IMPORTANT NOTICE
Please complete the enclosed proxy card and return it as soon as possible in the
enclosed postage paid envelope; or for your convenience, you may vote by calling
toll-free at 1- 800-293-5871, 24 hours a day. When voting by telephone, please
enter your 10-digit control number, which is located on your proxy card. A
confirmation of your telephone vote will be mailed to you.
NOTE: You cannot vote by telephone if your shares are held in the name of your
brokerage firm (a "street name account"). If you have a street name account,
please complete your proxy card and return it to your broker. Your vote is still
important.
IDEX FUND
IDEX FUND 3
201 HIGHLAND AVENUE
LARGO, FLORIDA 33770-2597
July 25, 1996
Dear Fellow Shareholder:
You are cordially invited to attend the joint special meeting of shareholders of
IDEX Fund and IDEX Fund 3 that will be held at 201 Highland Avenue, Largo,
Florida on September 16, 1996 at 10:00 a.m., local time. A Prospectus/Proxy
Statement, which gives you information about the purpose of the meeting, and a
form of proxy for you to cast your vote, are included with this letter. This
will be an important meeting and we hope you will read the Prospectus/Proxy
Statement carefully and that you will vote.
The Prospectus/Proxy Statement asks you to approve the proposed reorganization
of IDEX Fund and IDEX Fund 3 (the "Funds") and the transactions contemplated
thereby (the "Reorganization"), pursuant to which the Funds will be reorganized
and become part of IDEX II Growth Portfolio of the IDEX II Series Fund. If
approved, it is anticipated that the Reorganization will be implemented on or
about September 20, 1996. The shareholders of both IDEX Fund and IDEX Fund 3
must approve the Reorganization. If the Reorganization is approved, IDEX Fund
and IDEX Fund 3 will be dissolved, and the shareholders of IDEX Fund and IDEX
Fund 3 will automatically become holders of a separate class of shares of IDEX
II Growth Portfolio, to be designated Class T Shares (the "Class T Shares"). The
Reorganization will be a tax-free Reorganization, therefore, no gain or loss
will result to the Funds, their shareholders, or the IDEX II Series Fund.
Pre-liquidating distributions will be made to shareholders of the Funds prior to
the closing of the Reorganization.
IDEX II Growth Portfolio has the same investment objective and policies as each
of the Funds. Your rights and responsibilities as a shareholder of IDEX Fund
and/or IDEX Fund 3 will not be materially affected by the proposed
Reorganization. The adviser, sub-adviser, portfolio manager, principal
underwriter and other service providers for each of the Funds currently are the
same as those for the IDEX II Growth Portfolio. Like the shares of IDEX Fund and
IDEX Fund 3, Class T Shares of the IDEX II Growth Portfolio will be sold subject
to a maximum initial 8.50% sales charge, but will not be subject to ongoing
annual 12b-1 distribution or service fees. Class T Shares are not currently
anticipated to be offered or sold to new investors.
<PAGE>
The Reorganization is part of an effort by the IDEX Group of Funds to reduce the
number of separately organized investment companies in the IDEX Group, and to
combine the prospectuses, statements of additional information, and shareholder
reports for funds that are currently separately organized. We anticipate that
the Reorganization should result over time in a reduction in the level of future
operating expenses associated with maintaining IDEX Fund and IDEX Fund 3 as
separate entities as compared with combining them into the Class T Shares of the
Growth Portfolio, as well as economies of scale and more efficient operations.
In addition, it is anticipated that the Reorganization will result in lower
advisory fees because the combined assets of the Portfolio after the
Reorganization will enable all Class T shareholders (including former IDEX Fund
and IDEX Fund 3 shareholders) to reach advisory fee breakpoints currently in
effect for the Portfolio. For more detailed information, please read "Reasons
for the Reorganization" in the Prospectus/Proxy Statement included with this
letter. Your Trustees have recently reviewed and unanimously endorsed the
Reorganization as being in the best interests of the shareholders of IDEX Fund
and IDEX Fund 3. Trustees of IDEX II Series Fund have recently reviewed and
unanimously endorsed the Reorganization as being in the best interests of the
shareholders of IDEX II Growth Portfolio and IDEX II Series Fund. YOUR TRUSTEES
RECOMMEND A VOTE FOR THE REORGANIZATION.
We realize that this Prospectus/Proxy Statement is detailed and technical and we
hope this letter presents a concise overview of the Reorganization. We hope you
will be able to attend the meeting and would welcome the opportunity to meet you
and discuss any questions you might have about the Funds and IDEX II Growth
Portfolio. YOUR VOTE IS IMPORTANT, REGARDLESS OF THE NUMBER OF SHARES YOU OWN.
PLEASE TAKE A FEW MINUTES TO REVIEW THIS MATERIAL, CAST YOUR VOTE ON THE
ENCLOSED PROXY CARD AND RETURN THE PROXY CARD IN THE ENCLOSED POSTAGE-PAID
ENVELOPE OR, IF MORE CONVENIENT, PLEASE TELEPHONE YOUR VOTE, FOLLOWING THE
INSTRUCTIONS IN THE BOX AT THE TOP OF THIS LETTER. PLEASE VOTE EACH PROXY YOU
RECEIVE. Your prompt response will help avoid the necessity and expense of
sending follow up letters to obtain a quorum.
The Funds are using Shareholder Communications Corporation, a professional proxy
solicitation firm, to assist shareholders in the voting process. As the date of
the meeting approaches, if we have not already heard from you, you may receive a
telephone call from Shareholder Communications Corporation reminding you to
exercise your right to vote.
Thank you for your prompt response. We look forward to seeing you at the
meeting.
/S/ JOHN R. KENNEY /S/ G. JOHN HURLEY
John R. Kenney G. John Hurley
Chairman of the Board President and Chief Executive Officer
<PAGE>
IF YOU ARE A SHAREHOLDER OF MORE THAN ONE OF THE FUNDS INVOLVED IN THE MEETING,
YOU WILL RECEIVE A PROXY STATEMENT AND PROXY CARD RELATING TO SHARES OF EACH
FUND. PLEASE BE CERTAIN TO VOTE, WITH RESPECT TO EACH PROXY CARD, EITHER BY MAIL
OR BY TELEPHONE.
IDEX FUND
IDEX FUND 3
201 HIGHLAND AVENUE
LARGO, FLORIDA 33770-2597
(800) 851-9777
NOTICE OF A SPECIAL MEETING OF SHAREHOLDERS
SEPTEMBER 16, 1996
To the respective shareholders of IDEX Fund and IDEX Fund 3:
Notice is hereby given that a special meeting of the shareholders of IDEX Fund
and IDEX Fund 3 (each, a "Fund" and collectively, the "Funds"), respectively,
will be held jointly at 201 Highland Avenue, Largo, Florida, on the 16th day of
September, 1996, at 10:00 a.m., local time, or any adjournment(s) thereof, for
the following purpose:
1. To approve a proposed Agreement and Plan of Reorganization and Liquidation
dated May 31, 1996 among the Funds and IDEX II Series Fund, on behalf of
its IDEX II Growth Portfolio, providing for the transfer of all of the
assets of IDEX Fund and IDEX Fund 3 to IDEX II Growth Portfolio in exchange
for Class T Shares of IDEX II Growth Portfolio having a value equal to the
aggregate net asset value of the IDEX Fund and IDEX Fund 3 shares, and the
redemption of all outstanding shares of IDEX Fund and IDEX Fund 3 by
distributing to holders thereof Class T Shares of IDEX II Growth Portfolio
equal in value to the IDEX Fund and IDEX Fund 3 shares redeemed.
The Boards of Trustees of IDEX Fund and IDEX Fund 3 have fixed the close of
business on July 18, 1996, as the record date for the determination of
shareholders of each Fund entitled to notice of, and to vote at, the meeting.
You are entitled to vote at the meeting and any adjournment(s) thereof if you
owned shares of either of the Funds at the close of business on July 18, 1996.
If you attend the meeting, you may vote your shares in person. If you do not
expect to attend the meeting, please either complete, date, sign and return the
enclosed proxy card in the enclosed postage paid envelope, or vote by calling
toll-free at1-800-293-5871, 24 hours a day. A confirmation of your telephone
vote will be mailed to you. NOTE: You cannot vote by telephone if your shares
are held in the name of your brokerage firm (a "street name account"). If you
have a street name account, please complete your proxy card and return it to
your broker. Your vote is still important. If you mail your vote by proxy ballot
or cast your vote by telephone and then decide to attend the meeting, you may
change your vote in person at the meeting.
By Order of the Board of Trustees,
/S/ BECKY A. FERRELL
Becky A. Ferrell, Vice President,
Counsel and Secretary
IDEX Fund
IDEX Fund 3
Largo, Florida
July 25, 1996
YOUR VOTE IS IMPORTANT
NO MATTER HOW MANY SHARES YOU OWN
Please indicate your voting instructions on the enclosed proxy card, date and
sign the card, and return it in the envelope provided, or vote by telephone as
instructed above. If you sign, date and return the proxy card but give no voting
instructions, your shares will be voted "FOR" the Reorganization. In order to
avoid the additional expense and delay of further solicitation, we ask for your
cooperation in voting.
<PAGE>
PROSPECTUS/PROXY STATEMENT DATED JULY 25, 1996
IDEX FUND
IDEX FUND 3
201 HIGHLAND AVENUE
LARGO, FLORIDA 33770-2597
(TOLL FREE) 1-800-851-9777
This Prospectus/Proxy Statement is a joint proxy statement for IDEX Fund and
IDEX Fund 3 (each, a "Fund" and collectively, the "Funds") furnished in
connection with the solicitation of proxies by the respective Boards of Trustees
of IDEX Fund and IDEX Fund 3 to be used at each Fund's special meeting of
shareholders or any adjournment(s) thereof (the "Meeting"). The Meeting will be
held jointly on September 16, 1996 at 10:00 a.m., local time, at 201 Highland
Avenue, Largo, Florida 33770- 2597.
The primary purpose of the Meeting is to vote on the proposed reorganization of
IDEX Fund and IDEX Fund 3 into the Growth Portfolio of IDEX II Series Fund (the
"Portfolio"). The proposed reorganization (the "Reorganization") will be
effected in accordance with the Agreement and Plan of Reorganization and
Liquidation attached hereto as Exhibit A (the "Plan"). The Reorganization will
be effected by the transfer of all of the assets of each Fund to the Portfolio
in exchange solely for shares of beneficial interest, no par value, in the
Portfolio of a class to be established for this purpose and designated Class T
shares (the "Class T Shares"), and the assumption by the Portfolio of all of the
liabilities of each Fund. The Class T Shares would then be distributed pro rata
to the respective shareholders of IDEX Fund and IDEX Fund 3, and IDEX Fund and
IDEX Fund 3 would be liquidated. As a result of and on the effective date of the
Reorganization, each respective shareholder of IDEX Fund and IDEX Fund 3 would
receive a number of full and fractional Class T Shares which, although they may
be a different number of shares from the number of shares of IDEX Fund and/or
IDEX Fund 3 formerly owned by such shareholders, will have a total net asset
value equal to the net asset value of the respective shareholder's IDEX Fund and
IDEX Fund 3 shares on the effective date of the Reorganization.
IDEX II Series Fund is an open-end diversified management investment company
organized as a Massachusetts business trust, and currently has eleven series:
IDEX II Growth, Global, Flexible Income, Tax-Exempt, Income Plus, Aggressive
Growth, Equity-Income, Balanced, Capital Appreciation, Tactical Asset Allocation
and C.A.S.E. Portfolios. The IDEX II Growth Portfolio is a series of IDEX II
Series Fund. The shares of beneficial interest of each series are currently
divided into three classes: Class A, Class B and Class C shares. Each class
represents an interest in the same assets of the Portfolio. The current
Prospectus for IDEX II Series Fund contains a detailed description regarding the
differences in the classes of shares of each series of IDEX II Series Fund that
are currently offered to investors. The only investment objective of the
Portfolio is growth of capital.
This Prospectus/Proxy Statement, which should be retained for future reference,
sets forth concise information about the proposed Reorganization and about the
Class T Shares of the Growth Portfolio that an investor should know before
voting on the proposed Reorganization. A copy of the current prospectus of IDEX
Fund and of IDEX Fund 3, each dated March 1, 1996, have been filed with the
Securities and Exchange Commission ("SEC") and are incorporated by reference
herein. Copies of each Fund prospectus, and the Statement of Additional
Information for each Fund, may be obtained without charge by contacting IDEX
Mutual Funds, 201 Highland Avenue, Largo Florida 33770-2597, or by calling
toll-free 1-800-851-9777. Copies can also be inspected and copied at the Public
Reference Room maintained by the SEC at 450 Fifth Street, N.W., Washington, D.C.
20549, and obtained from the Public Reference Branch Office of Consumer Affairs
and Information Services, SEC, Washington, D.C. 20559, at prescribed rates. In
addition, the current prospectus of the IDEX II Series Fund dated February 1,
1996 (which contains information regarding the Portfolio), is included with this
Prospectus/Proxy Statement, and is also incorporated by reference herein.
A Statement of Additional Information dated February 1, 1996 of the IDEX II
Series Fund (which contains information regarding the Portfolio) and Statements
of Additional Information for IDEX Fund and IDEX Fund 3, each dated March 1,
1996, have been filed with the SEC and are incorporated by reference herein.
Copies of these documents may also be obtained without charge by contacting IDEX
Mutual Funds, 201 Highland Avenue, Largo, Florida 33770-2597, or by calling
toll-free 1-800-851-9777.
A Statement of Additional Information dated July 25, 1996, relating to the
proposed Reorganization, including historical and pro forma financial
statements, has been filed with the SEC and is incorporated by reference herein.
Copies of this Statement of Additional Information may be obtained without
charge by contacting IDEX Mutual Funds, 201 Highland Avenue, Largo, Florida
33770-2597, or by calling toll-free 1-800-851-9777.
THESE SECURITIES 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 OR ANY STATE SECURITIES COMMISSION, NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
<PAGE>
TABLE OF CONTENTS
Introduction and Voting Information...........................................1
Approval of a Proposed Agreement and Plan of Reorganization and Liquidation
for the Funds and the Transactions Contemplated Thereby...................3
Summary.......................................................................3
The Proposed Reorganization...................................................3
Operation of the Portfolio After the Reorganization...........................3
IDEX II Series Fund...........................................................4
Management and Distribution Fees..............................................5
Summary of Expenses...........................................................5
Principal Risk Factors........................................................8
The Reorganization............................................................8
Agreement and Plan of Reorganization and Liquidation..........................8
Reasons for the Reorganization................................................9
Investment Objectives and Policies...........................................10
Tax Considerations...........................................................10
Expenses of the Reorganization...............................................10
Appraisal Rights.............................................................11
Purchases and Exchanges......................................................11
Redemption Procedures........................................................12
Dividends and Distributions..................................................12
Comparison of Investment Objectives and Policies.............................12
Description of Securities To Be Issued.......................................12
Capitalization...............................................................13
Ratios.......................................................................14
Miscellaneous................................................................15
Additional Available Information....................................15
Legal Matters.......................................................15
Experts.............................................................16
Shareholder Proposals...............................................16
Other Business......................................................16
Agreement and Plan of Reorganization And Liquidation.................Appendix A
IDEX II Growth Portfolio Excerpt from
IDEX II Series Fund's Annual Report to
Shareholders Dated September 30, 1995.......................................*
Prospectus of IDEX II Series Fund dated February 1, 1996......................*
*Enclosed Herewith
<PAGE>
INTRODUCTION AND VOTING INFORMATION
This document is a joint Prospectus/Proxy Statement for IDEX Fund and IDEX Fund
3 (each, a "Fund" and collectively, the "Funds") furnished to shareholders of
the Funds in connection with the solicitation of proxies by the respective
Boards of Trustees of IDEX Fund and IDEX Fund 3, to be used at each Fund's
special meeting of shareholders or any adjournment(s) thereof (the "Meeting").
The Meeting will be held jointly on September 16, 1996 at 10:00 a.m., local
time, at 201 Highland Avenue, Largo, Florida 33770-2597, for the purposes set
forth in the Notice of the Special Meeting.
Shareholders of record of each Fund at the close of business on July 18, 1996
(the "Record Date") will be entitled to vote at the Meeting. Shareholders are
entitled to one vote for each share held and fractional votes for fractional
shares held. A majority of the shares of beneficial interest outstanding on the
Record Date, represented in person or by proxy, of a Fund will constitute a
quorum for the Meeting and therefore must be present for the transaction of
business at that Fund's Meeting. In the event that for either Fund a quorum is
not present at the Meeting, or a quorum is present but sufficient votes to
approve the Reorganization are not received, the persons named as proxies may
propose one or more adjournments of that Fund's Meeting to permit further
solicitation of proxies. Any such adjournment will require the affirmative vote
of a majority of that Fund's shares represented at the Meeting in person or by
proxy. The persons named as proxies will vote those proxies that they are
entitled to vote FOR the Reorganization in favor of an adjournment and will vote
those proxies required to be voted AGAINST the Reorganization against such
adjournment. A shareholder vote may be taken on the Reorganization proposed in
this Prospectus/Proxy Statement prior to any such adjournment if sufficient
votes have been received and it is otherwise appropriate.
The individuals named as proxies in the enclosed proxy card will vote in
accordance with your directions, if your proxy is received properly executed. If
you properly execute your proxy and give no voting instructions with respect to
the Reorganization, your shares will be voted FOR the Reorganization. The duly
appointed proxies may, in their discretion, vote upon such other matters as may
properly come before the Meeting.
Abstentions and "broker non-votes" (as defined below) are counted as shares
eligible to vote at the Meeting in determining whether a quorum is present, but
do not represent votes cast with respect to the Reorganization. "Broker
non-votes" are shares held by a broker or nominee as to which instructions have
not been received from the beneficial owners or persons entitled to vote and the
broker or nominee does not have discretionary voting power.
You may revoke your proxy: (a) at any time prior to its exercise by written
notice of its revocation to the Secretary of the applicable Fund at the above
address prior to the Meeting; (b) by the subsequent execution and return of
another proxy prior to the Meeting; or (c) by being present and voting in person
at the Meeting and giving oral notice of revocation to the Chairman of the
Meeting.
Shareholders of a Massachusetts business trust such as a Fund are not entitled
to appraisal rights (i.e., to demand fair value of their shares) in the event of
a reorganization. Consequently, the shareholders of each of the Funds will be
bound by the terms of the Reorganization, if approved. Any shareholder of a Fund
may, however, redeem his or her Fund shares at net asset value prior to the
closing date of the Reorganization.
The Reorganization must be approved by a majority of the outstanding shares of
the particular Fund, which is defined as the lesser of (1) the affirmative vote
of 67% or more of the shares of the Fund present at the Meeting if the holders
of more than 50% of the outstanding shares are present in person or by proxy, or
(2) the vote of more than 50% of the outstanding shares of the Fund.
CONSUMMATION OF THE REORGANIZATION WILL REQUIRE THE AFFIRMATIVE VOTE OF A
MAJORITY OF OUTSTANDING SHARES OF BOTH IDEX FUND AND IDEX FUND 3.
As of the Record Date, IDEX Fund and IDEX Fund 3 had 16,027,339.911 and
9,408,555.435 shares of beneficial interest outstanding, respectively. As of the
Record Date, State Street Bank and Trust Company as Trustee for the ConAgra
Retirement Income Savings Plan, Boston, Massachusetts, owned of record 22.93% of
the outstanding shares of IDEX Fund. As of the Record Date, IDEX II Growth
Portfolio had 24,194,166.485 shares of beneficial interest outstanding. To the
knowledge of IDEX Fund 3 and IDEX II Growth Portfolio, as of the Record Date, no
shareholder owned beneficially more than 5% of the outstanding shares of either
the Fund or the Portfolio.
1
<PAGE>
The principal solicitation of proxies will be by the mailing of this joint
Prospectus/Proxy Statement on or about July 26, 1996, but proxies may also be
solicited by telephone and/or in person by representatives of each Fund, regular
employees of Idex Investor Services, Inc., the transfer agent of each Fund, or
its affiliate(s), certain broker-dealers (who may be specifically compensated
for such services), and representatives of any independent proxy solicitation
service retained for the meeting. It is anticipated that the cost of such
supplementary solicitation, if any, will be nominal. Arrangements will be made
with brokerage houses and other custodians, nominees, and fiduciaries to forward
proxies and proxy materials to their principals. The costs of the meeting,
including the preparation and mailing of the notice, Prospectus/Proxy Statement
and proxy, and the solicitation of proxies, including reimbursement to
broker-dealers and others who forward proxy materials to their clients, will be
borne by the Funds.
