IDEX MUTUAL FUNDS
PROSPECTUS
MARCH 1, 1999
The Securities and Exchange Commission has not approved or disapproved these
securities or passed upon the adequacy or accuracy of this prospectus. Any
representation to the contrary is a criminal offense.
[LOGO]
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IDEX MUTUAL FUNDS
IDEX Mutual Funds consist of 18 individual funds. Each fund invests in a range
of securities, such as stocks and/or bonds. Please read this prospectus
carefully before you invest or send money. It has been written to provide
information and assist you in making an informed decision, while not
overwhelming you with unnecessary data. If you would like additional
information, please request a copy of the Statement of Additional Information
(see back cover).
In addition, we suggest you contact your financial professional or an IDEX
customer service representative, who will be happy to assist you.
TABLE OF CONTENTS
ALL ABOUT THE IDEX FUNDS ...................................... 2-37
IDEX T. Rowe Price Small Cap .............................. 2
IDEX JCC Capital Appreciation ............................. 4
IDEX Pilgrim Baxter Mid Cap Growth ........................ 6
IDEX Alger Aggressive Growth .............................. 8
IDEX GE/Scottish Equitable International Equity ........... 10
IDEX JCC Global ........................................... 12
IDEX Salomon All Cap ...................................... 14
IDEX JCC Growth ........................................... 16
IDEX Goldman Sachs Growth ................................. 18
IDEX C.A.S.E. Growth ...................................... 20
IDEX NWQ Value Equity ..................................... 22
IDEX T. Rowe Price Dividend Growth ........................ 24
IDEX Dean Asset Allocation ................................ 26
IDEX LKCM Strategic Total Return .......................... 28
IDEX JCC Balanced ......................................... 30
IDEX JCC Flexible Income .................................. 32
IDEX AEGON Income Plus .................................... 34
IDEX AEGON Tax Exempt ..................................... 36
INFORMED INVESTOR (RISK/REWARD SCALE) ......................... 38
EXPLANATION OF STRATEGIES AND RISKS ........................... 39-41
HOW THE IDEX FUNDS ARE MANAGED AND ORGANIZED .................. 43-44
SHAREHOLDER INFORMATION ....................................... 45-53
How to Buy Shares ......................................... 46
How to Sell Shares ........................................ 47
How to Exchange Shares .................................... 48
Other Account Information ................................. 49-53
DISTRIBUTION ARRANGEMENTS ..................................... 53
FINANCIAL HIGHLIGHTS .......................................... 54-62
TO HELP YOU UNDERSTAND...
In this prospectus, you'll see symbols like the ones at right. These are
"icons," graphic road signs that let you know at a glance the subject of the
nearby paragraphs. The icons serve as tools for your convenience as you read
this prospectus.
[Target Icon] The target directs you to a fund's goals or objective.
[Chess Piece The chess piece indicates discussion about a fund's strategies.
Icon]
[Warning Sign The warning sign indicates the risks of investing in a fund.
Icon]
[Graph Icon] The graph indicates investment performance.
[Dollar Icon] The dollar sign indicates fees and expenses of a fund.
[Question The question mark indicates fund information or it will direct
Mark Icon] you on how to obtain further information.
AN INVESTMENT IN THE FUND IS NOT A DEPOSIT OF A BANK AND IS NOT INSURED OR
GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER GOVERNMENT
AGENCY.
1
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IDEX T. ROWE PRICE SMALL CAP
Summary of Risks and Returns
[TARGET ICON] OBJECTIVE
The investment objective of IDEX T. Rowe Price Small Cap is to seek long-term
growth of capital by investing primarily in common stocks of small growth
companies.
This fund may be appropriate for investors who want an aggressive, long-term
approach to building capital and who can tolerate significant fluctuations
inherent in small-cap stock investing.
