this Agreement.
13. TERMINATION. This Agreement may be terminated at any time, without
penalty, by the Trustees of the Fund or by the shareholders of the Fund acting
by vote of at least a majority of its outstanding voting securities (as that
phrase is defined in Section 2(a)(42) of the Investment Company Act of 1940, as
amended), provided in either case that 60 days' written notice of termination be
given to Idex Management at its principal place of business. This Agreement may
be terminated by Idex Management at any time by giving 60 days' written notice
of termination to the Fund, addressed to its principal place of business.
14. ASSIGNMENT. This Agreement shall terminate automatically in the
event of any assignment (as the term is defined in Section 2(a)(4) of the
Investment Company Act of 1940, as amended) of this Agreement.
15. TERM. This Agreement shall continue in effect, unless sooner
terminated in accordance with its terms, for one year from the date hereof, and
shall continue in effect from year to year thereafter only so long as such
continuance is specifically approved at least annually by the vote of a majority
of the Trustees of the Fund who are not parties hereto or interested persons (as
that term is defined in Section 2(a)(19) of the Investment Company Act of 1940,
as amended) of any such party, cast in person at a meeting called for the
purpose of voting on the approval of the terms of such renewal, and by either
the Trustees of the Fund or the affirmative vote of a majority of the
outstanding voting securities of the Fund (as that phrase is defined in Section
2(a)(42) of the Investment Company Act of 1940, as amended).
16. AMENDMENTS. This Agreement may be amended only with the approval by
the affirmative vote of a majority of the outstanding voting securities of the
Fund (as that phrase is defined in Section 2(a)(42) of the Investment Company
Act of 1940, as amended) and the approval by the vote of a majority of Trustees
of the Fund who are not parties hereto or interested persons (as that phrase is
defined in Section 2(a)(19) of the Investment Company Act of 1940, as amended)
of any such party, cast in person at a meeting called for the purpose of voting
on the approval of such amendment.
17. PRIOR AGREEMENTS. This agreement supersedes all prior agreements
between the parties relating to the subject matter hereof, and all such prior
agreements are deemed terminated upon the effectiveness of this agreement.
18. LIMITATION OF LIABILITY. A copy of the Fund's Declaration of Trust
is on file with the Secretary of The Commonwealth of Massachusetts, and notice
is hereby given that this Agreement is executed on behalf of the Trustees as
Trustees of the Fund and not individually, and that the obligations under this
Agreement are not binding upon any of the Trustees, officers, shareholders,
agents or employees of the Fund individually, but binding only upon the assets
and property of the Fund.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of April
22, 1991.
ATTEST: IDEX MANAGEMENT, INC.
/s/ WILLIAM H. GEIGER By: /s/ G. JOHN HURLEY
- --------------------------------- -------------------------------------
William H. Geiger, Secretary G. John Hurley, President and Chief
Executive Officer
ATTEST: IDEX FUND
/s/ PAMELA C. DILS By: /s/ JOHN R. KENNEY
- --------------------------------- -------------------------------------
Pamela C. Dils, Secretary John R. Kenney, Chairman of the Board
4
Exhibit 5(b)
IDEX FUND
INVESTMENT COUNSEL AGREEMENT
This Agreement is entered into as of April 22, 1991, between IDEX
MANAGEMENT, INC., a Delaware corporation (referred to herein as "Idex
Management"), and JANUS CAPITAL CORPORATION, a Colorado corporation (referred to
herein as "Janus Capital").
WHEREAS, Idex Management entered into a Management and Investment
Advisory Agreement (referred to herein as the "Advisory Agreement"), dated April
22, 1991 with IDEX FUND, a Massachusetts business trust (referred to herein as
the "Fund"), under which Idex Management agreed, among other things, to act as
investment adviser to the Fund.
WHEREAS, the Advisory Agreement provides that Idex Management may
engage Janus Capital to furnish investment information and advice to assist Idex
Management in carrying out its responsibilities under the Advisory Agreement as
investment adviser to the Fund.
WHEREAS, it is the purpose of this Agreement to express the mutual
agreements of the parties hereto with respect to the services to be provided by
Janus Capital to Idex Management and the terms and conditions under which such
services will be rendered.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
set forth herein, the parties hereto agree as follows:
1. SERVICES OF JANUS CAPITAL. Janus Capital shall act as investment
counsel to Idex Management. In this capacity, Janus Capital shall have the
following responsibilities:
(a) to furnish continuous investment information, advice and
recommendations to Idex Management as to the acquisition, holding or disposition
of any or all of the securities or other assets which the Fund may own or
contemplate acquiring from time to time;
(b) to cause its officers to attend meetings of Idex Management or
the Fund and furnish oral or written reports, as Idex Management may reasonably
require, in order to keep Idex Management and its officers and the Trustees of
the Fund and appropriate officers of the Fund fully informed as to the condition
of the investment portfolio of the Fund, the investment recommendations of Janus
Capital, and the investment considerations which have given rise to those
recommendations;
(c) to furnish such statistical and analytical information and
reports as may reasonably be required by Idex Management from time to time; and
(d) to supervise the purchase and sale of securities as directed
by the appropriate officers of the Fund or of Idex Management.
2. OBLIGATIONS OF IDEX MANAGEMENT. Idex Management shall have the
following obligations under this Agreement:
(a) to keep Janus Capital continuously and fully informed as to
the composition of the Fund's investment portfolio and the nature of the Fund's
assets and liabilities from time to time;
(b) to furnish Janus Capital with a certified copy of any
financial statement or report prepared for the Fund by certified or independent
public accountants, and with copies of any financial statements or reports made
by the Fund to its shareholders or to any governmental body or securities
exchange;
(c) to furnish Janus Capital with any further materials or
information which Janus Capital may reasonably request to enable it to perform
its functions under this Agreement; and
(d) to compensate Janus Capital for its services under this
Agreement by the payment of fees equal to (i) 50% of the fees received by Idex
Management pursuant to Section 5 of the Advisory Agreement for services rendered
by Idex Management to the Fund during the term of this Agreement, less (ii) 50%
of any amount reimbursed to the Fund by Idex Management pursuant to the
provisions of Section 7 of the Advisory Agreement, but only to the extent that
such reimbursement exceeds any amount paid by the Fund to Idex Management to
reimburse Idex Management for accounting and recordkeeping services furnished to
the Fund pursuant to Section 2 of the Advisory Agreement. In the event that this
Agreement shall be effective for only part of a period to
<PAGE>
which any such fee received by Idex Management is attributable, then an
appropriate proration of the fee that would have been payable hereunder if this
Agreement had remained in effect until the end of such period shall be made,
based on the number of calendar days in such period and the number of calendar
days during the period in which this Agreement was in effect. The fees payable
to Janus Capital hereunder shall be payable upon receipt by Idex Management from
the Fund of fees payable to Idex Management under Section 5 of the Advisory
Agreement.
(e) to compensate Janus Capital, in addition to the compensation
payable under paragraph (d) above, as follows: If on December 31 of 1991 and
each year thereafter ("Target Date") the aggregate actual net assets on that
date of the Fund, IDEX II, IDEX Fund 3, IDEX Total Income Trust and any other
registered investment company sponsored by Idex Management, containing the name
IDEX or with respect to which Idex Management acts as investment adviser or
administrator, and to which Janus Capital provides investment advice (the
"Advised Funds") are less that the applicable Target Net Assets specified in
Table 1 below, then Idex Management shall pay to Janus Capital a percentage, as
specified in Table 2 below, of the Net Fee otherwise payable to InterSecurities,
Inc., or any other Idex Management affiliate serving as administrator to the
Fund for the calendar year following such date (the "Administrator").
<TABLE>
<CAPTION>
TABLE 1
-------
ADVISED FUNDS
TARGET DATE TARGET NET ASSETS
----------- -----------------
<S> <C>
December 31, 1991 $450 million
December 31, 1992 $700 million
December 31, 1993 (and $950 million
December 31 of each
year thereafter)
</TABLE>
The Net Fee of the Administrator shall be the fee received by the Administrator
from Idex Management less any reimbursement from the Administrator in connection
with any applicable Fund expense limitation. The percentage of the Net Fee so
payable to Janus Capital shall be determined by the percentage that on the
applicable Target Date the aggregate actual net assets of the Advised Funds are
less than the applicable Target Net Assets of the Advised Funds ("Shortfall of
Target") in accordance with Table 2 below:
<TABLE>
<CAPTION>
TABLE 2
-------
SHORTFALL OF TARGET PERCENTAGE OF NET FEE
------------------- ---------------------
<S> <C>
5% - 10% 10%
Over 10% - 20% 20%
Over 20% - 30% 30%
Over 30% 40%
</TABLE>
No fees shall be payable to Janus Capital under this paragraph (e) for any
year if, for the five-year period ending December 31 of the preceding year, the
respective total returns of a majority of the Advised Funds that have the
objective of investing primarily in equity securities with such a five-year
record (and with respect to which Janus Capital shall have provided investment
advice for all of such five years and for the then current year) are not in the
top one-third of their respective fund categories as determined by Lipper
Analytical Services, Inc. or its successor (or if no successor exists, by a
mutually agreed upon statistical service).
3. TREATMENT OF INVESTMENT ADVICE. Idex Management shall treat the
investment information, advice and recommendations of Janus Capital as being
advisory only, and shall determine the extent to which such advice and
recommendations shall be passed on to the Fund or incorporated in investment
advice by Idex Management to the Fund. Idex Management may direct Janus Capital
to furnish its investment information, advice and recommendations directly to
officers or Trustees of the Fund.
4. PURCHASES BY AFFILIATES. Neither Janus Capital nor any of its officers
or Directors shall take a long or short position in the securities issued by the
Fund. This prohibition, however, shall not prevent the purchase from the Fund of
shares issued by the Fund by the officers and Directors of Janus Capital (or
deferred benefit plans established for their benefit) at the current price
available to the public, or at such price with reductions in sales
- 2 -
<PAGE>
charge as may be permitted in the Fund's current prospectus in accordance with
Section 22(d) of the Investment Company Act of 1940.
5. LIABILITY OF JANUS CAPITAL. Janus Capital may rely on information
reasonably believed by it to be accurate and reliable. Except as may otherwise
by provided by the Investment Company Act of 1940, neither Janus Capital nor its
officers, directors, employees or agents shall be subject to any liability to
the Fund or any shareholders of the Fund for any error of judgement, mistake of
law or any loss arising out of any investment or other act or omission in the
course of, connected with or arising out of any service to be rendered
hereunder, except by reason or willful misfeasance, bad faith or gross
negligence in the performance of its duties or by reason of reckless disregard
of its obligations and duties under this Agreement.
6. COMPLIANCE WITH LAWS. Janus Capital represents that it is, and will
continue to be throughout the term of this Agreement, an investment adviser
registered under all applicable federal and state laws. In all matters relating
to the performance of this Agreement, Janus Capital will act in conformity with
the Fund's Declaration of Trust, Bylaws, and current prospectus and with the
instructions and direction of Idex Management and the Fund's Trustees, and will
conform to and comply with the Investment Company Act of 1940 and all other
applicable federal or state laws and regulations.
7. TERMINATION. This Agreement shall terminate automatically upon the
termination of the Advisory Agreement. This Agreement may be terminated at any
time, without penalty, by Idex Management or by the Fund by giving 60 days'
written notice of such termination to Janus Capital at its principal place of
business, provided that such termination is approved by the Trustees of the Fund
or by vote of a majority of the outstanding voting securities (as that phrase is
defined in Section 2(a)(42) of the Investment Company Act of 1940, as amended)
of the Fund. This Agreement may be terminated at any time by Janus Capital by
giving 60 days' written notice of such termination to the Fund and Idex
Management at their respective principal places of business.
8. ASSIGNMENT. This Agreement shall terminate automatically in the event
of any assignment (as that term is defined in Section 2(a)(4) of the Investment
Company Act of 1940, as amended) of this Agreement.
9. TERM. This Agreement shall continue in effect, unless sooner terminated
in accordance with its terms, for one year from the date hereof and shall
continue in effect from year to year thereafter only so long as such continuance
is specifically approved at least annually by the vote of a majority of the
Trustees of the Fund who are not parties hereto or interested persons (as that
term is defined in Section 2(a)(19) of the Investment Company Act of 1940, as
amended) of any such party, cast in person at a meeting called for the purpose
of voting on the approval of the terms of such renewal, and by either the
Trustees of the Fund or the affirmative vote of a majority of the outstanding
voting securities of the Fund (as that phrase is defined in Section 2(a)(42) of
the Investment Company Act of 1940, as amended).
10. AMENDMENTS. This Agreement may be amended only with the approval by
the affirmative vote of a majority of the outstanding voting securities (as that
phrase is defined in Section 2(a)(42) of the Investment Company Act of 1940, as
amended) and the approval by the vote of a majority of the Trustees of the Fund
who are not parties hereto or interested persons (as that term is defined in
Section 2(a)(19) of the Investment Company Act of 1940, as amended) of any such
party cast in person at a meeting called for the purpose of voting on the
approval of such amendment.
- 3 -
<PAGE>
11. PRIOR AGREEMENTS. This agreement supersedes all prior agreements
between the parties relating to the subject matter hereof, and all such prior
agreements are deemed terminated upon the effectiveness of this agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date first above written.
ATTEST: JANUS CAPITAL CORPORATION
/s/ JANICE M. TEAGUE By: /s/ JACK R. THOMPSON
- ---------------------------- -----------------------------------
Janice M. Teague Jack R. Thompson
ATTEST: IDEX MANAGEMENT, INC.
/s/ WILLIAM H. GEIGER By: /s/ G. JOHN HURLEY
- ---------------------------- -----------------------------------
William H. Geiger, Secretary G. John Hurley, President and Chief
Executive Officer
- 4 -
Exhibit 5(c)
IDEX FUND
ADMINISTRATIVE SERVICES AGREEMENT
This Agreement is entered into as of April 22, 1991 by IDEX MANAGEMENT,
INC., a Delaware corporation ("Idex Management"), and InterSecurities, Inc.
(formerly known as Idex Distributors, Inc.), a Delaware corporation (the
"Distributor").
WHEREAS, Idex Management has entered into a Management and Investment
Advisory Agreement (referred to herein as the "Advisory Agreement"), dated April
22, 1991 with IDEX Fund, a Massachusetts business trust (referred to herein as
the "Fund"), under which Idex Management agreed, among other things, to provide
management and administrative services to the Fund.
WHEREAS, the Advisory Agreement provides that Idex Management may
engage the Distributor to furnish it with management and administrative services
to assist Idex Management in carrying out certain of its functions under the
Advisory Agreement.
WHEREAS, it is the purpose of this Agreement to express the mutual
agreement of the parties hereto with respect to the services to be provided by
the Distributor to Idex Management and the terms and conditions under which such
services will be rendered.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
set forth herein, the parties hereto agree as follows:
1. SERVICES OF THE DISTRIBUTOR. The Distributor shall provide executive
and management services to Idex Management and the Fund. Subject to the overall
supervision of Idex Management and the Fund, the Distributor shall furnish to
the Fund the services of executive and administrative personnel to supervise the
performance of all administrative, recordkeeping, shareholder relations,
regulatory reporting and compliance, and all other functions of the Fund other
than the investment function, and shall supervise and coordinate the Fund's
Custodian and its Transfer Agent and monitor their services to the Fund. The
Distributor shall also assist Idex Management and the Fund in maintaining
communications and relations with shareholders of the Fund, answer shareholder
inquiries or supervise such activity by the Fund's transfer agent, assist in
preparation of reports to shareholders of the Fund and prepare sales literature
promoting sale of the Fund shares as requested by Idex Management and the Fund.
The Distributor shall provide the Fund with necessary office space, telephones
and other communications facilities. Upon the request of Idex Management, the
Distributor shall also perform such administrative and clerical functions,
including recordkeeping and bookkeeping functions, daily pricing of the Fund
shares and preparation of reports and returns, as Idex Management reasonably
requests; provided that Idex Management shall reimburse the Distributor at least
monthly for all costs and expenses reasonably incurred by the Distributor in
connection with the performance of such functions.
2. OBLIGATIONS OF IDEX MANAGEMENT. Idex Management shall have the
following obligations under this Agreement:
(a) to provide the Distributor with access to all information,
documents and records of and about the Fund that are necessary to permit the
Distributor to carry out its functions and responsibilities under this
Agreement;
(b) to furnish the Distributor with a certified copy of any financial
statement or report prepared for the Fund by certified or independent public
accountants, and with copies of any financial statements or reports made by the
Fund to its shareholders or to any governmental body or securities exchange;
(c) to compensate the Distributor for its services under this Agreement
by the payment of fees equal to (i) 50% of the fees received by Idex Management
pursuant to Section 5 of the Advisory Agreement for services rendered by Idex
Management to the Fund during the term of this Agreement, less (ii) 100% of any
amount reimbursed to the Fund by Idex Management pursuant to the provisions of
Section 7 of the Advisory Agreement to the extent that such reimbursement is no
greater than any amount paid by the Fund to Idex Management to reimburse Idex
Management
<PAGE>
for accounting and recordkeeping services furnished to the Fund pursuant to
Section 2 of the Advisory Agreement, and 50% of any amount reimbursed to the
Fund by Idex Management pursuant to the provisions of Section 7 of the Advisory
Agreement to the extent that such reimbursement exceeds the aforesaid amount
paid by the Fund to Idex Management. In the event that this Agreement shall be
effective for only part of a period to which any such fee received by Idex
Management is attributable, then an appropriate proration of the fee that would
have been payable hereunder if this Agreement had remained in effect until the
end of such period shall be made, based on the number of calendar days in such
period and the number of calendar days during the period in which this Agreement
was in effect. The fees payable to the Distributor hereunder shall be payable
upon receipt by Idex Management from the Fund of fees payable to Idex Management
under Section 5 of the Advisory Agreement.
(d) the fees payable to the Distributor under paragraph (c) above
shall, notwithstanding the provisions of paragraph (c), be subject to reduction
as follows: If on December 31 of 1991 and each year thereafter ("Target Date")
the aggregate actual net assets on that date of the Fund, IDEX II, IDEX Fund 3,
IDEX Total Income Trust and any other registered investment company sponsored by
Idex Management, containing the name IDEX or with respect to which Idex
Management acts as investment adviser or administrator, and to which Janus
Capital Corporation ("Janus Capital") provides investment advice (the "Advised
Funds") are less that the applicable Target Net Assets specified in Table 1
below, then Idex Management shall pay to Janus Capital a percentage, as
specified in Table 2 below, of the Net Fee otherwise payable to the Distributor
pursuant to paragraph (c) above.
<TABLE>
<CAPTION>
TABLE 1
-------
ADVISED FUNDS
TARGET DATE TARGET NET ASSETS
----------- -----------------
<S> <C>
December 31, 1991 $450 million
December 31, 1992 $700 million
December 31, 1993 (and $950 million
December 31 of each
year thereafter)
</TABLE>
The percentage of the Net Fee otherwise payable to the Distributor pursuant to
paragraph (c) above that is instead payable to Janus Capital shall be determined
by the percentage that on the applicable Target Date the aggregate actual net
assets of the Advised Funds are less than the applicable Target Net Assets of
the Advised Funds ("Shortfall of Target") in accordance with Table 2 below:
<TABLE>
<CAPTION>
TABLE 2
-------
SHORTFALL OF TARGET PERCENTAGE OF NET FEE
------------------- ---------------------
<S> <C>
5% - 10% 10%
Over 10% - 20% 20%
Over 20% - 30% 30%
Over 30% 40%
</TABLE>
No fees shall be payable to Janus Capital and no reduction in the
fees payable to the Distributor under this paragraph (d) shall be made for any
year if, for the five-year period ending December 31 of the preceding year, the
respective total returns of a majority of the Advised Funds that have the
objective of investing primarily in equity securities with such a five-year
record (and with respect to which Janus Capital shall have provided investment
advice for all of such five years and for the then current year) are not in the
top one-third of their respective fund categories as determined by Lipper
Analytical Services, Inc. or its successor (or if no successor exists, by a
mutually agreed upon statistical service).
- 2 -
<PAGE>
3. INVESTMENT COMPANY ACT COMPLIANCE. In performing services hereunder,
the Distributor shall at all times comply with the applicable provisions of the
Investment Company Act of 1940 and any other federal state securities laws.
4. PURCHASE BY AFFILIATES. Neither the Distributor nor any of its officers
or Directors shall take a long or short position in the securities issued by the
Fund. This prohibition, however, shall not prevent the purchase from the Fund of
shares issued by the Fund to the officers and Directors of the Distributor (or
deferred benefit plans established for their benefit) at the current price
available to the public, or at such price with reductions in sales charge as may
be permitted by the Fund's current prospectus, in accordance with Section 22 of
the Investment Company Act of 1940.
5. TERMINATION. This Agreement shall terminate automatically upon the
termination of the Advisory Agreement. This Agreement may be terminated at any
time, without penalty, by Idex Management or by the Fund by giving 60 days'
written notice of such termination of the Distributor at its principal place of
business, provided that such termination is approved by the Trustees of the Fund
or by vote of a majority of the outstanding voting securities (as that phrase is
defined in Section 2(a)(42) of the Investment Company Act of 1940, as amended)
of the Fund. This Agreement may be terminated at any time by the Distributor by
giving 60 days' written notice of such termination to the Fund and Idex
Management at their respective principal places of business.
6. ASSIGNMENT. This Agreement shall terminate automatically in the event
of any assignment (as that term is defined in Section 2(a)(4) of the Investment
Company Act of 1940, as amended) of this Agreement.
7. TERM. This Agreement shall continue in effect, unless sooner terminated
in accordance with its terms, for one year from the date hereof, and shall
continue in effect from year to year thereafter only so long as such continuance
is specifically approved at least annually by the vote of a majority of the
Trustees of the Fund who are not parties hereto or interested persons (as that
term is defined in Section 2(a)(19) of the Investment Company Act of 1940, as
amended) of any such party, cast in person at a meeting called for the purpose
of voting on the approval of the terms of such renewal, and by either the
Trustees of the Fund or the affirmative vote of a majority of the outstanding
voting securities of the Fund (as that phrase is defined in Section 2(a)(42) of
the Investment Company Act of 1940, as amended).
8. AMENDMENTS. This Agreement may be amended only by written instrument
signed by the parties hereto.
9. PRIOR AGREEMENTS. This agreement supersedes all prior agreements
between the parties relating to the subject matter hereof, and all such prior
agreements are deemed terminated upon the effectiveness of this agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date first above written.
ATTEST: INTERSECURITIES, INC.
/s/ WILLIAM H. GEIGER By: /s/ JOHN R. KENNEY
- ----------------------------- -------------------------------------
William H. Geiger, Secretary John R. Kenney, Chairman of the Board
ATTEST: IDEX MANAGEMENT, INC.