Shareholder Communications Corporation ("SCC"), an independent proxy
solicitation service, may be engaged to assist in the solicitation of proxies.
As the meeting date approaches, certain shareholders of the Funds may receive a
call from a representative of SCC if the Funds have not yet received their vote.
Authorization to permit SCC to execute proxies may be obtained from shareholders
of the Funds by telephonic instructions. Proxies that are obtained
telephonically will be recorded in accordance with the procedures set forth
below. Management of the Funds believes that these procedures are reasonably
designed to ensure that the identity of the shareholder casting the vote is
accurately determined and that the voting instructions of the shareholder are
accurately reflected. Management of the Funds believes that the telephone voting
procedures comply with applicable state law.
In all cases where a telephonic proxy is solicited, the SCC representative is
required to ask the shareholder for such shareholder's full name, address,
social security or employer identification number, title (if the person giving
the proxy is authorized to act on behalf of an entity, such as a corporation),
the number of shares owned, and to confirm that the shareholder has received the
Prospectus/Proxy Statement in the mail. If the information solicited agrees with
the information provided to SCC by the Funds, then the SCC representative has
the responsibility to explain the process, read the proposal listed on the proxy
card, and ask for the shareholder's instructions on such proposal. The SCC
representative, although he or she is permitted to answer questions about the
solicitation process, is not permitted to recommend to the shareholder how to
vote, other than to read any recommendation set forth in the Prospectus/Proxy
Statement. SCC will record the shareholder's instructions on the card. Within 72
hours, SCC will send the shareholder a letter or mailgram to confirm the
shareholder's vote and asking the shareholder to call SCC immediately if the
shareholder's instructions are not correctly reflected in the confirmation.
If a shareholder wishes to participate in the Meeting, but does not wish to give
a proxy by telephone, such shareholder may still submit the proxy card
originally sent with the Prospectus/Proxy Statement or attend the Meeting in
person. Any proxy given by a shareholder, whether in writing or by telephone, is
revocable. A shareholder may revoke the accompanying proxy or a proxy given
telephonically at any time prior to its use by filing with the Funds a written
revocation or duly executed proxy bearing a later date. In addition, any
shareholder who attends the Meeting in person may vote by ballot at the Meeting,
thereby cancelling any proxy previously given.
The shareholders of each of IDEX Fund and IDEX Fund 3 are being asked to approve
the proposed Reorganization pursuant to which all of the assets of the Funds
would be transferred to the Portfolio in exchange for Class T Shares of the
Portfolio and the assumption by the Portfolio of all of the Funds' liabilities.
Consummation of the Reorganization is conditioned upon the approval of the
Reorganization by shareholders of IDEX Fund and by shareholders of IDEX Fund 3.
THE BOARD OF TRUSTEES OF EACH OF THE FUNDS RECOMMENDS THAT YOU VOTE "FOR" THE
APPROVAL OF THE REORGANIZATION.
2
<PAGE>
APPROVAL OF A PROPOSED AGREEMENT
AND PLAN OF REORGANIZATION AND LIQUIDATION
FOR THE FUNDS AND THE TRANSACTIONS CONTEMPLATED THEREBY
SUMMARY
The following is a summary of certain information contained elsewhere in this
Prospectus/Proxy Statement, the respective Prospectuses of IDEX Fund, IDEX II
Series Fund and IDEX Fund 3, and the Plan. Shareholders should read the entire
Prospectus/Proxy Statement carefully.
THE PROPOSED REORGANIZATION
The purpose of each Meeting is to vote on the proposed Reorganization of IDEX
Fund and IDEX Fund 3 into the IDEX II Growth Portfolio, a separate series of
IDEX II Series Fund, which, like the Funds, is a Massachusetts business trust.
In order to effect the Reorganization, the shareholders of each Fund must
approve the Plan, the form of which is attached to this Prospectus/Proxy
Statement as Exhibit A. The Reorganization will involve the transfer of all of
the assets of each Fund in exchange solely for shares of beneficial interest, no
par value, in the Portfolio, of a class to be established for this purpose and
designated Class T Shares (the "Class T Shares"); and the assumption by the
Portfolio of all of the liabilities of each Fund. The Class T Shares would then
be distributed pro rata to the respective shareholders of each Fund in complete
liquidation of such Fund. The Trustees of each Fund, at a meeting held on May
22, 1996, approved the Plan. The Plan was executed on May 31, 1996.
The investment objective, policies and restrictions of the Portfolio following
the Reorganization will be identical in all respects to the current investment
objective, policies and restrictions of each Fund. IN THE VIEW OF MANAGEMENT OF
THE FUNDS, THE RIGHTS OF FUND SHAREHOLDERS WILL NOT BE MATERIALLY AFFECTED BY
THE REORGANIZATION. CLASS T SHARES OF THE PORTFOLIO WILL NOT BE SUBJECT TO A
PLAN OF DISTRIBUTION ADOPTED PURSUANT TO RULE 12B-1; THEREFORE, NO 12B-1
DISTRIBUTION OR SERVICE FEES WILL BE APPLICABLE TO CLASS T SHARES. CLASS T
SHARES WILL NOT BE OFFERED OR SOLD TO NEW INVESTORS; ONLY EXISTING SHAREHOLDERS
OF A FUND AS OF THE DATE OF THE PROPOSED REORGANIZATION WILL BE PERMITTED TO
PURCHASE CLASS T SHARES AND TO RECEIVE ANY DIVIDENDS OR CAPITAL GAIN
DISTRIBUTIONS IN ADDITIONAL CLASS T SHARES FOLLOWING THE REORGANIZATION.
FINALLY, EACH FUND AND IDEX II SERIES FUND HAVE RECEIVED AN OPINION OF COUNSEL
THAT THE REORGANIZATION WILL BE A TAX-FREE REORGANIZATION AND THEREFORE WILL
RESULT IN NO TAX CONSEQUENCES, OTHER THAN A PRE-LIQUIDATING DISTRIBUTION TO
SHAREHOLDERS OF THE FUNDS PRIOR TO THE CLOSING OF THE REORGANIZATION.
The consummation of the Reorganization is subject to a number of conditions set
forth in the Plan. Among other conditions, it is a condition of the proposed
Reorganization that the shareholders of each of the Funds shall have approved
the Plan and the transactions contemplated thereby. After the closing of the
Reorganization, the name of IDEX II Series fund will be changed to IDEX Series
Fund.
OPERATION OF THE PORTFOLIO AFTER THE REORGANIZATION
Implementation of the Reorganization will not result in any material change with
respect to the nature of the investment owned by former Fund shareholders. The
investment adviser, sub-adviser, principal underwriter and other service
providers currently employed by each of the Funds also currently serve in such
capacities for the Portfolio. The portfolio manager for the Funds currently also
serves as portfolio manager for the Portfolio. The Board of Trustees of IDEX II
Series Fund has approved a Management and Investment Advisory Agreement pursuant
to which Idex Management, Inc. ("IMI") serves as the Portfolio's investment
adviser which has terms substantially identical to the Management and Investment
Advisory Agreement currently in effect between each Fund and IMI (see
"Management and Distribution Fees," below). Similarly, the Board of Trustees of
IDEX II Series Fund has approved an Investment Counsel Agreement pursuant to
which Janus Capital Corporation ("Janus Capital") serves as the sub-adviser for
the Portfolio which has terms substantially identical to the Investment Counsel
Agreement currently in effect between IMI and Janus Capital with respect to each
Fund.
3
<PAGE>
InterSecurities, Inc. ("ISI") serves, and upon implementation of the
Reorganization, will continue to serve, as the principal underwriter of the
Portfolio (including its Class T Shares) pursuant to an Underwriting Agreement
which is the same, in all material respects, as the Underwriting Agreement
currently in effect between the Funds and ISI except those changes to the
Underwriting Agreement that are deemed necessary and appropriate to facilitate
the offering of the Class T Shares, and are approved by the Trustees of IDEX II
Series Fund, including the Trustees of IDEX II Series Fund who are not
"interested persons" of IDEX II Series Fund or of the Funds, as that term in
defined in the Investment Company Act of 1940, as amended ("Independent
Trustees"). ISI also serves as the administrator of the IDEX II Series Fund and
the Portfolio pursuant to an Administrative Services Agreement virtually
identical to the Administrative Services Agreement currently in effect between
IMI and ISI with respect to each of the Funds. Similarly, custodian and transfer
agency arrangements with Investors Fiduciary Trust Company and Idex Investor
Services, Inc., respectively, for the IDEX II Series Fund and the Portfolio are
anticipated to be identical to the arrangements currently in effect with respect
to each of the Funds. In addition, Price Waterhouse LLP serves as the
independent accountants of IDEX Fund, IDEX Fund 3 and IDEX II Series Fund.
For the reasons set forth below under "Reasons for the Reorganization," the
Board of Trustees of each Fund, including the Independent Trustees, has
concluded that the Reorganization is in the best interests of such Fund and that
the interests of its shareholders will not be diluted or otherwise adversely
affected as a result of the Reorganization. Accordingly, each Fund's Board of
Trustees recommends approval of the Reorganization.
IDEX II SERIES FUND
Like the Funds, IDEX II Series Fund is an open-end, diversified management
investment company, organized as a business trust under the laws of the
Commonwealth of Massachusetts pursuant to a Declaration of Trust dated January
7, 1986. The operations of IDEX II Series Fund are governed by a Restatement of
Declaration of Trust dated August 30, 1991 ("Declaration of Trust"), its Bylaws
and Massachusetts law. IDEX II Series Fund is subject to the provisions of the
1940 Act and the rules and regulations of the SEC thereunder. IDEX II Series
Fund is a "series fund"; it issues its shares in series, with each series
representing a separately managed portfolio of securities. IDEX II Series Fund
currently consists of eleven series: IDEX II Growth, Global, Flexible Income,
Tax-Exempt, Income Plus, Aggressive Growth, Equity-Income, Balanced, Capital
Appreciation, Tactical Asset Allocation and C.A.S.E. Portfolios. The fiscal year
of each series of IDEX II Series Fund currently ends on September 30, although
the Board of Trustees of IDEX II Series Fund recently approved a change in the
fiscal year end of IDEX II Series Fund to October 31. This change is expected to
take effect during calendar year 1996. Like the Funds, each separate portfolio
of IDEX II Series Fund is authorized by its Board of Trustees to issue and sell
its shares in multiple classes. Currently, each Portfolio of IDEX II Series Fund
offers for sale three classes of shares: Class A, Class B and Class C shares.
See the current prospectus for IDEX II Series Fund that accompanies this
Prospectus/Proxy Statement attached hereto for more information about these
classes of shares.
In connection with the proposed Reorganization, the Board of Trustees of IDEX II
Series Fund has created and designated Class T Shares as a new separate class of
shares of IDEX II Growth Portfolio. Purchases of Class T Shares of IDEX II
Growth Portfolio will be subject to a maximum 8.50% initial sales charge as a
percentage of the public offering price of Class T Shares; Class T Shares will
not be subject to annual service or distribution fees. It is anticipated that
following the Reorganization, Class T Shares will be offered and sold to former
shareholders of each Fund subject to the same terms, including sales charges,
available discounts (including rights of accumulation and letters of intention)
and reinvestment and exchange privileges, as the terms currently applicable to
shares of each Fund (which are identical). It is not currently anticipated that
Class T Shares will be available for sale to new investors; however, former
shareholders of each Fund will be permitted to purchase additional Class T
Shares and to receive any dividends or capital gain distributions in additional
Class T Shares. Class T Shares will have designations, powers, preferences,
rights (including redemption rights), qualifications, limitations and
restrictions that are identical to those of the shares of each Fund. No sales
charges will be imposed on Class T Shares acquired pursuant to the
Reorganization.
4
<PAGE>
Subject to the provisions of its Declaration of Trust, the business of IDEX II
Series Fund is managed by its Board of Trustees, who have all powers necessary
and appropriate to carry out that responsibility. The Board of Trustees of IDEX
II Series Fund is composed of the same individuals who serve as the Trustees of
the Funds. The responsibilities, powers and fiduciary duties of the Trustees of
IDEX II Series Fund are identical to those of the Trustees of IDEX Fund and IDEX
Fund 3. IDEX II Growth Portfolio commenced operations on May 8, 1986, and as of
March 31, 1996, had net assets of approximately $528 million.
MANAGEMENT AND DISTRIBUTION FEES
Pursuant to the Management and Investment Advisory Agreement between IMI and the
Portfolio, IMI serves as the investment adviser of the Portfolio and receives
from the Portfolio an annual fee, computed daily and paid monthly, equal to
1.00% of the Portfolio's average daily net assets up to $750 million, 0.90% of
its average daily net assets up to the next $250 million, and 0.85% of its
average daily net assets over $1 billion. This fee is identical to the fee
received by IMI from IDEX Fund pursuant to its current Management and Investment
Advisory Agreement with IMI. IDEX Fund 3 is currently subject to an advisory fee
at an annual rate of 1.00% of average daily net assets pursuant to its current
Management and Investment Advisory Agreement with IMI; however, upon
implementation of the Reorganization, all Class T shareholders (including former
IDEX Fund 3 shareholders) will receive the benefits of lower advisory fees
payable by the Portfolio in light of the advisory fee breakpoints currently in
effect for the Portfolio.
For Janus Capital's services as sub-adviser to the Portfolio pursuant to the
Investment Counsel Agreement between IMI and Janus Capital, IMI compensates
Janus Capital in the same manner as currently in effect with respect to each
Fund pursuant to the Investment Counsel Agreement between IMI and Janus Capital
for such Fund. Janus Capital receives 50% of the fees received by IMI under the
Management and Investment Advisory Agreement, less 50% of any amount reimbursed
to the Portfolio by IMI. In addition, as described more fully in the Statements
of Additional Information for each of the Funds and for IDEX II Series Fund, IMI
pays additional compensation to Janus Capital under certain circumstances
depending on the level of the aggregate net assets of the IDEX Group of Funds
for which Janus Capital serves as sub-adviser. The same arrangement will apply
to the assets of the Funds that will be transferred to the Portfolio pursuant to
the Reorganization.
In addition, ISI, as the principal underwriter of the Portfolio, may receive
annual service and distribution fees in accordance with the Plan of Distribution
in effect with respect to those classes of shares of the Portfolio with respect
to which such Plan has been adopted pursuant to Rule 12b-1 under the 1940 Act.
See the current prospectus for IDEX II Series Fund that accompanies this
Prospectus/Proxy Statement for more information about the 12b-1 Distribution
Plans currently in effect for each such class. CLASS T SHARES WILL NOT BE
SUBJECT TO A 12B-1 PLAN OF DISTRIBUTION; THEREFORE, NO 12B-1 DISTRIBUTION OR
SERVICE FEES WILL BE APPLICABLE TO CLASS T SHARES.
SUMMARY OF EXPENSES
Please read this section carefully. The Class T Shares will incur certain
expenses. The Fee Table shows the expenses involved in owning shares of IDEX
Fund, IDEX Fund 3 or Class T Shares of the Growth Portfolio (on a pro forma
basis). The Examples of Expenses show the expenses you might pay when making a
hypothetical $1,000 investment.
5
<PAGE>
<TABLE>
<CAPTION>
FEE TABLE
IDEX FUND IDEX FUND 3 PRO FORMA COMBINED
CLASS T SHARES OF IDEX
II SERIES FUND GROWTH
PORTFOLIO(7)
<S> <C> <C> <C>
Shareholder Transaction Expenses
Maximum Sales Load Imposed on 8.50% 8.50% 8.50%
Purchases (as percentage of offering
price) (1)
Exchange Fees (2) None None None
Redemption Fees (3) None None None
Deferred Sales Charge (as a percentage None None None
of original purchase price or
redemption proceeds, whichever is
lower) (4)
Annual Operating Expenses
(as a percentage of average net assets)
Management Fees 1.00% 1.00% 1.00%
12b-1 Service and Distribution Fees None None None
Other Expenses (net of expense 0.39% 0.36% 0.34%
reimbursements and/or fee waivers, if
any (5)
Total Operating Expenses (net of 1.39% 1.36% 1.34%
expense reimbursements and/or fee
waivers, if any) (5)
<FN>
(1) On certain purchases, the sales load may be reduced or waived.
Certain shares may be subject to a 1% deferred sales charge. See
Note 4.
(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.
(4) On sales in amounts greater than $1,000,000 on which no up-front
sales charge was imposed, a contingent deferred sales charge of 1%
applies for twelve months.
(5) Other Expenses and Total Operating Expenses of IDEX Fund and IDEX
Fund 3 are presented for the fiscal year ended October 31, 1995.
Other Expenses and Total Operating Expenses of IDEX Fund for the
period ended September 30, 1995 would have been 0.43% and 1.43%,
respectively. Other Expenses and Total Operating Expenses of IDEX
Fund for the period ended March 31, 1996 would have been 0.33% and
1.33%, respectively. Other Expenses and Total Operating Expenses of
IDEX Fund 3 for the period ended September 30, 1995 would have been
0.38% and 1.38%, respectively. Other Expenses and Total Operating
Expenses of IDEX Fund 3 for the period ended March 31, 1996 would
have been 0.31% and 1.31%, respectively. Other Expenses and Total
Operating Expenses of Class T Shares of IDEX II Series Fund Growth
Portfolio are based on estimated expenses for the fiscal year ended
September 30, 1997. Short periods have been annualized.
</FN>
</TABLE>
6
<PAGE>
<TABLE>
<CAPTION>
EXAMPLES OF EXPENSES
The examples below reflect the payment of Other Expenses at the levels set forth
in the Fee Table above.
IDEX FUND IDEX FUND 3 PRO FORMA COMBINED
CLASS T SHARES OF IDEX
II SERIES FUND GROWTH
PORTFOLIO (7)
<S> <C> <C> <C>
Examples of Expenses: (6)
You would pay the following expenses
on a $1,000 investment, assuming (a) a
5% annual return and (b) redemption at
the end of each period:
1 year $98 $98 $97
3 years $125 $124 $124
5 years $155 $153 *
10 years $238 $235 *
<FN>
(6) The Examples assume all dividends and distributions are paid in additional
shares and no payment of exchange or redemption fees.
(7) Pro Forma Combined Other Expenses and Total Operating Expenses have been
estimated based upon the Pro Forma combined level of net assets which will
result upon Reorganization of the Funds and other anticipated economies of
scale. Actual operating expenses may be greater than or less than
these estimates.
* Note: Pursuant to applicable rules, Portfolios that have been in operation for
less than 10 months complete only one- and three-year period portions of the
Examples.
</FN>
</TABLE>
The purpose of the preceding table as an owner of Class T Shares of the IDEX II
Series Fund Growth Portfolio is to help you understand the various costs and
expenses you might bear. For more information aboutthese expenses, please read
"Management and Distribution Fees", "Expenses of the Reorganization" and
"Description of Securities to be Issued."
EXPENSES SHOWN IN THE ABOVE EXAMPLES 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%.
<TABLE>
<CAPTION>
EXAMPLES OF EXPENSES
The examples below reflect the payment of Other Expenses at the levels set forth
in the Fee Table above.
IDEX FUND IDEX FUND 3 PRO FORMA COMBINED
CLASS T SHARES OF IDEX
II SERIES FUND GROWTH
PORTFOLIO (7)
<S> <C> <C> <C>
Examples of Expenses: (6)
You would pay the following expenses
on a $1,000 investment, assuming (a) a
5% annual return and (b) redemption at
the end of each period:
1 year $98 $98 $97
3 years $125 $124 $124
5 years $155 $153 *
10 years $238 $235 *
<FN>
(6) The Examples assume all dividends and distributions are paid in additional
shares and no payment of exchange or redemption fees.
(7) Pro Forma Combined Other Expenses and Total Operating Expenses have been
estimated based upon the Pro Forma combined level of net assets which will
result upon Reorganization of the Funds and other anticipated economies of
scale. Actual operating expenses may be greater than or less than
these estimates.
* Note: Pursuant to applicable rules, Portfolios that have been in operation for
less than 10 months complete only one- and three-year period portions of the
Examples.
</FN>
</TABLE>
The purpose of the preceding table as an owner of Class T Shares of the IDEX II
Series Fund Growth Portfolio is to help you understand the various costs and
expenses you might bear. For more information aboutthese expenses, please read
"Management and Distribution Fees", "Expenses of the Reorganization" and
"Description of Securities to be Issued."
EXPENSES SHOWN IN THE ABOVE EXAMPLES 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%.