[CHESS PIECE ICON] STRATEGIES AND POLICIES
The fund's sub-adviser, T. Rowe Price Associates, Inc. (T. Rowe Price), seeks
to achieve the fund's objective by investing fund assets principally in:
/bullet/ Common stocks of small-cap growth companies
To a lesser extent, the fund may invest in:
/bullet/ Stock index futures
This fund will invest at least 65% of its total assets in small-cap growth
companies. These companies are defined as companies whose market capitalization
is smaller than 80% of those in the Standard & Poor's 500 Stock Index ("S&P
500") which was approximately $2.8 billion as of December 31, 1998, but the
upper size limit will vary with market fluctuations. The S&P 500 measures the
performance of the common stocks of 500 large U.S. companies in the
manufacturing, utilities, transportation, and financial industries. (A company's
market "cap" is found by multiplying its shares outstanding by its stock price.)
Companies whose capitalization increases above this range after the portfolio's
initial purchase continue to be considered small companies for purposes of this
policy.
To help manage cash flows efficiently, T. Rowe Price may also buy and sell stock
index futures. The fund intends to be invested in a large number of holdings. T.
Rowe Price believes this diversification should minimuze the effects of
individual security selection on fund performance.
T. Rowe Price uses a number of quantitative models that is designed to identify
key characteristics of small-cap growth stocks. Quantitative models are
furnished by a sub-adviser to assist the sub-adviser in evaluating a potential
security. Characteristics are included in the model that the sub-adviser deems
advantageous in a security. Based on these models, stocks are selected in a
"top-down" manner so that the fund's portfolio as a whole reflects
characteristics T. Rowe Price considers important, such as valuations
(price/earnings or price/book value ratios, for example) and projected earnings
growth.
While the fund invests primarily in common stocks, it may also purchase other
securities, including futures and options in keeping with its objective. The
fund may sell securities for a variety of reasons, such as to secure gains,
limit losses, or redeploy assets into more promising opportunities.The fund may
take a temporary defensive position when the securities trading markets or the
economy are experiencing excessive volatility or a prolonged general decline, or
other adverse conditions exist. Under these circumstances, the fund will be
unable to achieve its investment objective.
[WARNING SIGN ICON] RISKS
The fund is subject to the following principal investment risks:
/bullet/ STOCKS
While stocks have historically outperformed other investments over the long
term, they tend to go up and down more dramatically over the shorter term. These
price movements may result from factors affecting individual companies,
industries or the securities market as a whole.
Because the stocks the fund holds fluctuate in price, the value of your
investment in the fund will go up and down.
/bullet/ SMALL-CAP COMPANIES
Investing in small companies involves greater risk than is customarily
associated with more established companies. Stocks of small companies may be
subject to more abrupt or erratic price movements than larger company
securities. Small companies often have limited product lines, markets, or
financial resources, and their management may lack depth and experience.
Also, growth stocks can experience steep price declines if the company's
earnings disappoint investors. Since the fund will typically be fully invested
in this market sector, investors are fully exposed to its volatility.
/bullet/ QUANTITATIVE MODELS
Stocks selected using quantitative models may not be effective and may cause
overall returns to be lower than if other methods are used.
/bullet/ STOCK INDEX FUTURES
Futures involve additional investment risks and transactional costs, and draw
upon skills and experience which are different than those needed to pick other
securities. Special risks include:
/bullet/ Inaccurate market predictions
/bullet/ Imperfect correlation
/bullet/ Illiquidity
/bullet/ Tax considerations
You may lose money if you invest in this fund.These and other risks are fully
described in the section entitled "Explanation of Strategies and Risks,"
beginning on page 39.
2
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[GRAPH ICON] PAST PERFORMANCE
Because the fund commenced operations in 1999, it has no historical performance
information to present to you. Performance history will be available for the
fund after it has been in operation for one calendar year.
[DOLLAR SIGN ICON] FEES AND EXPENSES
As an investor, you pay certain fees and expenses in connection with the fund,
which are described in the table below. Shareholder transaction fees are paid
from your account. Annual fund operating expenses are paid out from fund assets.
SHAREHOLDER FEES
Class of Shares
A B M
- -------------------------------------------------------------------------
Maximum sales charges (load) on
purchases (as a % of offering price) 5.50% None 1.00%
Maximum deferred sales charge (load) None(a) 5.00% 1.00%(b)
(as a percentage of purchase price or
redemption proceeds, whichever is lower)
A $10 fee will be charged twice a year for an account opened for more than 2
years with a balance below the share class minimum because of redemptions.