/s/ WILLIAM H. GEIGER By: /s/ G. JOHN HURLEY
- ----------------------------- -------------------------------------
William H. Geiger, Secretary G. John Hurley, President and Chief
Executive Officer
- 3 -
Exhibit 6(a)
IDEX FUND
UNDERWRITING AGREEMENT
This Agreement is entered into as of April 22, 1992, between IDEX FUND,
a Massachusetts business trust (the "Fund"), and InterSecurities, Inc. (formerly
known as Idex Distributors, Inc.), a Delaware corporation (the "Distributor").
It is the purpose of this Agreement to express the mutual desire and agreement
of the parties that the Distributor act as principal underwriter of the Fund's
shares and use its best efforts to sell shares of the Fund as the Fund's
exclusive agent for the distribution of its shares. In consideration of their
mutual promises and undertakings set forth below, the parties agree as follows:
1. APPOINTMENT AND AUTHORITY OF AGENT. The Fund appoints the
Distributor as its principal underwriter, to sell shares of beneficial interest
of the Fund during the term of this Agreement. While this Agreement is in force,
the Distributor agrees to use its best efforts to find purchasers for such
shares of the Fund.
The Distributor shall sell, as agent on behalf of the Fund, the shares
needed, but not more than the shares needed (except for clerical errors and
errors of transmission) to fill unconditional orders placed with the
Distributor, and the price which the Fund shall receive for shares so purchased
shall be the net asset value used in determining the public offering price on
which such orders were based. (The term "net asset value" as used in this
Agreement shall have the meaning assigned to it in the Fund's Declaration of
Trust, as amended from time to time.)
The Distributor shall notify the Custodian of the Fund, at the end of
each business day, or as soon thereafter as the orders placed with it in such
period have been compiled, of the number of shares and the prices thereof which
the Distributor shall have sold on behalf of the Fund. The Distributor shall use
its best efforts to cause the sums due for shares ordered from the Fund to be
collected or to be advanced to the Fund on behalf of the purchasers on or before
the seventh business day (excluding Saturdays) after the shares have been so
ordered.
The agency of the Distributor shall be exclusive, except that it shall
not apply to (1) shares issued in connection with the merger or consolidation of
any other investment company or entity with the Fund or the non-taxable
acquisition, by purchase or otherwise, of all (or substantially all) of the
assets or the outstanding shares of any company by the Fund, or (2) shares which
may be offered by the Fund to its shareholders for reinvestment of dividends and
capital gains distributions, whether declared in cash or in shares or cash at
the option of the shareholder.
<PAGE>
The Fund may suspend the sale of its shares at any time by notice to
the Distributor for such period of time as the Fund deems desirable. Such a
suspension of sales shall not effect a termination of this Agreement.
2. TERMS OF SALE OF SHARES. The Fund's shares shall be sold by the
Distributor as agent on behalf of the Fund to dealers having sales agreements
with the Distributor and to investors upon the terms and conditions (including
minimum purchase requirements) set forth in the current prospectus relating to
the Fund's shares and (to the extent not inconsistent with said prospectus) upon
the following terms and conditions:
a. PUBLIC OFFERING PRICE. The public offering price, which means the
price per share at which the Distributor or a dealer purchasing shares from the
Fund may sell shares to the public, shall be based upon the per share net asset
value determined as of the time specified in the then current prospectus
relating to the Fund's shares. The public offering price shall not exceed the
per share net asset value on the basis of which the applicable public offering
price is determined plus a sales charge as described in the then current
prospectus relating to the Funds' shares, which shall not exceed 8.5% of the
public offering price. The public offering price shall be adjusted to the nearer
cent. The Distributor shall fix, in its agreements with dealers, the portion of
the sales charge which may be reallowed to the dealers on the purchase of shares
from the Fund.
b. DETERMINATION OF NET ASSET VALUE. The Fund shall determine the net
asset value of the shares of the Fund (or cause such net asset value to be
determined) as of the close of the New York Stock Exchange on each business day
on which said Exchange is open, in accordance with the method set forth in the
Declaration of Trust. Upon due notice to the Distributor, the Fund may also
employ other methods or times in calculation of net asset value, to the extent
authorized by its Declaration of Trust and consistent with applicable federal
laws and the rules of the National Association of Securities Dealers, Inc. The
Fund shall also have the right to suspend the sale of its shares and the
calculation of net asset value if, because of some extraordinary condition, the
New York Stock Exchange shall be closed, or if, in the judgment of a majority of
the members of the Trustees of the Fund, or its Executive Committee, conditions
existing during the hours when said Exchange is open render such action
advisable.
c. CONFIRMATIONS. The Distributor shall issue and deliver on behalf of
the Fund or cause to be issued and delivered all confirmations of transactions
effected hereunder for the account of the Fund.
3. NECESSARY CORPORATE ACTION. The Fund agrees that it will, from time
to time, but subject to any necessary approval of its shareholders, take all
appropriate action fixing the number of its authorized shares, and such other
steps as may be necessary to register the same under the Securities Act of 1933,
to the end that there will be available for sale such number of shares as the
Distributor may reasonably be expected to sell. The Fund plans to discontinue
sales of its shares except to existing shareholders when it reaches $500,000,000
in net assets.
2
<PAGE>
4. INDEMNITY OF FUND BY DISTRIBUTOR. The Distributor will indemnify and
hold harmless the Fund and each of its officers and trustees and each person, if
any, who controls the Fund within the meaning of Section 15 of the Securities
Act of 1933, against any loss, liability, damage, claim, or expense (including
the reasonable cost of investigating or defending any alleged loss, liability,
damage, claim or expense and reasonable counsel fees incurred in connection
therewith), arising by reason of or in connection with any person acquiring any
shares of the Fund, which may be based upon the Securities Act of 1933 or any
other statute or on the common law, on account of any wrongful act of the
Distributor or any of its employees or on the ground that the registration
statement or prospectus, as from time to time amended and supplemented, includes
an untrue statement of a material fact or omits to state a material fact
required to be stated therein or necessary in order to make the statements
therein not misleading, insofar as any such statement or omission was made in
reliance upon, and in conformity with, information furnished to the Fund in
connection therewith by or on behalf of the Distributor, provided, however, that
in no case shall (1) the indemnity of the Distributor in favor of any person
indemnified be deemed to protect the Fund or any such person against any
liability to which the Fund or any such person would otherwise be subject by
reason of willful misfeasance, bad faith, or gross negligence in the performance
of its (or his) duties or by reason of its (or his) reckless disregard of its
(or his) obligations and duties under this Agreement, or (2) the Distributor be
liable under its indemnity agreement contained in this paragraph with respect to
any claim made against the Fund or any person indemnified unless the Fund or
such person, as the case may be, shall have notified the Distributor in writing
within a reasonable time after the summons or first legal process giving notice
of the claim shall have been served upon the Fund or upon such person (or after
the Fund or such person shall have received notice of such service on any
designated agent), but failure to notify the Distributor of any such claim shall
not relieve it from any liability which it may have to the Fund or any person
against whom such action is brought otherwise than on account of its indemnity
agreement contained in this paragraph. In the case of any such notice to the
Distributor, it shall be entitled to participate, at its own expense, in the
defense or, if it so elects, to assume the defense of any suit brought to
enforce any such liability, but, if the Distributor elects to assume the
defense, such defense shall be conducted by counsel chosen by it and
satisfactory to the Fund, and to those of its officers, trustees or controlling
persons who are defendants in the suit. In the event that the Distributor elects
to assume the defense of any such suit and retain such counsel, the Fund and
those of its officers, trustees or controlling persons who are defendants in the
suit shall bear the fees and expenses of any additional counsel retained by
them, but, in case the Distributor does not elect to assume the defense of any
such suit, it shall reimburse them for the reasonable fees and expenses of any
counsel so retained by them. The Fund agrees to notify the Distributor promptly
of the commencement of any litigation or proceedings against it in connection
with the issue and sale of any of the shares.
5. INDEMNITY OF DISTRIBUTOR BY FUND. The Fund will indemnify and hold
harmless the Distributor and each of its officers and directors and each person,
if any, who controls the Distributor within the meaning of Section 15 of the
Securities Act of 1933 against any loss, liability, claim, damage or expense
(including the reasonable cost of investigating or defending any alleged loss,
liability, claim, damage or expense and reasonable counsel fees incurred in
connection therewith), arising by reason of or in connection with any person
acquiring any of its shares, which may be based upon the Securities Act of 1933
or on any other statute or on the common law, on the ground
3
<PAGE>
that the registration statement or prospectus, as from time to time amended and
supplemented, includes an untrue statement of a material fact or omits to state
a material fact required to be stated therein or necessary in order to make the
statement therein not misleading, unless such statement or omission was made in
reliance upon, and in conformity with, information furnished to the Fund in
connection therewith by or on behalf of the Distributor; provided, however, that
in no case shall (1) the indemnity of the Fund in favor of the Distributor and
any such controlling person be deemed to protect the Distributor or any such
controlling person against any liability to which the Distributor (or any such
controlling person) would otherwise be subject by reason of its willful
misfeasance, bad faith, or gross negligence in the performance of its (or his)
duties or by reason of its (or his) reckless disregard of its (or his)
obligations and duties under this Agreement, or (2) the Fund be liable under its
indemnity agreement contained in this paragraph with respect to any claim made
against the Distributor (or any such controlling person) unless the Distributor
or such controlling person, as the case may be, shall have notified the Fund in
writing within a reasonable time after the summons or first legal process giving
notice of the claim shall have been served upon the Distributor or upon such
controlling person (or after such Distributor or controlling person shall have
received notice of such service on any designated agent), but failure to notify
the Fund of any such claim shall not relieve it from any liability which it may
have to the person against whom such action is brought otherwise than on account
of its indemnity agreement contained in this paragraph. The Fund will be
entitled to participate at its own expense in the defense or, if it so elects,
to assume the defense of any suit brought to enforce any such liability, but, if
the Fund elects to assume the defense, such defense shall be conducted by
counsel chosen by it and satisfactory to the Distributor and to the controlling
persons who are defendants in the suit. In the event the Fund elects to assume
the defense of any such suit and retain such counsel, the Distributor or persons
who are defendants in the suit shall bear the fees and expenses of any
additional counsel retained by them, but, in case the Fund does not elect to
assume the defense of any such suit, it will reimburse them for the reasonable
fees and expenses of any counsel so retained by them. The Distributor agrees to
notify the Fund promptly of the commencement of any litigation or proceedings
against it or any of its officers or directors in connection with the issuance
or sale of any of the shares.
6. COMPLIANCE WITH SECURITIES LAWS. The Distributor, in selling the
shares of the Fund, will in all respects duly conform with all federal and state
laws relating to the sale of such securities.
7. AUTHORIZED REPRESENTATIONS. Neither the Distributor, any dealer nor
any other person is authorized by the Fund to give any information or to make
any representations, other than those contained in the registration statement or
prospectus filed with the Securities and Exchange Commission under the
Securities Act of 1933, as amended (as said registration statement and
prospectus may be amended or supplemented from time to time), covering the
shares of the Fund, or in such other sales literature as the Fund may expressly
authorize the Distributor to use. No dealer (except the Distributor acting as
agent of the Fund for the account of the Fund) is authorized to act as agent for
the Fund in connection with the offering or sale of shares of the Fund to the
public or otherwise.
8. COSTS TO BE INCURRED BY DISTRIBUTOR. In addition to the expenses
which the Distributor may incur in the performance of its own functions under
this Agreement, and the expenses which
4
<PAGE>
it may expressly undertake to pay under other agreements with the Fund or
otherwise, the Distributor will pay:
a. The expenses of printing and distributing prospectuses (in addition
to those required for filing with federal and state agencies) and preparing,
printing and distributing all other sales literature used by the Distributor or
by dealers (including copies of the Fund's reports to shareholders or federal or
state regulatory agencies, in addition to those needed for the regular mailing
or filing, which the Fund may permit to be used as sales literature) in
connection with the offering of Fund shares for sale to the public and any
expenses of advertising in connection with such offering. The Fund will pay all
of its own expenses, except as expressly provided herein or in any other
agreements which the Fund may have with the Distributor or any other person.
9. VOLUNTARY REPURCHASE OF SHARES BY THE FUND. The Fund reserves the
right, by resolution of its Trustees, to authorize and require the Distributor
to repurchase, upon prices, terms and conditions to be set forth in such
resolution, as agent of the Fund and for its account, such shares of the Fund as
may be offered for voluntary repurchase by the Fund from time to time.
10. LONG OR SHORT POSITIONS. The Distributor agrees that it will not
take any long or short positions in the shares of the Fund except to the extent
contemplated by paragraphs 1 and 9 above, and that, so far as it can control the
situation, it will prevent any officer or director of (or person financially
interested in) the Distributor from taking any long or short position in the
shares of the Fund, except as permitted by the Declaration of Trust of the Fund
and by those portions of its Bylaws which are not subject to amendment except by
the shareholders of the Fund.
11. AMENDMENTS. This Agreement may be supplemented or amended by mutual
consent of the parties, provided that no amendment hereto shall be effective
unless approved by a majority of the trustees of the Fund who are not interested
persons (as that term is defined in Section 2(a)(19) of the Investment Company
Act of 1940, as amended) of the Distributor, cast in person at a meeting called
for the purpose of voting on such approval. If, at any time during the existence
of this Agreement, the Fund shall in good faith deem it necessary or advisable
in the best interests of the Fund that any amendment of this Agreement be made
in order to comply with the recommendations or requirements of the Securities
and Exchange Commission or other governmental authority or to obtain any proper
advantage under federal or state tax laws, and shall notify the Distributor of
the form of amendment which it deems necessary or advisable and the reasons
therefor, and, if the Distributor declines to assent to such amendment, the Fund
may terminate this Agreement immediately, upon written notice. If, at any time
during the existence of this Agreement, upon request by the Distributor, the
Fund fails (after a reasonable time) to make any changes in its governing
instruments, or in its methods of doing business, which are in good faith deemed
by the Distributor to be necessary in order to comply with federal law or the
lawful requirements of the Securities and Exchange Commission or of the National
Association of Securities Dealers, Inc. relating to the sale of the shares of
the Fund, the Distributor may terminate this Agreement immediately, upon written
notice.
5
<PAGE>
12. TERM. This Agreement shall continue in effect unless sooner
terminated in accordance with its terms for one year from the date hereof and
shall continue in effect from year to year thereafter only so long as such
continuance is specifically approved at least annually by the Trustees of the
Fund or by the affirmative vote of a majority of the outstanding voting
securities of the Fund (as that phrase is defined in Section 2(a)(42) of the
Investment Company Act of 1940, as amended); provided that no renewal hereof
shall be effective unless the terms of such renewal have been approved by the
vote of a majority of the Trustees of the Fund who are not interested parties
(as that term is defined in Section 2(a)(19) of the Investment Company Act of
1940, as amended) of the Distributor, cast in person at a meeting called for the
purpose of voting on the approval of the terms of such renewal. Either party
shall have the right to terminate this Agreement upon 60 days' written notice
given to the other party.
13. ASSIGNMENT. In the event of the assignment (as defined in Section
2(a)(4) of the Investment Company Act of 1940, as amended) of this Agreement by
the Distributor, this Agreement shall automatically terminate.
14. PRIOR AGREEMENTS. This agreement supersedes all prior agreements
between the parties relating to the subject matter hereof, and all such prior
agreements are deemed terminated upon the effectiveness of this agreement.
15. LIMITATION OF LIABILITY. A copy of the Fund's Declaration of Trust
is on file with the Secretary of The Commonwealth of Massachusetts, and notice
is hereby given that this Agreement is executed on behalf of the Trustees as
Trustees of the Fund and not individually, and that the obligations under this
Agreement are not binding upon any of the Trustees, officers, shareholders,
agents or employees of the Fund individually, but binding only upon the assets
and property of the Fund.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first appearing above.
ATTEST: IDEX FUND
/s/ PAMELA C. DILS By: /s/ G. JOHN HURLEY
- ----------------------------- -------------------------------------
Pamela C. Dils, Secretary G. John Hurley, President and Chief
Executive Officer
ATTEST: INTERSECURITIES, INC.
/s/ WILLIAM H. GEIGER By: /s/ JOHN R. KENNEY
- ----------------------------- -------------------------------------
William H. Geiger, Secretary John R. Kenney, Chairman of the Board
6
Exhibit 6(b)
IDEX FUND InterSecurities, Inc.
IDEX II SERIES FUND 201 Highland Avenue
CASH EQUIVALENT FUND Largo, FL 34640
Telephone: (813) 585-6565
Dated: __________________
Ladies and Gentlemen: PART I
IDEX FUND
DEALER'S SALES AGREEMENT
We have entered into an underwriting agreement with IDEX Fund (the
"Fund") whereby we will act as Principal Underwriter as defined in the
Investment Company Act of 1940, with the right to purchase shares of beneficial
interest of the Fund for sale of such shares to investors either directly or
indirectly through other broker-dealers. As Principal Underwriter, we offer to
sell to you shares of the Fund subject to the following conditions:
1. In all sales of shares to the public you shall act as dealer
for your own account.
2. On purchases of shares, you shall receive a discount amounting
to a percentage of the applicable public offering price as set
forth in the then current prospectus for the Fund. Such
payment shall be subject to all of the terms and conditions
relating thereto as set forth in the then current prospectus
for the Fund.
We shall pay to you an Administrative Services Fee, computed
on an annual basis and paid quarterly, in the amount of ten
basis points (1/10 of 1%) of the average daily aggregate value
(at net asset value) of shares of the Fund and IDEX Fund 3
held by your clients, provided that the average daily net
asset value of such shares held by your clients are at least
equal to $500,000 throughout each quarter. Payment of this
Administrative Services Fee or the terms thereof, may be
modified or terminated at any time.
3. You represent that you are, and at the time of purchasing any
shares of the Fund will be, a member in good standing of the
National Association of Securities Dealers, Inc.
4. Orders received from you will be accepted by us only at the
public offering price applicable to each order as established
by the then current Prospectus of the Fund. The procedure
relating to handling orders shall be subject to instructions
which we shall forward to you from time to time. All orders
are subject to acceptance or rejection by us in our sole
discretion.
5. You agree to purchase shares only from us or from your
customers. If you purchase shares from us, you agree that all
such purchases shall be made only to cover orders already
received by you from your customers, or for your own bona fide
investment.
If you purchase shares from your customers, you agree to pay
such customers not less than the redemption price in effect on
the date of purchase, as defined in the Prospectus of the
Fund. We in turn agree that we will not purchase any shares
from the Fund except for the purpose of covering purchase
orders which we have already received.
6. You shall sell shares only (a) to customers at the public
offering price then in effect and (b) to the Fund or to any
dealer who is a member of the National Association of
Securities Dealers, Inc. at the redemption price in effect on
the date of sale.
7. Only unconditional orders for shares of a definite specified
price will be accepted.
8. If any shares sold to you under the terms of this agreement
are repurchased by the Fund or are tendered for redemption
within seven business days after the date of confirmation, it
is agreed that you shall forfeit your right to any discount
received by you on such shares.
9. Remittance of the net amount due for shares purchased from us
shall be made payable to Idex Investor Services, Inc., Agent
for the Underwriter, promptly, but in no event later than the
maximum amount of time legally permissible after our
confirmation of sale to you (currently, three business days).
Such payment should be sent, together with stock transfer
stamps required on account of the sale by you, to Idex
Investor Services, Inc., P.O. Box 9015, Clearwater, FL
34618-9015, with your transfer instructions on the appropriate
copy of our confirmation of sale to you. If such payment is
not received by Idex Investor Services, Inc., we reserve the
right, without notice, forthwith to cancel the sale.
10. Promptly upon receipt of payment, shares sold to you shall be
deposited by us or our agent, Idex Investor Services, Inc. No
certificates will be issued unless specifically requested.
11. No person is authorized to make any representations concerning
shares of the Fund except those contained in the current
Prospectus for the Fund and in supplements thereto. In
purchasing shares from us you shall rely solely on the
representations contained in the Prospectus for the Fund and
supplements thereto.
<PAGE>
12. Additional copies of the current Prospectus and supplements
thereto and other literature will be supplied by us in
reasonable quantities upon request.
13. Certain of your registered representatives may, from time to
time, request access to certain account information with
respect to the shares of the Fund (the "Account Information")
via downloading of such Account Information to an electronic
mailbox which will be accessed by the registered
representative through his or her personal computer. The
Account Information will be accessed by the registered
representative via software purchased from an outside vendor
to whom the Fund provides access to the Account Information.
In exchange for the cooperation of the Fund and of
InterSecurities, Inc. in providing access to the Account
Information for the convenience of the registered
representatives, you agree that it is your sole responsibility
to oversee and supervise your registered representatives in
the utilization of such Account Information, including
verification of the accuracy of all written material produced
by a registered representative from the Account Information.
Further, you are solely responsible for ensuring that all
NASD, SEC and other regulations are fully complied with by the
registered representatives in connection with the utilization
of and preparation of any written or oral material from the
Account Information. You shall fully indemnify and hold
harmless the undersigned and the Fund from any and all claims
made against them by any party with respect to your registered
representatives' use of such Account Information.
14. We reserve the right in our discretion, without notice, to
suspend sales or withdraw the offering of shares entirely or
to modify or cancel this agreement.
15. We both hereby agree to abide by the Rules of Fair Practice of
the National Association of Securities Dealers, Inc. ("NASD
Rules"). Specifically, and without limiting the foregoing, we
both hereby agree that sales of the shares shall be effected
in accordance with Section 2 and Section 26 of the NASD Rules,
as interpreted by the NASD.
16. All communications to us should be sent to the above address.
Any notice to you shall be duly given if mailed or telegraphed
to you at your address specified below. This agreement shall
be construed in accordance with the laws of Florida.
17. Your registered representatives may, from time to time, assist
your customers in determining and documenting such customers'
eligibility for reductions in, or waivers of, front end sales
charges to which shares may be subject. You agree that it is
your responsibility to oversee and supervise the activities of
your registered representatives in connection with the sale
and redemption of shares of the Fund, including verification
of the eligibility of customers for reductions in, or waivers
of, sales charges to the extent that your registered
representatives assist customers in determining and
documenting such eligibility. You shall fully indemnify and
hold harmless the undersigned and the Fund from any and all
losses sustained by them as a result of any inaccurate, or
incomplete, representations made by your registered
representatives or your customers in connection with
eligibility for reductions in, or waivers of, sales charges,
if and to the extent that you or your registered
representatives knew, or should have known, of such
inaccuracies or omissions.
PART II
IDEX II SERIES FUND
DEALER'S SALES AGREEMENT
We have entered into an underwriting agreement with IDEX II Series Fund
(the "IDEX II Fund") whereby we will act as Principal Underwriter as defined in
the Investment Company Act of 1940, with the right to purchase shares of
beneficial interest of the IDEX II Fund for sale of such shares to investors
either directly or indirectly through other broker-dealers. As Principal
Underwriter, we offer to sell to you the various series and classes of shares of
the IDEX II Fund (the "Fund") representing the various Portfolios of the IDEX II
Fund (each Portfolio and class thereof referred to individually as a "Portfolio"
or "Class", as applicable, and collectively, the "Portfolios" or "Classes", as
applicable), subject to the following conditions:
18. In all sales of shares to the public you shall act as dealer
for your own account.