7
<PAGE>
PRINCIPAL RISK FACTORS
As discussed above, the investment objectives, policies and restrictions of IDEX
Fund and IDEX Fund 3 are identical to those of the Portfolio. To the extent that
the investment objective (growth of capital) is identical, the principal risks
of investment are also identical. These risk factors include the following:
investments of the Portfolio may not appreciate in value or may lose value, and
may react negatively to conditions in the securities markets or changes in the
level of interest or other rates. The current prospectus of each of the Funds
and of the Portfolio gives detailed descriptions of the risk factors applicable
to certain investments.
THE REORGANIZATION
AGREEMENT AND PLAN OF REORGANIZATION AND LIQUIDATION
The terms and conditions of the Reorganization are set forth in the Plan.
Significant provisions of the Plan are summarized below; however, this summary
is qualified in its entirety by reference to the Plan as set forth in Exhibit A.
In the Reorganization, if it is approved, all of the assets of each Fund will be
acquired by the Portfolio in exchange solely for Class T Shares of the Portfolio
and the assumption by the Portfolio of all of the Fund's liabilities. The Class
T Shares will then be distributed to shareholders of each Fund pro rata in
proportion to their respective Fund shares, and the Funds will be liquidated.
Following the liquidation, the Funds will be deregistered as investment
companies pursuant to the 1940 Act, and dissolved as a matter of Massachusetts
law.
The Reorganization is anticipated to occur on September 20, 1996, or such other
date as the parties may agree (the "Closing Date"). As a result of the proposed
Reorganization, each shareholder of each of the Funds will receive Class T
Shares having a total net asset value as of the Closing Date equal to the net
asset value of the shareholder's Fund shares as of the Closing Date. The
investment objective, policies and restrictions of the Portfolio after the
Reorganization are anticipated to be .identical to the investment objective,
policies and restrictions of each of the Funds immediately prior to the
Reorganization. Moreover, the rights and responsibilities of the shareholders of
the Funds will be unchanged by the Reorganization. Finally, each Fund and IDEX
II Series Fund have received an opinion of counsel to the effect that there will
be no tax consequences for shareholders of the Funds as a result of the exchange
of shares pursuant to the Reorganization. It is anticipated that a Shareholder's
tax basis in Class T Shares of the Portfolio will be the same as the
shareholder's tax basis in its Fund Shares as of the Closing Date. See "Tax
Considerations" for more information.
The assets of the Funds to be acquired by the Portfolio pursuant to the
Reorganization include without limitation all cash, cash equivalents,
securities, receivables (including interest and dividends receivable), claims
and rights of action, rights to register shares under applicable securities
laws, books and records, and other property owned by the Funds. The Portfolio
will assume all of the Funds' debts, liabilities, obligations and duties of
whatever kind or nature. The Portfolio also will deliver Class T Shares to the
Funds, which the Funds will then distribute to shareholders of the Funds. The
value of assets to be acquired and liabilities to be assumed by the Portfolio in
connection with the Reorganization and the net asset value of a Class T Share
will be determined as of the close of regular trading on the New York Stock
Exchange, Inc. ("NYSE") on the Closing Date, using the valuation procedures set
forth in the Plan.
On the Closing Date or as soon as practicable thereafter, the Funds will
liquidate and constructively distribute to their shareholders of record as of
the Closing Date the Class T Shares received by the Funds pro rata in proportion
to the net asset value of their respective Fund shares, in liquidation and
redemption of their Fund shares. This liquidation and distribution will be
accomplished by the transfer of the Class T Shares then credited to the Funds'
account on the Portfolio's Class T share records to open accounts on those
records in the name of each shareholder of the Funds, whereupon the Fund shares
will be canceled. Each shareholder account will represent the proportionate
number of the Class T Shares of the Portfolio due to such Fund shareholder.
Fractional shares will be rounded to the third decimal place. Each shareholder
account will be identical in all respects to the accounts currently maintained
for each Fund shareholder.
8
<PAGE>
Accordingly, every shareholder of each of the Funds will own Class T Shares
immediately after the Reorganization whose value will be equal to the value of
the shareholder's Fund shares immediately prior to the Reorganization. Thus, the
Reorganization will not result in a dilution of any shareholder account value.
Any transfer taxes payable upon issuance of the Class T Shares in a name other
than the registered holder of the shares on the books of the corresponding Fund
as of that time shall be paid by the person to whom such shares are to be issued
as a condition of such transfer. Any reporting responsibility of a Fund will
continue to be the responsibility of that Fund up to and including the Closing
Date and such later date on which the Fund is liquidated.
The consummation of the Reorganization is subject to a number of conditions set
forth in the Plan, some of which may be waived by the Boards of Trustees, or an
authorized officer of the Funds or of IDEX II Series Fund, respectively. One
condition of the Plan that may not be waived is that the shareholders of each of
the Funds must approve the Reorganization. The Plan may be terminated and the
Reorganization abandoned at any time, before or after approval by the
shareholders of the Funds, prior to the Closing Date. In addition, the Plan may
be amended in any manner if mutually agreed upon by the Funds and IDEX II Series
Fund, except that no amendment may be made to the Plan subsequent to the Meeting
of shareholders of the Funds that would have a material adverse effect on the
interest of the Funds' shareholders unless the Plan, as modified, is approved by
the requisite vote of the shareholders of the Funds. After the closing of the
Reorganization, the name of IDEX II Series fund will be changed to IDEX Series
Fund.
REASONS FOR THE REORGANIZATION
The Reorganization is part of an effort by the IDEX Group of Funds to reduce the
number of separately organized investment companies in the IDEX Group, and to
combine the prospectuses, statements of additional information ("SAIs") and
shareholder reports of the investment companies comprising the IDEX Group of
Funds that are currently separately organized. The proposed transactions are
part of a restructuring and "streamlining" of operations within the IDEX Group.
The Reorganization will be a tax-free Reorganization, therefore, no gain or loss
will result to the Funds, their shareholders, or the IDEX II Series Fund.
Pre-liquidating distributions will be made to shareholders of the Funds prior to
the closing of the Reorganization. Rather than continue to provide services to
three separate funds or portfolios with the same investment objective within the
same family of funds, and recognizing the potential benefits to the respective
shareholders of each of those Funds in consolidating the provision of those
services, IMI and its affiliates proposed that IDEX Fund and IDEX Fund 3 be
reorganized into the Portfolio.
By not operating the Funds as separate legal entities, economies of scale are
anticipated that will result from spreading certain expenses among more assets
under management, and more than one series of shares. It is anticipated that the
expenses that may be reduced with respect to the Funds over time will include,
among other things, investment advisory, recordkeeping, legal, auditing,
accounting, tax returns preparation and filing, costs of shareholders' meetings
and registration or qualification of shares of the Funds pursuant to federal and
state law.
In addition, the Funds have historically prepared, filed with the SEC and (where
required) state securities commissions, printed, and periodically updated
separate prospectuses, SAIs and shareholder reports. It is anticipated that
after the Reorganization, these documents will be combined with the prospectus,
SAI and shareholder reports, respectively, of the IDEX II Series Fund. Using
combined prospectuses, SAIs and shareholder reports may benefit shareholders by
reducing the printing costs and professional fees associated with the
preparation of those documents. Additionally, combined prospectuses, SAIs and
shareholder reports ensure that shareholders and investors who have demonstrated
an interest in a particular family of funds such as IDEX are aware of other
funds that are managed and distributed by the same or affiliated entities. The
use of combined prospectuses, SAIs and shareholder reports also simplifies
compliance with regulatory requirements concerning the delivery of prospectuses
and shareholder reports. However, when a combined prospectus is used, it is
possible that a fund or portfolio could become liable for a misstatement in the
prospectus regarding another fund or portfolio.
Each Fund's Board of Trustees, including a majority of the Independent Trustees,
has determined that the interests of the Fund will not be diluted as a result of
the Reorganization, and that the Reorganization is in the best interests of the
Fund.
9
<PAGE>
The Trustees based their decision to recommend the proposed transactions on a
number of factors, including the following:
(1) the cost savings to each Fund (and indirectly, its shareholders) that could
be achieved by combining IDEX Fund, IDEX Fund 3 and IDEX II Growth Portfolio;
(2) the compatibility of the investment objectives, policies and restrictions of
each of the Funds and the Portfolio;
(3) the future prospects for continued growth (and resulting economies of scale)
of IDEX Fund, IDEX Fund 3 and IDEX II Growth Portfolio both under circumstances
where they are not reorganized, and if the Reorganization is effected;
(4) the effect of the Reorganization on the expense ratios of IDEX Fund, IDEX
Fund 3 and IDEX II Growth Portfolio over time based on a comparison of the
expense ratios of IDEX Fund and IDEX Fund 3 with those of Class T Shares of IDEX
II Growth Portfolio on a "pro forma" basis; and an analysis of anticipated
reductions in advisory fees and operating expenses based on economies of scale;
(5) the costs of the Reorganization;
(6) the tax-free nature of the Reorganization; and
(7) the actual and potential benefits to the affiliates of the Funds and the
IDEX II Series Fund, including IMI and Janus Capital, the respective investment
adviser and sub-adviser to the Funds and the Portfolio.
The Trustees also took into account the likelihood that IDEX Fund, IDEX Fund 3
and IDEX II Growth Portfolio will potentially benefit from the Reorganization
because the expected increase in size of the combined IDEX II Growth Portfolio,
both immediately following the Reorganization and on a going forward basis,
could enhance its ability to invest more effectively, to achieve certain
economies of scale and, in turn, potentially to increase its operating
efficiencies.
INVESTMENT OBJECTIVES AND POLICIES
The investment objectives, policies and restrictions of the Portfolio are
identical to those of IDEX Fund and IDEX Fund 3.
TAX CONSIDERATIONS
Each Fund and IDEX II Series Fund have received an opinion of Sutherland, Asbill
& Brennan, counsel to the Funds and IDEX II Series Fund, to the effect that the
proposed Reorganization will constitute a tax-free reorganization within the
meaning of Section 368 (a)(1)(C) of the Internal Revenue Code of 1986, as
amended (the "Code"). Accordingly, no gain or loss generally will be recognized
by a Fund, the Portfolio or their respective shareholders in connection with the
Reorganization.
The opinion also concludes, among other things, that (1) the basis for federal
income tax purposes of the Class T Shares to be received by each current Fund
shareholder will be the same as that of the shareholder's current shares, and
(2) each current Fund shareholder's holding period for the Class T Shares will
include the shareholder's holding period for those shares, provided the Fund
shares were held as capital assets by that shareholder on the date of the
Reorganization.
On or immediately prior to the Closing Date, each Fund will declare and pay to
its shareholders of record one or more dividends and/or other distributions so
that each will have distributed substantially all of its investment company
taxable income (as defined in Section 852(b)(2) of the Code) and net capital
gain (as defined in Sections 852(b)(3) and 1222(11) of the Code), computed
without regard to any deduction for dividends paid, for all taxable years
through its liquidation.
EXPENSES OF THE REORGANIZATION
All expenses relating to the proposed Reorganization, including professional
fees and the costs of the Meeting, such as the preparation and mailing of the
notice, prospectus/proxy statement and proxy, and the solicitation of proxies
which may include
10
<PAGE>
reimbursement to broker-dealers and others who forward proxy materials to their
clients, will be borne by the Funds and, if the Reorganization is consummated,
will be assumed by the Portfolio. Such expenses will be charged against the
income of the Funds and, if the Reorganization is consummated, of the Portfolio,
for the current year. Management of the Funds anticipates that the expenses of
the proposed Reorganization will be offset over time by future savings resulting
therefrom.
APPRAISAL RIGHTS
Each Fund's Declaration of Trust and applicable law do not grant appraisal
rights to shareholders of the Funds in the event of a structural change such as
the Reorganization. Although appraisal rights are not available, shareholders
retain their right to redeem their shares of the Funds or the Portfolio, as the
case may be, at net asset value (less any applicable contingent deferred sales
charges) at any time before or after the Reorganization. The right to redeem
shares at net asset value is not affected by the proposed Reorganization.
PURCHASES AND EXCHANGES
Shares of IDEX Fund, IDEX II Growth Portfolio and IDEX Fund 3 are available at
the public offering price through ISI directly or through broker-dealers who
have sales agreements with ISI. The minimum initial investment in each IDEX
Fund/Portfolio ordinarily is $500, and each additional investment must
ordinarily be at least $50.
Shares of IDEX Fund and IDEX Fund 3 are sold subject to a maximum sales charge
of 8.50% of the public offering price that is applicable to a purchase of less
than $10,000. Shares of IDEX Fund and IDEX Fund 3 are not currently available
for sale to new investors.
Class A Shares of each of the IDEX II Growth, Global, Aggressive Growth,
Equity-Income, Capital Appreciation, Balanced, Tactical Asset Allocation and
C.A.S.E. Portfolios are currently sold subject to a maximum sales charge of
5.50% of the public offering price that is applicable to a purchase of less than
$50,000. For IDEX II Flexible Income, Tax-Exempt and Income Plus Portfolios,
Class A Shares are currently sold subject to a maximum sales charge of 4.75% of
the public offering price that is applicable to a purchase of less than $50,000.
Class B Shares of the IDEX II Portfolios are currently offered at net asset
value, and are subject to a contingent deferred sales charge upon redemption at
a declining rate (maximum 5% of the lesser original purchase price or redemption
proceeds) if redeemed within 6 years of purchase. Class C Shares of the IDEX II
Portfolios are offered at net asset value without a sales charge, but are
subject to higher annual service and distribution fees as described in the
current Prospectus for IDEX II Series Fund that accompanies this
Prospectus/Proxy Statement. The current prospectus of IDEX II Series Fund also
gives a detailed description of the terms under which shares of the portfolios
of IDEX II Series Fund are sold.
Class T Shares of IDEX II Growth Portfolio will be sold subject to a maximum
sales charge of 8.50% of the public offering price that is applicable to a
purchase of less than $10,000. (A purchase of $10,000 but less than $25,000 will
be subject to a maximum sales charge of 7.75%; of $25,000 but less than $50,000,
6.25% ; of $50,000 but less than $75,000, 5.75%; $75,000 but less than $100,000,
5.00%; $100,000 but less than $250,000, 4.25%; $250,000 but less than $500,000,
3.00%; $500,000 but less than $1,000,000, 1.25%; and $1,000,000 or more, 0.00%).
CLASS T SHARES WILL BE AVAILABLE FOR SALE ONLY TO EXISTING CLASS T SHAREHOLDERS
(THE FORMER SHAREHOLDERS OF THE FUNDS). CLASS T SHARES ARE NOT SUBJECT TO ANNUAL
SERVICE AND DISTRIBUTION FEES.
Class A, B and C shares of an IDEX II Portfolio may be exchanged for shares of
any other IDEX II Portfolio of the same class or certain money market funds, as
described in the current Prospectus for IDEX II Series Fund. The minimum amount
of shares exchanged must have a value of at least $500. There is currently no
service charge for an exchange. Class T Shares may be exchanged only for Class A
shares of the IDEX II Portfolios other than the Growth Portfolio. There will be
no sales charges imposed on such exchanges; however Class A shares of all IDEX
II Portfolios are subject to 12b-1 distribution and service fees. Shareholders
may not exchange other classes of shares of the IDEX II Portfolios for Class T
Shares.
11
<PAGE>
REDEMPTION PROCEDURES
Shares of IDEX Fund and IDEX Fund 3, and shares of each IDEX II Portfolio, may
be redeemed upon request in proper form. As described in the current Prospectus,
shares of each IDEX II Portfolio are generally redeemed at net asset value;
however Class B shares and certain Class A share sales of each IDEX II Portfolio
are charged a contingent deferred sales charge upon certain redemptions.
Redemption proceeds are ordinarily paid within three days of the receipt of a
redemption request in proper form.
DIVIDENDS AND DISTRIBUTIONS
IDEX II Series Fund intends to declare and pay semi-annual dividends, if any,
from the net investment income of the Portfolio. Distributions of net capital
gains, if any, realized by the Portfolio during each fiscal year are distributed
annually. It is also each Fund's policy to declare and pay dividends, if any,
semi-annually and net capital gain distributions, if any, annually. On or
immediately prior to the Closing Date, each Fund will declare and pay to its
shareholders of record one or more dividends and/or other distributions so that
each will have distributed substantially all (and in any event not less than
ninety-eight percent) of its investment company taxable income (as defined in
Section 852(b)(2) of the Code), computed without regard to any deduction for
dividends paid, and net capital gain (as defined in Section 1222(11) of the
Code), if any, for all taxable years through each Fund's liquidation.
COMPARISON OF INVESTMENT OBJECTIVES AND POLICIES
The investment objective of the Portfolio is growth of capital. The Portfolio
invests primarily in common stocks listed on a national securities exchange or
on NASDAQ, which the Portfolio's sub-adviser believes have a good potential for
capital growth. The current prospectus of IDEX II Series Fund gives a detailed
description of securities in which the Portfolio may invest.
The investment objective of each of the Funds is also growth of capital. Each
Fund also invests primarily in common stocks listed on a national securities
exchange or on NASDAQ, which the sub-adviser believes have a good potential for
capital growth. The current prospectuses of IDEX Fund and IDEX Fund 3 give a
detailed description of securities in which each of the respective Funds may
invest.
The investment objective and policies of IDEX Fund, the Portfolio and IDEX Fund
3 are non-fundamental and, as such, may be changed by the respective Boards of
Trustees without shareholder approval, although the Trustees have no present
intention to do so and would require that at least thirty days' notice be given
to shareholders prior to any change of investment objective.
The investment restrictions applicable to IDEX Fund, the Portfolio and IDEX Fund
3 are also identical . The current Statements of Additional Information for each
of the Funds and the Portfolio give a detailed description of these investment
restrictions.
DESCRIPTION OF SECURITIES TO BE ISSUED
The shares of each IDEX II Portfolio represent shares of beneficial interest in
a separate portfolio of IDEX II Series Fund, which is an open-end management
investment company. IDEX II Series Fund's capital consists of an unlimited
number of shares currently divided into three classes of each IDEX II Portfolio.
Class T Shares of IDEX II Growth Portfolio will be sold subject to a maximum
initial 8.50% sales charge, but no ongoing annual 12b-1 distribution or service
fees. Class T Shares will not be offered or sold to new investors; only existing
shareholders of a Fund as of the date of the proposed Reorganization will be
permitted to purchase Class T Shares and to receive any dividends or capital
gain distributions in additional Class T Shares following the Reorganization.
Each class of shares of an IDEX II Portfolio represents an equal proportionate
interest in that Portfolio with each other share, and each share is entitled to
equal voting, dividend liquidation and redemption rights. Shares of each IDEX II
Portfolio entitle their holders to one vote per full share and fractional votes
for fractional shares held. Separate votes are taken by each IDEX II Portfolio
on matters
12
<PAGE>
affecting that Portfolio. For example, a change in a fundamental investment
restriction for an IDEX II Portfolio would be voted upon only by shareholders of
that Portfolio. Additionally, approval of a Management and Investment Advisory
Agreement and an Investment Counsel Agreement are matters to be determined only
by the affected Portfolio. Therefore, if shareholders of one IDEX II Portfolio
approve an advisory contract, it is effective as to that Portfolio, whether or
not the shareholders of any other IDEX II Portfolios also approve the contract.
The shares of each IDEX II Portfolio have noncumulative voting rights, do not
have preemptive or subscription rights, and are transferable.
As a Massachusetts business trust, IDEX II Series Fund is not required to hold
annual meetings of its shareholders and does not intend to do so unless required
by the 1940 Act or its Declaration of Trust. A meeting will be called for the
purpose of voting upon the question of removal of any trustee upon the written
request of holders of at least 10% of the outstanding shares of IDEX II Series
Fund.
Shareholders of a Massachusetts business trust may, under certain circumstances,
be held personally liable for its obligations. However, IDEX II Series Fund's
Declaration of Trust expressly disclaims and provides indemnification against
such liability. Accordingly, the risk of a shareholder incurring financial loss
on account of shareholder liability is limited to circumstances in which IDEX II
Series Fund itself would be unable to meet its obligations, a possibility that
the investment advisers to IDEX II Series Fund believe is remote.
For additional information, please refer to the current prospectus for IDEX II
Series Fund that accompanies this Prospectus/Proxy Statement.