(Before the fee is assessed, you will be given 60 days notice to have the
opportunity to increase your balance.)
ANNUAL FUND OPERATING EXPENSES
% OF AVERAGE DAILY NET ASSETS
Class of Shares
A B M
- ----------------------------------------------------------------------
Management fees 0.80% 0.80% 0.80%
Distribution and service (12b-1)fees 0.35% 1.00% 0.90%
Other expenses(c) 2.70% 2.70% 2.70%
--------------------------
TOTAL ANNUAL FUND OPERATING EXPENSES 3.85% 4.50% 4.40%
EXPENSE REDUCTION (WAIVER)(d) 2.30% 2.30% 2.30%
--------------------------
NET OPERATING EXPENSES 1.55% 2.20% 2.10%
- ----------------------------------------------------------------------
(a) Certain purchases of Class A shares in amounts greater than $1 million are
subject to a 1% contingent deferred sales charge for 24 months after
purchase.
(b) Class M shares are subject to a 1% contingent deferred sales charge if
redeemed within 18 months of purchase.
(c) Because the fund commenced operations in 1999, the "Other expenses" are
estimates.
(d) Contractual arrangement with Idex Management, Inc. through 4/30/2000.
EXAMPLE
This example is here to help you compare the cost of investing in this fund with
that of other mutual funds. It shows the cumulative expenses you'd pay if you
invested $10,000 and held your shares for various time periods, with a 5% annual
return and fund operating expenses remain the same. This return is for
illustration purposes and is not guaranteed. Actual costs may be higher or
lower.
If the shares are redeemed at the end of each period:
Share Class 1 year 3 years
- ------------------------------------------------------------------
A $699 $1,460
B $723 $1,453
M $410 $1,213
If the shares are not redeemed:
Share Class 1 year 3 years
- ------------------------------------------------------------------
A $699 $1,460
B $223 $1,153
M $311 $1,213
3
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IDEX JCC CAPITAL APPRECIATION
(FORMERLY CAPITAL APPRECIATION PORTFOLIO)
SUMMARY OF RISKS AND RETURNS
[TARGET ICON] OBJECTIVE
THE OBJECTIVE OF IDEX JCC CAPITAL APPRECIATION IS LONG-TERM GROWTH OF CAPITAL.
This fund may be appropriate for investors who want capital growth and who can
stand the risks associated with common stock investments.
[CHESS PIECE ICON] STRATEGIES AND POLICIES
The fund's sub-adviser, Janus Capital Corporation (Janus), seeks to achieve the
fund's objective by:
/bullet/ investing at least 50% of the fund's assets in common stocks of
medium-sized companies
Medium-sized companies are those whose market capitalizations, at the time of
purchase, fall within the range of the S&P Mid Cap 500 Index. As of December 31,
1998, this range was $142 million to $73 billion.
To a lesser extent, the fund may also invest in the stocks of smaller or larger
companies, including some foreign companies.
This fund is non-diversified under Federal securities laws.The portfolio's
classification as "non-diversified" under the 1940 Act means that the fund has
the ability to take larger positions in a smaller number of issuers. To the
extent a fund invests a greater portion of its assets in the securities of a
smaller number of issues, it may be more susceptible to any single economic,
political or regulatory occurrence than a widely diversified fund and may be
subject to greater loss with respect to its portfolio securities. However, to
meet Federal tax requirements, at the close of each quarter the fund may not
have more than 25% of its total assets invested in any one issuer, and, with
respect to 50% of its total assets, not more than 5% of its total assets
invested in any one issuer.
This fund invests in industries and stocks of companies that Janus believes are
experiencing favorable demand for their products and services, and are operating
in favorable competitive and regulatory environments.
Janus uses a "bottom up" approach when choosing securities for the fund's
portfolio. In other words, Janus seeks to identify individual companies with
earnings growth potential that may not be recognized by the market. Janus makes
this assessment by looking at companies one at a time, regardless of size,
country of organization, place of principal business activity, or other similar
selection criteria.