19. On purchases of Class A Portfolio shares, you shall receive a
discount amounting to a percentage of the applicable public
offering price, as set forth in the then current prospectus
for the Portfolio. On purchases of Class B Portfolio shares,
you shall receive a commission amounting to a percentage of
the net asset value, as set forth in the then current
prospectus for the Portfolio. Such payment shall be subject to
all of the terms and conditions relating thereto as set forth
in the then current prospectus for the Class A and Class B
shares of the Portfolio. In addition to the discount or
commission payable to you pursuant to this Section 2: (a) for
your distribution, marketing and/or administrative services in
the promotion and sale of Portfolio shares, we shall,
providing this Agreement is in force, pay to you a fee as to
each Class of shares of a Portfolio sold by you, computed on
an annual basis and paid quarterly, to the extent and in the
amount such fee, if any, is set forth in the then current
prospectus for the applicable Class of the Portfolio based on
a percentage of the average daily aggregate value (at net
asset value) of shares of the applicable Class of the
Portfolio held by your clients; and (b) for your personal
service and/or maintenance of shareholder accounts with
respect to your customers who own shares of a Portfolio, we
shall, providing this Agreement is in force, pay to you a fee
as to each Class of shares of a Portfolio computed on an
annual basis and paid quarterly, to the extent and in the
amount such fee, if any, is set forth in the then current
prospectus for the applicable Class of the Portfolio based on
a percentage of the average daily aggregate value (at net
asset value) of shares of the applicable Class of the
Portfolio held by your clients. Payment of these fees or the
terms thereof, may be modified or terminated by us at any
time.
20. You represent that you are, and at the time of purchasing any
shares of a Portfolio will be, a member in good standing of
the National Association of Securities Dealers, Inc.
- 2 -
<PAGE>
21. Orders received from you will be accepted by us only at the
public offering price applicable to each order as established
by the then current Prospectus applicable to the particular
shares of the IDEX II Fund. The procedure relating to handling
orders shall be subject to instructions which we shall forward
to you from time to time. All orders are subject to acceptance
or rejection by us in our sole discretion.
22. You agree to purchase shares only from us or from your
customers. If you purchase shares from us, you agree that all
such purchases shall be made only to cover orders already
received by you from your customers, or for your own bona fide
investment.
If you purchase shares from your customers, you agree to pay
such customers not less than the redemption price in effect on
the date of purchase, as defined in the then current
Prospectus applicable to the particular shares of the IDEX II
Fund. We in turn agree that we will not purchase any shares
from the IDEX II Fund except for the purpose of covering
purchase orders which we have already received.
23. You shall sell shares only (a) to customers at the public
offering price then in effect and (b) to the IDEX II Fund or
to any dealer who is a member of the National Association of
Securities Dealers, Inc. at the redemption price in effect
with respect to the particular shares on the date of sale.
24. Only unconditional orders for shares of a definite specified
price will be accepted.
25. If any shares sold to you under the terms of this agreement
are repurchased by the Fund or are tendered for redemption
within seven business days after the date of confirmation, it
is agreed that you shall forfeit your right to any discount
received by you on such shares.
26. Remittance of the net amount due for shares purchased from us
shall be made payable to Idex Investor Services, Inc., Agent
for the Underwriter, promptly, but in no event later than the
maximum amount of time legally permissible after our
confirmation of sale to you (currently, three business days).
Such payment should be sent, together with stock transfer
stamps required on account of the sale by you, to Idex
Investor Services, Inc., P. O. Box 9015, Clearwater, FL
34618-9015, with your transfer instructions on the appropriate
copy of our confirmation of sale to you. If such payment is
not received by Idex Investor Services, Inc., we reserve the
right, without notice, forthwith to cancel the sale.
27. Promptly upon receipt of payment, shares sold to you shall be
deposited by us or our agent, Idex Investor Services, Inc. No
certificates will be issued unless specifically requested.
28. No person is authorized to make any representations concerning
shares of a Portfolio except those contained in the then
current Prospectus applicable to the particular shares of the
IDEX II Fund and in supplements thereto. In purchasing shares
from us you shall rely solely on the representations contained
in the Prospectus applicable to the particular shares of the
Fund and supplements thereto.
29. Additional copies of the current Prospectus and supplements
thereto and other literature will be supplied by us in
reasonable quantities upon request.
30. Certain of your registered representatives may, from time to
time, request access to certain account information with
respect to the shares of the Fund (the "Account Information")
via downloading of such Account Information to an electronic
mailbox which will be accessed by the registered
representative through his or her personal computer. The
Account Information will be accessed by the registered
representative via software purchased from an outside vendor
to whom the Fund provides access to the Account Information.
In exchange for the cooperation of the Fund and of
InterSecurities, Inc. in providing access to the Account
Information for the convenience of the registered
representatives, you agree that it is your sole responsibility
to oversee and supervise your registered representatives in
the utilization of such Account Information, including
verification of the accuracy of all written material produced
by a registered representative from the Account Information.
Further, you are solely responsible for ensuring that all
NASD, SEC and other regulations are fully complied with by the
registered representatives in connection with the utilization
of and preparation of any written or oral material from, the
Account Information. You shall fully indemnify and hold
harmless the undersigned and the Fund from any and all claims
made against them by any party with respect to your registered
representatives' use of such Account Information.
31. We reserve the right in our discretion, without notice, to
suspend sales or withdraw the offering of shares entirely or
to modify or cancel this agreement.
32. We both hereby agree to abide by the NASD Rules. Specifically,
and without limiting the foregoing, we both hereby agree that
sales of the shares of each Portfolio, and each Class thereof,
shall be effected in accordance with Section 2 and Section 26
of the NASD Rules, as interpreted by the NASD.
33. All communications to us should be sent to the above address.
Any notice to you shall be duly given if mailed or telegraphed
to you at your address specified below. This agreement shall
be construed in accordance with the laws of Florida.
34. You agree to abide by the Sales Compliance Policies Relating
to the Multiple Class Distribution System, attached to this
Agreement as Appendix A, with respect to each Portfolio of the
IDEX II Fund and to include such Sales Compliance Policies in
your internal guidelines for sales compliance.
- 3 -
<PAGE>
35. Your registered representatives may, from time to time, assist
your customers in determining and documenting such customers'
eligibility for reductions in, or waivers of, front end sales
charges or contingent deferred sales charges to which one or
more Classes of shares may be subject. You agree that it is
your responsibility to oversee and supervise the activities of
your registered representatives in connection with the sale
and redemption of shares of the Portfolios, including
verification of the eligibility of customers for reductions
in, or waivers of, sales charges to the extent that your
registered representatives assist customers in determining and
documenting such eligibility. You shall fully indemnify and
hold harmless the undersigned and the Fund from any and all
losses sustained by them as a result of any inaccurate, or
incomplete, representations made by your registered
representatives or your customers in connection with
eligibility for reductions in, or waivers of, sales charges,
if and to the extent that you or your registered
representatives knew, or should have known, of such
inaccuracies or omissions.
PART III
CASH EQUIVALENT FUND
SALES AGREEMENT
We have entered into a Services Agreement (the "KFS Agreement") with
Kemper Financial Services, Inc. ("KFS"), the administrator, distributor and
principal underwriter for CASH EQUIVALENT FUND ("CEF"), pursuant to which we
have agreed to sell shares of CEF and perform certain shareholder services and
provide certain facilities and equipment in connection with such services. The
KFS Agreement permits us to enter into agreements with other broker-dealers
pursuant to which such broker-dealers shall sell shares of CEF and we will
perform certain shareholder servicing functions with respect to CEF shares owned
by the clients of such broker-dealers. Accordingly, we agree as follows:
36. SALE OF CEF SHARES. You shall sell shares of CEF to the public
in accordance with the terms and conditions set forth in this
Agreement:
(a) You shall offer and sell CEF shares only in states
where they may legally be sold.
(b) In all sales of CEF shares to the public, you shall
act as dealer for your own account, and you shall not
have authority to act as agent for CEF, for KFS, for
InterSecurities, Inc., or for any representative or
agent of such parties.
(c) All orders shall be subject to acceptance or
rejection by KFS in its sole discretion, and will be
accepted by KFS only at the public offering price
applicable to each order as established by CEF's then
current prospectus. You may offer and sell CEF shares
to your customers only at the public offering price,
which is the net asset value per share as described
in CEF's prospectus. KFS will not accept any
conditional orders for shares. You shall place orders
for CEF shares in the manner set forth in CEF's
prospectus.
(d) You shall purchase shares only from KFS or your
client, and you shall not purchase shares from your
clients at a price lower than that quoted by or for
CEF. You may sell shares for the account of your
customer to CEF, or to KFS as agent for CEF, at the
price currently quoted by or for CEF.
(e) You will purchase shares from KFS only to cover
purchase orders already received from your clients or
for your own bona fide investment.
(f) You will not withhold placing with KFS orders
received from your clients so as to profit yourself
as a result of such withholding.
(g) All sales will be made subject to receipt by KFS of
shares from CEF.
37. UNAUTHORIZED REPRESENTATIONS. No person is authorized to make
any representations concerning shares of CEF except those
contained in the current prospectus of CEF and in supplemental
printed information subsequently issued by CEF or by KFS.
38. NASD MEMBERSHIP. You represent that you are, and at the time
of purchasing any shares of CEF will be, a member in good
standing of the National Association of Securities Dealers,
Inc.
39. AGREEMENTS OF INTERSECURITIES, INC.
(a) We agree to supply you with such reasonable number of
copies of CEF's prospectus and sales literature as
you may request.
(b) We shall perform the following services with respect
to your clients who own CEF shares: answer routine
client inquiries regarding CEF, assist clients in
changing dividend options, account designations and
addresses, and similar coordination of shareholder
matters with KFS and CEF, provided, however, that we
may terminate such service at any time upon written
notice to you. In the event that we cease to perform
such services, those services will be performed
directly by KFS.
(c) We shall pay you a fee after the end of each calendar
quarter in the amount of .10 of 1% of the average
aggregate daily net asset value of CEF shares owned
by your clients. In computing your fee, one-fourth of
the applicable fee rate shall be applied to the
average aggregate daily net asset value of such CEF
shares owned by your clients for the quarter in
question.
- 4 -
<PAGE>
Each quarter's fee shall be determined independently
of every other quarter's fee. For the quarter in
which this Agreement becomes effective or terminates,
there shall be an appropriate proration on the basis
of the number of days that the Agreement is in effect
during that quarter.
40. REPORTS. You shall prepare such reports as we may request in
order to comply with our reporting obligations to KFS.
41. DOWNLOADING OF ACCOUNT INFORMATION. Certain of your registered
representatives may, from time to time, request access to
certain account information with respect to the CEF shares
(the "Account Information") via downloading of such Account
Information to an electronic mailbox which will be accessed by
the registered representative through his or her personal
computer. The Account Information will be accessed by the
registered representative via software purchased from an
outside vendor to whom access to the Account Information is
provided. In exchange for the cooperation of the IDEX Group of
Funds and of InterSecurities, Inc. in providing access to the
Account Information for the convenience of the registered
representatives, you agree that it is your sole responsibility
to oversee and supervise your registered representatives in
the utilization of such Account Information, including
verification of the accuracy of all written material produced
by a registered representative from the Account Information.
Further, you are solely responsible for ensuring that all
NASD, SEC and other regulations are fully complied with by the
registered representatives in connection with the utilization
of and preparation of any written or oral material from, the
Account Information. You shall fully indemnify and hold
harmless the undersigned and the IDEX Group of Funds from any
and all claims made against them by any party with respect to
your registered representatives' use of such Account
Information.
42. TERMS AND TERMINATION. This Agreement shall become effective
on the date hereof and continue in effect until terminated.
This Agreement shall automatically terminate in the event of
its assignment and upon any termination of the KFS Agreement.
It may be terminated at any time by us or you on thirty (30)
days written notice.
43. NOTICES AND COMMUNICATIONS. All notices and communications to
us should by sent to the above address. Any notice to you
shall be duly given if mailed, hand delivered or telegraphed
to the address specified below.
Very truly yours,
InterSecurities, Inc.
By:_______________________________________
Registered Principal
The undersigned hereby accepts and agrees to the terms of this Agreement.
Firm Name: _______________________________
By: ______________________________________
Authorized Securities Principal
Name: ____________________________________
Title: ___________________________________
Address: _________________________________
_________________________________
Telephone: _______________________________
Federal Tax I.D.: ________________________
NASD CRD No.: ____________________________
(RETAIN A COPY AND RETURN THE ORIGINAL)
- 5 -
<PAGE>
APPENDIX A
TO
IDEX II SERIES FUND
DEALER'S SALES AGREEMENT
SALES COMPLIANCE POLICIES RELATING TO THE
MULTIPLE CLASS DISTRIBUTION SYSTEM
Effective October 1, 1995, each portfolio of IDEX II Series Fund (each
a "Portfolio" and collectively, the "Portfolios"), plans to offer three classes
of shares as follows:
Class A shares are ordinarily purchased with a front-end sales load and
are currently subject to an annual 12b-1 fee of up to .35% of the
average daily net assets of that Portfolio's Class A shares.
Class B shares are purchased with no front-end sales charge and are
currently subject to an annual 12b-1 fee of 1.00% of the average daily
net assets of that Portfolio's Class B shares. Class B shares are also
subject to a contingent deferred sales charge at a declining rate,
payable upon redemption of the shares during the first six years after
purchase. Class B shares automatically convert to Class A shares eight
years after purchase.
Class C shares are purchased with no front-end sales charge and are
currently subject to an annual 12b-1 fee of up to .90% (.60% for the
Tax-Exempt Portfolio) of the average daily net assets of that
Portfolio's Class C shares.
To assist investors in selecting the method of investing that best
meets their needs and to ensure proper supervision of mutual fund purchase
recommendations, we request that your internal guidelines include the following
policies:
(1) Any purchases of Portfolio shares for less than $500,000 may
be of shares either 1)subject to a front-end sales charge and
an ongoing 12b-1 fee of up to .35% of the average daily net
assets of those shares (Class A Shares); 2) subject to an
ongoing 12b-1 fee of 1.00% of the average daily net assets of
those shares, a contingent deferred sales charge on the lesser
of the original purchase price or redemption proceeds at a
declining rate for the six years following purchase as
follows: 5% during the first year, 4% during the second year,
3% during the third year, 2% during the fourth year, 1% during
the fifth and sixth years, and 0% after the sixth year, and
automatic conversion to Class A shares eight years after
purchase (Class B Shares); or 3) subject to no front-end sales
charge and a 12b-1 fee of up to .90% (.60% for the Tax-Exempt
Portfolio) of the average daily net assets of those shares
(Class C Shares).
(2) Any purchases of Portfolio shares for $500,000 or more but
less than $1,000,000 may be of shares either 1) subject to a
front-end sales charge and an ongoing 12b-1 fee of up to .35%
of the average daily net assets of those shares (Class A
shares); or 2) subject to no front-end sales charge and a
higher 12b-1 fee (Class C shares). Purchases of $500,000 or
more for Class B shares will be declined.
(3) Sales personnel should determine which class of shares best
meets the investor's needs based on the relevant facts and
circumstances, including, but not limited to:
(a) the specific dollar amount of the purchase;
(b) the length of time the investor expects to hold
his or her shares;
(c) any other relevant circumstances, such as the
availability of sales charge waivers or reductions
on Class A and Class B shares;
(d) the availability of breakpoints for reduced sales
loads on Class A shares; and
(e) sales of shares of each Portfolio, and each Class
thereof, shall be effected in accordance with
Section 2 and Section 26 of the NASD Rules, as
interpreted by the NASD.
(4) Any purchase of Portfolio shares for $1,000,000 or more
normally should be for Class A shares because such a purchase
will not be subject to a front-end sales charge and will have
lower ongoing 12b-1 fees than those imposed on Class B or
Class C shares.
(5) Investors who are eligible for a complete waiver of the
front-end sales charge on Class A shares normally should
purchase Class A shares because the ongoing 12b-1 fees of such
shares are lower than those of Class B or Class C shares.
Investors should consider both ongoing annual expenses and front-end
and contingent deferred sales charges, if any, in estimating the costs of
investing in the respective classes of Portfolio shares over time. For example,
investors that qualify for a substantial reduction in a front-end sales charge
ordinarily should determine that a purchase of Class A shares, subject to lower
ongoing expenses, is preferable to a purchase of Class B shares which are
subject to higher ongoing 12b-1 fees and a contingent deferred sales charge or
of Class C shares which would be subject to payment of a higher ongoing 12b-1
fee.
Alternatively, an investor whose purchase of Portfolio shares would not
qualify for a reduction of the front-end sales charge, may wish to avoid the
sales charge and thus initially invest all of his or her dollars in Class B or
Class C shares. Such an investor should consider how long he or she plans to
hold such
- 1 -
<PAGE>
shares when deciding which class of shares to purchase. Certain investors may
elect to purchase Class B shares if they determine it to be most advantageous to
have all their funds invested initially and intend to hold their shares for an
extended period of time. Investors in Class B shares should take into account
whether they intend to remain invested until the end of the conversion period
and thereby take advantage of the reduction in ongoing fees resulting from the
conversion into Class A shares. Other investors may elect to purchase Class C
shares if they determine that it is advantageous to have all their assets
invested initially and they are uncertain as to the length of time they intend
to hold their assets in the Fund. See especially the sections "Summary of
Expenses," "Alternative Purchase Arrangements," "How to Purchase Shares" and
"Investment Advisory and Other Services" in the prospectus for the respective
Portfolio.
The above policies go into effect October 1, 1995, and are reflected in
a revised prospectus for the Portfolios. These policies are in addition to, and
not intended to override, any other of your internal policies.
- 2 -
Exhibit 6(c)
SERVICE AGREEMENT
This AGREEMENT is entered into between __________________ ("Servicer")
and InterSecurities, Inc. ("Distributor") (collectively, "Parties"), effective
as of ______________, 19__.
WHEREAS, Distributor is a broker-dealer registered with the Securities
and Exchange Commission ("SEC") under the Securities Exchange Act of 1934 ("1934
Act") and a member of the National Association of Securities Dealers, Inc.
("NASD");
WHEREAS, Distributor is the principal underwriter for certain open-end
investment companies registered with the SEC under the Investment Company Act of
1940, as amended ("1940 Act"), and which are set forth in Schedule A attached
hereto ("Funds"), pursuant to an Underwriting Agreement between each Fund and
Distributor;
WHEREAS, each Fund offers for sale shares of the Fund, which may
include shares issued in separate series or classes ("Shares");
WHEREAS, certain of the Funds have adopted a plan of distribution
pursuant to Rule 12b-1 under the 1940 Act ("Plan") with respect to Shares and
approved the form of this Agreement pursuant to Rule 12b-1;
WHEREAS, Servicer desires to make it possible for its customers and
clients ("Investors") to purchase Shares and to act as the Investors' agent in
performing certain administrative support services in connection with purchases
and redemptions of Shares from time to time upon the order and for the account
of the Investors and to provide related services to the Investors in connection
with investments in the Funds ("Services"); and
WHEREAS, Distributor desires to retain Servicer to furnish the
Services;
NOW THEREFORE, in consideration of the foregoing and the mutual
premises and covenants herein contained, which consideration is full and
complete, Distributor and Servicer mutually agree as follows:
1. APPOINTMENT. Distributor hereby appoints Servicer to render or
cause to be rendered the Services set forth in Paragraph 2 of this Agreement
with respect to Investors. Servicer accepts such appointment and, while this
Agreement is in force, shall render the Services and the obligations set forth
herein for the compensation herein provided. Servicer's appointment hereunder is
non-exclusive, and the Parties recognize and agree that, from time to time,
Distributor may enter into service agreements with other entities. Servicer
shall prepare such quarterly reports in connection with such Services as
Distributor may reasonably request.
2. SERVICES TO BE PROVIDED. The Services to be provided by Servicer
pursuant to Paragraph 1 of this Agreement may include, but are not limited to,
the following Services:
(a) maintaining account records and providing subaccounting for
Investors that become shareholders of one or more of the Funds
("Shareholders");
(b) transmitting Shareholder orders to purchase, redeem, and exchange
Shares;
(c) transfer and receipt funds for the purchase and redemption of
shares, and confirming and reconciling all such transactions;
(d) review of activity in Shareholders' Fund accounts;
(e) assisting Investors or Shareholders to complete application forms
and designate and update dividend options, account designations
and mailing addresses;
(f) maintaining and distributing current copies of the Funds'
prospectuses and semi-annual and annual reports;
(g) transmitting proxy statements on behalf of the Funds and
receiving, tabulating and transmitting to the Funds proxies
executed by Shareholders with respect to meetings of Shareholders;
(h) advertising and otherwise informing Investors of the availability
of Shares;
(i) providing assistance and review in designing materials relating to
the Funds to distribute to Investors and developing methods of
making such materials accessible to Investors and potential
Investors;
<PAGE>
(j) responding to inquiries from Shareholders and Investors regarding
various matters relating to the Funds;
(k) providing, or assisting the Funds in obtaining, information from
Shareholders required by the Funds in connection with the
establishment of Fund accounts and the purchase of Shares;
(l) taking reasonable steps to ensure that taxpayer identification
numbers provided by Shareholders are correct and providing
Distributor with timely written notice of any failure to obtain
such correct taxpayer identification numbers; and
(m) providing such other services as may be agreed upon from time to
time and as may be permitted by applicable statutes, rules and
regulations.
The Services set forth above are illustrative. Servicer is not required
to perform each Service and may at any time perform either more or fewer
Services than described above as Servicer shall deem appropriate under the
circumstances.
3. EXPENSES. During the term of this Agreement, Servicer shall pay all
expenses incurred by it in connection with Services provided pursuant to this
Agreement, except out-of-pocket expenses incurred by Servicer in connection with
the transmittal of proxy materials to Shareholders and the tabulation and
submission to a Fund of proxies executed by Shareholders, for which Servicer may
obtain reimbursement from that Fund or its agent.
4. COMPENSATION. For the Services provided and the expenses assumed by
Servicer pursuant to this Agreement, Distributor shall pay Servicer the
compensation as set forth in Schedule B, attached hereto. Payment of this
compensation or the terms thereof may be modified or terminated at any time by
Distributor sending a new Schedule B to Servicer.
5. PURCHASES AND REDEMPTIONS OF SHARES.
(a) Orders received from Servicer for the purchase of Shares shall be
accepted by Distributor through Idex Investor Services, Inc.
("Transfer Agent"), only at the public offering price applicable
to each order as set forth in the then current prospectus and
statement of additional information (collectively, "Prospectus")
of the applicable Fund. The procedure relating to the handling of
orders shall be in accordance with oral or written instructions
that Distributor, Transfer Agent or the Fund shall forward to
Servicer from time to time. Payments for Shares ordered from
Distributor must be received together with Servicer's order and
shall be made as specified in the applicable Fund's Prospectus. If
payment for any purchase order is not received in accordance with
the terms of the applicable Fund's Prospectus, Distributor
reserves the right, without notice, to cancel the sale and to hold
Servicer responsible for any loss sustained as a result thereof.