CAPITALIZATION
The following tables show the capitalization of IDEX II Growth Portfolio, IDEX
Fund and IDEX Fund 3 as of March 31, 1996 and September 30, 1995 on a pro forma
basis as of each date (unaudited), giving effect to the Reorganization:
March 31, 1996 (unaudited)
Amounts in thousands (except per share amounts)
IDEX II Pro Forma
Growth IDEX Fund IDEX Fund 3 Combined
Net Assets $527,650 $356,922 $172,451 $1,056,697
Net Asset Value
("NAV") per Share:
Class A $21.82 $21.82
Class B 21.53 21.52
Class C 21.57 21.56
Class T N/A 21.97
IDEX Fund $22.33 N/A
IDEX Fund 3 $17.82 N/A
Shares Outstanding:
Class A 23,759 23,759
Class B 65 65
Class C 355 355
Class T N/A 24,095
IDEX Fund 15,984 N/A
IDEX Fund 3 9,679 N/A
13
<PAGE>
September 30, 1995 (unaudited)
Amounts in thousands
IDEX II Pro Forma
Growth IDEX Fund IDEX Fund 3 Combined
Net Assets $491,528 $328,215 $166,529 $985,946
Net Asset Value
("NAV") per Share:
Class A $22.84 $22.84
Class B N/A N/A
Class C 22.64 22.63
Class T N/A 22.96
IDEX Fund $23.61 N/A
IDEX Fund 3 $19.77 N/A
Shares Outstanding:
Class A 21,271 21,271
Class B N/A N/A
Class C 247 247
Class T N/A 21,548
IDEX Fund 13,901 N/A
IDEX Fund 3 8,423 N/A
RATIOS
The following tables show the ratios of expenses to average net assets and the
ratios of net investment income to average net assets of IDEX II Growth, IDEX
Fund and IDEX Fund 3 for the periods ended March 31, 1996 and September 30, 1995
on a pro forma basis as of each date (unaudited) giving effect to the
Reorganization:
Six months ended March 31, 1996 (unaudited)
Ratio of expenses to Ratio of net investment
average net assets income (loss) to average net
assets
Absent Reorganization:
IDEX II Growth:
Class A 1.90% (0.33)%
Class B 2.55% (0.98)%
Class C 2.45% (0.88)%
Class T N/A N/A
IDEX Fund 1.33% 0.12%
IDEX Fund 3 1.31% 0.09%
Pro Forma Combined
Assuming Reorganization:
IDEX II Growth:
Class A 1.69% (0.26)%
Class B 2.34% (0.91)%
Class C 2.24% (0.81)%
Class T 1.34% 0.09%
IDEX Fund N/A N/A
IDEX Fund 3 N/A N/A
14
<PAGE>
Year ended September 30, 1995 (unaudited)
Ratio of net investment
Ratio of expenses to income (loss) to average net
average net assets assets
Absent Reorganization:
IDEX II Growth:
Class A 1.86% (0.26)%
Class B N/A N/A
Class C 2.41% (0.81)%
Class T N/A N/A
IDEX Fund 1.43% 0.22%
IDEX Fund 3 1.38% 0.16%
Pro Forma Combined
Assuming Reorganization:
IDEX II Growth:
Class A 1.78% (0.16)%
Class B N/A N/A
Class C 2.33% (0.71)%
Class T 1.43% 0.19%
IDEX Fund N/A N/A
IDEX Fund 3 N/A N/A
MISCELLANEOUS
ADDITIONAL AVAILABLE INFORMATION
Additional information about each Portfolio of IDEX II Series Fund is included
in the current Prospectus dated February 1, 1996 of IDEX II Series Fund, a copy
of which is included with this Prospectus/Proxy Statement and incorporated by
reference herein. Further information about IDEX II Series Fund and the
Reorganization is included in the Statement of Additional Information relating
to this Prospectus/Proxy Statement dated July 25, 1996, and the current
Statement of Additional Information dated February 1, 1996 of IDEX II Series
Fund, each of which has been filed with the SEC and is incorporated by reference
herein. A copy of each of these Statements of Additional Information may be
obtained without charge by contacting IDEX II Series Fund, 201 Highland Avenue,
Largo, Florida 33770-2597 or by calling 1-800-851-9777.
IDEX II Series Fund is subject to the informational requirements of the
Securities Exchange Act of 1934 and the 1940 Act, and in accordance therewith
files reports, proxy materials and other information with the SEC. IDEX Fund and
IDEX Fund 3 are also registered under the 1940 Act and required to file reports
under the 1940 Act. Such reports, proxy materials and other information can be
inspected and copied at the Public Reference Room maintained by the SEC at 450
Fifth Street, N.W., Washington, D.C. 20549. Copies of such material can also be
obtained from the Public Reference Branch, Office of Consumer Affairs and
Information Services, Securities and Exchange Commission, Washington, D.C. 20549
at prescribed rates.
LEGAL MATTERS
Certain legal matters in connection with the issuance of the Class T Shares of
IDEX II Growth Portfolio will be passed upon by Becky A. Ferrell, Esquire, Vice
President, Secretary and Counsel for the IDEX II Series Fund and the Funds.
15
<PAGE>
EXPERTS
The audited financial statements of IDEX II Growth Portfolio incorporated by
reference in the Statement of Additional Information have been examined by Price
Waterhouse LLP, independent accountants, whose report thereon is included in
that Portfolio's 1995 annual report to shareholders. Such financial statements
are incorporated herein by reference in reliance upon such report given on the
authority of such firm as experts in accounting and auditing.
THE BOARD OF TRUSTEES OF EACH FUND RECOMMENDS THAT YOU VOTE FOR THE
REORGANIZATION.
SHAREHOLDER PROPOSALS
As a general matter, the Funds do not hold annual meetings of shareholders.
Shareholders wishing to submit proposals for inclusion in a proxy statement for
a subsequent shareholders' meeting should send their written proposals to the
Secretary of the Fund, 201 Highland Avenue, Largo, Florida 33770-2597.
OTHER BUSINESS
Management knows of no business to be presented to the Meeting other than the
matters set forth in this Prospectus/Proxy Statement, but should any other
matter requiring a vote of shareholders arise, the proxies will vote thereon
according to their best judgment in the interests of the Funds.
By Order of the Board of Trustees,
/S/ BECKY A. FERRELL
Becky A. Ferrell, Vice President,
Counsel and Secretary
IDEX Fund
IDEX Fund 3
Largo, Florida
16
<PAGE>
AGREEMENT AND PLAN OF REORGANIZATION AND LIQUIDATION
THIS AGREEMENT AND PLAN OF REORGANIZATION AND LIQUIDATION ( the "Agreement") is
made and entered into as of the 31st day of May, 1996, by and among IDEX II
Series Fund, a Massachusetts business trust, on behalf of its IDEX II Growth
Portfolio (the "Portfolio"), IDEX Fund, a Massachusetts business trust ("IDEX
Fund") and IDEX Fund 3, a Massachusetts business trust ("IDEX Fund 3"). IDEX
Fund and IDEX Fund 3 are herein referred to as each, a "Fund" and collectively,
the "Funds." The Portfolio and the Funds are herein collectively referred to as
the "Parties."
This Agreement is intended to be, and is adopted as, a plan of reorganization as
described in Section 368 (a)(1)(C) of the Internal Revenue Code of 1986, as
amended (the "Code"). The reorganization will comprise the transfer of all of
the assets of the Funds, in exchange solely for shares of beneficial interest of
a class, no par value, in the Portfolio, to be established for this purpose and
designated Class T shares (the "Class T Shares"), and the Portfolio's assumption
of the Funds' liabilities, and the constructive distribution, after the Closing
Date (as defined in paragraph 3.1), of the Class T Shares to the shareholders of
the Funds (the "Shareholders") in liquidation of the Funds as provided herein,
all upon the terms and conditions hereinafter set forth in this Agreement. The
foregoing transaction is referred to herein as the Reorganization (the
"Reorganization"). All agreements, representations, and actions described herein
made or to be taken by the Portfolio are made and shall be taken by IDEX II
Series Fund on behalf of the Portfolio.
In consideration of the premises and of the mutual promises and agreements
herein, the Parties hereto covenant and agree as follows:
1. THE REORGANIZATION
1.1. Subject to the terms and conditions herein set forth and on
the basis of the representations and warranties contained
herein, each Fund agrees to sell, assign, convey, transfer and
deliver all of its respective assets as set forth in paragraph
1.2 (the "Assets") to the custodian and such foreign
sub-custodians designated by the Portfolio prior to the
Closing Date, on behalf of the Portfolio, and the Portfolio
1
<PAGE>
agrees in exchange therefor (a) to issue and deliver to each
Fund the number of full and fractional Class T Shares of the
Portfolio, determined by dividing the aggregate value of the
net assets of each Fund (computed in the manner and as of the
time and date set forth in paragraph 2.1) by the net asset
value of a Class T Share (computed in the manner and as of the
time and date set forth in paragraph 2.2), and (b) to assume
all of the liabilities of each of the Funds as set forth in
paragraph 1.3. The consummation of such transactions (the
"Closing") shall take place on the Closing Date.
1.2. The assets of the Funds to be acquired by the Portfolio shall
include, without limitation, all cash (whether in U.S. or
foreign currencies), cash equivalents, securities, receivables
(including interest and dividends receivable), claims and
rights of action, rights to register shares under applicable
securities laws, books and records, and other property owned
by the Funds (including any deferred or prepaid expenses shown
as assets on the books of the Funds) on the Closing Date (the
"Assets").
1.2.1. All securities of U.S. issuers, together with other securities
which the Portfolio designates as securities to be held by a
U.S. custodian, and other non-cash assets of the Funds shall
be delivered no later than the Closing Date by the Funds to
the U.S. custodian to be held in conformity with applicable
custody provisions under the Investment Company Act of 1940
(the "1940 Act") until the Closing for the account of the
Portfolio. All foreign securities shall be delivered no later
than the Closing Date to the foreign sub-custodians designated
by the Portfolio. Securities so delivered shall be duly
endorsed in proper form for transfer in such condition as to
constitute a good delivery thereof, in accordance with the
custom of brokers, and shall be accompanied by all necessary
stock transfer stamps (or other documentation evidencing
payment of necessary taxes), if any, or a check for the
appropriate purchase price of such stamps (or payment of such
necessary tax). Unless otherwise directed by the Portfolio in
writing on or before the Closing Date, cash held by each Fund
shall be delivered on the Closing Date and shall be in the
form of currency or wire transfer in Federal funds, payable to
the order of the
2
<PAGE>
account of the Portfolio at the U.S. custodian. Unless
otherwise directed by the Portfolio in writing on or before
the Closing Date, cash held in foreign currency, if any, shall
be converted to U.S. dollars prior to Closing. A confirmation
for the shares registered in the name of each Fund shall be
delivered to each Fund on the Closing Date.
1.3. Except as otherwise provided herein, the Portfolio shall
assume from the Funds all debts, liabilities, obligations and
duties of the Funds of whatever kind or nature, whether
absolute, accrued, contingent or otherwise, whether or not
arising in the ordinary course of business, whether or not
determinable as of the Closing Date and whether or not
specifically referred to in this Agreement.
1.4. On or immediately prior to the Closing Date, each Fund will
declare and pay to its shareholders of record one or more
dividends and/or other distributions so that each will have
distributed substantially all of its investment company
taxable income (as defined in Section 852(b)(2) of the Code)
and net capital gain (as defined in Sections 852(b)(3) and
1222(11) of the Code), computed in each case without regard to
any deduction for dividends paid, for all taxable years
through its liquidation.
1.5. On a date on or as soon after the Closing Date as is
conveniently practicable (the "Liquidation Date"), each of the
Funds shall liquidate and distribute the Class T Shares
received by such Fund pursuant to paragraph 1.1 to
Shareholders of record, determined as of the close of business
on the Closing Date, pro rata in proportion to the value of
shares of such Fund (hereinafter, "Fund Shares") owned by such
Shareholders as of the close of business on the Closing Date,
in complete liquidation and redemption of their Fund Shares.
Such liquidation and distribution shall be accomplished by the
transfer of the Class T Shares then credited to each Fund's
account on the Portfolio's share records to open accounts on
those records in the names of such Shareholders (each account
representing the proportionate number of Class T Shares due
the Shareholder in whose name the account is opened),
whereupon the Fund Shares held by such Shareholders shall be
canceled. Fractional Class T Shares shall be rounded to the
third decimal place. Following the distribution of the Class T
Shares, each Fund shall take all actions necessary or
3
<PAGE>
appropriate in connection with the dissolution of such Fund
pursuant to applicable law and the deregistration of such Fund
under the 1940 Act.
1.6. The Portfolio shall not issue certificates representing the
Class T Shares issued and delivered to Shareholders, except to
any Shareholder who requests same.
1.7. Any transfer taxes payable upon issuance of the Class T Shares
in a name other than the registered holder of the shares on
the books of the Funds as of that time shall be paid by the
person to whom such Class T Shares are to be issued as a
condition of such transfer.
1.8. Any financial, regulatory and tax reporting
responsibility of a Fund is and shall remain the
responsibility of such Fund up to and including the
Liquidation Date.
1.9. All books and records of a Fund, including all books and
records required to be maintained under the 1940 Act and the
rules and regulations thereunder, shall become the property of
the Portfolio on or prior to the Closing Date.
2. VALUATION
2.1. The value of each Fund's assets and liabilities to be acquired
and assumed, respectively, by the Portfolio shall be the
aggregate value of such Fund's net assets computed as of the
close of regular trading on the New York Stock Exchange
("NYSE") (usually 4:00 p.m., eastern time) on the Closing Date
(such time and date being hereinafter called the "Valuation
Time"), each Fund using the valuation procedures set forth in
such Fund's then-current prospectus and statement of
additional information.
2.2. The net asset value of a Class T Share of the Portfolio shall
be the net asset value per such share as initially determined
by the Board of Trustees of IDEX II Series Fund or as
subsequently computed as of the Valuation Time, using the
valuation procedures set forth in a then-current prospectus
and statement of additional information for IDEX II Series
Fund.
4
<PAGE>
2.3. The number of Class T Shares of the Portfolio to be issued
(including fractional shares, if any) in exchange for each
Fund's net assets shall be calculated by dividing the net
assets of such Fund determined in accordance with paragraph
2.1 by the net asset value per share of a Class T share of the
Portfolio determined in accordance with paragraph 2.2.
3. CLOSING AND CLOSING DATE
3.1. The closing shall occur on September 20, 1996, or such other
date as the Parties may agree upon (the "Closing Date"). All
acts taking place at the Closing shall be deemed to take place
simultaneously as of the close of business on the Closing
Date, unless otherwise provided. The Closing shall be at the
offices of the Parties or at such other place as the Parties
may agree.
3.2. Each Fund shall deliver to the Portfolio at the Closing a
certificate of an authorized officer of Investors Fiduciary
Trust Company ("IFTC"), as custodian for the Fund, stating
that (a) the Fund's Assets have been delivered in proper form
to IFTC and those foreign sub-custodians designated by the
Portfolio prior to the Closing Date, on behalf of the
Portfolio on the Closing Date, and (b) all necessary taxes,
including all applicable federal and state stock transfer
stamps, if any, have been paid, or provision for payment has
been made, in conjunction with the delivery of such Assets.
3.3. In the event that, as of the Valuation Time (a) the NYSE or
other primary trading market for securities of the Portfolio
or either of the Funds shall be closed to trading or trading
thereon shall be restricted, or (b) trading or the reporting
of trading on said Exchange or elsewhere shall be disrupted so
that accurate appraisal of the value of the net assets of the
Portfolio or either of the Funds impracticable, the Closing
Date shall be postponed until such other date as the Parties
may agree upon.
3.4. Each Fund shall deliver to the Portfolio on or prior to the
Liquidation Date, a list of names and addresses of the
Shareholders of such Fund and the number of its outstanding
shares owned by each such Shareholder (as shown on the books
of the
5
<PAGE>
Fund's transfer agent), all as of the close of business on the
Closing Date, certified by the Secretary or Assistant
Secretary of each Fund. The Portfolio shall issue and deliver
to said Secretary or Assistant Secretary a confirmation
evidencing the Class T Shares of the Portfolio to be credited
to the Shareholders of each Fund on the Liquidation Date
pursuant to paragraph 1.5, or provide evidence satisfactory to
the Funds that such Class T Shares have been credited to each
Fund's account on the books of the Portfolio. At the Closing,
each Party shall deliver to the other such bills of sale,
checks, assignments, share certificates, receipts, and other
documents as such other Party or its counsel may reasonably
request to effect the transactions contemplated by this
Agreement.
4. REPRESENTATIONS AND WARRANTIES
4.1. Each Fund represents and warrants (which representations and
warranties will be true and correct on the Closing Date as
though made on and as of the Closing Date) as to such Fund as
follows:
4.1.1. It is an unincorporated voluntary association duly
organized, validly existing, and in good standing as
a business trust under the laws of the Commonwealth
of Massachusetts, and a copy of its respective
Restatement of Declaration of Trust ("Declaration of
Trust") is on file with the Secretary of the
Commonwealth of Massachusetts.
4.1.2. It is an open-end management investment company duly
registered under the 1940 Act, and the registration
statement on Form N-1A for such Fund is in full force
and effect and conforms in all material respects to
the requirements of the Securities Act of 1933, as
amended (the "1933 Act") and the 1940 Act.
4.1.3. All of its shares have been offered and sold in
compliance in all material respects with applicable
requirements of the federal and state securities
laws. Its shares are registered in all jurisdictions
in which they are required to be registered and all
such registrations, together with any periodic
reports or supplemental filings required to be made
in any such jurisdiction are
6
<PAGE>
complete and current, all fees required to be paid
have been paid and the Fund is not subject to any
stop order and is fully qualified to continue to sell
its shares in each such jurisdiction.
4.1.4. The Fund is not, and the execution, delivery and
performance of this Agreement will not result in its
being, in violation of any provision of its
Declaration of Trust or By-Laws or of any material
agreement, indenture, instrument, contract, lease or
other undertaking to which it is a party or by which
it is bound; provided, however, that any investment
policy or restriction of such Fund that may prevent
it from acquiring the Class T Shares of the Portfolio
necessary to consummate the transactions contemplated
by this Agreement shall not be deemed to give rise to
a violation for purposes of this paragraph 4.1.4.
4.1.5. All material contracts or other commitments of or
applicable to the Fund (other than this Agreement)
shall be terminated on or prior to the Closing Date,
except that each of its transfer agency agreements
and custodian contracts shall be terminated
immediately after the Closing; all such terminations
shall be made without the Portfolio or the Fund
incurring any liability or penalty with respect
thereto.
4.1.6. No material litigation or administrative proceeding
or investigation of or before any court or
governmental body is presently pending or threatened
against the Fund or any of its properties or assets,
except as previously disclosed in writing to the
Portfolio. The Fund knows of no facts that might form
the basis for the institution of such proceedings,
and the Fund is not a party to or subject to the
provisions of any order, decree or judgment of any
court or governmental body that materially and
adversely affects its business, its financial
condition, or its ability to consummate the
transactions herein contemplated.
4.1.7. The Statements of Assets and Liabilities, the
Statements of Operations, the Statements of Changes
in Net Assets, Financial Highlights, and the
Schedules
7
<PAGE>
of Investments of the Fund at or for the period ended
October 31, 1995, as applicable, have been audited by
Price Waterhouse LLP, independent accountants, in
accordance with generally accepted auditing
standards. Such financial statements are presented in
accordance with generally accepted accounting
principles consistently applied and fairly present,
in all material respects, the financial condition of
the Fund as of such date, and there are no material
known liabilities of the Fund as of October 31, 1995
(contingent or otherwise) not disclosed therein.
4.1.8. Since October 31, 1995, there has not been any
material adverse change in the Fund's financial
condition, assets, liabilities or business other than
changes occurring in the ordinary course of business,
or any incurrence by the Fund of indebtedness
maturing more than one year from the date such
indebtedness was incurred, except as otherwise
disclosed to and accepted by the Portfolio. For the
purposes of this paragraph 4.1.8, a decline in net
asset value per share or an increase or decrease in
the number of shares outstanding shall not constitute
a material adverse change.
4.1.9. All federal and other tax returns and reports of the
Fund required by law to have been filed have been
filed, and all federal and other taxes shown as due
on such returns and reports shall have been paid
insofar as due, or provision shall have been made for
the payment thereof, and to the best of the Fund's
knowledge, no such return is currently under audit
and no assessment has been asserted with respect to
such returns. Final tax returns of the Fund shall be
filed within 2 1/2months after the end of the month
in which the Closing Date occurs, and the Fund shall
have made provisions for such filings.
4.1.10. The Fund's liabilities to be assumed by the Portfolio
were incurred by the Fund in the ordinary course of
its business.
4.1.11. For each past taxable year since it commenced
operations and for the current taxable year, the Fund
has met, and shall continue to meet, the requirements
8
<PAGE>
of Subchapter M of the Code, for qualification and
treatment as a regulated investment company under the
Code.