Although themes may emerge in the fund, stocks are usually selected without
regard to any defined industry sector or other similarly defined selection
procedure. Though income is not an objective of the fund, some holdings might
produce incidental income.
Janus may sell the fund's securities when its expectations regarding growth
potential change.
[WARNING SIGN ICON] RISKS
The fund is subject to the following principal investment risks:
/bullet/ STOCKS
While stocks have historically outperformed other investments over the long
term, they tend to go up and down more dramatically over the shorter term. These
price movements may result from factors affecting individual companies,
industries or the securities market as a whole.
Because the stocks the fund holds fluctuate in price, the value of your
investment in the fund will go up and down.
/bullet/ MEDIUM SIZED COMPANIES
These companies present additional risks because their earnings are less
predictable, their share prices more volatile, and their securities less liquid
than larger, more established companies.
You may lose money if you invest in this fund.
These and other risks are fully described in the section entitled "Explanation
of Strategies and Risks," beginning on page 39.
- --------------------------------------------------------------------------------
4
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[GRAPH ICON] PAST PERFORMANCE
The bar chart and the table below show the fund's annual returns and its
long-term performance. The bar chart and table indicate the risks of investing
in the fund by showing you how the fund's performance has varied from year to
year. The bar chart does not reflect the impact of sales charges, which lower
the fund's return. The table compares how the fund's average annual returns for
different calendar periods compare to the returns of the S&P MidCap 400 Index
(S&P 400), a widely recognized unmanaged index of stock performance. The table
reflects the impact of the fund's sales load for each share class. The bar chart
and table assume reinvestment of dividends and capital gain distributions. As
with all mutual funds, past performance is not a prediction of future results.
YEAR-BY-YEAR TOTAL RETURN as of 12/31 each year (%)
Class "A" Shares
36.62 13.00 12.18 31.32
1995 1996 1997 1998
Quarter Ended Return
- -------------------------------------
Best Quarter: 12/31/98 34.17%
Worst Quarter: 9/30/98 (15.64)
- -------------------------------------
Average annual total returns as of 12/31/98
(with sales loads)
Since
One Year Inception
- -----------------------------------
A Shares 24.09% 21.97%
B Shares 25.87% 18.00%
M Shares** 28.63% 22.89%
S&P 400* 18.98% 24.82%
- ----------------------------------
* Since inception of Class A and Class M shares (12/02/94). Since inception of
Class B shares (10/01/95) is 21.80%.
** Effective March 1, 1999, Class C became Class M shares.
[DOLLAR SIGN ICON] FEES AND EXPENSES
As an investor, you pay certain fees and expenses in connection with the
fund, which are described in the table below. Shareholder transaction fees are
paid from your account. Annual fund operating expenses are paid out from fund
assets.
SHAREHOLDER FEES
Class of Shares
A B M
- -------------------------------------------------------
Maximum sales charges
(load) on purchases
(as a % of offering price) 5.50% None 1.00%
Maximum deferred
sales charge (load) None(a) 5.00% 1.00%(b)
(as a percentage of purchase price or redemption proceeds, whichever is lower)
A $10 fee will be charged twice a year for an account opened for more than 2
years with a balance below the share class minimum because of redemptions.
(Before the fee is assessed, you will be given 60 days notice to have the
opportunity to increase your balance.)
ANNUAL FUND OPERATING EXPENSES (as of 10/31/98)
% of average daily net assets Class of Shares
A B M
- -----------------------------------------------------------
Management fees 1.00% 1.00% 1.00%
Distribution and service
(12b-1) fees 0.35% 1.00% 0.90%
Other expenses 0.89% 0.89% 0.89%
------------------------
TOTAL ANNUAL FUND
OPERATING EXPENSES 2.24% 2.89% 2.79%
EXPENSE REDUCTION (c) 0.39% 0.39% 0.39%
NET OPERATING EXPENSES 1.85% 2.50% 2.40%
- -----------------------------------------------------------
(a) Certain purchases of Class A shares in amounts greater than $1 million are
subject to a 1% contingent deferred sales charge for 24 months after
purchase.
(b) Purchases of Class M shares are subject to a 1% contingent deferred sales
charge if redeemed within 18 months of purchase.