All orders are subject to acceptance or rejection, in their sole
discretion, by Distributor, the Fund, or by the Transfer Agent
acting on behalf of Distributor and the Fund, and orders shall be
effective only upon confirmation by Distributor, the Fund, or the
Transfer Agent. Servicer shall place orders for Shares in
accordance with the minimum initial and subsequent purchase
requirements as set forth in the Prospectus of the Fund.
Distributor reserves the right in its discretion and without
notice to Servicer to reject any purchase request, suspend sales,
or withdraw the offering of Shares.
(b) Servicer shall in no event place orders for Shares unless it has
already received purchase orders from Investors for such Shares at
the applicable public offering price as set forth in the
Prospectus of the applicable Fund and subject to the terms
thereof. Servicer shall not offer or sell any Shares except under
circumstances that will result in compliance with all applicable
federal and state securities laws, and that in connection with
sales and offers to sell Shares, Servicer shall furnish to each
person to whom any such sale or offer is made, at or prior to the
time of the offering or sale, a copy of the then current
prospectus of the applicable Fund and, if requested, the then
current statement of additional information of the Fund.
Distributor shall supply Servicer with reasonable quantities of
prospectuses, statements of additional information, supplemental
sales literature, periodic reports and proxy solicitation
materials of the Funds upon request.
- 2 -
<PAGE>
CHECK SECTION 5(C)(1) OR 5(C)(2), WHICHEVER IS APPLICABLE:
___(c)(1) Servicer shall make Shares available to Investors on a fully
disclosed basis, wherein Distributor shall confirm purchases and
redemptions directly to Investors as recordholders of the Shares
and the Transfer Agent will maintain records for each such
Investor. Servicer shall assist Distributor in obtaining all
information Distributor or the Funds may reasonably request in
connection with the Investors purchase and redemption of Shares.
Servicer hereby represents and warrants that it will have full
right, power and authority to effect transactions in Shares of the
Funds on behalf of Investors for whom it effects such
transactions.
or
___(c)(2) Servicer shall make Shares available to Investors on an "omnibus"
basis, wherein Servicer shall be the recordholder of the Shares
and will be responsible for subaccounting and the confirmation of
purchases and redemptions by the Investors. Each Fund, at the
request of regulatory authorities having jurisdiction over it, may
request, and in such event, Servicer shall furnish to that Fund, a
list of all Shareholders' accounts maintained by Servicer, showing
each account name, address and shareholding. Servicer shall
provide Distributor or the Fund with such other information as
they may reasonably request, including the location by state of
Shares sold. All information provided by Servicer to Distributor
shall be accurate and complete. Servicer hereby represents and
warrants that it will have full right, power and authority to
effect transactions in Shares of the Funds on behalf of Investors
for whom it effects such transactions.
(d) Servicer shall offer and sell Shares only in states and
jurisdictions in which the Shares are registered and qualified for
sale under, or are exempt from the requirements of, the respective
securities laws of such states and jurisdictions. Distributor
shall keep Servicer fully informed with respect to the states and
jurisdictions so qualified and exempt; however, Distributor
assumes no responsibility or obligation as to Servicer's right to
make available Shares in any state or jurisdiction.
(e) Orders received from Servicer for the redemption of Shares shall
be executed through the Transfer Agent only at the public offering
price applicable to each order as set forth in the Prospectus of
the applicable Fund and subject to the terms thereof.
(f) Exchanges (i.e., the investment of the proceeds from the
liquidation of the Shares of one Fund in the Shares of another
Fund) shall be made by Servicer subject to and in accordance with
the Prospectus of the applicable Fund.
6. INDEMNIFICATION. Servicer agrees to indemnify and hold harmless
Distributor, the Fund and the Transfer Agent, and their respective subsidiaries,
affiliates, officers, trustees, directors, agents and employees against any and
all direct and indirect claims, damages, liabilities, losses, expenses or costs
(including any legal or other expenses incurred in connection with investigating
or defending any such claim, damage, liability or loss) to which any of them
become subject arising from, related to, or otherwise connected with: (1) any
breach by Servicer of any provision of this Agreement; (2) any action or
omission of Distributor or the Funds in reliance upon any oral, written or
electronically transmitted communication given by or on behalf of Servicer which
Distributor or the Fund believes to be genuine; and (3) any act or failure to
act by Servicer. This Paragraph 6 shall survive the termination of this
Agreement.
7. INFORMATION PERTAINING TO THE SHARES. Servicer and its officers,
employees and agents shall not (a) make any representation, or furnish to any
person any information, relating to the Funds or the Shares that is inconsistent
in any respect with the information contained in the respective Prospectuses of
the Funds (as then amended or supplemented) or any printed material provided to
Servicer by Distributor or the Funds, or (b) cause any written materials to be
used in connection with sale of Shares or any advertisement to be published in
any newspaper, broadcast by television, radio or other means, or posted in any
public place without the prior written consent of Distributor.
8. STATUS OF SERVICER.
(a) The signing of this Agreement and the purchase of Shares pursuant
hereto is a representation by Servicer that it is duly organized
and validly existing in good standing under the laws of the
jurisdiction in which it is organized and that it is either (i) a
"bank" as that term is defined by Section 3(a)(6) of the 1934 Act,
or (ii) a member in good standing with the NASD and a
broker-dealer registered under the 1934 Act affiliated with a
bank.
- 3 -
<PAGE>
(b) If Servicer is a "bank," Servicer represents and warrants that it
shall act in accordance with all applicable federal and state
laws, including the rules and regulations of all applicable
federal and state bank regulatory agencies and authorities.
Servicer shall give written notice to Distributor promptly in the
event that Servicer shall cease to be a bank as defined in Section
3(a)(6) of the 1934 Act.
(c) If Servicer is a registered broker-dealer, Servicer represents and
warrants that it shall act in accordance with all applicable
federal and state laws and the Rules of Fair Practice of the NASD,
including Section 26 of Article III of such Rules. Servicer shall
notify Distributor immediately (1) in the event Servicer ceases to
be a member in good standing of the NASD or Servicer is found to
have violated any applicable federal or state law, rule or
regulation arising out of its activities as a broker-dealer or in
connection with this Agreement, or (2) upon the occurrence of any
other event which may otherwise materially affect its ability to
act in accordance with this Agreement.
(d) Servicer shall, for all purposes herein, be deemed to be an
independent contractor. Nothing in this Agreement shall be deemed
or construed to make Servicer an employee, agent, representative
or partner of Distributor or any Fund, and Servicer is not
authorized to act for a Fund or Distributor or to make any
representations on behalf of Distributor or any Fund.
9. SOLICITATION OR PROXIES. Servicer shall not solicit or cause to be
solicited, directly or indirectly, at any time, any proxies from the
Shareholders of any Fund in opposition to proxies solicited by management of the
Fund, unless a court of competent jurisdiction shall have determined that the
conduct of a majority of the Board of Trustees of the Fund constitutes willful
misfeasance, bad faith, gross negligence or reckless disregard of their duties.
This Paragraph 9 shall survive the termination of this Agreement.
10. ACTIVITIES OF SERVICER. The Parties recognize that Servicer may be
subject to the provisions of the Glass-Steagall Act of 1933, as amended, and
other federal and state laws and regulations governing the permissible
activities of banks and their affiliates. Servicer shall be solely responsible
for the determination that its activities and obligations pursuant to this
Agreement are permissible under such laws and regulations.
11. DURATION OF AGREEMENT. For each series or class of Shares with
respect to which a Fund has adopted a Plan, this Agreement shall continue in
effect for one year from the date of its execution and thereafter for successive
periods of one year, provided that the form of this Agreement is approved at
least annually by the Board of Trustees of that Fund, including a majority of
the members of the Board of Trustees of the Fund who are not interested persons
(as defined in the 1940 Act) of the Fund and have no direct or indirect
financial interest in the operation of the Fund's Plan or in any agreements
related to the Plan (the "Disinterested Trustees") case in person at a meeting
called for voting on such continuance.
12. TERMINATION.
(a) Notwithstanding paragraph 11 hereof, this Agreement may be
terminated with respect to a particular Fund as follows:
(i) at any time, without the payment of any penalty, by the vote
of the Board of Trustees of the Fund, by the vote of a majority of
the Disinterested Trustees of the Fund, or by the vote of a
majority of the outstanding voting securities of the Fund, or
separate series or class thereof, as defined in the 1940 Act on
not more than sixty (60) days' written notice to the Parties to
this Agreement;
(ii) automatically in the event of the termination of the
Underwriting Agreement or the Administrative Services Agreement
between the Fund and Distributor;
(iii) automatically in the event of the assignment (as defined in
the 1940 Act) of this Agreement;
(iv) by either Party to the Agreement without cause by giving the
other Party at least sixty (60) days' written notice of its
intention to terminate;
(v) if Servicer is a bank, in the event of Servicer's ceasing to
be a bank as defined in Section 3(a)(6) of the 1934 Act; and
(vi) if Servicer is a registered broker-dealer, (1) in the event
Servicer ceases to be a member in good standing of the NASD or
Servicer is found to have violated any applicable federal or state
law, rule or regulation arising out of its activities as a
broker-dealer or in connection with this Agreement, or (2) upon
the occurrence of any other event which may otherwise materially
affect its ability to act in accordance with this Agreement.
- 4 -
<PAGE>
(b) The termination of this Agreement with respect to any one Fund
will not cause the Agreement's termination with respect to any
other Fund.
13. NOTICES. Any notice under this Agreement shall be in writing and
shall be addressed and delivered, or mailed, postage prepaid to the other
Party's principal place of business, attention: Legal Department, or to such
other place as shall have been previously specified by written notice given to
the other Party.
14. AMENDMENTS TO AGREEMENT. This Agreement may be amended by
Distributor from time to time by the following procedure. Distributor shall
provide notice of the amendment to Servicer in the manner set forth in Paragraph
13. If Servicer does not object to the amendment within thirty (30) days after
its receipt, the amendment shall become part of this Agreement. Servicer's
objection must be in writing and be received by Distributor within such thirty
(30) days of Servicer's receipt of the amendment. Any order to purchase Shares
placed by Servicer after notice of any amendment to this Agreement has been sent
to Servicer shall constitute Servicer's agreement to such amendment.
15. MISCELLANEOUS. This Agreement constitutes the entire agreement
between the Parties and no conditions or warranties shall be implied unless
expressly set forth herein. This Agreement and all of the rights and obligations
of the Parties hereunder shall be governed by and construed under the laws of
the State of Florida. To the extend that the applicable laws of the State of
Florida conflict with the applicable provisions of the federal securities laws,
the latter shall prevail. The captions in this Agreement are included for
convenience of reference only and in no way define or limit any of the
provisions hereof or otherwise affect their construction or effect.
IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be
executed by their officers designated below.
_____________________________
Servicer
(Please Print or Type)
_____________________________
Address
_____________________________
City State Zip Code
By: _________________________
Name:
Title:
InterSecurities, Inc.
201 Highland Avenue
Largo, Florida 34640
By: _________________________
Name:
Title:
- 5 -
<PAGE>
AMENDMENT TO
SCHEDULE A FOR SERVICE AGREEMENT
Distributor is the principal underwriter for each of the following registered
investment companies:
IDEX Fund
IDEX II Series Fund
IDEX II Growth Portfolio IDEX II Balanced Portfolio
Class A Shares Class A Shares
Class B Shares Class B Shares
Class C Shares Class C Shares
IDEX II Global Portfolio IDEX II Capital Appreciation Portfolio
Class A Shares Class A Shares
Class B Shares Class B Shares
Class C Shares Class C Shares
IDEX II Flexible Income Portfolio IDEX II Aggressive Growth Portfolio
Class A Shares Class A Shares
Class B Shares Class B Shares
Class C Shares Class C Shares
IDEX II Tax-Exempt Portfolio IDEX II Equity-Income Portfolio
Class A Shares Class A Shares
Class B Shares Class B Shares
Class C Shares Class C Shares
IDEX II Income Plus Portfolio IDEX II Tactical Asset Allocation Portfolio
Class A Shares Class A Shares
Class B Shares Class B Shares
Class C Shares Class C Shares
IDEX II C.A.S.E. Portfolio
Class A Shares
Class B Shares
Class C Shares
Dated February 1, 1996
InterSecurities, Inc.
Principal Underwriter for
IDEX Fund and IDEX II Series Fund
By: /s/ G. JOHN HURLEY
-----------------------------
G. John Hurley, President
<PAGE>
AMENDMENT TO
SCHEDULE B FOR SERVICE AGREEMENT
A. With respect to each purchase of Shares of a Fund by or on behalf of an
Investor pursuant to an order placed by Servicer, Distributor shall pay
Servicer an amount equal to the dealer allowance, if any, specified in
the then current prospectus of that Fund that would be applicable to
that purchase of Shares if Servicer were acting as a dealer in that
transaction. The amounts due Servicer shall be paid quarterly; however,
if any Shares purchased by or through Servicer are redeemed or
repurchased within seven (7) days after Servicer's order to purchase
those Shares, Servicer shall refund to Distributor any fee paid to
Servicer as a result of that order.
B. For the personal services and/or maintenance of shareholder accounts
described in Paragraph 2 of the Service Agreement, Distributor shall
pay to Servicer a fee, computed on an annual basis and paid quarterly,
in an amount equal to the applicable percentage of the average
aggregate net asset value of the Shares of the Fund, as set forth
below, held by or on behalf of Investors. For the month and year in
which this Schedule B becomes effective or the Agreement terminates,
there shall be an appropriate proration of the fee payable hereunder
made on the basis of the number of days that the Schedule or Agreement,
as applicable, is in effect.
<TABLE>
<S> <C>
IDEX Fund N/A
IDEX II Series Fund:
IDEX II Growth Portfolio
Class A Shares 0.25%
Class B Shares 0.25%
Class C Shares 0.90%*
IDEX II Global Portfolio
Class A Shares 0.25%
Class B Shares 0.25%
Class C Shares 0.60%*
IDEX II Flexible Income Portfolio
Class A Shares 0.25%
Class B Shares 0.25%
Class C Shares 0.90%*
IDEX II Tax-Exempt Portfolio
Class A Shares 0.25%
Class B Shares 0.25%
Class C Shares 0.90%*
IDEX II Income Plus Portfolio
Class A Shares 0.25%
Class B Shares 0.25%
Class C Shares 0.90%*
IDEX II Balanced Portfolio
Class A Shares 0.25%
Class B Shares 0.25%
Class C Shares 0.90%*
IDEX II Capital Appreciation Portfolio
Class A Shares 0.25%
Class B Shares 0.25%
Class C Shares 0.90%*
1
<PAGE>
IDEX II Aggressive Growth Portfolio
Class A Shares 0.25%
Class B Shares 0.25%
Class C Shares 0.90%*
IDEX II Equity-Income Portfolio
Class A Shares 0.25%
Class B Shares 0.25%
Class C Shares 0.90%*
IDEX II Tactical Asset Allocation Portfolio
Class A Shares 0.25%
Class B Shares 0.25%
Class C Shares 0.90%*
IDEX II C.A.S.E. Portfolio
Class A Shares 0.25%
Class B Shares 0.25%
Class C Shares 0.90%*
<FN>
- ---------------------------
* Consists of an annual distribution fee of up to 0.75%, and an annual
service fee of up to 0.25%; however the total fee payable may not on an
annualized basis exceed 0.90% of the average daily net assets of Class C shares
of each Portfolio (0.60% for the Tax-Exempt Portfolio). The Distributor
currently reallows the total distribution and service fees to Servicer for the
sale of Class C shares.
</FN>
</TABLE>
Dated February 1, 1996 InterSecurities, Inc.
Principal Underwriter for
IDEX Fund and IDEX II Series Fund
By: /s/ G. JOHN HURLEY
-----------------------------
G. John Hurley, President
2
Exhibit 6(d)
CONTRACTOR'S AGREEMENT
FOR THE WHOLESALING OF
IDEX FUNDS AND WRL VARIABLE PRODUCTS
This Agreement ("this Wholesaling Agreement") is entered into effective
January 1, 1995, by and among InterSecurities, Inc. ("ISI"), Western Reserve
Life Assurance Co. of Ohio ("WRL") and the undersigned ("Contractor"). ISI and
WRL are sometimes referred to collectively as "the Company".
RECITALS:
ISI is a registered Broker-Dealer and is engaged in retail Broker-
Dealer operations.
ISI also serves as the Principal Underwriter of certain securities,
including the group of mutual funds distributed under the name of IDEX Mutual
Funds (the "Funds") and certain variable annuity contracts and variable life
insurance policies issued by WRL (collectively, the "Variable Products" or,
individually, a "Variable Policy"). The Funds and the Variable Products are
sometimes referred to collectively as "Underwritten Securities". In its capacity
as Principal Underwriter (the " Principal Underwriter"), ISI may promote the
distribution of the Underwritten Securities by authorizing registered
Broker-Dealers or persons registered and associated with Broker-Dealers to act
as wholesalers for the Underwritten Securities.
Contractor is (check the applicable box):
[ ] a. a registered representative of ISI, holding a
Sales Representative Agreement with ISI and a General
Agent or Regional Director Agreement with WRL for
retail sales (referred to herein as an "ISI
Contractor"); or
[ ] b. a registered Broker-Dealer which [ ]does, [ ]does
not, hold a retail Selling Agreement(s) with
ISI for the retail sales of the Funds and/or the
Variable Products (referred to herein as a
"Broker-Dealer Contractor").
<PAGE>
In addition to Contractor performing any retail sales or recruiting and
supervising registered representatives to do so under (a) or (b) above,
Contractor desires to act as a wholesaler to assist in marketing the
Underwritten Securities to selling Broker-Dealers on behalf of the Principal
Underwriter.
AGREEMENT:
In consideration of the mutual promises, conditions, and covenants as
set forth below, the parties agree as follows:
1. APPOINTMENT AS WHOLESALER. ISI appoints and authorizes Contractor to
act as a wholesaler for the Underwritten Securities, pursuant to the
terms and conditions of this Wholesaling Agreement. Contractor shall,
and is hereby appointed to, solicit, place, support and endeavor to
maintain Selling Agreements with certain Broker-Dealers. "Selling
Agreement" for this purpose means a retail Dealer Sales Agreement or
similar agreement between a Broker-Dealer and the Principal Underwriter
for the retail selling by the Broker-Dealer of one or more of the
Underwritten Securities.
1.1 WHOLESALER EXCLUSIVE TO THE COMPANY. Contractor warrants that he does
not directly or indirectly wholesale any mutual funds, variable
annuities or variable life products in any territory other than the
Underwritten Securities. Contractor agrees he will not do so while this
Wholesaling Agreement is in effect.
2. ASSIGNED BROKER-DEALERS.
(a) ASSIGNED BROKER-DEALERS. The Contractor's appointment to act
as wholesaler hereunder shall be limited to "Assigned
Broker-Dealers". The term "Assigned Broker-Dealer" as used in
this Wholesaling Agreement shall mean and be limited to a duly
registered Broker-Dealer (other than an Ineligible
Broker-Dealer) who is designated in Exhibit I, attached to
this Wholesaling Agreement, as may be updated by ISI,
("Exhibit I").
(b) INELIGIBLE BROKER-DEALERS. The following Broker-Dealers shall
not be eligible for assignment to the Contractor under this
Agreement: (i) ISI itself or any other Broker-Dealer
subsidiary of AEGON USA, Inc.; (ii) WMA Securities, Inc.;
(iii) any financial institution doing business with the
Financial Markets Division of AEGON USA, Inc. or Broker-Dealer
affiliated with such an institution; (iv) any Broker-Dealer
holding a seat on a national stock exchange (unless expressly
shown on Exhibit I as an eligible Broker-Dealer); and (v) any
Broker-Dealer or branch office or registered representative
thereof designated in Exhibit I as "No Wholesaler Contact
Permitted" or as otherwise designated or restricted in Exhibit
I as not eligible for wholesaling.
(c) UPDATES OF EXHIBIT I. The Company may update Exhibit I from
time to time by giving written notice to all Wholesaling
Contractors. Updates to Exhibit I may delete Broker-Dealers
whose Selling Agreements have terminated or add new
Broker-Dealers. An update may also change the status of a
Broker-Dealer, branch office or registered representative from
"Ineligible" to "Assigned" or from "Assigned" to "Ineligible".
The Company agrees that no Broker-Dealer appearing on the
initial Exhibit I as "Assigned" will be subsequently changed
to "Ineligible" under Subparagraph 2.(b)(v).
(d) ERRORS AND OMISSIONS. The listings in the initial Exhibit I
and updates to Exhibit I may be lengthy documents containing
considerable data. While the Company
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<PAGE>
will make diligent efforts to assure they are complete and
accurate when published, Contractor acknowledges that errors
in or omissions from the list could sometimes occur. Should
such an error or omission occur, the Company reserves the
right to correct the error or omission by giving written
notice to Contractor promptly after the Company learns of the
error or omission.
(e) REMOVAL OR TRANSFER OF AN ASSIGNED BROKER-DEALER FROM THE
CONTRACTOR. The Company reserves the right at any time to
remove or transfer an Assigned Broker-Dealer, or a branch
office or registered representative thereof, from the
Contractor by written notice to the Contractor if the
Contractor fails to meet in a Calendar Year the Individual
Production Goal of Contractor for that period, as described in
Schedule 1.
(f) SELLING AGREEMENT REQUIRED. The Contractor shall not
authorize, encourage, assist or knowingly permit an Assigned
Broker-Dealer or a registered representative thereof to
solicit, offer or sell an Underwritten Security unless the
required Selling Agreement between the Broker-Dealer and the
Company is in effect.
3. ASSIGNED TERRITORY. With respect to an Assigned Broker-Dealer, the
Contractor's territory under this Agreement shall be limited to
registered representatives thereof residing in the states or geographic
areas listed in Schedule 2 (referred to in this Wholesaling Agreement
as the "Assigned States" or the "Assigned Territory").
The Company will periodically review the Contractor's activity and
production within each area or state in the Assigned Territory. The
Company may, by giving written notice to the Contractor, remove an
Assigned State from the Contractor if the Contractor fails to produce
in that state at least 10% of the Contractor's Production Goals for
that Calendar Year.
4. COMMISSIONS ON THE FUNDS. While this Wholesaling Agreement is in
effect, the Company shall pay Contractor the commissions at the
percentage rates set forth in Schedule 3 on new sales (excluding
dividends and capital gains reinvested) of shares of the Funds
purchased while this Wholesaling Agreement is in effect under customer
accounts of an Assigned Broker-Dealer's registered representatives
residing in the Assigned Territory ("Commissionable Fund Sales").
5. COMMISSIONS ON THE VARIABLE PRODUCTS. While this Wholesaling Agreement
is in effect, the Company shall pay Contractor the commissions
described in Subparagraphs 5(a) and 5(b) on Commissionable Policies.