4.1.12. The Fund has maintained all records required under
Section 31 of the 1940 Act and rules thereunder.
4.1.13. The Fund is not under the jurisdiction of a court in
a proceeding under Title 11 of the United States Code
or similar case within the meaning of section
368(a)(3)(A) of the Code.
4.1.14. All issued and outstanding shares of the Fund (1)
are, and at the Closing Date will be, duly and
validly issued and outstanding, fully paid and
non-assessable, except to the extent that under
Massachusetts law shareholders of an unincorporated
voluntary association organized as a business trust,
as the Fund is, may, under certain circumstances, be
held liable for the obligations of the association,
and (2) at the Closing Date will be held by the
persons and in the amounts set forth in the list of
Shareholders delivered to the Portfolio in accordance
with the provisions of paragraph 3.4. The Fund does
not have outstanding any options, warrants or other
rights to subscribe for or purchase any of its
shares, nor is there outstanding any security
convertible into any of its shares.
4.1.15. The Fund shall have good and marketable title to its
Assets and full right, power and authority to sell,
assign, convey, transfer and deliver such Assets free
of any liens, mortgages, pledges, encumbrances,
charges, claims and equities whatsoever, and upon
delivery and payment for such Assets, the Portfolio
will acquire good and marketable title thereto, free
and clear of all liens, mortgages, pledges,
encumbrances, charges, claims and equities (except as
to adverse claims under Article 8 of the Uniform
Commercial Code of which the Portfolio has notice and
necessary documentation at or prior to the time of
delivery). The fair market value of such Assets shall
exceed the amount of the liabilities the Portfolio
shall assume from the Fund or to which such Assets
shall be subject.
9
<PAGE>
4.1.16. The execution, delivery and performance of this
have been duly authorized by the Board of Trustees of
the Fund and by all other necessary corporate action,
subject to Shareholder approval, on the part of the
Fund, and this Agreement constitutes a valid and
binding obligation of the Fund enforceable in
accordance with its terms, subject to Shareholder
approval.
4.1.17. The information to be furnished by the Fund for use
in registration statements, proxy materials and other
documents that may be necessary in connection with
the transactions contemplated hereby shall be
accurate and complete in all material respects and
shall comply in all material respects with federal
securities and other laws and regulations thereunder
applicable thereto. On the effective date of the
registration statement to be filed with the
Securities and Exchange Commission ("SEC") by the
IDEX II Series Fund on Form N-14 relating to the
registration of the Class T Shares issuable pursuant
to the transactions contemplated by this Agreement,
and any supplement or amendment thereto (the
"Registration Statement"), and at the time of the
meeting of the Shareholders, and on the Closing Date,
the Registration Statement and the Prospectus/Proxy
Statement to be included therewith (the
"Prospectus/Proxy Statement") (i) will comply in all
material respects with the provisions of the 1933
Act, the Securities Exchange Act of 1934 (the "1934
Act"), and the 1940 Act, and the rules and
regulations thereunder, and (ii) will not contain any
untrue statement of a material fact or omit to state
a material fact required to be stated therein or
necessary to make the statements therein not
misleading; provided, however, that the
representations and warranties in this paragraph
4.1.17 shall not apply to statements in or omissions
from the Prospectus/Proxy Statement and the
Registration Statement made in reliance upon and in
conformity with information furnished by another
Party for use therein.
4.1.18. The Fund shall not engage in an operating business
after the Reorganization.
4.2. The Portfolio represents and warrants as follows:
10
<PAGE>
4.2.1. The Portfolio is a segregated portfolio of assets of
IDEX II Series Fund, an unincorporated voluntary
association duly organized, validly existing, and in
good standing as a business trust under the laws of
the Commonwealth of Massachusetts. A copy of IDEX II
Series Fund's Declaration of Trust is on file with
the Secretary of the Commonwealth of Massachusetts.
4.2.2. IDEX II Series Fund is an open-end management
investment company duly registered under the 1940
Act, and the registration statement on Form N-1A for
IDEX II Series Fund is in full force and effect and
conforms in all material respects to the requirements
of the 1933 Act and the 1940 Act.
4.2.3. All of the shares of the Portfolio have been offered
and sold in compliance in all material respects with
applicable requirements of the federal and state
securities laws. Shares of the Portfolio are
registered in all jurisdictions in which they are
required to be registered and all such registrations,
together with any periodic reports or supplemental
filings required to be made in any such jurisdiction
are complete and current, all fees required to be
paid have been paid and IDEX II Series Fund is not
subject to any stop order and is fully qualified to
continue to sell shares of the Portfolio in each such
jurisdiction.
4.2.4. The Portfolio is not, and the execution, delivery and
performance of this Agreement will not result in its
being, in violation of any provisions of the
Declaration of Trust or By-Laws of IDEX II Series
Fund or of any material agreement, indenture,
instrument, contract, lease or other undertaking to
which the IDEX II Series Fund or the Portfolio is a
party or by which the IDEX II Series Fund or the
Portfolio is bound.
4.2.5. No material litigation or administrative proceeding
or investigation of or before any court or
governmental body is presently pending or threatened
against the Portfolio or any of its properties or
assets, except as previously disclosed in writing to
the Funds. The Portfolio knows of no facts that might
form the basis for the institution of such
proceedings, and the Portfolio is not
11
<PAGE>
a party to or subject to the provisions of any order,
decree or judgment of any court or governmental body
that materially and adversely affects its business,
its financial condition, or its ability to consummate
the transactions herein contemplated.
4.2.6. The Statements of Assets and Liabilities, the
Statements of Operations, the Statements of Changes
in Net Assets, Financial Highlights, and the
Schedules of Investments of the Portfolio at or for
the period ended September 30, 1995, as applicable,
have been audited by Price Waterhouse LLP,
independent accountants, in accordance with generally
accepted auditing standards. Such financial
statements are presented in accordance with generally
accepted accounting principles consistently applied
and fairly present, in all material respects, the
financial condition of the Portfolio as of such date,
and there are no material known liabilities of the
Portfolio as of September 30, 1995 (contingent or
otherwise) not disclosed therein.
4.2.7. Since September 30, 1995, there has not been any
material adverse change in the Portfolio's financial
condition, assets, liabilities or business other than
changes occurring in the ordinary course of business,
or any incurrence by the Portfolio of indebtedness
maturing more than one year from the date such
indebtedness was incurred, except as otherwise
disclosed to and accepted by the Portfolio. For the
purposes of this paragraph 4.2.7, a decline in net
asset value per share or an increase or decrease in
the number of shares outstanding shall not constitute
a material adverse change.
4.2.8. All federal and other tax returns and reports of the
IDEX II Series Fund on behalf of the Portfolio
required by law to have been filed have been filed,
and all federal and other taxes shown as due on said
returns and reports shall have been paid insofar as
due, or provision shall have been made for the
payment thereof, and to the best of the Portfolio's
knowledge, no such return is currently under audit
and no assessment has been asserted with respect to
such returns.
12
<PAGE>
4.2.9. For each past taxable year since it commenced
operations and for the current taxable year, IDEX II
Series Fund and the Portfolio have met, and shall
continue to meet, the requirements of Subchapter M of
the Code for qualification and treatment as a
regulated investment company under the Code.
4.2.10. IDEX II Series Fund has maintained all records
required under Section 31 of the 1940 Act and rules
thereunder.
4.2.11. IDEX II Series Fund is not under the juris-
diction of a court in a proceeding under Title 11 of
the United States Code or similar case within the
meaning of section 368(a)(3)(A) of the Code.
4.2.12. Prior to the Closing Date, there shall be no issued
and outstanding Class T Shares of the Portfolio, and
Class T Shares issued in connection with the
transactions contemplated hereby will be duly and
validly issued and outstanding, fully paid, and
nonassessable, except to the extent that under
Massachusetts law shareholders of an unincorporated
voluntary association organized as a business trust,
as IDEX II Series Fund is, may, under certain
circumstances, be held personally liable for the
obligations of the association. Except as
contemplated by this Agreement, the Portfolio does
not have outstanding any options, warrants or other
rights to subscribe for or purchase any of its
shares, nor is there outstanding any security
convertible into any of its shares.
4.2.13. The execution, delivery and performance of this
Agreement have been duly authorized by the Board of
Trustees of IDEX II Series Fund and by all other
necessary action on the part of IDEX II Series Fund
and the Portfolio, and this Agreement constitutes a
valid and binding obligation of the Portfolio
enforceable in accordance with its terms.
4.2.14. The information to be furnished by the Portfolio for
use in registration statements, proxy materials and
other documents that may be necessary in
13
<PAGE>
connection with the transactions contemplated hereby
shall be accurate and complete in all material
respects and shall comply in all material respects
with federal securities and other laws and
regulations thereunder applicable thereto. On the
effective date of the registration statement to be
filed with the SEC by the IDEX II Series Fund on Form
N-14 relating to the registration of the Class T
Shares issuable pursuant to the transactions
contemplated by this Agreement, and any supplement or
amendment thereto (the "Registration Statement"), and
at the time of the meeting of the Shareholders, and
on the Closing Date, the Registration Statement and
the Prospectus/Proxy Statement (i) will comply in all
material respects with the provisions of the 1933
Act, the 1934 Act and the 1940 Act, and the rules and
regulations thereunder, and (ii) will not contain any
untrue statement of a material fact or omit to state
a material fact required to be stated therein or
necessary to make the statements therein not
misleading; provided, however, that the
representations and warranties in this paragraph
4.2.14 shall not apply to statements in or omissions
from the Prospectus/Proxy Statement and the
Registration Statement made in reliance upon and in
conformity with information furnished by a Fund for
use therein.
4.2.15. The Portfolio has no plan or intention to issue
additional Class T Shares following the
Reorganization except for shares issued in the
ordinary course of its business as a series of an
open-end investment company; nor does the Portfolio
have any plan or intention to redeem or otherwise
reacquire any Class T Shares issued to the
Shareholders pursuant to the Reorganization, other
than through redemptions arising in the ordinary
course of that business. Following the
Reorganization, it is not anticipated that Class T
Shares will generally be available for sale to the
public; however, the Shareholders will be able to
purchase additional Class T Shares as long as they
continue to own Class T Shares.
4.2.16. The Portfolio has no plan or intention to sell or
otherwise dispose of any of the Assets to be acquired
by the Portfolio in the Reorganization, except for
dispositions made in the ordinary course of the
Portfolio's business and
14
<PAGE>
dispositions necessary to maintain its status as a
regulated investment company under Subchapter M of
the Code.
4.2.17. The Portfolio has no current plan or intention
to be dissolved or merged with another corporation or
business trust or any "fund" thereof (within the
meaning of section 851(h)(2) of the Code) following
the Reorganization.
4.2.18. The Portfolio shall use a significant portion of the
Assets transferred by each Fund in its business.
4.2.19. The Portfolio has owned (directly and indirectly) no
shares of either Fund during the past five years.
4.3. Each of the Funds and the Portfolio represents and warrants as
follows:
4.3.1. The fair market value of the Class T Shares, when
received by each Shareholder, will be equal to the
fair market value of the respective Fund Shares
constructively surrendered in exchange therefor.
4.3.2. Its management (a) is unaware of any plan or inten-
tion of Shareholders to sell, exchange, redeem or
otherwise dispose of any portion of the Class T
Shares to be received by the Shareholders in the
Reorganization, and (b) does not anticipate
dispositions in contemplation of or soon after the
Reorganization to exceed the usual rate and frequency
of redemptions of Fund Shares as an open-end
investment company. Consequently, its management
expects that the percentage of Shareholder interests,
if any, that will be redeemed as a result of or at
the time of the Reorganization will be de minimis.
4.3.3. Immediately following consummation of the
Reorganization, the Shareholders will own all the
Class T Shares and will own such shares solely by
reason of their ownership of the respective Fund
Shares immediately prior to the Reorganization.
15
<PAGE>
4.3.4. Immediately following consummation of the
Reorganization, the Portfolio will hold the Assets
and be subject to the liabilities of each of the
Funds, plus any liabilities and expenses of the
Parties incurred in connection with the
Reorganization.
4.3.5. The fair market value of the Assets to be transferred
by each Fund to the Portfolio shall equal or exceed
the Fund's liabilities to be assumed by the Portfolio
plus any liabilities to which the transferred Assets
are subject.
4.3.6. There is no intercompany indebtedness between a Fund
and the Portfolio that was issued or acquired, or
will be settled, at a discount.
4.3.7. The Portfolio will acquire at least 90 percent of the
fair market value of the net assets and at least 70
percent of the fair market value of the gross assets
held by each Fund immediately prior to the
Reorganization, treating all amounts used to redeem
out Shareholders in contemplation of the
Reorganization, and all other redemptions and
distributions (other than distributions and
redemptions occurring in the ordinary course of the
Fund's business) made by the Fund immediately
preceding the Reorganization as assets of the Fund
held immediately prior to the Reorganization.
5. COVENANTS OF THE PORTFOLIO AND THE FUNDS
5.1. Each Fund covenants to operate its respective business in the
ordinary course between the date hereof and the Closing Date,
it being understood that such ordinary course of business will
include declaring and paying customary dividends and other
distributions and such changes in operations as are
contemplated by the normal operations of the Fund.
5.2. Each Fund covenants (1) to call a meeting of its Shareholders
to consider and act upon this Agreement, and (2) to take all
other actions necessary to obtain approval of the transactions
contemplated hereby, including preparing, or directing the
16
<PAGE>
preparation of, a proxy statement in compliance with the 1934
Act and the 1940 Act in connection with such Fund's
Shareholders meeting.
5.3. Each Fund covenants that the Class T Shares to be received by
such Fund in connection with the Reorganization are not being
acquired for the purpose of making any distribution thereof
other than in accordance with the terms of this Agreement.
5.4. Each Fund covenants that it shall assist the Portfolio in
obtaining such information as the Portfolio reasonably
requests concerning the beneficial ownership of respective
Fund Shares.
5.5. Each Party covenants that it will, from time to time, as and
when requested by another Party, execute and deliver or cause
to be executed and delivered all such assignments and other
instruments, and take or cause to be taken such further
action, as the other Party may deem necessary or desirable in
order to vest in and confirm to, as applicable, (a) the
Portfolio title to and possession of all the Assets, (b) each
Fund titles to and possession of Class T Shares, and (c) to
otherwise carry out the intent and purposes of this Agreement.
5.6. Subject to the provisions of this Agreement, each Fund and the
Portfolio shall take or cause to be taken all action, and will
do or cause to be done all things, reasonably necessary,
proper, or advisable to consummate and make effective the
transactions contemplated by this Agreement.
5.7. The Portfolio covenants to prepare, or direct the preparation
of, the Prospectus/Proxy Statement to be included in the
Registration Statement in compliance with the 1933 Act, the
1934 Act and the 1940 Act.
6. CONDITIONS PRECEDENT TO OBLIGATIONS OF EACH FUND
The obligations of each Fund to consummate the transactions provided
for herein shall be subject to the performance by the Portfolio of all
the obligations to be performed by it hereunder on or prior to the
Closing Date and the following further conditions:
17
<PAGE>
6.1. All representations and warranties of the Portfolio contained
in this Agreement shall be true and correct in all material
respects as of the date hereof and, except as they may be
affected by the transactions contemplated by this Agreement,
as of the Closing Date with the same force and effect as if
made on and as of the Closing Date.
6.2. The Portfolio shall have delivered to the Fund on the Closing
Date a certificate executed in its name by the President or a
Vice President of IDEX II Series Fund, in form and substance
satisfactory to the Fund and dated as of the Closing Date, to
the effect that the representations and warranties of the
Portfolio made in this Agreement are true and correct at and
as of the Closing Date, except as they may be affected by the
transactions contemplated by this Agreement, and as to such
other matters as the Fund shall reasonably request.
7. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE PORTFOLIO
The obligations of the Portfolio to complete the transactions provided
for herein shall be subject to the performance by each Fund of all the
obligations to be performed by it hereunder on or prior to the Closing
Date and the following further conditions:
7.1. All representations and warranties of each Fund contained in
this Agreement shall be true and correct in all material
respects as of the date hereof and, except as they may be
affected by the transactions contemplated by this Agreement,
as of the Closing Date with the same force and effect as if
made on and as of the Closing Date.
7.2. Each Fund shall have delivered to the Portfolio on the Closing
Date a statement of its assets and liabilities, which
statement shall be prepared in accordance with generally
accepted accounting principles consistently applied, together
with a list of its portfolio securities showing the adjusted
tax bases of such securities by lot, as of the Closing Date,
certified by the Principal Accounting Officer of the Fund.
7.3. Each Fund shall have delivered to the Portfolio on the Closing
Date a certificate executed in its name by the President or a
Vice President of the Fund, in form and substance satisfactory
to the Portfolio and dated as of the Closing Date, to the
effect
18
<PAGE>
that the representations and warranties of the Fund made in
this Agreement are true and correct at and as of the Closing
Date, except as they may be affected by the transactions
contemplated by this Agreement, and as to such other matters
as the Portfolio shall reasonably request.
7.4. On or immediately prior to the Closing Date, each Fund will
declare and pay to its shareholders of record one or more
dividends and/or other distributions so that each will have
distributed substantially all of its investment company
taxable income (as defined in Section 852(b)(2) of the Code)
and net capital gain (as defined in Sections 852(b)(3) and
1222(11) of the Code), computed in each case without regard to
any deduction for dividends paid, for all taxable years
through its liquidation.
8. FURTHER CONDITIONS PRECEDENT TO OBLIGATIONS OF THE PORTFOLIO
AND EACH OF THE FUNDS
The obligations of the Portfolio and each Fund hereunder are subject to
the further conditions that on or prior to the Closing Date:
8.1. This Agreement and the transactions contemplated hereby, and
any necessary waiver or suspension of any investment
restriction of either Fund, shall have been approved by the
requisite vote of the holders of the respective outstanding
Fund Shares in accordance with the 1940 Act, the laws of the
Commonwealth of Massachusetts and the provisions of each of
the Fund's Declaration of Trust, and the appropriate
certificate(s) from the Secretary of the Fund evidencing such
approval shall have been delivered to the Portfolio.
8.2. On the Closing Date, no action, suit or other proceeding shall
be pending before any court or governmental agency in which it
is sought to restrain or prohibit, or obtain damages or other
relief in connection with, this Agreement or the transactions
contemplated herein.
8.3. All consents of other parties and all consents, orders and
permits of federal, state and local regulatory authorities
(including those of the Securities and Exchange Commission and
of state Blue Sky or securities authorities, including
"no-action"
19
<PAGE>
positions of such authorities) deemed necessary by either the
Portfolio or either Fund to permit consummation, in all
material respects, of the transactions contemplated hereby
shall have been obtained, except where failure to obtain any
such consent, order or permit would not involve a risk of a
material adverse effect on either Party's assets or
properties, provided that either the Portfolio or a Fund may
for itself waive any part of this condition.
8.4. The registration statement on Form N-14 of IDEX II Series Fund
relating to the registration of Class T Shares issuable
pursuant to the transactions contemplated by this Agreement
shall have become effective under the 1933 Act, and no stop
orders suspending the effectiveness thereof shall have been
issued, and, to the best knowledge of the Parties hereto, no
investigation or proceeding under the 1933 Act for that
purpose shall have been instituted or be pending, threatened
or contemplated.
8.5. The Registration Statement and the Post-Effective Amendment on
Form N-1A of IDEX II Series Fund relating to Class T Shares
shall have become effective under the 1933 Act, and no stop
orders suspending the effectiveness thereof shall have been
issued, and, to the best knowledge of the Parties hereto, no
investigation or proceeding under the 1933 Act for that
purpose shall have been instituted or be pending, threatened
or contemplated.
8.6. The Parties shall have received all permits and other
authorizations necessary under state securities laws to
consummate the transactions contemplated by this Agreement.
8.7. The Portfolio and each Fund shall have received on or before
the Closing Date an opinion of counsel substantially to the
effect that for federal income tax purposes:
8.7.1. The Reorganization will constitute a reorganization
within the meaning of section 368(a)(1)(C) of the
Code, and each Fund and the Portfolio will be a
"party to a reorganization" within the meaning of
section 368(b) of the Code.
8.7.2. No gain or loss will be recognized to either Fund on
the transfer of the Assets to the Portfolio in
exchange solely for the Class T Shares and the
Portfolio's
20
<PAGE>
assumption of each Fund's liabilities and the
subsequent distribution of those shares to the
Shareholders in constructive exchange for their Fund
Shares in liquidation of each Fund.
8.7.3. No gain or loss will be recognized to the Portfolio
on its receipt of the Assets in exchange for the
Class T Shares and the Portfolio's assumption of each
Fund's liabilities.