(c) Contractual arrangement with Idex Management, Inc. through 4/30/2000.
EXAMPLE
This example is here to help you compare the cost of investing in this fund with
that of other mutual funds. It shows the cumulative expenses you'd pay if you
invested $10,000 and held your shares for various time periods, with a 5% annual
return and fund operating expenses remain the same. This return is for
illustration purposes and is not guaranteed. Actual costs may be higher or
lower.
If the shares are redeemed at the end of each period:
Share Class 1 year 3 years 5 years 10 years
- ---------------------------------------------------------
A $728 $1,176 $1,650 $2,955
B* $753 $1,158 $1,589 $3,029
M $440 $ 920 $1,525 $3,160
If the shares are not redeemed:
Share Class 1 year 3 years 5 years 10 years
- --------------------------------------------------------
A $728 $1,176 $1,650 $2,955
B* $253 $ 858 $1,489 $3,029
M $440 $ 920 $1,525 $3,160
*EXAMPLES FOR CLASS B SHARES ASSUME THEY'LL CONVERT TO CLASS A SHARES EIGHT
YEARS AFTER YOU PURCHASE THEM.
5
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IDEX PILGRIM BAXTER MID CAP GROWTH
SUMMARY OF RISKS AND RETURNS
[TARGET ICON] OBJECTIVE
THE INVESTMENT OBJECTIVE OF IDEX PILGRIM BAXTER MID CAP GROWTH IS TO SEEK
CAPITAL APPRECIATION.
This fund may be appropriate for investors who want long-term growth of capital
and who can tolerate fluctuations inherent in stock investing.
[CHESS PIECE ICON] STRATEGIES AND POLICIES
The fund's sub-adviser, Pilgrim Baxter & Associates, Ltd. (Pilgrim Baxter) seeks
to achieve the fund's objective by investing fund assets principally in:
/bullet/ common stocks of medium capitalization companies
In seeking capital appreciation, Pilgrim Baxter normally invests at least 65% of
the fund's total assets in common stocks, issued by companies with market
capitalizations or average revenues between $500 million and $10 billion. The
fund invests primarily in companies that Pilgrim Baxter believes have strong
earnings growth and capital-appreciation potential. To a lesser extent, the fund
may invest in foreign securities, warrants and rights.
Purchase ideas may be suggested by Pilgrim Baxter's quantitative models or
analysts, but the fund manager initiates all final decisions to purchase a
security only after extensive fundamental research. In all cases, the motivation
for the purchase concept is the same: to identify as early as possible stocks
with strong and improving trends in growth and profitability.
Pilgrim Baxter's primary sell discipline is to sell stocks that fail to mantain
fundamental momentum, as defined either by quantitative or subjective criteria.
A secondary discipline is to reduce or eliminate positions in stocks where
valuation exceeds levels that even strong momentum can sustain.
Pilgrim Baxter may take a temporary defensive position when the securities
trading markets or the economy are experiencing excessive volatility or a
prolonged general decline, or other adverse conditions exist. Under these
circumstances, the fund will be unable to achieve its investment objective.
[WARNING SIGN ICON] RISKS
The fund is subject to the following principal investment risks:
/bullet/ STOCKS
While stocks have historically outperformed other investments over the
long term, they tend to go up and down more dramatically over the shorter term.
These price movements may result from factors affecting individual companies,
industries or the securities market as a whole. Because the stocks the fund may
hold fluctuate in price, the value of your investment in the fund will go up
and down.
/bullet/ MEDIUM SIZED COMPANIES
These companies present additional risks because their earnings are less
predictable, their share price more volatile, and their securities less liquid
than larger, more established companies.
YOU MAY LOSE MONEY IF YOU INVEST IN THIS FUND.
These and other risks are fully described in the section entitled "Explanation
of Strategies and Risks," beginning on page 39.
- --------------------------------------------------------------------------------
6
<PAGE>
[GRAPH ICON] PAST PERFORMANCE
Because the fund commenced operations in 1999, it has no historical performance
information to present to you. Performance history will be presented for the
fund after it has been in operation for one calendar year.