"Commissionable Policy" refers to a Variable Policy which meets all of
the following conditions or, where the context indicates, a premium
payment under such a policy: (i) the policy type or plan is included in
Schedule 4 or Schedule 5; (ii) the policy is applied for and issued
while this Wholesaling Agreement is in effect; (iii) the policy is sold
by an Assigned/Broker Dealer's registered representative residing in
the Assigned Territory; and (iv) pursuant to the terms and conditions
of the Assigned Broker-Dealer's Selling Agreement, the premium is
considered earned and commissionable and the Assigned Broker-Dealer's
commission for that policy is earned and payable to the Assigned
Broker-Dealer. Even though compensation may already have been paid on a
premium, a premium will no longer be treated as commissionable under
this Wholesaling Agreement and such commission will be charged back to
Contractor to the extent that, under the terms of the Assigned
Broker-Dealer's Selling Agreement, the Company charges a commission
back to the Assigned Broker-Dealer for any reason, including, for
example, but not limited to, premium being refunded or becoming
unearned; in the event Contractor has already received compensation on
a premium that is no longer commissionable, the Company will charge
back to Contractor all corresponding
3
<PAGE>
compensation received by Contractor with respect to such premium,
including any commissions, office allowance, or Production Bonus.
(a) COMMISSIONS ON PREMIUMS AND TRAIL COMMISSIONS. The Company
will pay the Contractor commissions on premiums and trail
commission on a Commissionable Policy. Schedule 4, the
Wholesaler Commission Schedule for Variable Life Policies,
attached, and Schedule 5, the Wholesaler Commission Schedule
for Variable Annuities, set forth the wholesaler commissions
on premiums and the wholesaler trail commissions for the
respective policies. Subject to all the conditions set forth
in Schedules 4 and 5, the Company shall pay Contractor on
Commissionable Policies the commissions on premiums and trail
commissions in an amount equal to the difference between: (i)
the commissions on premiums and trail commissions at the rates
as set forth in Schedule 4 or 5, as appropriate; minus (ii)
the commissions on premiums and trail commissions at the rates
provided for such Variable Policy in the Assigned Broker
Dealer's Selling Agreement. If such difference is negative:
(i) no compensation shall be payable under this Subparagraph;
and (ii) the amount of compensation otherwise payable to
Contractor under Subparagraph 6(b) for Variable Life Policies
or Variable Annuities, respectively, shall be reduced by this
negative difference but in no event shall be less than zero.
Should the Assigned Broker-Dealer's Selling Agreement
terminate or should the Assigned Broker-Dealer's right to
commissions thereunder divest, then for purposes of
calculating the difference due to Contractor under this
Wholesaling Agreement, the rates "provided for such Variable
Policy in the Assigned Broker-Dealer's Selling Agreement"
shall be deemed to be the commission rates last in effect
under the Assigned Broker-Dealer's Selling Agreement.
(b) VARIABLE PRODUCTS, OFFICE ALLOWANCE. Schedule 6 provides for
an office allowance commission on certain variable life plans.
Monthly, or at such other periods the Company may set, the
Company will pay the office allowance commission to the
Contractor on Commissionable Policies, at the rates and on the
certain types of plans specified in Schedule 6 ("Office
Allowance"). The Office Allowance is payable only on target
premium produced, as described in Schedule 6, and is subject
to all the conditions set forth in Schedule 6.
6. PRODUCTION BONUS. Any commissions payable to Contractor under
Paragraph 4 or 5 above, and any Production Bonus payable to Contractor
under this Paragraph, shall be the Contractor's sole compensation for
all services rendered and all expenses incurred by Contractor for the
wholesaling of the Underwritten Securities or any services contemplated
under this Wholesaling Agreement. On Commissionable Fund Sales and
Commissionable Policies, the Company will pay Contractor a Production
Bonus ("Production Bonus" or "Bonus"), subject to the following
conditions, while this Wholesaling Agreement is in effect:
(a) BONUS ON FUNDS. A Bonus is payable, in the amount of 0.05% of
the purchase price of Commissionable Fund Sales.
(b) BONUS ON VARIABLE PRODUCTS. A Bonus is payable on
Commissionable Policies at the following rates on the
following types of plans:
(i) A Bonus of 5% of annualized first year target premium
produced is payable on Type 1 of the Freedom Equity
Protector; the Company reserves the right, as part of
its pending conversion of computer systems, to change
this calculation in the future to 5% of collected
first year target premium.
4
<PAGE>
(ii) A Bonus of 0.25% of collected first-year premium is
payable on the Freedom Attainer and Freedom
Conqueror.
(c) PAYMENT OF BONUS. Monthly, or at such other periods as the
Company may set, the Company will pay the Contractor the Bonus
for that period. Bonuses will be charged back as described in
Paragraph 5 in the event a policy or premium payment is not
commissionable. Bonuses payable on annualized target premium
will also be subject to chargebacks calculated as set forth in
Schedule 6.
7. DUTIES AND SERVICES OF CONTRACTOR. Contractor shall provide
wholesaling services to WRL and to ISI as the Principal Underwriter as
shall be mutually agreed upon from time to time. These services shall
include but not be limited to:
(a) Assistance in determining target Broker-Dealers for Selling
Agreement procurement;
(b) Utilization of Contractor's experience and Broker-Dealer
relationships in order to procure Selling Agreements for ISI;
(c) Assistance in the management of Broker-Dealer relations;
(d) Utilization of Contractor's relationships with representatives
for the purpose of promoting the Underwritten Securities;
(e) Completion and updating of a formal marketing plan at least
annually;
(f) Quarterly sales forecasts;
(g) Arranging and presiding over educational and sales meetings of
Broker-Dealers and representatives on a periodic basis so as
to ensure that they are familiar with the features of the
Underwritten Securities;
(h) Providing sales and marketing assistance to the Assigned
Broker-Dealers and their representatives, where required, to
assist in the sale of the Underwritten Securities;
(i) Providing technical assistance to the Assigned Broker-Dealers,
their representatives and their administrative staff in the
ongoing servicing of shareholders of the Underwritten
Securities; and
(j) encourage persistency of business.
Contractor agrees Contractor shall not in any manner encourage or
assist Assigned Broker-Dealers or the representatives, employees or
agents thereof to: (i) make any representations not contained in or
consistent with the current prospectus of an Underwritten Security; or
(ii) otherwise solicit or offer the Underwritten Securities in
violation of any applicable insurance or securities law or regulation
or in violation of the Assigned Broker-Dealer's Selling Agreement with
the Company. No Contractor shall use, publish, distribute or promote,
without the prior written approval of the WRL Law Department and ISI
Compliance Department, any training, recruiting, sales or other
marketing material relating to WRL or ISI or directly or indirectly to
the Underwritten Securities.
8. VESTING OF COMMISSIONS UPON TERMINATION OF THIS WHOLESALING AGREEMENT.
(a) THE FUNDS. There is no vesting under this Wholesaling
Agreement of any compensation on the Funds. Payment of such
compensation shall cease with termination of this Wholesaling
Agreement.
(b) THE VARIABLE PRODUCTS, COMMISSIONS ON PREMIUMS AND TRAIL
COMMISSIONS. Commissions on Premiums and Trail Commissions on
Commissionable Variable Policies, to the extent payable, as
set forth in Schedule 4 and set forth in Schedule 5
respectively, shall continue to be payable after termination
of this Wholesaling Agreement ("vest") subject to the
following terms and conditions. (In any event,
5
<PAGE>
there is no vesting on policies issued or applied for after
the termination of this Wholesaling Agreement.) Such
Commissions shall vest only if: (i) the Company terminates
this Wholesaling Agreement under Paragraph 12(a), below, for
reasons other than Contractor's failure to meet Production
Goals; or (ii) this Wholesaling Agreement terminates due to
Contractor's death or disability under Subparagraph 12(b)(2)
or 12(b)3, below. Otherwise, such Commissions shall not vest.
Vesting shall be limited to five (5) years from the date of
termination of this Wholesaling Agreement. Vesting and payment
of vested commissions shall cease on the fifth anniversary of
termination of this Wholesaling Agreement or immediately upon
any of the other divesting events listed in Paragraph 9,
below, whichever occurs first. Where vesting is due to death
or total disability, vested commissions shall be limited to
80% of their normal rate; in that case, the Company will
retain the other 20% to assist the Company in providing
wholesaling services in the Contractor's absence.
(c) OFFICE ALLOWANCE AND BONUS. There is no vesting under this
Wholesaling Agreement of any Office Allowance or Bonus on any
Underwritten Securities. Payment of such compensation shall
cease with termination of this Wholesaling Agreement.
9. DIVESTING EVENTS. If vesting is in effect after termination of this
Wholesaling Agreement as described in Paragraph 8 above, such vesting
and payment of vested commissions shall cease on the fifth anniversary
of termination of this Wholesaling Agreement or, if earlier,
immediately upon any of the following events:
(a) SUBSEQUENT NOTICE OF CAUSE. Upon written notice from ISI or
WRL that there was cause for termination of this Wholesaling
Agreement, as provided for in Paragraph 12(c) below.
(b) TERMINATION OF CONTRACTOR'S INSURANCE AGENT LICENSE OR
INSURANCE APPOINTMENT IN CERTAIN STATES. Upon termination of
the Contractor's insurance agent license or termination of
Contractor's appointment with WRL, in the case of a policy in
a jurisdiction where WRL determines in its discretion that
state insurance law requires Contractor to be so licensed
and/or appointed in order for WRL to pay such vested
compensation to Contractor.
(c) AN ISI CONTRACTOR'S ASSOCIATION WITH ANOTHER BROKER-DEALER.
Upon termination of Contractor's association with ISI in
connection with Contractor becoming associated with another
Broker-Dealer. In that event, upon ISI and WRL's acceptance of
Contractor's assignment to such Broker-Dealer of the right to
receive Contractor's vested commissions as provided in
Subparagraph 16(c), the Company shall pay the remaining vested
commissions payable under this Wholesaling Agreement to such
assignee.
(d) VIOLATION OF PARAGRAPH 14. Upon violation by Contractor of
Paragraph 14 of this Wholesaling Agreement.
(e) TERMINATION OF SECURITIES LICENSE. Upon termination of
Contractor's securities license or registration, in the case
of commissions on a policy in a jurisdiction where ISI in its
discretion determines that state securities law requires
Contractor to continue to be securities registered in order to
receive such vested commissions.
(f) STATUTORY DISQUALIFICATION OF AN ISI CONTRACTOR. Upon any
event causing an ISI Contractor to be statutorily disqualified
to be associated with a Broker-Dealer as
6
<PAGE>
defined under Sec. 3 (a) (39) of the Securities and Exchange
Act of 1934 or Art. II, Sec. 4 of the Bylaws of the National
Association of Securities Dealer, Inc. ("NASD"), as either may
be amended from time to time.
10. RIGHT TO BUY-OUT.
(i) CONDITIONS OF BUY-OUT. The Company will pay Contractor a
payment or series of payments referred to as the "Buy-Out" if
the Company terminates this Contract under the following
circumstance and subject to all of the following conditions.
Contractor will be entitled to the Buy-Out if:
(a) The Company terminates this Contract under Paragraph
12(a); and
(b) As of the date of termination, the Contractor has met
his Individual Production Goal, set forth in Schedule
1 hereto, on a year-to-date basis for the current
year--and for the prior year; and
(ii) PAYMENT OF BUY-OUT. If payable, the Company will pay the
Buy-Out as follows. The Company will elect one of the
following methods and resulting amounts:
(a) The Company may pay Contractor in one lump sum an
amount equal to the total Wholesaler Compensation
actually earned by and paid to Contractor for the 12
full calendar months preceding the date of
termination; or
(b) The Company may continue to pay Contractor
commission, Office Allowance and Production Bonus on
new business written during the first 12 full
calendar months following the date of termination,
even though the Contract is terminated and even
though such compensation would not otherwise be
payable. New business written during that 12 month
period shall not be entitled to any vesting described
in Paragraph 8; otherwise, any vesting provided under
Paragraph 8 is not affected by Paragraph 10.
11. WHOLESALING REPRESENTATIVES. The Contractor may, at his discretion,
employ or appoint additional "Sub-Contractors" to represent Contractor
in Contractor's duties under this Agreement ("Wholesaling
Representative"). However, any such Wholesaling Repre- sentative is
required to be a duly registered representative or principal of a
registered broker/dealer. In connection with this Wholesaling
Agreement, Contractor shall neither cause nor permit any person who is
not so duly registered to act as a Wholesaling Representative or to
engage in any other conduct relating to this Wholesaling Agreement
which requires such registration. Contractor shall be solely
responsible for compensating any Wholesaling Representative for such
wholesaling activity. Before Contractor appoints or engages a person as
a Wholesaling Representative, Contractor shall obtain the prior written
consent of an officer of ISI and WRL.
12. TERMINATION.
(a) TERMINATION WITHOUT CAUSE BY THE COMPANY BY WRITTEN NOTICE.
This Wholesaling Agreement may be terminated without cause by
WRL or ISI giving written notice to Contractor at least thirty
(30) days prior to the date of termination (or less than 30
days upon written agreement of Contractor),
(b) OTHER TERMINATION WITHOUT CAUSE. This Wholesaling Agreement
will be terminated without cause as follows:
7
<PAGE>
(1) by Contractor giving a written notice mailed or
delivered to WRL and ISI, at least thirty (30) days
prior to the date of termination (or less than 30
days upon written agreement of ISI and WRL),
(2) when Contractor dies, if Contractor is a natural
person,
(3) when Contractor becomes totally and permanently
disabled, as determined by the Company based on the
opinion of a physician selected by the Company, if
Contractor is a natural person,
(4) upon the Contractor's dissolution, bankruptcy,
insolvency or assignment for the benefit of
creditors,
(5) upon Contractor's failure to acquire or continuously
maintain all licenses required by law, unless waived
in writing by ISI and WRL,
(6) upon termination without cause of Contractor's Agent,
General Agent or Regional Director, if Contractor is
an ISI Contractor, unless waived in writing by ISI
and WRL.
(c) TERMINATION FOR CAUSE. Upon Termination of this Wholesaling
Agreement for cause, Contractor will have no further rights
under this Agreement to any commissions or other compensation
otherwise payable under the terms of this Agreement or the
attached Schedule(s). A termination for cause will be
effective immediately upon Contractor's conviction of a
felony, or revocation of Contractor's license, or immediately
upon the Company sending Contractor a written notice of
termination for cause. This Agreement may be terminated for
cause as follows, if Contractor:
(1) withholds any funds due the Company, a Broker-Dealer,
or a customer of the Company,
(2) withholds any policies, documents or correspondence
that rightfully should have been transmitted to the
Company, or to an Assigned Broker-Dealer,
(3) fails to promptly return any property belonging to
the Company or to a policy applicant or an Assigned
Broker-Dealer when requested to do so,
(4) refuses to pay any indebtedness that Contractor owes
the Company under the terms of this Wholesaling
Agreement or any other agreement Contractor enters
into with the Company,
(5) is convicted of a felony or any state or jurisdiction
revokes, suspends or fails to renew Contractor's
license,
(6) violates any applicable insurance or securities laws
or regulations, as determined by the Company,
(7) has a required bond refused or cancelled,
(8) misrepresents any of the Company's products or
services, or causes, advises, aids or abets an
Assigned Broker-Dealer to do so,
(9) misrepresents or omits any material information on an
application for, or reinstatement of, a Policy, or
causes, advises, aids or abets an Assigned Broker-
Dealer to do so,
(10) commits or attempts to commit fraud against the
Company or any applicant or policyholder, or causes,
advises, aids or abets an Assigned Broker-Dealer to
do so,
(11) fail to comply with material terms of this
Wholesaling Agreement or the Company's published
rules and regulations,
(12) causes or attempts to cause employees,
representatives or agents of the Company to
discontinue their association with the Company, or
causes, advises, aids or abets an Assigned
Broker-Dealer to do so,
8
<PAGE>
(13) causes or attempts to cause any policyowner of WRL to
discontinue any WRL policy, or causes, advises, aids
or abets an Assigned Broker-Dealer to do so, or
(14) falsifies or omits material information provided to
the Company.
If this Wholesaling Agreement was terminated without cause,
and the Company later determines there was cause, the Company
may change its previous action by giving Contractor written
notice of termination for cause.
13. INDEMNIFICATION. With respect to duties, services and activities
contemplated under this Wholesaling Agreement: (i) Contractor will
indemnify and hold harmless ISI, WRL, and the employees, agents,
officers, directors, affiliates, or successors of ISI and WRL from and
against any and all loss, cost, claims, or damage, including attorneys'
fees, arising out of any negligent, fraudulent, or intentional acts,
omissions or errors of Contractor or Contractor's Wholesaling
Representatives; and (ii) ISI and WRL will indemnify and hold harmless
Contractor and any Wholesaling Representatives, employees, agents,
officers, directors, affiliates, or successors of Contractor, from and
against any and all loss, cost, claims, or damage, including attorneys'
fees, arising out of any negligent, fraudulent, or intentional acts,
omissions or errors of ISI or WRL.
14. NON-REPLACEMENT COVENANTS. Contractor acknowledges that the
relationships between the Company and Assigned Broker-Dealers have been
established by the Company over a period of time and that the Company
has invested considerable time and resources to encourage and maintain
its Broker-Dealer relationships and blocks of business. While this
Wholesaling Contract is in effect and for a period of five years after
termination of this Wholesaling Agreement, Contractor agrees that:
(a) Contractor will not encourage, aid or abet any customer,
agent, representative or Broker-Dealer to engage in a pattern
of replacing or attempting to replace any existing Fund
accounts or WRL policies with those of other mutual funds or
life insurance companies.
Contractor understands that the Company is entitled to obtain from a
court of competent jurisdiction an order enjoining Contractor from any
conduct prohibited in Subparagraph 14(a).
15. INDEPENDENT CONTRACTOR. As an independent contractor, Contractor is
free to exercise his discretion and judgment as to time, place and
means of performing all acts hereunder. Nothing in this Wholesaling
Agreement is intended to create a relationship of employer and employee
between the Company and Contractor.
16. MISCELLANEOUS PROVISIONS.
(a) ENTIRE CONTRACT. This Wholesaling Agreement contains the
entire agreement of the parties relating to the wholesaling of
the Underwritten Securities. This Wholesaling Agreement, as of
its effective date, revokes and supersedes any previous
agreement or arrangement between the parties relating to the
wholesaling of the Underwritten Securities.
(b) MODIFICATION. Neither ISI nor WRL shall be bound by any
promise, agreement, understanding or representation relative
to the subject matter of this Wholesaling Agreement, unless
the same is made in writing, signed by an officer of ISI and
WRL, which expresses by its terms an intention to modify this
Wholesaling Agreement. WRL and ISI reserve the right to revise
any Schedule or Exhibit to
9
<PAGE>
this Wholesaling Agreement and to change any compensation
under this Wholesaling Agreement by giving thirty days advance
written notice to Contractor. Any such revised Schedule or
Exhibit or notice of change in compensation shall take effect
prospectively and shall not apply to policies or accounts
written prior to the effective date of the revision or notice.
(c) ASSIGNMENT. Except as provided in this Subparagraph, this
Wholesaling Agreement shall not be assigned or transferred by
Contractor. No assignment of this Wholesaling Agreement or
Contractor's compensation hereunder shall be valid unless
consented to by the Company and made in a writing acceptable
to the Company and signed by ISI, WRL, the Contractor and
assignee or transferee. Notwithstanding the above, if while
this Wholesaling Agreement is in effect, an ISI Contractor
becomes registered as a Broker-Dealer or becomes registered or
associated with another registered Broker-Dealer, then the
Company, in its sole discretion, may elect to continue this
Agreement and consent to Contractor's assignment of this
Agreement to the Contractor's successor Broker-Dealer.
(d) WAIVER. Failure by the Company or failure by Contractor to
insist upon compliance by the other party with any terms or
conditions of this Wholesaling Agreement shall not be
construed as a waiver of any rights under this Wholesaling
Agreement. Any such failure shall not be construed to waive
succeeding breaches of those terms or conditions or any
breaches of any other provision.
(e) NOTICES. Any notice given in connection with this Wholesaling
Agreement shall be deemed to be provided when it is sent first
class mail or by courier to the addresses set forth below, or
to the last address of record such party designates in
writing:
If to ISI: InterSecurities, Inc.
201 Highland Ave.
Largo, FL 34640
Attn: President
If to WRL: Western Reserve Life Assurance Co.
of Ohio
201 Highland Ave.
Largo, FL 34640
Attn: Diane Rogers, Vice President
If to Contractor: the address at Contractor's signature
at the end of this Wholesaling
Agreement
(f) CONTROLLING LAW, VENUE. This Wholesaling Agreement and all
questions relating to its validity, interpretation,
performance and enforcement shall be governed by and construed
in accordance with the laws of Florida. No suit shall be
brought by Contractor against ISI or WRL relating to this
Wholesaling Agreement except in the appropriate court of the
State of Florida, Pinellas County, or,in the case of federal
jurisdiction, in the U.S. District Court for the Middle
District of Florida.
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(g) SEVERABILITY. If any term or provision of this Wholesaling
Agreement, or any application thereof, shall be invalid or
unenforceable, the remainder of this Wholesaling Agreement,
and any other application of such provision, shall not be
affected thereby.
(h) HEADINGS. The headings and titles of Paragraphs contained in
this Wholesaling Agreement are for convenience only and have
no effect upon the construction or interpretation of any part
of this Wholesaling Agreement.
(i) COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but
all of which constitute one and the same instrument.
This Wholesaling Agreement is made by the parties in Largo, Florida and
executed by each on the dates shown below.
CONTRACTOR INTERSECURITIES, INC.
By:________________________________ By:___________________________
Name:______________________________ Name:_________________________
Date:______________________________ Title:________________________
Date:_________________________
WESTERN RESERVE LIFE ASSURANCE
CO. OF OHIO
By:________________________________
Name:______________________________
Title:_____________________________
Date:______________________________
11
Exhibit 7
DEFERRED COMPENSATION PLAN
FOR
TRUSTEES OF IDEX FUND, IDEX II SERIES FUND AND IDEX FUND 3
AND FOR
DIRECTORS OF WRL SERIES FUND, INC.
ARTICLE I
PURPOSE & AUTHORITY
1.1 PURPOSE. The purpose of the Plan is to offer Trustees and
Directors the opportunity to defer receipt of a portion of their fees from the
Funds, under terms advantageous both to the Trustees and Directors and to the
Funds.
1.2 EFFECTIVE DATE. The Plan is effective as of January 1,
1996.
1.3 AUTHORITY. Any decision made or action taken by the Funds
and any of its officers or employees involved in the administration of this
Plan, or any member of the Committee, arising out of or in connection with the
construction, administration, interpretation and effect of the Plan shall be
within the absolute discretion of all and each of them, as the case may be, and
will be conclusive and binding on all parties. No officer or employee of the
Funds shall be liable for any act or action hereunder, whether of omission or
commission, by any other member or employee or by any agent to whom duties in
connection with the administration of the Plan have been delegated or, except in
circumstances involving the member's or employee's bad faith, for anything done
or omitted to be done by himself or herself.
<PAGE>
ARTICLE II
DEFINITIONS
2.1 "ACCOUNT" means, for any Participant, the memorandum
account established for the Participant under Section 4.1.