8.7.4. The Portfolio's basis for the Assets will be the same
as each Fund's basis for the Assets immediately
before the Reorganization.
8.7.5. The Portfolio's holding period for the Assets will
include each Fund's therefor.
8.7.6. No gain or loss will be recognized to the
Shareholders on the constructive exchange of their
Fund Shares solely for Class T Shares.
8.7.7. The basis of the Class T Shares to be received by a
Shareholder will be the same as the adjusted basis of
that Shareholder's Fund Shares constructively
surrendered in exchange therefor.
8.7.8. The holding period of the Class T Shares received by
a Shareholder will include the Shareholder's holding
period for the Fund Shares constructively surrendered
in exchange therefor, provided such Fund Shares were
held as capital assets on the Closing Date.
At any time prior to the Closing, any of the foregoing conditions may
be waived by a Party if, in the judgment of its Board of Trustees, such
waiver will not have a material adverse effect on the interests of the
Shareholders.
21
<PAGE>
9. FINDER'S FEES AND EXPENSES
9.1. Each Party represents and warrants to the other that there are
no finder's fees payable in connection with the transactions
provided for herein.
9.2. The expenses of the Reorganization shall be borne
proportionately by the Parties in a manner determined and
agreed upon by duly authorized officers of each Party;
approved by the Board of Trustees of each Party; and
consistent with the requirements of applicable law.
10. ENTIRE AGREEMENT; SURVIVAL OF WARRANTIES
10.1. Neither the Portfolio nor a Fund has made any representation,
warranty or covenant not set forth herein, and this Agreement
constitutes the entire agreement between the Parties.
10.2. The representations, warranties and covenants contained in
this Agreement or in any document delivered pursuant hereto or
in connection herewith shall survive the consummation of the
transactions contemplated hereunder.
11. TERMINATION
A Party may at its option terminate this Agreement at or prior to the
Closing Date because of:
11.1. A mutual agreement among the Parties;
11.2. A material breach by another Party of any representation,
warranty or covenant contained herein to be performed at or
prior to the Closing Date; or
11.3. A condition herein expressed to be precedent to the
obligations of a Party not having been met and it reasonably
appearing that it will not or cannot be met.
22
<PAGE>
In the event of any such termination, there shall be no liability for
damages on the part of a Party or any trustee, director, or officer of
any of the Parties.
12. AMENDMENT
This Agreement may be amended, modified or supplemented at any time in
such manner as may be mutually agreed upon in writing by the Parties;
provided, however, that following the Shareholders' meeting called by
the Funds pursuant to paragraph 5.2, no such amendment shall be made
that has a material adverse on the Shareholders' interests unless the
Agreement, as modified, is approved by the requisite vote of the
Shareholders.
13. NOTICES
Any notice, report, demand or other communication required or permitted
by any provision of this Agreement shall be in writing and shall be
given by hand delivery, or prepaid certified mail or overnight delivery
service, addressed to Becky A. Ferrell, Vice President & Counsel.
14. HEADINGS; COUNTERPARTS; GOVERNING LAW; ASSIGNMENT
14.1. The paragraph headings contained in this Agreement are for
reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement.
14.2. This Agreement may be executed in any number of counterparts,
each of which shall be deemed an original.
14.3. This Agreement shall be governed by and construed in
accordance with the laws of the Commonwealth of Massachusetts
except to the extent that the subject matter covered by this
Agreement is governed by the federal securities laws.
14.4. This Agreement shall bind and inure to the benefit of the
Parties and their respective successors and assigns, and no
assignment or transfer hereof or of any rights or obligations
hereunder shall be made by either Party without the written
consent of the other Party. Nothing herein expressed or
implied is intended or shall be construed to confer upon or
give any person, firm or corporation other than the
23
<PAGE>
Parties and their respective successors and assigns any rights
or remedies under or by reason of this Agreement.
15. LIMITATION OF LIABILITY OF THE TRUSTEES AND SHAREHOLDERS
Neither the trustees of either IDEX II Series Fund , IDEX Fund or IDEX Fund 3
nor any shareholder of either the Portfolio or a Fund shall be liable for any
obligations of IDEX II Series Fund, the Portfolio, or a Fund pursuant to this
Agreement, and each Party agrees that, in asserting any rights or claims under
this Agreement, it shall look only to the assets and property of the other Party
in settlement of such rights or claims, and not to such directors, trustees or
shareholders.
IN WITNESS WHEREOF, each Party has caused this Agreement to be executed by the
undersigned officer of IDEX II Series Fund, IDEX Fund and IDEX Fund 3,
respectively.
IDEX II SERIES FUND on behalf of
Attest: IDEX II Growth Portfolio
/S/ BECKY A. FERRELL /S/ G. JOHN HURLEY
By:______________________________ By:______________________________
Secretary President
IDEX FUND
Attest:
/S/ BECKY A. FERRELL /S/ G. JOHN HURLEY
By:______________________________ By:______________________________
Secretary President
IDEX FUND 3
Attest:
/S/ BECKY A. FERRELL /S/ G. JOHN HURLEY
By:______________________________ By:______________________________
Secretary President
24
<PAGE>
IDEX II SERIES FUND
201 Highland Avenue
Largo, Florida 33770-2957
Shareholder Services (800) 851-9777
STATEMENT OF ADDITIONAL INFORMATION
This Statement of Additional Information relates to the proposed reorganization
whereby IDEX II Growth Portfolio of IDEX II Series Fund ("IDEX II Growth
Portfolio") would acquire the assets of IDEX Fund and IDEX Fund 3 (the "Funds")
in exchange solely for Class T shares of IDEX II Growth Portfolio and the
assumption by Class T shares of IDEX II Growth Portfolio of the Funds'
liabilities. This Statement of Additional Information consists of this cover
page and the following described documents, each of which is incorporated herein
by reference.
1. The Statement of Additional Information of IDEX II Series Fund dated
February 1, 1996;
2. The Statements of Additional Information of IDEX Fund and IDEX Fund 3
dated March 1, 1996;
3. The Annual Report of IDEX II Series Fund for the fiscal year ended
September 30, 1995;
4. The Annual Reports of IDEX Fund and IDEX Fund 3 for the fiscal years
ended October 31, 1995;
5. The Semi-Annual Report of IDEX II Series Fund for the six-month period
ended March 31, 1996;
6. The Semi-Annual Reports of IDEX Fund and IDEX Fund 3 for the six-month
periods ended April 30, 1996; and
7. The Pro Forma Combined Statement of Assets and Liabilities as of March
31, 1996 and Pro Forma Combined Statement of Operations for the fiscal year
ended September 30, 1995 for each of the following: IDEX II Growth Portfolio,
IDEX Fund and IDEX Fund 3.
This Statement of Additional Information is not a Prospectus and should be read
only in conjunction with the Prospectus/Proxy Statement dated July 25, 1996
relating to the above-referenced matter. A copy of this Prospectus/Proxy
Statement may be obtained without charge upon request to IDEX Mutual Funds, 201
Highland Avenue, Largo, Florida 33770-2597, or by calling toll-free
1-800-851-9777. This Statement of Additional Information is dated July 25, 1996.
<PAGE>
<TABLE>
March 31, 1996
PRO FORMA COMBINED SCHEDULES OF INVESTMENTS (continued) (unaudited)
<CAPTION>
IDEX II
Growth IDEX IDEX Pro Forma
Portfolio Fund Fund 3 Combined
Shares
<S> <C> <C> <C> <C>
COMMON STOCK
Consumer, Cyclical
Broadcasting
Infinity Broadcasting Corp.
Class A * 95,768 63,190 32,520 191,478
Clothing/Fabric
Fila Holding SpA # 58,900 39,000 20,000 117,900
Gucci Group N.V. # 199,075 134,325 65,000 398,400
Entertainment
Walt Disney Company 127,975 85,425 43,100 256,500
Footware
Nike, Inc. Class B 124,650 84,550 40,975 250,175
Restuarants
McDonald's Corp. 22,825 15,450 7,625 45,900
Consumer, Non-Cyclical
Beverages
Coca-Cola Company 186,050 124,025 62,300 372,375
Pepsico, Inc. 36,525 24,775 12,050 73,350
Food - Retailers
Starbucks Corp. * 96,100 63,850 32,350 192,300
Health Care
Oxford Health Plans, Inc. * 158,275 106,825 51,725 316,825
Pacificare Health Systems,
Inc. Class B * 91,725 61,900 30,025 183,650
United Healthcare Corp. 93,525 62,500 31,325 187,350
Pharmaceuticals
Astra AB A-Free + 101,848 66,270 35,298 203,416
BioChem Pharma, Inc. * 28,375 19,250 9,375 57,000
Eli Lilly And Company 116,150 78,375 37,975 232,500
Johnson & Johnson 74,375 50,325 24,600 149,300
Pfizer, Inc. 230,150 149,300 77,500 456,950
SmithKline Beecham PLC # 173,900 117,400 56,950 348,250
SmithKline Beecham PLC
Class A + 21,410 15,571 5,839 42,820
Financial
Banks
Chemical Banking Corp. 115,700 77,900 39,000 232,600
Citicorp 179,085 119,610 60,150 358,845
First Interstate Bancorp 90,950 61,725 29,850 182,525
Diversified
Federal Home Loan Mortgage
Corp. 77,675 52,450 26,125 156,250
Federal National Mortgage
Association 287,820 192,320 96,640 576,780
First Data Corp. 320,325 209,225 109,150 638,700
Grupo Financiero Inbursa
S.A. Class B + * 307,225 199,700 112,950 619,875
Securities Brokers
Merrill Lynch and Company,
Inc. 236,725 157,800 80,225 474,750
Independent
Conglomerates
General Electric Company 66,875 45,200 21,875 133,950
Technology
Advanced Medical Devices
Medtronic, Inc. 95,900 63,475 32,475 191,850
Aerospace/Defense
The Boeing Company 55,625 37,675 18,275 111,575
Biotechnology
Amgen, Inc. * 166,900 110,475 56,500 333,875
Chiron Corp. * 68,475 46,350 22,825 137,650
U.S. Bioscience, Inc. * 3,186 - - 3,186
Communications
America Online, Inc. * 79,200 53,450 25,875 158,525
Ascend Communications, Inc. *430,400 285,600 146,050 862,050
Glenayre Technologies, Inc. *222,318 147,505 75,037 444,860
L.M. Ericsson Telephone
Company Class B # 230,550 154,000 77,425 461,975
PictureTel Corp. * 235,550 159,725 77,375 472,650
Premisys Communications Inc.*119,875 81,100 40,000 240,975
Tellabs, Inc. * 18,450 12,275 6,150 36,875
US Robotics Corp. 129,775 88,150 43,125 261,050
Computers
Cisco Systems, Inc. * 356,000 235,800 120,150 711,950
International Business
Machines Corp. 34,050 23,125 11,175 68,350
Shiva Corp. * 48,075 32,625 15,775 96,475
StrataCom, Inc. * 348,500 231,650 116,950 697,100
Sun Microsystems, Inc. * 135,300 91,325 44,225 270,850
Verity, Inc. * 37,300 25,250 12,450 75,000
Software
Broderbund Software, Inc. * 49,950 33,725 16,325 100,000
Dialogic Corp. * 22,625 15,350 7,425 45,400
HBO & Company 156,800 106,150 51,175 314,125
HNC Software, Inc. * 12,200 8,275 4,025 24,500
HPR, Inc. - 20,150 9,850 30,000
Informix Corp. * 192,675 130,125 63,025 385,825
Intuit, Inc. * 84,900 57,450 28,325 170,675
Microsoft Corp. * 137,200 93,000 45,075 275,275
Netscape Communications
Corp. * 98,675 65,625 33,050 197,350
PeopleSoft, Inc. * 145,250 98,325 48,425 292,000
Red Brick Systems, Inc. * 45,150 30,475 14,775 90,400
NON-CONVERTIBLE PREFERRED STOCK
Technology
Software
Sap AG Vorzug + 116,769 78,052 39,106 233,927
Principal
LONG-TERM U.S. GOVERNMENT SECURITIES
United States Treasury Notes
5.500%, 9-30-97 $ 15,000,000 $ 2,000,000 $ - $ 17,000,000
SHORT-TERM U.S. GOVERNMENT SECURITIES
Federal National Mortgage Association
5.130%, 4-2-96 $ 20,000,000 $ 15,000,000 $ - $ 35,000,000
5.170%, 4-15-96 15,000,000 10,000,000 - 25,000,000
Federal Home Loan Mortgage Corp.
5.240%, 4-1-96 20,000,000 10,000,000 5,000,000 35,000,000
Total Short-Term U.S. Government Securities
COMMERCIAL PAPER
Ford Motor Credit Corp.
5.420%, 4-4-96 - - 7,000,000 7,000,000
General Electric Capital
5.400%, 4-3-96 - - 4,000,000 4,000,000
Household Finance Corp.
5.350%, 4-1-96 10,000,000 17,000,000 5,000,000 32,000,000
Prudential Funding Corp.
5.380%, 4-1-96 16,200,000 13,300,000 7,200,000 36,700,000
UNREALIZED GAIN ON FORWARD FOREIGN CURRENCY CONTRACTS
D German Deutschmark
4-11-96 Sell 10,000,000 6,500,000 3,500,000 20,000,000
D German Deutschmark
4-25-96 Sell 1,000,000 1,000,000 - 2,000,000
D German Deutschmark
8-22-96 Sell 10,822,000 7,117,000 3,707,000 21,646,000
</TABLE>
<TABLE>
<CAPTION>
IDEX II % Combined
Growth IDEX IDEX Pro Forma Value of
Portfolio Fund Fund 3 Combined Net Assets
Market Value
<S> <C> <C> <C> <C> <C>
COMMON STOCK
Consumer, Cyclical
EBroadcasting
Infinity Broadcasting Corp.
Class A * $ 4,153,937 $ 2,740,866 $ 1,410,555 $8,305,358 0.8%
Clothing/Fabric
Fila Holding SpA # 3,762,238 2,491,125 1,277,500 7,530,863 0.7%
Gucci Group N.V. # * 9,555,600 6,447,600 3,120,000 19,123,200 1.8%
13,317,838 8,938,725 4,397,500 26,654,063 2.5%
Entertainment
Walt Disney Company 8,174,403 5,456,521 2,753,013 16,383,937 1.6%
Footware
Nike, Inc. Class B 10,127,813 6,869,687 3,329,219 20,326,719 1.9%
Restuarants
McDonald's Corp. 1,095,600 741,600 366,000 2,203,200 0.2%
Consumer, Non-Cyclical
Beverages
Coca-Cola Company 15,372,381 10,247,565 5,147,538 30,767,484 2.9%
Pepsico, Inc. 2,310,206 1,567,019 762,163 4,639,388 0.5%
17,682,587 11,814,584 5,909,701 35,406,872 3.4%
Food - Retailers
Starbucks Corp. * 2,240,331 1,488,503 754,159 4,482,993 0.4%
Health Care
Oxford Health Plans, Inc. *13,888,631 9,373,894 4,538,869 27,801,394 2.6%
Pacificare Health Systems,
Inc. Class B * 7,819,556 5,276,975 2,559,631 15,656,162 1.5%
United Healthcare Corp. 5,751,788 3,843,750 1,926,487 11,522,025 1.1%
27,459,975 18,494,619 9,024,987 54,979,581 5.2%
Pharmaceuticals
Astra AB A-Free + 4,719,703 3,070,996 1,635,733 9,426,432 0.9%
BioChem Pharma, Inc. * 1,163,375 789,250 384,375 2,337,000 0.2%
Eli Lilly And Company 7,549,750 5,094,375 2,468,375 15,112,500 1.4%
Johnson & Johnson 6,861,094 4,642,481 2,269,350 13,772,925 1.3%
Pfizer, Inc. 15,420,050 10,003,100 5,192,500 30,615,650 2.9%
SmithKline Beecham PLC # 8,955,850 6,046,100 2,932,925 17,934,875 1.8%
SmithKline Beecham PLC
Class A + 214,688 156,138 58,550 429,376 0.0%
44,884,510 29,802,440 14,941,808 89,628,758 8.5%
Financial
Banks
Chemical Banking Corp. $ 8,156,850 $ 5,491,950 $ 2,749,500 $16,398,300 1.6%
Citicorp 14,326,800 9,568,800 4,812,000 28,707,600 2.7%
First Interstate Bancorp 15,779,825 10,709,287 5,178,975 31,668,087 3.0%
38,263,475 25,770,037 12,740,475 76,773,987 7.3%
Diversified
Federal Home Loan Mortgage
Corp. 6,621,794 4,471,362 2,227,156 13,320,312 1.3%
Federal National Mortgage
Association 9,174,262 6,130,200 3,080,400 18,384,862 1.7%
First Data Corp. 22,582,912 14,750,363 7,695,075 45,028,350 4.3%
Grupo Financiero Inbursa
S.A. Class B + * 1,181,949 768,281 434,539 2,384,769 0.2%
39,560,917 26,120,206 13,437,170 79,118,293 7.5%
Securities Brokers
Merrill Lynch and Company,
Inc. 14,381,044 9,586,350 4,873,669 28,841,063 2.7%
Independent
Conglomerates
General Electric Company 5,207,891 3,519,950 1,703,516 10,431,357 1.0%
Technology
Advanced Medical Devices
Medtronic, Inc. 5,718,038 3,784,697 1,936,322 11,439,057 1.1%
Aerospace/Defense
The Boeing Company 4,818,516 3,263,597 1,583,072 9,665,185 0.9%
Biotechnology
Amgen, Inc. * 9,701,062 6,421,359 3,284,063 19,406,484 1.8%
Chiron Corp. * 6,727,669 4,553,887 2,242,556 13,524,112 1.3%
U.S. Bioscience, Inc. * 20,908 - - 20,908 0.0%
16,449,639 10,975,246 5,526,619 32,951,504 3.1%
Communications
America Online, Inc. * 4,435,200 2,993,200 1,449,000 8,877,400 0.8%
Ascend Communications,
Inc. * 23,187,800 15,386,700 7,868,444 46,442,944 4.4%
Glenayre Technologies,
Inc. * 8,503,663 5,642,066 2,870,165 17,015,894 1.6%
L.M. Ericsson Telephone
Company Class B # 4,928,006 3,291,750 1,654,959 9,874,715 0.9%
PictureTel Corp. * 7,302,050 4,951,475 2,398,625 14,652,150 1.4%
Premisys Communications
Inc. * 3,895,938 2,635,750 1,300,000 7,831,688 0.8%
Tellabs, Inc. * 892,519 593,803 297,506 1,783,828 0.2%
US Robotics Corp. 16,773,419 11,393,388 5,573,906 33,740,713 3.2%
69,918,595 46,888,132 23,412,605 140,219,332 13.3%
Computers
Cisco Systems, Inc. * $ 16,509,500 $ 10,935,225 $ 5,571,956 $33,016,681 3.1%
International Business
Machines Corp. 3,783,806 2,569,766 1,241,822 7,595,394 0.7%
Shiva Corp. * 4,362,806 2,960,719 1,431,581 8,755,106 0.8%
StrataCom, Inc. * 12,763,813 8,484,181 4,283,294 25,531,288 2.4%
Sun Microsystems, Inc. * 5,919,375 3,995,469 1,934,843 11,849,687 1.2%
Verity, Inc. * 1,258,875 852,188 420,187 2,531,250 0.2%
44,598,175 29,797,548 14,883,683 89,279,406 8.4%
Software
Broderbund Software, Inc. * 1,885,612 1,273,119 616,269 3,775,000 0.4%
Dialogic Corp. * 955,906 648,538 313,706 1,918,150 0.2%
HBO & Company 14,778,400 10,004,637 4,823,244 29,606,281 2.7%
HNC Software, Inc. * 829,600 562,700 273,700 1,666,000 0.2%
HPR, Inc. - 778,294 380,456 1,158,750 0.1%
Informix Corp. * 5,081,803 3,432,047 1,662,284 10,176,134 1.0%
Intuit, Inc. * 3,820,500 2,585,250 1,274,625 7,680,375 0.7%
Microsoft Corp. * 14,148,750 9,590,625 4,648,359 28,387,734 2.6%
Netscape Communications
Corp. * 4,095,013 2,723,438 1,371,575 8,190,026 0.8%
PeopleSoft, Inc. * 8,351,875 5,653,688 2,784,438 16,790,001 1.6%
Red Brick Systems, Inc. * 1,941,450 1,310,425 635,325 3,887,200 0.4%
55,888,909 38,562,761 18,783,981 113,235,651 10.7%
Total Common Stock ( cost
$289,780,679, $195,744,687,
$95,974,989 and $581,500,355,
respectively) 423,942,193 284,616,069 141,768,054 850,326,316 80.5%
NON-CONVERTIBLE PREFERRED STOCK
Technology
Software
Sap AG Vorzug + 16,715,172 11,172,936 5,597,920 33,486,028 3.2%
(cost $6,857,763,
$4,583,163, $2,296,905
and $13,737,831,
respectively)
Market Value
LONG-TERM U.S. GOVERNMENT SECURITIES
United States Treasury Notes
5.500%, 9-30-97 $ 14,959,350 $ 1,994,580 $ - $16,953,930 1.6%
(cost $15,076,778,
$2,010,181 and
$17,086,959,
respectively)
SHORT-TERM U.S. GOVERNMENT SECURITIES
Federal National Mortgage Association
5.130%, 4-2-96 $ 19,997,150 $ 14,997,863 $ - $34,995,013 3.3%
5.170%, 4-15-96 14,969,842 9,979,894 - 4,949,736 2.4%
Federal Home Loan Mortgage Corp.