[DOLLAR SIGN ICON] FEES AND EXPENSES
As an investor, you pay certain fees and expenses in connection with the fund,
which are described in the table below. Shareholder transaction fees are paid
from your account. Annual fund operating expenses are paid out from fund assets.
SHAREHOLDER FEES
Class of Shares
A B M
- -----------------------------------------------------------
Maximum sales charges
(load) on purchases
(as a % of offering price) 5.50% None 1.00%
Maximum deferred
sales charge (load) None(a) 5.00% 1.00%(b)
(as a percentage of purchase price or
redemption proceeds, whichever is lower)
A $10 fee will be charged twice a year for an account opened for more than 2
years with a balance below the share class minimum because of redemptions.
(Before the fee is assessed, you will be given 60 days notice to have the
opportunity to increase your balance.)
ANNUAL FUND OPERATING EXPENSES
% OF AVERAGE DAILY NET ASSETS Class of Shares
A B M
- --------------------------------------------------------------
Management fees 0.80% 0.80% 0.80%
Distribution and
service (12b-1) fees 0.35% 1.00% 0.90%
Other expenses (c) 2.70% 2.70% 2.70%
---------------------
TOTAL ANNUAL FUND OPERATING EXPENSES 3.85% 4.50% 4.40%
Expense Reduction (Waiver)(d) 2.30% 2.30% 2.30%
NET OPERATING EXPENSES 1.55% 2.20% 2.10%
- -------------------------------------------------------------
(a) Certain purchases of Class A shares in amounts greater than $1 million are
subject to a 1% contingent deferred sales charge for 24 months after purchase.
(b) Purchases of Class M shares are subject to a 1% contingent deferred sales
charge if redeemed within 18 months of purchase.
(c) Because the fund commenced operations in 1999, the "Other expenses" are
estimates.
(d) Contractual arrangement with Idex Management, Inc. through 4/30/2000.
EXAMPLE
This example is here to help you compare the cost of investing in this fund with
that of other mutual funds. It shows the cumulative expenses you'd pay if you
invested $10,000 and held your shares for various time periods, with a 5% annual
return and fund operating expenses remain the same. This return is for
illustration purposes and is not guaranteed. Actual costs may be higher or
lower.
If the shares are redeemed at the end of each period:
Share Class 1 year 3 years
- ----------------------------------------------
A $699 $1,460
B $723 $1,453
M $410 $1,213
If the shares are not redeemed:
Share Class 1 year 3 years
- ---------------------------------------------
A $699 $1,460
B $223 $1,153
M $311 $1,213
7
<PAGE>
IDEX ALGER AGGRESSIVE GROWTH
(FORMERLY AGGRESSIVE GROWTH PORTFOLIO)
Summary of Risks and Returns
[TARGET ICON] OBJECTIVE
THE OBJECTIVE OF IDEX ALGER AGGRESSIVE GROWTH IS LONG-TERM CAPITAL APPRECIATION.
This fund may be appropriate for investors who seek capital growth aggressively,
and who can tolerate wide swings in the value of their investment.
[CHESS PIECE ICON] STRATEGIES AND POLICIES
The fund's sub-adviser, Fred Alger Management, Inc. (Alger), seeks to achieve
the fund's objective by investing fund assets principally in:
/bullet/ equity securities such as common or preferred stocks
/bullet/ convertible securities
To a lesser extent, Alger may invest fund assets in:
/bullet/ U.S. dollar denominated securities of foreign issuers (American
Depositary Receipts (ADRs))
/bullet/ money market instruments
/bullet/ repurchase agreements
Under normal market conditions, the fund invests at least 85% of its assets in
common stocks, which may include stocks of developing companies, of older
companies that are entering a new stage of growth, and of companies whose
products or services have a high unit volume growth rate. Alger may also invest
in rights, warrants, options and futures.