2.2 "ACCOUNT BALANCE" means, for any Participant as of any
date, the aggregate amount reflected in his or her Account.
2.3 "BENEFICIARY" means the person or persons designated from
time to time in writing by a Participant to receive payments under the Plan
after the death of such Participant or, in the absence of such designation or in
the event that such designated person or persons predeceases the Participant,
the Participant's estate.
2.4 "COMMITTEE" means the committee established by the Boards
of Trustees and the Board of Directors (as applicable) of the Funds to
administer the Plan.
2.5 "DEFERRAL ELECTION" means an election by a Trustee or
Director to defer a portion of his or her fees from the Funds under the Plan, as
described in Section 3.1.
2.6 "DIRECTOR" means a member of the Board of Directors of WRL
Series Fund, Inc.
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<PAGE>
2.7 "FUND" means IDEX Fund, IDEX II Series Fund, IDEX Fund 3,
or WRL Series Fund, Inc.
2.8 "PARTICIPANT" means a Trustee or Director or a former
Trustee or Director who has made a Deferral Election and who has not received a
distribution of his or her entire Account Balance.
2.9 "PLAN" means the Deferred Compensation Plan for Trustees
of IDEX Fund, IDEX II Series Fund and IDEX Fund 3 and for Directors of WRL
Series Fund, Inc.
2.10 "REVISED ELECTION" means an election made by a
Participant, in accordance with Section 5.2, to change the date as of which
payment of his or her Account Balance is to commence and/or the form in which
such payment is to be made.
2.11 "TRUSTEE" means a member of the Board of Trustees of IDEX
Fund, IDEX II Series Fund or IDEX Fund 3, including a trustee emeritus.
2.12 "VALUATION DATE" means each March 31, June 30, September
30, December 31, and such other dates as may be determined by the Committee.
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<PAGE>
ARTICLE III
DEFERRAL OF COMPENSATION
3.1 DEFERRAL ELECTION.
(a) During any calendar year, each individual
who is a Trustee or Director for such calendar year may, by properly completing
a Deferral Election, elect to defer all or a portion of the fees that, absent
deferral, would be paid to him or her for services rendered during the next
following calendar year.
(b) To be effective, a Deferral Election must be
made in writing by the Trustee or Director on a form furnished by the Committee
on or before the September 30 preceding the calendar year during which the
amounts to be deferred, absent deferral, would be paid to the Trustee or
Director; provided, however, that an individual who becomes a Trustee or
Director after the effective date of the Plan (as set forth in Section 1.2) may
make a Deferral Election with respect to fees that, absent deferral, would be
paid to him or her during the remainder of the calendar year in which he or she
becomes a Trustee or Director by filing the required written election with the
Committee on or before the date that is 30 days after the date on which he or
she becomes a Trustee or Director.
(c) Notwithstanding any provision of the Plan to
the contrary, a Trustee or Director may make a Deferral Election with respect to
fees that, absent deferral, would be paid to him or her in 1996 by filing the
required written election with the Committee on or before January 30, 1996.
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(d) Once made, a Deferral Election shall become
effective upon approval by the Committee and is thereafter irrevocable, except
to the extent otherwise provided in Section 5.2. A Deferral Election will be
deemed to have been approved by the Committee if it is not disapproved by the
Committee within ten days of the date on which it is received.
(e) A Deferral Election filed by a Trustee or a
Director must specify either a percentage or a certain dollar amount of his or
her fees to be deferred under the Plan. In addition, the Deferral Election must
specify the date on which payment of the Trustee's or the Director's Account
Balance is to commence and the manner in which such payment is to be made.
(1) The Trustee or Director must
specify the date as of which payment of his or her Account Balance is to
commence and may specify that such payment is to commence as of:
(A) the termination of his or
her status as a Trustee or Director; or
(B) a specific date (which may
be determined by reference to the termination of his or her status as a Trustee
or Director) that is at least five years after the date on which the amounts to
be deferred, absent deferral, would be paid to the Trustee or Director.
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<PAGE>
(2) The Trustee or Director must
specify the manner in which payment of his or her Account Balance is to be made
and may specify that such payment is to be made either in a single sum or in a
number of quarterly installments (not to exceed 40).
(f) Deferrals of a Trustee's or a Director's
fees shall be credited to the Plan ratably throughout the year (or, where
applicable, the portion of the year) to which the Deferral Election applies.
(g) Unless the Deferral Election form
specifically provides otherwise, a Deferral Election shall expire as of the last
day of the calendar year that includes the first day on which any amount, absent
deferral, would be paid to the Trustee or Director.
ARTICLE IV
TREATMENT OF DEFERRED AMOUNTS
4.1 MEMORANDUM ACCOUNT. The Funds shall establish on
their books an Account for each Participant. Amounts deferred by a Participant
pursuant to a Deferral Election shall be credited to the Participant's Account
on the date on which the deferred amounts, absent deferral, would have been paid
to the Participant. In addition, as of each Valuation Date, incremental amounts
determined in accordance with Section 4.2 will be credited or debited to each
Participant's Account. Any payments made to or on behalf of the Participant and
for his or her Beneficiary shall be debited from the Account. No assets shall be
segregated or earmarked in respect to any Account and no Participant or
Beneficiary shall
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<PAGE>
have any right to assign, transfer, pledge or hypothecate his or her interest or
any portion thereof in his or her Account. The Plan and the crediting of
Accounts hereunder shall not constitute a trust or a funded arrangement of any
sort and shall be merely for the purpose of recording an unsecured contractual
obligation of the Fund.
4.2 HYPOTHETICAL INVESTMENT DESIGNATION.
(a) Subject to the provisions of this Section 4.2, a
Participant's Account shall be credited or debited with amounts equal to the
amounts that would be earned or lost with respect to the Participant's Account
Balance if amounts equal to that Account Balance were actually invested in A
Shares of the IDEX II Series Fund in the manner specified by the Participant. In
determining the number of such shares by which a Participant's Account Balance
will be determined as of any date, no front-end sales charge will be applied.
(b) Each Participant shall elect, in 10 percent
increments, one or more of the portfolios available under the IDEX II Series
Fund to be used as a measure of the hypothetical investment performance of his
or her Account. Any such election shall continue in effect until modified by a
subsequent election. A Participant may modify his or her hypothetical investment
designations in accordance with rules prescribed by the Committee.
(c) Any investment designation made under this Section
shall be hypothetical only. No Fund shall be obligated to invest any amounts in
the portfolios selected by a Participant, but will merely maintain bookkeeping
entries to reflect the hypothetical
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<PAGE>
earnings or losses that would have been credited to or debited from the
Participant's Account if in fact amounts had been invested in the selected
portfolios.
(d) Notwithstanding the foregoing, until such time as an
exemptive order is granted with respect to the Plan by the Division of
Investment Management of the Securities and Exchange Commission which has the
effect of permitting hypothetical investment performance to be measured by the
performance of a Fund or Funds, each Account shall be deemed to earn interest at
an annual rate, effective on each January 1, determined by the Committee;
provided, however, that if the Committee does not select a new interest rate on
or prior to any subsequent January 1, the rate in effect prior to such date
shall remain in effect until a new rate is determined by the Committee. The
initial interest rate shall be six percent.
ARTICLE V
PAYMENT OF DEFERRED AMOUNTS
5.1 FORM AND TIME OF PAYMENT. The benefits to which a
Participant or a Beneficiary may be entitled under the Plan shall be paid in
accordance with this Section 5.1.
(a) All payments under the Plan shall be made in cash.
(b) Except as otherwise provided in Section 5.2 or
Section 5.3, payment of a Participant's Account Balance shall commence as of the
Valuation Date next following the date or dates specified in the Participant's
Deferral Election or Elections or (where applicable) the Participant's Revised
Election or Elections; provided, however, that where the
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<PAGE>
Participant's Deferral Election or Elections or (where applicable) the
Participant's Revised Election or Elections specify that payments with respect
to a Participant's Account Balance are to commence as of a specified date or
specified dates not determined by reference to the termination of the
Participant's status as a Trustee or Director and the Participant's status as
such terminates prior to such date or dates, payment of the portion of the
Participant's Account Balance that was deferred to such date or dates shall
commence as of the Valuation Date next following the termination of the
Participant's status as a Trustee or Director.
(c) All payments shall be made in the form or forms
specified in the Participant's Deferral Election or Elections or (where
applicable) the Participant's Revised Election or Elections.
(d) To the extent a Participant has not specified the
form or time of payment of his or her Account Balance, payment will be made in a
single sum as soon as administratively practicable, but in any event within 90
days, after the first Valuation Date following the termination of the
Participant's status as a Trustee or a Director.
(e) Notwithstanding any election made by a Participant,
any portion of a Participant's Account Balance that has not been paid to the
Participant as of the date of his or her death shall be paid to the
Participant's Beneficiary in the form elected by the Participant. If the
Participant dies after payments of his or her Account Balance have begun,
payments will continue as if the Participant had not died. If the Participant
dies before payments have
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<PAGE>
commenced, payments will commence as soon as administratively practicable, after
the Valuation Date following the date on which the Committee receives
notification of the Participant's death.
5.2 REVISED ELECTION.
(a) Pursuant to a Revised Election, a Participant may
specify:
(1) a date for the commencement of the payment
of the Participant's Account Balance that is after the date specified in the
Participant's Deferral Election; and/or
(2) a form of payment that calls for a greater
number of installment payments than that specified in the Participant's Deferral
Election, or a number of annual installment payments where the Participant
specified a single sum payment in his or her Deferral Election.
(b) If a Participant has made a Revised Election with
respect to amounts the payment of which has been deferred to a certain date, the
Participant may not thereafter make another Revised Election with respect to
amounts the payment of which, as of the date on which such Revised Election is
made and before giving effect to the Revised Election, has been deferred to the
same date.
(c) To be effective, a Revised Election must be:
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<PAGE>
(1) made in writing by the Participant on a form
furnished for such purpose by the Committee;
(2) submitted to the Committee on or before the
date that is one year and one day before the date on which the portion of the
Participant's Account Balance that is the subject of the Revised Election would,
absent the Revised Election, first become payable; and
(3) approved by the Committee. A Revised
Election will be deemed to have been approved by the Committee if it is not
disapproved by the Committee within ten days of the date on which it is
received.
5.3 PAYMENTS IN THE EVENT OF FINANCIAL HARDSHIP.
(a) Notwithstanding any other provision of the Plan to
the contrary, a Participant may receive payment of all or a portion of his or
her Account Balance as soon as administratively practicable following the
approval by the Committee of a written application for such payment which
demonstrates that the Participant has incurred a severe financial hardship as a
result of an unanticipated emergency beyond the control of the Participant. The
amount of any payment made pursuant to this Section 5.3 shall be limited to the
amount necessary to meet the financial hardship (including any taxes that
Participant will be required to pay as a result of the payment).
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<PAGE>
(b) Where a Participant receives a payment of less than
his or her entire Account Balance pursuant to Subsection 5.3(a), the portion of
the Participant's Account Balance to which each hypothetical investment Fund
designation is applied shall be reduced proportionately so that the investment
Fund designations apply to the Participant's Account Balance in the same
percentages immediately before and immediately after the payment.
5.4 ACCELERATION OF PAYMENT.
(a) Notwithstanding any provision of the Plan to the
contrary, in the event the Committee determines that any portion of a
Participant's Account Balance is the subject of a final determination by the
Internal Revenue Service that such portion is includible in the Participant's
taxable income, the Participant's Account Balance shall be distributed to the
extent it is so includible. All income taxes and related interest and penalties
associated with credits to or distributions from a Participant's Account shall
be borne by the Participant.
(b) Notwithstanding any other provision of this Plan to
the contrary, the portion of any Account Balances attributable to fees earned
from a Fund shall be paid to all or any group of similarly situated Participants
or Beneficiaries, whether before or after the termination of the Participants'
status as Trustees or Directors, upon the dissolution, liquidation or winding up
of such Fund, whether voluntary or involuntary, or the disposition of all or
substantially all of the Fund's assets (unless the Fund's obligations under the
Plan have been assumed by a financially responsible party purchasing such
assets) or upon the merger or consolidation of the Fund (unless prior to the
merger or consolidation the Fund's
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<PAGE>
Boards of Trustees determines that the deferrals under the Plan shall survive
the merger or consolidation).
ARTICLE VI
MISCELLANEOUS
6.1 AMENDMENT. The Committee may modify or amend, in
whole or in part, any of or all the provisions of the Plan, or suspend or
terminate it entirely; provided, however, that any such modification, amendment,
suspension or termination may not, without the Participant's consent, adversely
affect any deferred amount credited to him or her for any period prior to the
effective date of such modification, amendment, suspension or termination. The
Plan shall remain in effect until terminated pursuant to this provision.
6.2 ADMINISTRATION. The Committee shall have the sole
authority to interpret the Plan and in its discretion to establish and modify
administrative rules for the Plan. All expenses and costs in connection with the
operation of this Plan shall be borne by the Corporation. The Corporation shall
have the right to deduct from any payment to be made pursuant to this Plan any
federal, state or local taxes required by law to be withheld, and any associated
interest and/or penalties.
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<PAGE>
6.3 GOVERNING LAW. The Plan shall be construed and its
provisions enforced and administered in accordance with the laws of the state of
Florida, except as such laws may be superseded by the federal law.
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EXHIBIT 9
IDEX FUND AND IDEX INVESTOR SERVICES, INC.
TRANSFER AGENCY AGREEMENT
THIS TRANSFER AGENCY AGREEMENT is made and entered into as of this 1st
day of February, 1988 between IDEX FUND, a Massachusetts business trust and
registered investment company with its principal place of business at 600
Cleveland Street, Suite 800, Clearwater, Florida 34615, (the "Fund") and IDEX
Investor Services, Inc., a registered transfer agent with offices at 600
Cleveland Street, Suite 1000, Clearwater, Florida, 34615 (the "Transfer Agent").
In consideration of the mutual covenant herein contained, the parties
hereto agree as follows;
1. APPOINTMENT.
(a) The Fund hereby employs and appoints Transfer Agent as its transfer
agent and dividend disbursing agent effective February 1, 1988, for all shares
of beneficial interest of the Fund, now or hereafter issued, and for any further
class or classes of shares that the Fund subsequently may issue.
(b) Transfer Agent hereby accepts such employment and appointment and
agrees that it will act as the Fund's transfer agent and dividend disbursing
agent, and that in connection therewith, it will perform all of the usual and
ordinary services of a transfer agent and dividend disbursing agent, including,
without limitation, the following services and functions: issuing, transferring
and cancelling certificates of shares of beneficial interest, maintaining all
shareholder accounts, preparing shareholder meeting lists, mailing proxies,
receiving and tabulating proxies, mailing shareholder reports and prospectuses,
withholding taxes on non-resident alien and foreign corporation accounts, for
pension and deferred income, back-up withholding or other instances agreed upon
by the parties, preparing and mailing checks for disbursement of income
dividends and capital gains distributions, preparing and filing Form 1099 for
all shareholders, preparing and mailing confirmation forms to shareholders and
dealers for all transactions in shareholders accounts for which confirmations
are required, recording reinvestments of dividends and distributions in Fund
shares, recording redemptions of Fund shares and preparing and mailing checks
for payments upon redemptions and for disbursements to systematic withdrawal
plan holders.
(c) It is understood that the Transfer Agent is an affiliate of the
Fund's investment adviser, IDEX Management, Inc. (the "Adviser") and the Fund's
Principal Underwriter, Pioneer Western Distributors, Inc. ("Distributor"), and
that directors, officers, employees and agents of the Transfer Agent may be
interested in the Adviser, the Distributor or the Fund, or all of them, as
trustees, directors, officers, employees, agents, shareholders, or otherwise, of
the Adviser, the Distributor, the Fund or all of them.
(d) The Fund understands and agrees that the Transfer Agent may, in its
discretion, subcontract for certain of the services to be provided hereunder.
<PAGE>
2. REPRESENTATIONS AND WARRANTIES OF TRANSFER AGENT. Transfer
Agent represents and warrants to Fund that:
(a) It is a corporation duly organized and existing in good
standing under the laws of the State of Florida.
(b) It is registered as a transfer agent to the extent required
under the Securities Act of 1934.
3. REPRESENTATIONS AND WARRANTIES OF THE FUND. The Fund
represents and warrants to Transfer Agent that:
(a) It is a business trust duly organized and existing in good
standing under the laws of the Commonwealth of Massachusetts.
(b) It is an open-end diversified management investment company
registered under the Investment Company Act of 1940, as amended.
(c) A registration statement under the Securities Act of 1933 has been
filed and is effective with respect of all shares of the Fund to be offered for
sale.
(d) The Fund has the power under applicable laws and under its
Declaration of Trust and Bylaws to enter into and perform this Agreement.
4. DOCUMENTS TO BE SUPPLIED.
(a) On or before the effective date of this Agreement, Fund shall
deliver to the Transfer Agent the following documents:
(1) A certified copy of the Fund's Declaration of Trust
and all amendments thereto;
(2) A certified copy of the Bylaws of the Fund as then
in effect;
(3) Certified copies of the resolutions of the Trustees
of the Fund authorizing the execution of this Agreement and designating certain
authorized persons to give instructions to Transfer Agent and to sign
certificates of shares of beneficial interest of the Fund;
(4) A specimen certificate for shares of the Fund in the
form approved by the Trustees, accompanied by a certificate of the Secretary of
the Fund as to such approval;
(5) Specimens of the signatures of the officers of the
Fund authorized to sign certificates of shares of beneficial interest and of
individuals authorized to sign written instructions and requests;
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<PAGE>
(6) Copies of account application forms and other
documents relating to shareholder accounts;
(7) Copies of the registration statement and amendments
thereto, filed with the Securities and Exchange Commission;
(8) Copies of all agreements then in effective between
the Fund and any agent with respect to the issuance, sale or cancellation of
shares;
(9) A legal memorandum with respect to the status of
shares of beneficial interest of the Fund under state securities laws; and
(10) An opinion of counsel for the Fund with respect to
the validity of the shares of beneficial interest of the Fund.
(b) From time to time during the term of this agreement, the Fund shall
also furnish the Transfer Agent with the following documents:
(1) A certified copy of any amendment to the Declaration
of Trust and Bylaws of the Fund;
(2) Certified copies of each additional resolution of
the Trustees of the Fund designating authorized persons to give instructions to
the Transfer Agent;
(3) Certificates as to any change in officers, trustees
or authorized persons of the Fund;
(4) Each registration statement filed with the Securities and
Exchange Commission, and each amendment and/or with respect thereto, with
respect to the sale of shares of the Fund;
(5) Specimens of any new certificates for Fund shares
accompanied by appropriate resolutions of the Trustees of the Fund approving
such forms;
(6) Such other documents, certificates or opinions as
the transfer agent may reasonably request.
5. COMPENSATION AND EXPENSES.
(a) In consideration for its services hereunder as transfer agent and
dividend disbursing agent, the Fund shall pay to Transfer Agent fees in
accordance with the Fee Schedule attached hereto as Exhibit A.
3
<PAGE>
(b) The compensation agreed to in this Agreement may be changed from
time to time by the parties by attaching to this Agreement a revised Fee
Schedule, dated and signed by an authorized officer of each party, and a
certified resolution of the Trustees of the Fund authorizing such revised Fee
Schedule.
(c) In addition to the Transfer Agent fee paid pursuant to subparagraph
(a), above, Fund agrees to reimburse Transfer Agent for all reasonable
out-of-pocket expenses or advances in connection with the performance of
services under this Agreement, including, without limitation, postage,
envelopes, printing, check forms, forms for reports and statements, stationery,
microfilming, telephone and telegraph charges, including charges for a telephone
drop line, and similar items. Transfer Agent will provide to Fund, not less
frequently than monthly, a detailed accounting of all out-of-pocket expenditures
made by Transfer Agent on behalf of the Fund.
(d) Transfer Agent shall bill the Fund as soon as practicable after the
end of each calendar month for the fee due for that month, and said billings
shall be detailed in accordance with the Fee Schedule of the Fund. The Fund
shall promptly pay to the Transfer Agent the amount of such billing.
6. SALE OF SHARES.
(a) Whenever the Fund shall sell or cause to be sold any shares of
beneficial interest, the Fund shall provide or cause to be provided to the
Transfer Agent information concerning such sales, including: (i) the number of
shares sold, the trade date and price; (ii) the amount of money to be delivered
to the Custodian of the Fund for the sale of such shares; (iii) in the case of a
new account, a new account application or sufficient information to establish an
account.
(b) The Transfer Agent will, upon receipt by it of a check or other
payment identified by it as an investment in shares of the Fund and drawn or
endorsed to the Transfer Agent as agent for, or identified as being for the
account of, the Fund, promptly deposit such check or other payment to the
appropriate account and shall cause the investment to be duly recorded on the
shareholder records of the Fund. The Transfer Agent will notify the Fund, or its
designee, and the Custodian of all purchases and related account adjustments.
Out of the money received in payment for shares, Transfer Agent shall pay to the
Custodian the net asset value per share and shall pay to the Fund's Principal
Underwriter its commission.
(c) Upon receipt of the information required under subparagraph (a) and
notification from the Custodian that such money has been received by it, the
Transfer Agent shall issue to the purchaser or his authorized agent such shares
as he is entitled to receive, based upon the appropriate net asset value of the
Fund's shares, determined in accordance with applicable federal law or
regulation, as described in the Fund's current prospectus. In issuing shares to
a purchaser or his authorized agent, the Transfer Agent shall be entitled to
rely upon the latest written directions, if any, previously received by the
Transfer Agent from the purchaser or his authorized agent concerning the
delivery of such shares.
4
<PAGE>
(d) In connection with wire orders or telephone orders for shares,
Transfer Agent will follow such procedures which may established by the Fund
from time to time. All wire or telephone purchases will be subject to such
additional requirements as may be described in the Fund's current prospectus.
The Fund and the Transfer Agent reserve the right to modify or terminate the
procedures for wire orders or telephone orders at any time.
7. TRANSFERS AND EXCHANGES. The Transfer Agent is authorized to review
and process transfers of shares of the Fund and exchanges between the Fund and
other mutual funds as permitted in the current prospectus for the Fund. If
shares to be transferred are represented by outstanding certificates, the
Transfer Agent shall, upon surrender to it of the certificates in proper form
for transfer, and upon cancellation thereof, countersign and issue new
certificates for a like number of shares and deliver the same. If the shares to
be transferred are not represented by outstanding certificates, the Transfer
Agent shall, upon an order thereof by or on behalf of the registered holder
thereof in proper form, credit the same to the transferee on its books. If the
shares are to be exchanged for shares of another mutual fund, the Transfer Agent
will process such exchange in the same manner as a redemption and sale of
shares, except that it may, in its discretion, waive requirements for
information and documentation.