5.240%, 4-1-96 20,000,000 10,000,000 5,000,000 35,000,000 3.3%
Total Short-Term U.S. Government Securities
54,966,992 34,977,757 5,000,000 94,944,749 9.0%
(cost $54,966,991,
$34,977,757, $5,000,000
and $94,944,749,
respectively)
COMMERCIAL PAPER
Ford Motor Credit Corp.
5.420%, 4-4-96 - - 6,996,838 6,996,838 0.6%
General Electric Capital
5.400%, 4-3-96 - - 3,998,800 3,998,800 0.4%
Household Finance Corp.
5.350%, 4-1-96 10,000,000 17,000,000 5,000,000 32,000,000 3.0%
Prudential Funding Corp.
5.380%, 4-1-96 16,200,000 13,300,000 7,200,000 36,700,000 3.4%
Total Commercial Paper 26,200,000 30,300,000 23,195,638 79,695,638 7.4%
Cost $26,200,000, $30,300,000,
$23,195,638 and $79,695,638,
respectively)
Total Investments 536,783,707 363,061,342 175,561,6121,075,406,661 101.7%
Cost $392,882,211, $267,615,788,
$126,467,532 and $786,965,531,
respectively)
UNREALIZED GAIN ON FORWARD FOREIGN CURRENCY CONTRACTS
D German Deutschmark
4-11-96 Sell 292,250 189,963 102,288 584,501
D German Deutschmark
4-25-96 Sell 44,916 44,916 - 89,832
D German Deutschmark
8-22-96 Sell 113,128 74,397 38,751 226,276
450,294 309,276 141,039 900,609 0.1%
Liabilities in excess of
other Assets (9,583,558) (6,448,234) (3,251,916) (19,283,708) -1.8%
Pro Forma Adjustments - - - (326,000) 0.0%
Net Assets $ 527,650,443 $ 356,922,384 $ 172,450,7351,056,697,562 100.0%
</TABLE>
Notes to Pro Forma Combined Schedules of Investments
* Presently non-income producing.
+ Foreign securities.
# American Depository Receipts or Global Depository Receipts.
September 30, 1995
PRO FORMA COMBINED SCHEDULES OF INVESTMENTS (continued) (unaudited)
<TABLE>
<CAPTION>
IDEX II
Growth IDEX IDEX Pro Forma
Portfolio Fund Fund 3 Combined
Principal
<S> <C> <C> <C> <C>
COMMON STOCK
Basic Materials
Forest Products
Georgia Pacific Corp. 78,050 50,825 26,425 155,300
Other Non-ferrous
Phelps Dodge Corp. 2,625 1,725 900 5,250
Consumer, Cyclical
Broadcasting
Infinity Broadcasting Corp.
Class A * 95,768 63,190 32,520 191,478
Casinos
Circus Circus Enterprises,
Inc.* 102,550 67,850 34,775 205,175
Consumer Electronics
Samsung Electronics Company,
Ltd.#* 5,890 3,890 2,010 11,790
Entertainment
Walt Disney Company 161,375 105,125 54,875 321,375
Footware
Nike, Inc. Class B 22,350 14,550 7,575 44,475
Retailers-Specialty
Lowe's Companies, Inc. 190,920 126,500 64,690 382,110
Consumer, Non-Cyclical
Beverages
Coca-Cola Company 210,975 136,725 71,100 418,800
Health Care
Oxford Health Plans, Inc. * 121,725 80,550 41,250 243,525
Pacificare Health Systems,
Inc. Class B * 23,425 15,500 7,950 46,875
United Healthcare Corp. 58,575 38,775 19,875 117,225
Pharmaceuticals
Agouron Pharmaceuticals, Inc.* 39,950 26,400 13,550 79,900
Astra AB A-Free + 101,848 66,270 35,298 203,416
Pfizer, Inc. 230,150 149,300 77,500 456,950
SmithKline Beecham PLC # 103,250 68,350 35,000 206,600
Financial
Banks
Citicorp 147,185 95,135 48,925 291,245
First Interstate Bancorp 79,500 51,900 27,000 158,400
Diversified
Federal Home Loan Mortgage
Corp. 69,300 45,475 23,500 138,275
Federal National Mortgage
Association 56,205 36,830 19,035 112,070
First Data Corp. 320,325 209,225 109,150 638,700
Grupo Financiero Inbursa
S.A. Class B + * 307,225 199,700 112,950 619,875
Securities Brokers
Merrill Lynch and Company,
Inc. 278,850 184,750 94,500 558,100
Industrial
Containers and Packaging
Liqui-Box Corp. 75,075 60,975 37,255 173,305
Technology
Advanced Medical Devices
Medtronic, Inc. 72,800 48,200 24,700 145,700
Biotechnology
Amgen, Inc. * 164,225 108,450 55,775 328,450
U.S. Bioscience, Inc. * 3,222 - - 3,222
Communications
America Online, Inc. * 58,625 38,700 19,875 117,200
Ascend Communications, Inc. * 122,225 80,150 41,450 243,825
AT&T Corp. 158,175 104,775 53,600 316,550
DSC Communications Corp.* 81,000 53,425 27,475 161,900
Glenayre Technologies, Inc. * 135,437 89,412 46,150 270,999
L.M. Ericsson Telephone
Company Class B # 575,325 378,875 195,125 1,149,325
Motorola, Inc. 141,125 92,950 47,850 281,925
PictureTel Corp. * 145,275 95,850 49,325 290,450
Tellabs, Inc. * 23,725 15,675 8,075 47,475
US Robotics Corp. 179,850 118,450 61,050 359,350
Computers
Cisco Systems, Inc. * 148,675 98,025 50,700 297,400
Hewlett-Packard Company 117,550 77,875 39,825 235,250
International Business
Machines Corp. 47,050 31,075 15,950 94,075
StrataCom, Inc. * 185,550 122,325 63,275 371,150
Sun Microsystems, Inc. * 266,100 176,125 90,250 532,475
3COM Corp.* 23,450 7,775 4,000 35,225
Diversified
Texas Instruments, Inc. 244,375 161,370 82,995 488,740
Semiconductors
Altera Corp.* 116,775 77,250 39,600 233,625
Intel Corp. 46,900 46,550 23,850 117,300
LSI Logic Corp.* 167,150 110,725 56,650 334,525
Software
Autodesk, Inc. 65,850 43,400 22,350 131,600
Broderbund Software, Inc. * 68,250 45,050 23,150 136,450
Cerner Corp.* 19,150 12,500 6,550 38,200
HBO & Company 98,000 64,800 33,325 196,125
Informix Corp. * 262,050 171,925 89,000 522,975
Intuit, Inc. * 77,550 50,550 26,400 154,500
Microsoft Corp. * 200,250 131,875 67,900 400,025
Netscape Communications Corp. *64,725 42,625 21,950 129,300
PeopleSoft, Inc. * 25,125 16,425 8,525 50,075
CONVERTIBLE PREFERRED STOCK
Technology
Diversified
Nokia AB OY# 170,400 112,125 57,800 340,325
Nokia AB OY Cumulative+ 45,968 29,832 15,748 91,548
NON-CONVERTIBLE PREFERRED STOCK
Technology
Software
Sap AG Vorzug + 16,040 120,350 64,000 200,390
Principal
LONG-TERM U.S. GOVERNMENT SECURITIES
United States Treasury Notes
5.500%, 9-30-97 $ 15,000,000 $ 2,000,000 $ - $ 17,000,000
SHORT-TERM U.S. GOVERNMENT SECURITIES
Federal Home Loan Bank
5.590%, 10-11-95 - 5,000,000 - 5,000,000
Federal National Mortgage Association
5.680%, 10-10-95 - - 5,000,000 5,000,000
COMMERCIAL PAPER
Ford Motor Credit Corp.
5.770%, 10-5-95 $ 20,000,000 $ - $ 5,000,000 $ 25,000,000
Ford Motor Credit Corp.
5.740%, 10-2-95 - 16,000,000 - 16,000,000
General Electric Capital
6.500%, 10-2-95 20,600,000 15,800,000 7,900,000 44,300,000
Household Finance Company
6.250%, 10-2-95 - 3,000,000 - 3,000,000
UNREALIZED GAIN (LOSS) ON FORWARD FOREIGN CURRENCY CONTRACTS
D German Deutschmark
10-26-95 Sell 11,000,000 7,000,000 3,800,000 21,800,000
D German Deutschmark
11-17-95 Sell 10,822,000 7,117,000 3,707,000 21,646,000
</TABLE>
<TABLE>
<CAPTION>
IDEX II % Combined
Growth IDEX IDEX Pro Forma Value of
Portfolio Fund Fund 3 Combined Net Assets
Market Value
<S> <C> <C> <C> <C> <C>
COMMON STOCK
Basic Materials
Forest Products
Georgia Pacific Corp. $ 6,829,375 $ 4,447,188 $ 2,312,187 $ 13,588,750 1.3%
Other Non-ferrous
Phelps Dodge Corp. 164,391 108,028 56,363 328,782 0.1%
Consumer, Cyclical
Broadcasting
Infinity Broadcasting Corp.
Class A * 3,136,402 2,069,473 1,065,030 6,270,905 0.5%
Casinos
Circus Circus Enterprises,
Inc.* 2,871,400 1,899,800 973,700 5,744,900 0.6%
Consumer Electronics
Samsung Electronics Company,
Ltd.#* 830,137 548,257 283,289 1,661,683 0.2%
Entertainment
Walt Disney Company 9,258,891 6,031,547 3,148,453 18,438,891 1.8%
Footware
Nike, Inc. Class B 2,483,644 1,616,869 841,772 4,942,285 0.5%
Retailers-Specialty
Lowe's Companies, Inc. 5,727,600 3,795,000 1,940,700 11,463,300 1.2%
Consumer, Non-Cyclical
Beverages
Coca-Cola Company 14,557,275 9,434,025 4,905,900 28,897,200 2.8%
Health Care
Oxford Health Plans, Inc. * 8,855,494 5,860,013 3,000,937 17,716,444 1.8%
Pacificare Health Systems,
Inc. Class B * 1,592,900 1,054,000 540,600 3,187,500 0.3%
United Healthcare Corp. 2,862,853 1,895,128 971,391 5,729,372 0.6%
13,311,247 8,809,141 4,512,928 26,633,316 2.7%
Pharmaceuticals
Agouron Pharmaceuticals,
Inc.* 1,148,562 759,000 389,563 2,297,125 0.2%
Astra AB A-Free + 3,643,241 2,370,567 1,262,657 7,276,465 0.7%
Pfizer, Inc. 12,284,256 7,968,888 4,136,563 24,389,707 2.5%
SmithKline Beecham PLC # 5,227,031 3,460,219 1,771,875 10,459,125 1.1%
22,303,090 14,558,674 7,560,658 44,422,422 4.5%
Financial
Banks
Citicorp $ 10,413,339 $ 6,730,801 $ 3,461,444 $ 20,605,584 2.1%
First Interstate Bancorp 8,009,625 5,228,925 2,720,250 15,958,800 1.6%
18,422,964 11,959,726 6,181,694 36,564,384 3.7%
Diversified
Federal Home Loan Mortgage
Corp. 4,790,362 3,143,459 1,624,438 9,558,259 1.0%
Federal National Mortgage
Association 5,817,217 3,811,905 1,970,123 11,599,245 1.2%
First Data Corp. 19,860,150 12,971,950 6,767,300 39,599,400 4.0%
Grupo Financiero Inbursa
S.A. Class B + * 967,221 628,705 355,595 1,951,521 0.2%
31,434,950 20,556,019 10,717,456 62,708,425 6.4%
Securities Brokers
Merrill Lynch and Company,
Inc. 17,428,125 11,546,875 5,906,250 34,881,250 3.4%
Industrial
Containers and Packaging
Liqui-Box Corp. 2,224,097 1,806,384 1,103,679 5,134,160 0.5%
Technology
Advanced Medical Devices
Medtronic, Inc. 3,913,000 2,590,750 1,327,625 7,831,375 0.7%
Biotechnology
Amgen, Inc. * 8,190,722 5,408,944 2,781,778 16,381,444 1.7%
U.S. Bioscience, Inc. * 15,909 - - 15,909 0.1%
8,206,631 5,408,944 2,781,778 16,397,353 1.8%
Communications
America Online, Inc. * 4,030,469 2,660,625 1,366,405 8,057,499 0.8%
Ascend Communications, Inc. *9,778,000 6,412,000 3,316,000 19,506,000 2.0%
AT&T Corp. 10,400,006 6,888,956 3,524,200 20,813,162 2.1%
DSC Communications Corp.* 4,799,250 3,165,431 1,627,894 9,592,575 1.0%
Glenayre Technologies,
Inc. * 9,751,464 6,437,664 3,322,800 19,511,928 2.0%
L.M. Ericsson Telephone
Company Class B # 14,095,462 9,282,438 4,780,563 28,158,463 2.9%
Motorola, Inc. 10,778,422 7,099,056 3,654,543 21,532,021 2.2%
PictureTel Corp. * 6,573,694 4,337,213 2,231,955 13,142,862 1.3%
Tellabs, Inc. * 999,416 660,309 340,159 1,999,884 0.2%
US Robotics Corp. 15,332,213 10,097,863 5,204,513 30,634,589 3.1%
86,538,396 57,041,555 29,369,032 172,948,983 17.6%
Computers
Cisco Systems, Inc. * $ 10,258,575 $ 6,763,725 $ 3,498,300 $ 20,520,600 2.1%
Hewlett-Packard Company 9,800,731 6,492,827 3,320,409 19,613,967 2.0%
International Business
Machines Corp. 4,440,344 2,932,703 1,505,281 8,878,328 0.9%
StrataCom, Inc. * 10,182,056 6,712,584 3,472,216 20,366,856 2.1%
Sun Microsystems, Inc. * 16,764,300 11,095,875 5,685,750 33,545,925 3.4%
3COM Corp.* 1,066,975 353,763 182,000 1,602,738 0.2%
52,512,981 34,351,477 17,663,956 104,528,414 10.7%
Diversified
Texas Instruments, Inc. 19,519,453 12,889,429 6,629,226 39,038,108 4.0%
Semiconductors
Altera Corp.* 7,283,841 4,818,469 2,470,050 14,572,360 1.5%
Intel Corp. 2,819,863 2,798,819 1,433,981 7,052,663 0.7%
LSI Logic Corp.* 9,652,912 6,394,369 3,271,538 19,318,819 2.0%
19,756,616 14,011,657 7,175,569 40,943,842 4.2%
Software
Autodesk, Inc. 2,880,937 1,898,750 977,813 5,757,500 0.5%
Broderbund Software, Inc. * 5,195,531 3,429,431 1,762,294 10,387,256 1.0%
Cerner Corp.* 655,888 428,125 224,337 1,308,350 2.6%
HBO & Company 6,125,000 4,050,000 2,082,813 12,257,813 2.7%
Informix Corp. * 8,516,625 5,587,562 2,892,500 16,996,687 1.6%
Intuit, Inc. * 3,644,850 2,375,850 1,240,800 7,261,500 0.6%
Microsoft Corp. * 18,122,625 11,934,687 6,144,950 36,202,262 2.5%
Netscape Communications
Corp. * 4,045,312 2,664,063 1,371,875 8,081,250 0.8%
PeopleSoft, Inc. * 2,283,234 1,492,622 774,709 4,550,565 0.5%
51,470,002 33,861,090 17,472,091 102,803,183 12.8%
Total Common Stock 392,900,667 259,341,908 133,929,336 786,171,911 82.0%
(cost $285,768,388, $189,141,927,
$96,998,710 and $571,909,025,
respectively)
CONVERTIBLE PREFERRED STOCK
Technology
Diversified
Nokia AB OY# $ 11,885,400 $ 7,820,719 $ 4,031,550 $ 23,737,669 2.4%
Nokia AB OY Cumulative+ 3,225,787 2,093,449 1,105,110 6,424,346 0.7%
15,111,187 9,914,168 5,136,660 30,162,015 3.1%
NON-CONVERTIBLE PREFERRED STOCK
Technology
Software
Sap AG Vorzug + 30,268,929 19,581,088 10,412,876 60,262,893 6.1%
Total Preferred Stock 45,380,116 29,495,256 15,549,536 90,424,908 9.2%
(cost $19,202,450, $12,528,583,
$6,584,031 and $38,315,064,
respectively)
Market Value
LONG-TERM U.S. GOVERNMENT SECURITIES
United States Treasury Notes
5.500%, 9-30-97 $ 14,910,600 $ 1,988,080 $ - $ 16,898,680 1.7%
(cost $15,101,099, $2,013,406,
$0 and $17,114,505,
respectively)
SHORT-TERM U.S. GOVERNMENT SECURITIES
Federal Home Loan Bank
5.590%, 10-11-95 - 4,992,236 - 4,992,236 0.5%
Federal National Mortgage Association
5.680%, 10-10-95 - - 4,992,900 4,992,900 0.5%
Total Short-Term U.S.
Government Securities - 4,992,236 4,992,900 9,985,136 1.0%
(cost $0, $4,992,236,
$4,992,900 and $9,985,136,
respectively)
COMMERCIAL PAPER
Ford Motor Credit Corp.
5.770%, 10-5-95 $ 19,987,178 $ - $ 4,996,794 $ 24,983,972 0.5%
Ford Motor Credit Corp.
5.740%, 10-2-95 - 15,997,449 - 15,997,449 1.5%
General Electric Capital
6.500%, 10-2-95 20,596,280 15,797,147 7,898,574 44,292,001 4.4%
Household Finance Company
6.250%, 10-2-95 - 2,999,479 - 2,999,479 0.2%
Total Commercial Paper 40,583,458 34,794,075 12,895,368 88,272,901 6.6%
(cost $40,583,458, $34,794,075,
$12,895,368 and $88,272,901,
respectively)
Total Investments 493,774,841 330,611,555 167,367,140 991,753,536 100.5%
(cost #360,655,395, $243,470,227,
$121,471,009 and $725,596,631,
respectively)
UNREALIZED GAIN (LOSS) ON FORWARD FOREIGN CURRENCY CONTRACTS
D German Deutschmark
10-26-95 Sell 261,217 166,229 90,239 517,685
D German Deutschmark
11-17-95 Sell (107,891) (70,954) (36,957) (215,802)
153,326 95,275 53,282 301,883 0.1%
Liabilities in excess
of other Assets (2,400,470) (2,492,131) (891,241) (5,783,842) -0.6%
Pro Forma Adjustments - - - (326,000) 0.0%
Net Assets $ 491,527,697 $ 328,214,699 $ 166,529,181 $ 985,945,577 100.0%
</TABLE>
Notes to Pro Forma Combined Schedules of Investments
* Presently non-income producing.
+ Foreign securities.
# American Depository Receipts or Global Depository Receipts.
<TABLE>
September 30, 1995
PRO FORMA COMBINED STATEMENTS OF ASSETS AND LIABILITIES (unaudited)
All numbers (except per share amounts) in thousands
<CAPTION>
IDEX II IDEX IDEX Pro Forma Pro Forma
Growth Portfolio Fund Fund Adjustments Combined
<S> <C> <C> <C> <C> <C>
Assets:
Investment securities,
at market value $ 493,775 $ 330,612 $ 167,367 $ - $ 991,754
Cash, receivables and
other assets 10,917 5,646 3,195 - 19,758
Total assets 504,692 336,258 170,562 - 1,011,512
Liabilities:
Total liabilities 13,164 8,043 4,033 326 25,566
Net assets $ 491,528 $ 328,215 $ 166,529 $ (326) 985,946
Investment securities, at cost 360,655 243,470 121,471 - 725,596
Net assets consist of:
Shares of beneficial interest,
unlimited shares authorized 307,416 201,188 94,099 (326) 602,377
Accumulated undistributed net
investment income (loss) - 18 (5) - 13
Accumulated undistributed net
realized gain from
investments and foreign
currency transactions 50,839 39,773 26,486 - 117,098
Net unrealized appreciation of
investments and on translation
of assets and liabilities
in foreign currencies 133,273 87,236 45,949 - 266,458
Net assets $ 491,528 $ 328,215 $ 166,529 $ (326) $ 985,946
Shares outstanding:
Class A shares 21,271 - - - 21,271
Class B shares - - - - -
Class C shares 247 - - - 247
Class T shares - - - 21,539 21,539
IDEX Fund - 13,901 - (13,901) -
IDEX Fund 3 - - 8,423 (8,423) -
Net asset value per share (net assets divided by shares outstanding):
Class A shares $ 22.84 $ - $ - $ 22.84
Class B shares - - - -
Class C shares 22.64 - - 22.64
Class T shares - - - 22.97
IDEX Fund - 23.61 - -
IDEX Fund 3 - - 19.77 -
Offering price per share:
Class A shares (1) $ 24.17 $ - - $ 24.17
Class B shares - - - -
Class C shares 22.64 - - 22.64
Class T shares - - - 25.10
IDEX Fund - 25.80 - -
IDEX Fund 3 - - 21.61 -
<FN>
(1) Includes the maximum selling commission (represented as a percentage of
offering price) which is reduced on sales of $50,000 or
more as set forth in the Prospectus.
</FN>
</TABLE>
<TABLE>
For the year ended September 30, 1995
PRO FORMA COMBINED STATEMENTS OF OPERATIONS (unaudited)
All numbers in thousands
<CAPTION>
IDEX II IDEX IDEX Pro Forma Pro Forma
Growth Portfolio Fund Fund 3 Adjustments Combined
<S> <C> <C> <C> <C> <C>
Investment Income:
Dividends, interest,
and other $ 6,867 $ 4,543 $ 2,213 $ - $ 13,623
Expenses:
Management and advisory fees 4,292 2,799 1,461 (102) 8,450
Distribution fees:
Class A 1,488 - - - 1,488
Class B - - - - -
Class C 38 - - - 38
Transfer agent fees and expenses 1,741 1,011 360 (110) 3,002
Custody fees and expenses 156 53 35 (81) 163
Registration fees 37 29 75 (85) 56
Audit fees and expenses 25 19 22 (21) 45
Trustees fees and expenses 51 35 38 - 124
Other 203 50 26 (24) 255
Less amounts/reimbursed by the
investment adviser - - - - -
8,031 3,996 2,017 (423) 13,621
Custodian earnings and
Brokerage credits (121) (77) (39) - (237)
Net expenses 7,910 3,919 1,978 (423) 13,384
Net investment income
(loss) (1,043) 624 235 423 239
Realized and unrealized gain on investments
and foreign currency:
Net realized gain on investments and foreign currency
55,933 39,080 26,591 - 121,604
Net unrealized appreciation during the period on
investments and foreign currency
81,841 50,142 22,411 - 154,394
Net gain on investments and foreign currency
137,774 89,222 49,002 - 275,998
Net increase in net assets resulting
from operations
$ 136,731 $ 89,846 $ 49,237 $ 423 $ 276,237
</TABLE>
<TABLE>
March 31, 1996
PRO FORMA COMBINED STATEMENTS OF ASSETS AND LIABILITIES (unaudited)
All numbers (except per share amounts) in thousands
<CAPTION>
IDEX II IDEX IDEX Pro Forma Pro Forma
Growth Portfolio Fund Fund 3 Adjustments (2) Combined
<S> <C> <C> <C> <C> <C>
Assets:
Investment securities,
at market value $ 536,784 $ 363,061 $ 175,562 $ - $ 1,075,407
Cash, receivables and
other assets 2,602 1,293 564 - 4,459
Total assets 539,386 364,354 76,126 - 1,079,866
Liabilities:
Total liabilities 11,736 7,432 3,675 326 23,169
Net assets $ 527,650 $ 356,922 $ 172,451 $ (326) $ 1,056,697
Investment securities,
at cost $ 392,882 $ 267,616 $ 126,468 $ - 786,966
Net assets consist of:
Shares of beneficial
interest, unlimited
shares authorized $ 362,337 $ 244,608 $ 114,356 $ (326) $ 720,975
Accumulated undistributed
net investment income (loss) (820) 421 - (248)
Accumulated undistributed net
realized gain from investments
and foreign currency
transactions 21,781 16,138 8,709 - 46,628
Net unrealized appreciation of
investments and on translation
of assets and liabilities in
foreign currencies 144,352 95,755 49,235 - 289,342
Net assets $ 527,650 $ 356,922 $ 172,451 $ (326) $ 1,056,697
Shares outstanding:
Class A shares 23,759 - - - 23,759
Class B shares 65 - - - 65
Class C shares 355 - - - 355
Class T shares - - - 24,095 24,095
IDEX Fund - 15,984 - (15,984) -
IDEX Fund 3 - - 9,679 (9,679) -
Net asset value per share (net assets divided by shares outstanding):
Class A shares $ 21.82 $ - $ - $ 21.82
Class B shares $ 21.53 $ - $ - $ 21.52
Class C shares $ 21.57 $ - $ - $ 21.56
Class T shares$ - $ - $ - $ 21.97
IDEX Fund $ - $ 22.33 $ - $ -
IDEX Fund 3 $ - $ - $ 17.82 $ -
Offering price per share:
Class A shares (1) $ 23.09 $ - $ - $ 23.09
Class B shares $ 21.53 $ - $ - $ 21.52
Class C shares $ 21.57 $ - $ - $ 21.56
Class T shares (1) $ - $ - $ - $ 24.01
IDEX Fund $ - $ 24.40 $ - $ -
IDEX Fund 3 $ - $ - $ 19.48 $ -
<FN>
(1) Includes the maximum selling commission (represented as a percentage of
offering price) as set forth in the Prospectus.
(2) In connection with the reorganization, the combined Portfolio will expend
non-recurring costs of approximately $326,000 or $0.01 per share. See Notes to
Pro Forma Combined Financial Statements.
</FN>
</TABLE>
<TABLE>
For the six months ended March 31, 1996
PRO FORMA COMBINED STATEMENTS OF OPERATIONS (unaudited)
All numbers in thousands
<CAPTION>
IDEX II IDEX IDEX Pro Forma Pro Forma
Growth Portfolio Fund Fund 3 Adjustments Combined
<S> <C> <C> <C> <C> <C>
Investment Income:
Dividends, interest,
and other $ 3,759 $ 2,613 $ 1,228 $ - $ 7,600
Expenses:
Management and advisory fees 2,535 1,703 846 (140) 4,944
Distribution fees:
Class A 874 - - - 874
Class B 2 - - - 2
Class C 30 - - - 30
Transfer agent fees and expenses 861 397 151 (47) 1,362
Custody fees and expenses 85 58 42 (34) 151
Registration fees 76 21 16 (29) 84
Audit fees and expenses 14 11 12 (12) 25
Trustees fees and expenses 28 17 16 - 61
Other 146 48 25 (14) 205
4,651 2,255 1,108 (276) 7,738
Custodian earnings and
brokerage credits (72) (45) (36) - (153)
Net expenses 4,579 2,210 1,072 (276) 7,585
Net investment income
(loss) (820) 403 156 276 15
Realized and unrealized gain on
investments and foreign currency:
Net realized gain on
investments and foreign
currency 37,989 24,141 13,206 - 75,336
Net unrealized appreciation
during the period on
investments and foreign
currency 11,079 8,519 3,286 - 22,884
Net gain on investments
and foreign currency 49,068 32,660 16,492 - 98,220
Net increase in net
assets resulting
from operations $ 48,248 $ 33,063 $ 16,648 $ 276 98,235
</TABLE>
IDEX II Series Fund Growth Portfolio, IDEX Fund and IDEX Fund 3
Notes to Pro Forma Combined Financial Statements
March 31, 1996 and September 30, 1995 (unaudited)
Basis of Presentation:
Subject to approval of the Agreement and Plan of Reorganization and Liquidation
("Reorganization Agreement") by the shareholders of IDEX Fund ("Fund") and IDEX
Fund 3 ("Fund 3"), the IDEX II Series Fund Growth Portfolio, ("Growth"), a
series of IDEX II Series Fund, would acquire all the assets and assume all of
the liabilities of Fund and Fund 3, in exchange for shares of beneficial
interest of a newly issued class of shares of Growth (Class T shares) at net
asset value as of the Closing Date as defined in the Reorganization Agreement.
Shares of beneficial interest of Growth Class T would then be distributed pro
rata to Fund and Fund 3 shareholders, and Fund and Fund 3 would be subsequently
liquidated. Effective upon the Closing Date, IDEX II Series Fund will change its
name to IDEX Series Fund.
The pro forma combined financial statements reflect the combined financial
position of Growth, Fund, and Fund 3, respectively, at March 31, 1996 and
September 30, 1995, and the pro forma combined results of operations of Growth,
Fund and Fund 3, respectively, for the period from October 1, 1995 to March 31,
1996 and October 1, 1994 to September 30, 1995, as though the reorganization had
occurred on October 1, 1995 and October 1, 1994, respectively. Pro forma
combined financial statements for both periods have been prepared in order to
provide updated interim financial statement information subsequent to the
September 30, 1995 fiscal year end of Growth (the surviving Portfolio).
The pro forma combined financial statements are presented for the information of
the reader and may not necessarily be representative of how the pro forma
combined financial statements would have appeared had the reorganization
actually occurred. The pro forma combined financial statements should be read
with the historical financial statements of the respective portfolios.
At March 31, 1996, the pro forma combined number of shares of 24,095,271 for
Growth Class T consists of 16,245,898 shares of Growth Class T attributed to
shareholders of Fund and 7,849,373 shares of Growth Class T attributed to
shareholders of Fund 3.
At September 30, 1995, the pro forma combined number of shares of 21,548,078 for
Growth Class T consists of 14,295,065 shares of Growth Class T attributed to
shareholders of Fund and 7,253,013 shares of Growth Class T attributed to
shareholders of Fund 3.
The assumed net asset values and related offering prices per share for Growth
Class T shares at March 31, 1996 and September 30, 1995 have been determined
using the net asset values for Growth Class A shares for those dates, and
adjusting for appropriate expense differentials (principally 12b-1 distribution
fees).
Pro Forma Adjustments:
The pro forma combined Statements of Assets and Liabilities reflect the
reclassification of capital for Fund and Fund 3 (Massachusetts business trusts)
into shares of beneficial interest of Growth (a Massachusetts business trust).
Also, net assets and total liabilities reflect an adjustment for $326,000 at
March 31, 1996 and September 30, 1995 representing estimated non-recurring costs
to effect the reorganization including such items as legal, accounting, federal
and state Blue Sky Fees and proxy costs.
It is assumed that the pro forma combined Statements of Assets and Liabilities
would not be materially affected by the following adjustments to the pro forma
combined Statements of Operations, as the effect on net investment income would
be substantially offset by corresponding adjustments to dividends paid by the
combined funds/portfolios.
IDEX II Series Fund Growth Portfolio, IDEX Fund and IDEX Fund 3
Notes to Pro Forma Combined Financial Statements (continued)
March 31, 1996 and September 30, 1995 (unaudited)
The pro forma combined Statements of Operations for Growth, Fund and Fund 3
reflect the following adjustments:
A decrease in management and advisory fees as combined net assets would be
subject to Growth's management fee structure of 1.00% on average net assets to
$750 million, 0.90% on the next $250 million and 0.85% on the excess.
A decrease in transfer agent fees and expense related to elimination of
estimated redundancy (like accounts that could be combined) in the account base
of Fund and Fund 3.
A decrease in custody fees and expenses related to investment security
transactions charges that would be eliminated for Fund and Fund 3.
A decrease in Registration Fees comprised of a decrease in state Blue Sky fees
since many states assess separately at the trust or portfolio level (and thus
would be eliminated for Fund and Fund 3).
A net decrease in audit and tax return preparation fees as requirements for work
on Fund and Fund 3 would be eliminated, offset by increases related to Growth
being a larger portfolio once combined with Fund and Fund 3.
A decrease in other expenses composed of reduced legal, prospectus and
shareholder report expenses associated with the elimination of Fund and Fund 3.
<PAGE>
[IDEX LOGO]
PROXY SERVICES
P.O. BOX 9156
FARMINGDALE, NY 11735-9858
[SHAREHOLDER NAME, ADDRESS, TAX ID. OR SOCIAL SECURITY NO.]
IDEX FUND
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES OF IDEX FUND. THE
BOARD OF TRUSTEES OF IDEX FUND RECOMMENDS A VOTE FOR THE PROPOSAL. THE
UNDERSIGNED HEREBY APPOINT(S) G. JOHN HURLEY AND BECKY A. FERRELL, AND EACH OF
THEM, OR EITHER OF THEM IF ONLY ONE SHALL BE PRESENT, AS ATTORNEYS AND PROXIES,
EACH WITH THE POWER TO APPOINT HIS SUBSTITUTE, AND HEREBY AUTHORIZES THEM TO
REPRESENT AND TO VOTE, AS DESIGNATED BELOW, THE SHARES OF IDEX FUND HELD OF
RECORD BY THE UNDERSIGNED ON JULY 18, 1996 AT THE SPECIAL MEETING OF
SHAREHOLDERS OF IDEX FUND AND IDEX FUND 3 (EACH, A "FUND" AND COLLECTIVELY, THE
"FUNDS") TO BE HELD JOINTLY ON SEPTEMBER 16, 1996 AT 10:00 A.M., LOCAL TIME, AT
201 HIGHLAND AVENUE, LARGO, FL 33770-2597 (THE "MEETING"), AND AT ANY
ADJOURNMENTS THEREOF, WITH RESPECT TO THE MATTER SET FORTH BELOW AND DESCRIBED
IN THE NOTICE OF SPECIAL MEETING AND PROSPECTUS/PROXY STATEMENT DATED JULY 25,
1996, RECEIPT OF WHICH IS HEREBY ACKNOWLEDGED WITH DISCRETIONARY POWER TO VOTE
UPON SUCH OTHER BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING AND ANY
ADJOURNMENT THEREOF.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED HEREIN
BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE
VOTED "FOR" THE PROPOSAL. IF YOU HAVE ANY QUESTIONS WITH REGARD TO THIS PROXY,
PLEASE CALL CUSTOMER SERVICE AT (800) 851-9777 BETWEEN 8:00 A.M. AND 7:00 P.M.
EASTERN TIME.
PLEASE INDICATE YOUR VOTING INSTRUCTIONS, DATE AND SIGN EXACTLY AS YOUR NAME(S)
APPEARS ABOVE, AND RETURN IN THE ENVELOPE PROVIDED. WHEN SIGNING AS ATTORNEY,
EXECUTOR, ADMINISTRATOR, GUARDIAN, TRUSTEE, CUSTODIAN, ETC., PLEASE GIVE YOUR
FULL TITLE AS SUCH. IF A CORPORATION OR PARTNERSHIP, PLEASE SIGN THE FULL NAME
OF AN AUTHORIZED OFFICER OR PARTNER. IF SHARES ARE OWNED JOINTLY, ALL PARTIES
SHOULD SIGN. I ACKNOWLEDGE RECEIPT OF THE PROSPECTUS/PROXY STATEMENT DATED JULY
25, 1996.
[SHAREHOLDER ACCOUNT NO., SHARES, CONTROL NO.]
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: |X|
KEEP THIS PORTION FOR YOUR RECORDS
- - - -------------------------------------------------------------------------------
DETACH AND RETURN THIS PORTION ONLY
IDEX FUND
[SIGNATURE(S) OF SHAREHOLDER(S)] [DATE]
APPROVAL OF A PROPOSED REORGANIZATION OF IDEX FUND AND IDEX FUND 3
INTO THE GROWTH PORTFOLIO OF IDEX II SERIES FUND IN ACCORDANCE WITH AN
AGREEMENT AND PLAN OF REORGANIZATION AND LIQUIDATION ATTACHED AS
APPENDIX A TO THE PROSPECTUS/PROXY STATEMENT.
VOTE ON PROPOSAL
_ _ _
|_| FOR |_| AGN |_| ABS
_
|_| CHECK THIS BOX IF YOU WILL ATTEND THE MEETING.
<PAGE>
[IDEX LOGO]
PROXY SERVICES
P.O. BOX 9156
FARMINGDALE, NY 11735-9858
[SHAREHOLDER NAME, ADDRESS, TAX ID. OR SOCIAL SECURITY NO.]
IDEX FUND 3
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES OF IDEX FUND 3. THE
BOARD OF TRUSTEES OF IDEX FUND 3 RECOMMENDS A VOTE FOR THE PROPOSAL. THE
UNDERSIGNED HEREBY APPOINT(S) G. JOHN HURLEY AND BECKY A. FERRELL, AND EACH OF
THEM, OR EITHER OF THEM IF ONLY ONE SHALL BE PRESENT, AS ATTORNEYS AND PROXIES,
EACH WITH THE POWER TO APPOINT HIS SUBSTITUTE, AND HEREBY AUTHORIZES THEM TO
REPRESENT AND TO VOTE, AS DESIGNATED BELOW, THE SHARES OF IDEX FUND 3 HELD OF
RECORD BY THE UNDERSIGNED ON JULY 18, 1996 AT THE SPECIAL MEETING OF
SHAREHOLDERS OF IDEX FUND AND IDEX FUND 3 (EACH, A "FUND" AND COLLECTIVELY, THE
"FUNDS") TO BE HELD JOINTLY ON SEPTEMBER 16, 1996 AT 10:00 A.M., LOCAL TIME, AT
201 HIGHLAND AVENUE, LARGO, FL 33770-2597 (THE "MEETING"), AND AT ANY
ADJOURNMENTS THEREOF, WITH RESPECT TO THE MATTER SET FORTH BELOW AND DESCRIBED
IN THE NOTICE OF SPECIAL MEETING AND PROSPECTUS/PROXY STATEMENT DATED JULY 25,
1996, RECEIPT OF WHICH IS HEREBY ACKNOWLEDGED WITH DISCRETIONARY POWER TO VOTE
UPON SUCH OTHER BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING AND ANY
ADJOURNMENT THEREOF.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED HEREIN
BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE
VOTED "FOR" THE PROPOSAL. IF YOU HAVE ANY QUESTIONS WITH REGARD TO THIS PROXY,
PLEASE CALL CUSTOMER SERVICE AT (800) 851-9777 BETWEEN 8:00 A.M. AND 7:00 P.M.
EASTERN TIME.
PLEASE INDICATE YOUR VOTING INSTRUCTIONS, DATE AND SIGN EXACTLY AS YOUR NAME(S)
APPEARS ABOVE, AND RETURN IN THE ENVELOPE PROVIDED. WHEN SIGNING AS ATTORNEY,
EXECUTOR, ADMINISTRATOR, GUARDIAN, TRUSTEE, CUSTODIAN, ETC., PLEASE GIVE YOUR
FULL TITLE AS SUCH. IF A CORPORATION OR PARTNERSHIP, PLEASE SIGN THE FULL NAME
OF AN AUTHORIZED OFFICER OR PARTNER. IF SHARES ARE OWNED JOINTLY, ALL PARTIES
SHOULD SIGN. I ACKNOWLEDGE RECEIPT OF THE PROSPECTUS/PROXY STATEMENT DATED JULY
25, 1996.
[SHAREHOLDER ACCOUNT NO., SHARES, CONTROL NO.]
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: |X|
KEEP THIS PORTION FOR YOUR RECORDS
- - - -------------------------------------------------------------------------------
DETACH AND RETURN THIS PORTION ONLY
IDEX FUND 3
[SIGNATURE(S) OF SHAREHOLDER(S)] [DATE]
APPROVAL OF A PROPOSED REORGANIZATION OF IDEX FUND AND IDEX FUND 3
INTO THE GROWTH PORTFOLIO OF IDEX II SERIES FUND IN ACCORDANCE WITH AN
AGREEMENT AND PLAN OF REORGANIZATION AND LIQUIDATION ATTACHED AS
APPENDIX A TO THE PROSPECTUS/PROXY STATEMENT.
VOTE ON PROPOSAL
_ _ _
|_| FOR |_| AGN |_| ABS
_
|_| CHECK THIS BOX IF YOU WILL ATTEND THE MEETING.
<PAGE>