8. REDEMPTION.
(a) Transfer Agent shall redeem shares of the Fund upon receipt by
Transfer Agent of: (i) a written request for redemption, signed by each
registered owner exactly as the shares are registered; (ii) any certificates
which have been issued for such shares, properly endorsed; (iii) signature
guarantees to the extent required by the Transfer Agent as described in the
current prospectus for the Fund; (iv) any additional documents required by the
Transfer Agent for redemption by corporations, executors, administrators,
guardians and others acting in a representative capacity. The Transfer Agent
will, consistent with procedures which may be established by the Fund from time
to time for redemption by wire or telephone, upon receipt of such a wire order
or telephone redemption request, redeem shares and transmit the proceeds of such
redemption to the redeeming shareholder as directed. All wire or telephone
redemptions will be subject to such additional requirements as may be described
in the Fund's current prospectus. The Fund and the Transfer Agent reserve the
right to modify or terminate the procedures for wire orders or telephone
redemptions at any time.
(b) If the Transfer Agent has received a completed application and
authorization of redemption by draft signed by the registered owner in
accordance with procedures established by the Fund, Transfer Agent will, as
agent for the shareholder, upon receipt of a redemption draft cause the Fund to
redeem a sufficient number of shares in the shareholder's account to cover the
amount of the draft. All draft redemptions will be subject to such additional
requirements as may be described in the Fund's current prospectus and the rules
and regulations of the Transfer Agent.
(c) Upon receipt of all necessary information and documentation
relating to a redemption, the Transfer Agent will issue to the Custodian an
advice setting forth the number of shares of the Fund received by the Transfer
Agent for redemption and that such shares are valid and
5
<PAGE>
in good form for redemption. The Transfer Agent shall, upon notification that
the Custodian has transferred funds for the redemption of shares to a redemption
account at the Custodian or at another bank, pay such monies to the shareholder,
his authorized agent or legal representative.
9. CONFIRMATIONS. Upon each transaction in a shareholder's
account, Transfer Agent shall mail confirmations of such transactions to
shareholders and dealers in a timely fashion.
10. DUTIES AS DIVIDEND DISBURSING AGENT.
(a) Transfer Agent will maintain one or more deposit accounts as
dividend disbursing agent for the Fund, into which the funds for payment of
dividends and distributions provided for hereunder will be deposited and against
which checks will be drawn.
(b) The Fund will promptly notify the Transfer Agent of the declaration
of any dividend or distribution. The Fund shall furnish to the Transfer Agent a
certificate of an authorized person specifying the date of the declaration of
such dividend or distribution, the payment date thereof, the record date as of
which shareholders entitled to payment shall be determined, the amount payable
per share to shareholders of record as of that date, and the total amount
payable to the Transfer Agent on the payment date.
(c) On or before the payable date of any dividend or distribution, the
Transfer Agent shall notify the Fund's Custodian of the estimated amount of cash
required to pay said dividend or distribution, and the Fund agrees that, on or
before the mailing date of such dividend or distribution, the Fund shall
instruct the Custodian to place in a dividend disbursing account at such bank as
may be directed by the Transfer Agent, the funds equal to the cash amount to be
paid out to shareholders. Transfer Agent shall, in accordance with shareholder
instructions, calculate, prepare and mail checks to or (where appropriate)
credit such dividends or distributions to the account of, Fund shareholders, and
maintain and safeguard all underlying records.
(d) Transfer Agent shall replace lost checks upon receipt of properly
executed affidavits and maintain stop payment orders against such replaced
checks.
(e) Transfer Agent shall not be liable for any improper payments
made in accordance with resolutions of the Trustees of the Fund.
(f) Transfer Agent shall prepare and mail to each Fund shareholder such
information which respect to each dividend or distribution as is required by
applicable by federal and state income tax laws and regulations and by the
Investment Company Act of 1940.
11. CERTIFICATES.
(a) The Fund shall supply Transfer Agent with an adequate supply of
blank share certificates to meet the Transfer Agent's requirements therefor.
Such share certificates will be signed manually or by facsimile signatures of
the officers of the Fund authorized by law and by the
6
<PAGE>
Bylaws of the Fund to sign such share certificates. The Fund agrees that,
notwithstanding the death, resignation or removal of any officer of the Fund
whose signature appears on such certificates, the Transfer Agent may continue to
countersign certificates which bear such signatures until otherwise directed in
writing by the Fund.
(b) The Transfer Agent shall maintain a record of each certificate
issued and the number of shares represented thereby and the holder of record of
such shares, and shall maintain a stop transfer record on lost and/or replaced
certificates.
(c) The Transfer Agent agrees to prepare, issue and mail certificates
for shares as requested by shareholders of the Fund in accordance with the
instructions of the Fund and to confirm such issuance to the shareholder and the
Fund or its designee.
(d) The Fund hereby authorizes the Transfer Agent to issue replacement
share certificates in lieu of certificates which have been lost, stolen or
destroyed, without any further action of the Trustees or any officer of the
Fund, upon receipt by the Transfer Agent of properly executed affidavits or lost
certificate bonds in form satisfactory to the Transfer Agent, and the Fund and
the Transfer Agent shall be obligees under any such bond.
(e) The Transfer Agent may establish such rules and regulations
governing the transfer or registration of share certificates as it deems
advisable and consistent with such rules and regulations generally adopted by
transfer agents.
12. RECORDS AND REPORTS.
(a) Transfer Agent shall maintain and safeguard records for each
shareholder's account showing at least the following information: (i) name,
addresses, taxpayer identification numbers and account numbers; (ii) number of
shares held; (iii) historical account information, including dividends paid and
date and price of all transactions on a shareholder's account; (iv) certificate
numbers and denominations for any shareholders holding share certificates; (v)
dealer identification and commission information; (vi) any stop order or
restraining order placed against the shareholder's account; (vii) information
concerning withholdings in the case of a foreign shareholder; (viii) any capital
gain or dividend reinvestment order, Check-o-Matic Plan, Systematic Withdrawal
Plan, Letter of Intention or retirement plan information.
(b) Transfer Agent shall maintain records of (i) issued shares and (ii)
number of shareholders and their aggregate shareholding, classified according to
their residence in each state of the United States or foreign country.
(c) Any records required to be maintained by Rule 31a-1 under the
Investment Company Act of 1940 shall be preserved for the period prescribed in
Rule 31a-2 under such Act. Such records may be inspected by the Fund at all
reasonable times. The Transfer Agent may, at its option at any time, and shall
forthwith upon the Fund's demand, turn over to the Fund and cease to retain in
Transfer Agent's files records and documents created and maintained by the
Transfer Agent in
7
<PAGE>
performance of its services hereunder or for its protection. At the end of the
prescribed retention period, such records and documents shall either be turned
over to the Fund or destroyed, in accordance with the Fund's authorization.
(d) Transfer Agent will furnish to the Fund and to properly authorized
auditors, examiners and other persons designated by the Fund, access to records
and reports maintained by Transfer Agent in connection with its duties
hereunder.
(e) Except as otherwise agreed between the parties or as otherwise
required by law, Transfer Agent will keep confidential all records of and
information in its possession relating to the Fund or its shareholders or
shareholder accounts and will not disclose the same to any person except at the
request of or with the consent of the Fund.
13. SHAREHOLDER SERVICING.
(a) Transfer Agent will respond promptly to correspondence and
telephone inquiries from shareholders and shall investigate all shareholder
inquires.
(b) In connection with any meeting of shareholders, upon receiving
appropriate instructions and written materials prepared by the Fund, the
Transfer Agent will prepare shareholder lists and proxy cards, mail and certify
as to the mailing of proxy materials, process and tabulate returned proxy cards,
furnish one or more reports of proxies voted prior to the meeting, and certify
to the Secretary of the Fund the shares voted at the meeting.
(c) Transfer Agent shall address and mail all communications to
shareholders or their nominees, including proxy material and periodic reports to
shareholders.
14. INSTRUCTIONS.
(a) The Transfer Agent shall be protected in acting upon any paper or
document believed by it to be genuine and to be signed by an authorized person
of the Fund and shall not be held to have any notice of any change of authority
of any person until receipt of written notice thereof from the Fund. It shall
also be protected in processing share certificates which it reasonably believes
to bear the proper manual or facsimile signatures of the officers of the Fund
and the proper counter-signature of the Transfer Agent.
(b) Transfer Agent may apply at any time to any officer of the Fund for
written instructions, and, at the expense of the Fund, may seek advice from
legal counsel for the Fund, with respect to any matter arising in connection
with this Agreement, and it shall not be liable for any action taken to not
taken or suffered by it in good faith in accordance with such written
instructions or with the opinion of such counsel. In addition, the Transfer
Agent, its officers, agents or employees, shall accept instructions or requests
given to them by any person representing or acting on behalf of the Fund only if
said representative is known by the Transfer Agent, its officers, agents or
employees, to be an authorized person of the Fund. The Transfer Agent shall have
no duty or
8
<PAGE>
obligation to inquire into, nor shall the Transfer Agent be responsible for, the
legality of any act done by it upon the request or direction of authorized
persons of the Fund.
(c) Notwithstanding any provision of this Agreement, the Transfer Agent
shall have no duty or obligation to inquire into, and shall not be liable for:
(i) the legality of the issue or sale of any shares of the Fund or the
sufficiency of the amount to be received therefor; (ii) the legality of the
redemption of any shares of the Fund or priority of the amount to be paid
therefore; (iii) the legality of the declaration of any dividend of the Fund, or
the legality of the issue of any shares of the Fund in payment of any stock
dividend; or (iv) the legality of any recapitalization or readjustment of the
shares of the Fund.
15. INDEMNIFICATION AND STANDARD OF CARE.
(a) Transfer Agent shall at all times use reasonable care and
act in good faith in performing its duties hereunder.
(b) Except to the extent that Transfer Agent is covered by and receives
payment from any insurance coverage, Transfer Agent shall incur no liability to
the Fund in connection with its performance of services hereunder, unless such
liability such arise from any error, omission or negligent act within the scope
of its duties hereunder, including but not limited to failure to discover any
dishonest act, or acts done with intent to cause damage to the Fund. Without
limiting the generality of the foregoing, Transfer Agent shall not be liable or
responsible for delays or errors occurring by reason of circumstances beyond its
control, including acts of civil, military, banking or other regulatory
authority, national emergencies, labor difficulties, fire, flood or other
catastrophes, acts of God, insurrection, war, riots, failure of transportation,
communication or power supply, or malfunctions of, or unavoidable difficulties
with, Transfer Agent's records or equipment.
(c) The Fund hereby agrees to indemnify and hold harmless the Transfer
Agent from and against any and all claims, demands, expenses and liabilities
(whether with or without basis in fact or law) of any and every nature which the
Transfer Agent may sustain or incur or which may be asserted against Transfer
Agent by any person by reason of, or as a result of: (i) any action taken or
omitted to be taken by the Transfer Agent in good faith in reliance upon any
certificate, instrument, order or share certificate believed by it to be genuine
and to be signed, countersigned or executed by any duly authorized person of the
Fund, upon the oral or written instructions of any authorized person of the Fund
or upon the opinion of legal counsel for the Fund or its own counsel; or (ii)
any action taken or omitted to be taken by the Transfer Agent in connection with
its appointment in good faith in reliance upon any law, act, regulation or
interpretation of the same even though the same may thereafter may have been
altered, changed, amended or repealed. However, this indemnification shall not
apply to actions or omissions of the Transfer Agent or its directors, officers,
employees or agents in cases of its own gross negligence, willful misconduct,
bad faith, or reckless disregard of its or their duties hereunder.
9
<PAGE>
16. TERM AND TERMINATION.
(a) This Agreement shall become effective on February 1, 1988 and shall
continue in effect until terminated in accordance with the provisions hereof.
(b) Either party may terminate this Agreement by giving 60 days written
notice to the other party. In the event such notice is given by the Fund, it
shall be accompanied by a certified resolution of the Trustees of the Fund,
stating the election to terminate this Agreement and designating a successor
transfer agent.
(c) In addition to any other rights or remedies it may have under this
Agreement or by law, the Fund shall have the right to terminate this Agreement
immediately upon the occurrence at any time of any of the following events:
(1) any interruption or cessation of operations by
Transfer Agent or its assigns or subcontractors which materially interferes with
the business and operation of the Fund;
(2) the bankruptcy of Transfer Agent or the appointment
of a receiver; or
(3) failure by Transfer Agent or its assigns or subcontractors
to perform its duties in accordance with this Agreement, which failure
materially adversely affects the business and operations of the Fund and which
failure continues for 30 days after receipt of written notice from the Fund to
Transfer Agent.
(d) If this Agreement is terminated by the Fund pursuant to subsection
(b) above, the Fund will have and is hereby granted the right, at its option, to
use or cause its agents, employees or independent contractors to use for as long
as the Fund deems necessary for its operations, and without payment of any
compensation or reimbursement to Transfer Agent, Transfer Agent's system,
including all of the programs, manuals and other materials and information
necessary to operate the system.
(e) In the event of termination, Transfer Agent agrees to cooperate
with the Fund in effecting all necessary transfers of the Fund's records to the
Fund or to the successor Transfer Agent.
17. APPLICABLE LAW. This Agreement is executed and delivered
in the State of Florida and shall be governed by the laws of the State of
Florida.
18. AMENDMENT. No provisions of this Agreement may be amended
or modified in any manner except by written instrument executed by both parties
hereto.
19. ASSIGNMENT. This Agreement shall not be assigned by either
party except with the written consent of the other party.
10
<PAGE>
20. COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.
21. NOTICES. Any notice or other instrument in writing, authorized or
required by this Agreement to be given to the Fund or the Transfer Agent, shall
be deemed to be sufficiently given if addressed to that party and mailed or
delivered to it at its office set forth below or at such other place as such
party may from time to time designate in writing:
To the Fund: IDEX Fund
600 Cleveland Street, Suite 800
Clearwater, FL 34615
ATT: Peter D. Jones
Executive Vice President
To the Transfer Agent: IDEX Investor Services, Inc.
600 Cleveland Street, Suite 1000
Clearwater, FL 34615
ATT: G. John Hurley
22. LIMITATION OF LIABILITY. A copy of the Declaration of Trust of the
Fund is on file with the Secretary of the Commonwealth of Massachusetts and
notice is hereby given that this Agreement has been executed on behalf of the
Fund by the undersigned officer of the Fund in his capacity as an officer of the
Fund. The obligations of this Agreement shall only be binding upon the assets
and property of the Fund and shall not be binding upon any trustee, officer or
shareholder of the Fund individually.
IN WITNESS WHEREOF, the parties have caused this agreement to be
executed by their respective duly authorized officers, as of the day and year
first above written.
IDEX FUND, a Massachusetts
business trust
By: /S/ Peter D. Jones
----------------------------------------
Peter D. Jones
Executive Vice President
IDEX INVESTOR SERVICES, INC.,
a Florida corporation
By: /S/ G. John Hurley
-----------------------------------------
G. John Hurley
11
<PAGE>
IDEX FUND
AMENDMENT TO TRANSFER AGENCY AGREEMENT
THIS AMENDMENT TO TRANSFER AGENCY AGREEMENT is made and entered into
this 12th day of March, 1989, between IDEX FUND, a Massachusetts business trust
and registered investment company with its principal place of business at 201
Highland Avenue, Largo, Florida 34640 (the "Fund"), and IDEX INVESTOR SERVICES,
INC., a registered transfer agent with offices at 201 Highland Avenue, Largo,
Florida 34640 (the "Transfer Agent").
RECITALS
A. The Fund and the Transfer Agent have entered into a Transfer
Agency Agreement dated February 1, 1988, (the "Transfer
Agency Agreement").
B. The parties desire to amend the Transfer Agency Agreement to
provide for the periodic adjustment of the compensation
payable thereunder to the Transfer Agent.
Now, therefore, the parties agree as follows:
1. COMPENSATION. The transfer agent fees payable to the Transfer Agent
as set forth on Exhibit A to the Transfer Agency Agreement shall be
re-established annually, commencing April 1, 1989. Such re-established
compensation shall be computed by (i) multiplying the compensation rate
then in effect by the percentage increase in the "Consumer Price Index"
or the "Producer Price Index" for the immediately preceding fiscal
year, whichever is less, as published by the United States Department
of Labor, Bureau of Labor Statistics, or any successor index thereto;
and (ii) adding the product of such computation to the then-current
compensation rate to determine the new adjusted compensation rate;
provided, however, that any such fee adjustment shall not take effect
until approved by the Trustees of the Fund.
2. REMAINDER OF AGREEMENT. Except as expressly amended herein, the
Transfer Agency Agreement remains in full force and effect.
IDEX FUND, a Massachusetts IDEX INVESTOR SERVICES, INC.,
business trust a Florida corporation
By: /S/ John R. Kenney By: /S/ G. John Hurley
--------------------------------- -----------------------------
John R. Kenney, President G. John Hurley, President
12
<PAGE>
IDEX FUND
AMENDMENT TO TRANSFER AGENCY AGREEMENT
THIS AMENDMENT TO TRANSFER AGENCY AGREEMENT (this "Amendment") is made
and entered into this 16th day of March, 1992, between IDEX FUND, a
Massachusetts business trust and registered investment company with its
principal place of business at 201 Highland Avenue, Largo, Florida 34640 (the
"Fund"), and IDEX INVESTOR SERVICES, INC., a registered transfer agent with
offices at 201 Highland Avenue, Largo, Florida 34640 (the "Transfer Agent").
RECITALS
A. The Fund and the Transfer Agent have entered into a Transfer
Agency Agreement dated February 1, 1988, (the "Transfer
Agency Agreement").
B. On March 12, 1989, the parties entered into an Amendment To
Transfer Agency Agreement, to provide for the periodic
adjustment of the compensation payable thereunder to the
Transfer Agent, (the "Previous Amendment").
C. The parties desire to revise the formula set forth in the
Previous Amendment and intend this Amendment to supersede
the Previous Amendment.
Now, therefore, the parties agree as follows:
1. COMPENSATION. The transfer agent fees payable to the Transfer Agent
as set forth on Exhibit A to the Transfer Agency Agreement shall be
re-established annually, commencing April 1, 1992. Such re-established
compensation shall be computed by (i) multiplying the compensation rate
then in effect by the average (arithmetic mean) of the percentage
increase in the "Consumer Price Index" and the "Producer Price Index"
for the immediately preceding fiscal year, as published by the United
States Department of Labor, Bureau of Labor Statistics, or any
successor index thereto; and (ii) adding the product of such
computation to the then-current compensation rate to determine the new
adjusted compensation rate; provided, however, that any such fee
adjustment shall not take effect unless approved by the Trustees of the
Fund.
2. REMAINDER OF AGREEMENT. Except as expressly amended herein, the
Transfer Agency Agreement remains in full force and effect.
IDEX FUND, IDEX INVESTOR SERVICES, INC.,
a Massachusetts business trust a Florida corporation
By: /S/ G. John Hurley By: /S/ Thomas R. Moriarty
--------------------------------- -----------------------------
G. John Hurley, Thomas R. Moriarty
President and Chief Senior Vice President
Executive Officer
13
<PAGE>
IDEX FUND
THIRD AMENDMENT TO TRANSFER AGENCY AGREEMENT
THIS AMENDMENT TO TRANSFER AGENCY AGREEMENT ("Amendment") is made and
entered into this 1st day of April, 1993, between IDEX FUND, a Massachusetts
business trust and registered investment company with its principal place of
business at 201 Highland Avenue, Largo, Florida 34640 (the "Fund"), and IDEX
INVESTOR SERVICES, INC., a registered transfer agent with offices at 201
Highland Avenue, Largo, Florida 34640 (the "Transfer Agent").
RECITALS
A. The Fund and the Transfer Agent have entered into a Transfer
Agency Agreement dated February 1, 1988, as amended March 16,
1992 (the "Transfer Agency Agreement").
B. The parties desire to amend Section 5(c) of the Transfer
Agency Agreement to expressly include in reimbursable out-
of-pocket expenses the charges paid by the Transfer Agent to
DST Systems, Inc. ("DST") for system usage and programming
charges.
Now, therefore, the parties agree Section 5(c) of the Transfer Agency
Agreement is amended in its entirety to read as follows:
5. COMPENSATION AND EXPENSES. (c) In addition to the transfer agent
fees payable to the Transfer Agent in accordance with the Fee Schedule
attached as Exhibit A to the Transfer Agency Agreement, the Fund agrees
to reimburse Transfer Agent for all reasonable out-of-pocket expenses
or advances in connection with the performance of services under this
Agreement, including without limitation, postage, envelopes, printing,
check forms, forms for reports and statements, stationery,
microfilming, telephone and telegraph charges, including charges for a
telephone drop line, DST charges for system usage and programming, and
similar items. Transfer Agent will provide to Fund, not less frequently
than monthly, a detailed accounting of all out-of-pocket expenditures
made by Transfer Agent on behalf of the Fund.
IDEX FUND, IDEX INVESTOR SERVICES, INC.,
a Massachusetts business trust a Florida corporation
By: /S/ G. John Hurley By: /S/ Thomas R. Moriarty
--------------------------------- ---------------------------
G. John Hurley, Thomas R. Moriarty
President and Chief Senior Vice President
Executive Officer
14
<PAGE>
TRANSFER AGENCY AGREEMENT
FEE SCHEDULE
EXHIBIT A
For its services as Transfer Agent, Fund shall pay to Idex Investor Services,
Inc. the following fees:
$8.25 per account per (pro rated)
$2.00 set-up fee for each new account established
$ .10 per closed account per month
15
<PAGE>
TRANSFER AGENCY AGREEMENT
FEE SCHEDULE
EXHIBIT A
For its services as Transfer Agent, Fund shall pay to Idex Investor Services,
Inc. the following fees:
$8.63 per account per (pro rated)
$2.09 set-up fee for each new account established
$1.25 per closed account per month
16
<PAGE>
TRANSFER AGENCY AGREEMENT
FEE SCHEDULE
EXHIBIT A
For its services as Transfer Agent, Fund shall pay to Idex Investor Services,
Inc. the following fees:
$9.01 per account per (pro rated)
$2.19 set-up fee for each new account established
$1.31 per closed account per month
17
<PAGE>
IDEX FUND
TRANSFER AGENCY AGREEMENT
AMENDED FEE SCHEDULE
EXHIBIT A
For its services as Transfer Agent, the Fund shall pay to IDEX Investor
Services, Inc. the following fees *:
$9.51 per account per year (pro rated)
$2.31 set up fee for each new account established
$1.38 per closed account per year
* less the amount of credits, if any, received by or applied to transfer
agent from DST Systems, Inc. for brokerage of portfolio transactions of
the Fund placed by or through a broker/dealer affiliated with DST
Systems, Inc.
Amended this 23rd day of September, 1991.
IDEX FUND IDEX INVESTOR SERVICES, INC.
By: /S/ G. John Hurley By: /S/ Thomas R. Moriarty
--------------------------------- -----------------------
G. John Hurley Thomas R. Moriarty
President and Chief Senior Vice President
Executive Officer
18
<PAGE>
IDEX FUND
TRANSFER AGENCY AGREEMENT
AMENDED FEE SCHEDULE
EXHIBIT A
For its services as Transfer Agent, the Fund shall pay to IDEX Investor
Services, Inc. the following fees *:
$9.65 per account per year (pro rated)
$2.35 set up fee for each new account established
$1.40 per closed account per year
* less the amount of credits, if any, received by or applied to transfer
agent from DST Systems, Inc. for brokerage of portfolio transactions of
the Fund placed by or through a broker/dealer affiliated with DST
Systems, Inc.
Effective this 1st day of April, 1992.
IDEX FUND IDEX INVESTOR SERVICES, INC.
By: /S/ G. John Hurley By: /S/ Thomas R. Moriarty
--------------------------------- -----------------------
G. John Hurley Thomas R. Moriarty
President and Chief Senior Vice President
Executive Officer
19
<PAGE>
IDEX FUND
TRANSFER AGENCY AGREEMENT
AMENDED FEE SCHEDULE
EXHIBIT A
For its services as Transfer Agent, the Fund shall pay to IDEX Investor
Services, Inc. the following fees *:
$9.86 per account per year (pro rated)
$2.40 set up fee for each new account established
$1.43 per closed account per year
* less the amount of credits, if any, received by or applied to transfer
agent from DST Systems, Inc. for brokerage of portfolio transactions of
the Fund placed by or through a broker/dealer affiliated with DST
Systems, Inc.
Effective this 1st day of April, 1993.
IDEX FUND IDEX INVESTOR SERVICES, INC.
By: /S/ G. John Hurley By: /S/ Thomas R. Moriarty
--------------------------------- -----------------------
G. John Hurley Thomas R. Moriarty
President and Chief Senior Vice President
Executive Officer
20
<PAGE>
IDEX FUND
TRANSFER AGENCY AGREEMENT
AMENDED FEE SCHEDULE
EXHIBIT A
For its services as Transfer Agent, the Fund shall pay to Idex Investor
Services, Inc. the following fees*:
$ 12.00 per open account per year (pro rated)**
$ 2.43 set up fee for each new account established
$ 1.45 per closed account per year
* Less the amount of credits, if any, received by or applied to the
transfer agent from DST Systems, Inc. for brokerage of portfolio
transactions of the Fund placed by or through a broker/dealer
affiliated with DST Systems, Inc.
** This $12.00 fee includes the annual base rate per open account of
$10.00, plus an additional annual $2.00 per open account fee,
contingent upon review after one year, which is to cover expenses paid
by the transfer agent for the Imaging technology system, including
projected annual operating costs and training resources.
Effective this day, April 1, 1994
IDEX FUND IDEX INVESTOR SERVICES, INC.
By: /S/ G. John Hurley By: /S/ Thomas R. Moriarty
--------------------------------- -----------------------
G. John Hurley Thomas R. Moriarty
President and Chief Senior Vice President
Executive Officer
21
<PAGE>
CERTIFICATE OF
IDEX FUND
I, Becky A. Ferrell, Assistant Vice President and Secretary of IDEX
Fund (the "Fund"), hereby certify that the following resolutions were duly
adopted by the Board of Trustees of the Fund on March 14, 1994, which
resolutions have not been amended, rescinded or annulled and remain in full
force and effect:
WHEREAS, Section 5 of the Transfer Agency Agreement, as amended, for
each of the Funds provides for annual fee adjustments based on the
average of the Consumer Price Index ("CPI") and Producer Price Index
("PPI"); and
WHEREAS, the Board of Trustees has determined that it is in the best
interest of the Fund and its shareholders to obtain the anticipated
benefits of the Transfer Agent's acquisition of Imaging equipment to
enhance customer service for the Funds;
NOW THEREFORE BE IT
RESOLVED, that the revised fee schedule for the Transfer Agency
Agreement between each Fund and Idex Investor Services, Inc. ("IIS")
reflecting a 1.45% increase in the fees payable pursuant to the
Transfer Agency Agreement, which represents the average of the CPI and
PPI for 1993, a copy of which is attached to these minutes as Exhibit
B, be, and it hereby is, approved; and
FURTHER RESOLVED, that the appropriate officers of and counsel to the
Funds be, and they hereby are, directed to prepare and execute an
amendment to the Transfer Agency Agreement between each Fund and IIS,
that would expressly include an additional annual $2.00 per open
account fee to cover expenses paid by IIS for the Imaging technology
system, including projected annual operating costs and training
resources; and
FURTHER RESOLVED, that in March of 1995, the Trustees intend to
re-evaluate the $2.00 per open account additional annual fee in light
of the expenses actually incurred by IIS in connection with the
acquisition and implementation of Imaging technology, and if
appropriate, to consider an adjustment in the amount of such fee.
DATED: April 1, 1994 By: /S/ Becky A. Ferrell
--------------------------
Becky A. Ferrell
Assistant Vice President and Secretary
IDEX Fund
22
<PAGE>
IDEX FUND
TRANSFER AGENCY AGREEMENT
AMENDED FEE SCHEDULE
EXHIBIT A
For its services as Transfer Agent, the Fund shall pay to Idex Investor
Services, Inc. the following fees*:
$ 14.00 per open account per year (pro rated)**
$ 2.43 set up fee for each new account established
$ 1.45 per closed account per year
* Less the amount of credits, if any, received by or applied to
the transfer agent from DST Systems, Inc. for brokerage of
portfolio transactions of the Fund placed by or through a
broker/dealer affiliated with DST Systems, Inc.
** This fee includes the annual base rate per open account of $10.00, plus
an additional annual $2.00 per open account fee, contingent upon review
in March, 1995, which is to cover expenses paid by the transfer agent
for the Imaging technology system, including projected annual operating
costs and training resources. The open account fee also includes a
temporary $2.00 increase (on an annual basis) for the period October 1,
1994 through March 31, 1995.
Effective this day, October 1, 1994
IDEX FUND IDEX INVESTOR SERVICES, INC.
By: /S/ G. John Hurley By: /S/ Thomas R. Moriarty
-------------------------------- ---------------------------
G. John Hurley Thomas R. Moriarty
President and Chief Senior Vice President
Executive Officer
23
<PAGE>
CERTIFICATE OF
IDEX FUND
I, Becky A. Ferrell, Assistant Vice President and Secretary of IDEX Fund
(the "Fund"), hereby certify that the following resolution was duly adopted by
the Board of Trustees of the Fund on September 19, 1994, which resolution has
not been amended, rescinded or annulled and remain in full force and effect:
RESOLVED, that the fee schedule for the Transfer Agency Agreement between
each Fund and Idex Investor Services, Inc. ("IIS") be revised to reflect an
annual increase of $2.00 per open account fee for the period October 1,
1994 through March 31, 1995, payable pursuant to the Transfer Agency
Agreement, which would offset the net decrease in accounts that IIS is
currently undergoing, be, and it hereby is, approved.
DATED: October 1, 1994 By: /S/ Becky A. Ferrell
---------------------------------
Becky A. Ferrell
Assistant Vice President and Secretary
IDEX Fund
24
<PAGE>
IDEX FUND
TRANSFER AGENCY AGREEMENT
AMENDED FEE SCHEDULE
EXHIBIT A
For its services as Transfer Agent, the Fund shall pay to Idex Investor
Services, Inc. the following fees*:
$ 14.22 per open account per year (pro rated)**
$ 2.48 set up fee for each new account established
$ 1.48 per closed account per year
* Less the amount of credits, if any, received by or applied to
the transfer agent from DST Systems, Inc. for brokerage of
portfolio transactions of the Fund placed by or through a
broker/dealer affiliated with DST Systems, Inc.
** This fee includes an increase in the annual base rate per open account
from $10.00 to $10.22, plus an additional annual $2.00 per open account
fee, continued through March, 1996, which is to cover ongoing expenses
paid by the transfer agent for the Imaging technology system. The open
account fee also includes the continuation of a temporary $2.00
increase (on an annual basis) for the period April 1, 1995 through
September 30, 1995.
Effective this day, April 1, 1995
IDEX FUND IDEX INVESTOR SERVICES, INC.
By: /S/ G. John Hurley By: /S/ Thomas R. Moriarty
----------------------------- -----------------------------
G. John Hurley Thomas R. Moriarty
President and Chief Executive Officer Senior Vice President
25
<PAGE>
CERTIFICATE OF
IDEX FUND
I, Becky A. Ferrell, Assistant Vice President and Secretary of IDEX
Fund (the "Fund"), hereby certify that the following resolutions were
duly adopted by the Board of Trustees of the Fund on March 6, 1995, which
resolutions have not been amended, rescinded or annulled and remain in full
force and effect:
RESOLVED, that the revised fee schedule for the Transfer Agency
Agreement between each Fund and Idex Investor Services, Inc. ("IIS")
reflecting a 2.2% increase in the fees payable pursuant to the Transfer
Agency Agreement, which represents the average of the CPI and PPI for
1994, be, and it hereby is, approved; and
RESOLVED, that the continuation of the annual $2.00 per open account
fee for the period April 1, 1995 to March 31, 1996 to cover expenses
paid by IIS for the Imaging technology system, including projected
annual operating costs and training resources, be and it hereby is,
approved; and
FURTHER RESOLVED, that the continuation of the annual increase of $2.00
per open account fee for the period April 1, 1995 through September 30,
1995, be, and it hereby is, approved.
DATED: April 1, 1995 By: /S/ Becky A. Ferrell
--------------------------------------
Becky A. Ferrell
Assistant Vice President and Secretary
IDEX Fund
26
<PAGE>
IDEX FUND
TRANSFER AGENCY AGREEMENT
AMENDED FEE SCHEDULE
EXHIBIT A
For its services as Transfer Agent, the Fund shall pay to Idex Investor
Services, Inc. the following fees*:
$ 14.22 per open account per year (pro rated)**
$ 2.48 set up fee for each new account established
$ 1.48 per closed account per year
* Less the amount of credits, if any, received by or applied to
the transfer agent from DST Systems, Inc. for brokerage of
portfolio transactions of the Fund placed by or through a
broker/dealer affiliated with DST Systems, Inc.
** This fee includes an additional annual $2.00 per open account fee,
continued through March, 1996, which is to cover ongoing expenses paid
by the transfer agent for the Imaging technology system. The open
account fee also includes the continuation of a temporary $2.00
increase (on an annual basis) for the period October 1, 1995 through
March 31, 1996.
Effective this day, October 1, 1995
IDEX FUND IDEX INVESTOR SERVICES, INC.
By: /S/ G. John Hurley By: /S/ Thomas R. Moriarty
------------------------------------- -----------------------
G. John Hurley Thomas R. Moriarty
President and Chief Executive Officer Senior Vice President
27
<PAGE>
CERTIFICATE OF
IDEX FUND
I, Becky A. Ferrell, Vice President and Secretary of IDEX Fund (the
"Fund"), hereby certify that the following resolutions were duly adopted by the
Board of Trustees of the Fund on September 18, 1995, which resolutions have not
been amended, rescinded or annulled and remain in full force and effect:
WHEREAS, the Board has previously approved a temporary annual increase
of $2.00 per open account fee for the period April 1, 1995 through
September 30, 1995;
NOW THEREFORE BE IT
RESOLVED, that the continuation of the temporary annual increase of
$2.00 per open account fee for the period October 1, 1995 through March
31, 1996, be, and it hereby is, approved.
DATED: October 1, 1995 By: /S/ Becky A. Ferrell
-----------------------------
Becky A. Ferrell
Vice President and Secretary
IDEX Fund
28
EXHIBIT 10
December 22, 1995
IDEX Fund
201 Highland Avenue
Largo, FL 34640
RE: IDEX Fund
Offering of Shares of Beneficial Interest
Gentlemen:
In my capacity as Vice President and Counsel, I have acted as counsel
for IDEX Fund (the "Fund") and have reviewed the Registration Statement under
the Securities Act of 1933 on Form N-1A, and amendments thereto, with respect
to the offer and sale of shares of beneficial interest, no par value, of the
above-referenced Fund, including the "Rule 24f-2 Notice" for the fiscal year
ended 10/31/95, registering such shares pursuant to such Registration
Statement, as amended, in accordance with Rule 24f-2 under the Investment
Company Act of 1940.
I have examined the Fund's Declaration of Trust and Bylaws, as amended;
the proceedings of its Board of Trustees relating to the authorization,
issuance, and proposed sales of the shares; and such other records and documents
as I deemed relevant. Based upon such examination, it is my opinion that upon
the issuance and sale of the shares of beneficial interest of the Fund in the
manner contemplated by the aforesaid Registration Statement, as amended, such
shares were validly issued, fully paid and nonassessable outstanding shares of
beneficial interest of the Fund.
Very truly yours,
/S/ Becky A. Ferrell
- -------------------------------------
Becky A. Ferrell
Vice President and Counsel
EXHIBIT 11(a)
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Prospectus and
Statement of Additional Information constituting parts of this Post-Effective
Amendment No. 15 to the registration statement on Form N-1A (the "Registration
Statement") of our report dated December 13, 1995, relating to the financial
statements and financial highlights appearing in the October 31, 1995 Annual
Report to Shareholders of the IDEX Fund, which is also incorporated by reference
into the Registration Statement. We also consent to the reference to us under
the heading "Financial Highlights" in the Prospectus and under the heading
"Legal Counsel and Auditors" in the Statement of Additional Information.
/s/ PRICE WATERHOUSE LLP
- ------------------------
Price Waterhouse LLP
Kansas City, Missouri
December 29, 1995
EXHIBIT 11(b)
CONSENT OF SUTHERLAND, ASBILL & BRENNAN
We consent to the reference to our firm under the heading
"Legal Counsel and Auditors" in the statement of additional information included
in Post-Effective Amendment No. 15 to the Registration Statement on Form N-1A
for IDEX Fund (File No. 2-95237). In giving this consent, we do not admit that
we are in the category of persons whose consent is required under Section 7 of
the Securities Act of 1933.
/s/ SUTHERLAND, ASBILL & BRENNAN
----------------------------
SUTHERLAND, ASBILL & BRENNAN
Washington, D.C.
December 26, 1995
Exhibit 18(a)
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned hereby makes,
constitutes and appoints BECKY A. FERRELL and G. JOHN HURLEY and each of them,
severally, his true and lawful attorneys and agents in his name, place and stead
and on his behalf (a) to sign and cause to be filed registration statements of
IDEX Fund under the Securities Act of 1933 and the Investment Company Act of
1940, and all amendments, consents and exhibits thereto; (b) to withdraw such
statements or any amendments or exhibits and make requests for acceleration in
connection therewith; (c) to take all other action of whatever kind or nature in
connection with such registration statements which said attorneys may deem
advisable; and (d) to make, file, execute, amend and withdraw documents of every
kind, and to take other action of whatever kind they may elect, for the purpose
of complying with the laws of any state relating to the sale of securities of
IDEX Fund, hereby ratifying and confirming all actions of any of said attorney
thereunder. Said attorneys may act jointly or severally, and the action of one
shall bind the undersigned as fully as if two or more had acted together.
DATED this day, June 9, 1995
/s/ JOHN R. KENNEY
------------------------
John R. Kenney
Exhibit 18(b)
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned hereby
makes, constitutes and appoints BECKY A. FERRELL and G. JOHN HURLEY and each of
them, severally, his true and lawful attorneys and agents in his name, place and
stead and on his behalf (a) to sign and cause to be filed registration
statements of IDEX Fund under the Securities Act of 1933 and the Investment
Company Act of 1940, and all amendments, consents and exhibits thereto; (b) to
withdraw such statements or any amendments or exhibits and make requests for
acceleration in connection therewith; (c) to take all other action of whatever
kind or nature in connection with such registration statements which said
attorneys may deem advisable; and (d) to make, file, execute, amend and withdraw
documents of every kind, and to take other action of whatever kind they may
elect, for the purpose of complying with the laws of any state relating to the
sale of securities of IDEX Fund, hereby ratifying and confirming all actions of
any of said attorneys thereunder. Said attorneys may act jointly or severally,
and the action of one shall bind the undersigned as fully as if two or more had
acted together.
DATED this day, June 9, 1995
/s/ JAMES L. CHURCHILL
------------------------
James L. Churchill
Exhibit 18(c)
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned hereby
makes, constitutes and appoints BECKY A. FERRELL and G. JOHN HURLEY and each of
them, severally, his true and lawful attorneys and agents in his name, place and
stead and on his behalf (a) to sign and cause to be filed registration
statements of IDEX Fund under the Securities Act of 1933 and the Investment
Company Act of 1940, and all amendments, consents and exhibits thereto; (b) to
withdraw such statements or any amendments or exhibits and make requests for
acceleration in connection therewith; (c) to take all other action of whatever
kind or nature in connection with such registration statements which said
attorneys may deem advisable; and (d) to make, file, execute, amend and withdraw
documents of every kind, and to take other action of whatever kind they may
elect, for the purpose of complying with the laws of any state relating to the
sale of securities of IDEX Fund, hereby ratifying and confirming all actions of
any of said attorneys thereunder. Said attorneys may act jointly or severally,
and the action of one shall bind the undersigned as fully as if two or more had
acted together.
DATED this day, June 9, 1995
/s/ WILLIAM W. SHORT, JR.
------------------------
William W. Short, Jr.
Exhibit 18(d)
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned hereby
makes, constitutes and appoints BECKY A. FERRELL and G. JOHN HURLEY and each of
them, severally, his true and lawful attorneys and agents in his name, place and
stead and on his behalf (a) to sign and cause to be filed registration
statements of IDEX Fund under the Securities Act of 1933 and the Investment
Company Act of 1940, and all amendments, consents and exhibits thereto; (b) to
withdraw such statements or any amendments or exhibits and make requests for
acceleration in connection therewith; (c) to take all other action of whatever
kind or nature in connection with such registration statements which said
attorneys may deem advisable; and (d) to make, file, execute, amend and withdraw
documents of every kind, and to take other action of whatever kind they may
elect, for the purpose of complying with the laws of any state relating to the
sale of securities of IDEX Fund, hereby ratifying and confirming all actions of
any of said attorneys thereunder. Said attorneys may act jointly or severally,
and the action of one shall bind the undersigned as fully as if two or more had
acted together.
DATED this day, June 9, 1995
/s/ JACK E. ZIMMERMAN
------------------------
Jack E. Zimmerman
Exhibit 18(e)
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned hereby
makes, constitutes and appoints BECKY A. FERRELL and G. JOHN HURLEY and each of
them, severally, his true and lawful attorneys and agents in his name, place and
stead and on his behalf (a) to sign and cause to be filed registration
statements of IDEX Fund under the Securities Act of 1933 and the Investment
Company Act of 1940, and all amendments, consents and exhibits thereto; (b) to
withdraw such statements or any amendments or exhibits and make requests for
acceleration in connection therewith; (c) to take all other action of whatever
kind or nature in connection with such registration statements which said
attorneys may deem advisable; and (d) to make, file, execute, amend and withdraw
documents of every kind, and to take other action of whatever kind they may
elect, for the purpose of complying with the laws of any state relating to the
sale of securities of IDEX Fund, hereby ratifying and confirming all actions of
any of said attorneys thereunder. Said attorneys may act jointly or severally,
and the action of one shall bind the undersigned as fully as if two or more had
acted together.
DATED this day, June 9, 1995
/s/ PETER R. BROWN
------------------------
Peter R. Brown
Exhibit 18(f)
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned hereby
makes, constitutes and appoints BECKY A. FERRELL and G. JOHN HURLEY and each of
them, severally, his true and lawful attorneys and agents in his name, place and
stead and on his behalf (a) to sign and cause to be filed registration
statements of IDEX Fund under the Securities Act of 1933 and the Investment
Company Act of 1940, and all amendments, consents and exhibits thereto; (b) to
withdraw such statements or any amendments or exhibits and make requests for
acceleration in connection therewith; (c) to take all other action of whatever
kind or nature in connection with such registration statements which said
attorneys may deem advisable; and (d) to make, file, execute, amend and withdraw
documents of every kind, and to take other action of whatever kind they may
elect, for the purpose of complying with the laws of any state relating to the
sale of securities of IDEX Fund, hereby ratifying and confirming all actions of
any of said attorneys thereunder. Said attorneys may act jointly or severally,
and the action of one shall bind the undersigned as fully as if two or more had
acted together.
DATED this day, June 9, 1995
/s/ CHARLES C. HARRIS
------------------------
Charles C. Harris
Exhibit 18(g)
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned hereby
makes, constitutes and appoints BECKY A. FERRELL, his true and lawful attorney
and agent in his name, place and stead and on his behalf (a) to sign and cause
to be filed registration statements of IDEX Fund under the Securities Act of
1933 and the Investment Company Act of 1940, and all amendments, consents and
exhibits thereto; (b) to withdraw such statements or any amendments or exhibits
and make requests for acceleration in connection therewith; (c) to take all
other action of whatever kind or nature in connection with such registration
statements which said attorneys may deem advisable; and (d) to make, file,
execute, amend and withdraw documents of every kind, and to take other action of
whatever kind they may elect, for the purpose of complying with the laws of any
state relating to the sale of securities of IDEX Fund, hereby ratifying and
confirming all actions of any of said attorney thereunder.
DATED this day, June 9, 1995
/s/ G. JOHN HURLEY
------------------------
G. John Hurley
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY INFORMATION EXTRACTED FROM THE FINANCIAL
STATEMENTS OF IDEX FUND FOR THE PERIOD ENDED OCTOBER 31, 1995, AND IS QUALIFIED
IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> OCT-31-1995
<PERIOD-START> NOV-01-1994
<PERIOD-END> OCT-31-1995
<INVESTMENTS-AT-COST> 247,732
<INVESTMENTS-AT-VALUE> 331,384
<RECEIVABLES> 1,947
<ASSETS-OTHER> 2,044
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 335,375
<PAYABLE-FOR-SECURITIES> 7,773
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 417
<TOTAL-LIABILITIES> 8,190
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 195,685
<SHARES-COMMON-STOCK> 13,671
<SHARES-COMMON-PRIOR> 15,726
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 48,034
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 83,466
<NET-ASSETS> 327,185
<DIVIDEND-INCOME> 2,128
<INTEREST-INCOME> 2,263
<OTHER-INCOME> 0
<EXPENSES-NET> 3,840
<NET-INVESTMENT-INCOME> 551
<REALIZED-GAINS-CURRENT> 48,258
<APPREC-INCREASE-CURRENT> 34,993
<NET-CHANGE-FROM-OPS> 83,802
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 1,832
<DISTRIBUTIONS-OF-GAINS> 3,295
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 2,804
<NUMBER-OF-SHARES-REDEEMED> 5,152
<SHARES-REINVESTED> 293
<NET-CHANGE-IN-ASSETS> 40,107
<ACCUMULATED-NII-PRIOR> 1,320
<ACCUMULATED-GAINS-PRIOR> 3,032
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 2,832
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 3,928
<AVERAGE-NET-ASSETS> 283,346
<PER-SHARE-NAV-BEGIN> 18.25
<PER-SHARE-NII> 0.05
<PER-SHARE-GAIN-APPREC> 5.98
<PER-SHARE-DIVIDEND> 0.13
<PER-SHARE-DISTRIBUTIONS> 0.22
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 23.93
<EXPENSE-RATIO> 1.39
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