When selecting stocks for the fund, Alger considers the following factors:
/bullet/ insiders' activity
/bullet/ market style leadership
/bullet/ institutional activity and holdings
/bullet/ relative strength price change
/bullet/ price-to-declining U.S. dollar
/bullet/ earnings to projected change
/bullet/ quarterly earnings per-share growth rate
Alger selects convertible securities for the fund that can be converted, or
exchanged, for stock of the issuer. Convertible securities are often rated below
investment grade, or not rated because they fall below debt obligations and just
above common stock in order of preference or priority on the issuer's balance
sheet. Alger does not limit convertible securities by rating, and there is no
minimal acceptance rating for a convertible securities by rating and there is no
minimal acceptance rating for a convertible security to be purchased or held by
the fund.
The fund may also use leveraging, a technique that involves borrowing money to
invest in an effort to enhance shareholder returns.
Alger may take a temporary defensive position when the securities trading
markets or the economy are experiencing excessive volatility or a prolonged
general decline, or other adverse conditions exist. During this time, the fund
may invest up to 100% of its assets in money market instruments and cash
equivalents. Under these circumstances, the fund will be unable to pursue its
investment objective.
Alger may sell fund securities when its expectations regarding growth change.
[WARNING SIGN ICON] RISKS
The fund is subject to the following principal investment risks:
/bullet/ STOCKS
While stocks have historically outperformed other investments over the
long term, they tend to go up and down more dramatically over the shorter term.
These price movements may result from factors affecting individual companies,
industries or the securities market as a whole.
Because the stocks the fund holds fluctuate in price, the value of your
investment in the fund will go up and down.
/bullet/ INVESTING AGGRESSIVELY
/bullet/ The value of developing-company stocks may be very volatile, and can
drop significantly in a short period of time
/bullet/ Rights, options and futures contracts may not be exercised and may
expire worthless
/bullet/ Warrants and rights may be less liquid than stocks
/bullet/ Leveraging practices may make the fund more volatile:
/bullet/ Leveraging may exaggerate the effect on net asset value of
any increase or decrease in the market value of the fund's
securities.
/bullet/ Money borrowed for leveraging is subject to interest costs.
/bullet/ Minimum average balances may need to be maintained or a line
of credit with connection to borrowing may be necessary
resulting in an increased cost of borrowing.
/bullet/ CONVERTIBLE SECURITIES
As with all debt securities, the market value of convertible securities tends to
decline as interest rates increase and, conversely, to increase as interest
rates decline.
YOU MAY LOSE MONEY IF YOU INVEST IN THIS FUND.
These and other risks are fully described in the section entitled "Explanation
of Strategies and Risks," beginning on page 39.
- --------------------------------------------------------------------------------
8
<PAGE>
[GRAPH ICON] PAST PERFORMANCE
The bar chart and the table below show the fund's annual returns and its
long-term performance. The bar chart and table indicate the risks of investing
in the fund by showing you how the fund's performance has varied from year to
year. The bar chart does not reflect the impact of sales charges, which lower
the fund's return. The table compares how the fund's average annual returns for
different calendar periods compare to the returns of the S&P 500 Composite Stock
Price Index ("S&P 500"), a widely recognized unmanaged index of stock
performance. The table reflects the impact of the fund's sales loads for each
share class. The bar chart and table assume reinvestment of dividends and
capital gain distributions. As with all mutual funds, past performance is not a
prediction of future results.
YEAR-BY-YEAR TOTAL RETURN as of 12/31 each year (%)
Class "A" Shares
55.00 5.99 23.27 48.92
1995 1996 1997 1998
Quarter Ended Return
- -----------------------------------------------
Best Quarter: 12/31/98 28.99%
Worst Quarter: 9/30/98 (9.47)%
- -----------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS AS OF 12/31/98
(WITH SALES LOADS)
Since
One Year Inception
- -----------------------------------------------
A Shares 40.73% 30.55%
B Shares 43.50% 18.57%
M Shares** 46.08% 31.70%
S&P 500* 28.58% 30.20%
- ------------------------------------------------
* Since inception of Class A shares and Class M shares (12/02/94). Since
inception of Class B shares (10/01/95) is 28.04%
** Effective March 1, 1999, Class C shares became Class M shares.
[DOLLAR SIGN ICON] FEES AND EXPENSES
As an investor, you pay certain fees and expenses in connection with the fund,
which are described in the table below. Shareholder transaction fees are paid
from your account. Annual fund operating expenses are paid out from fund assets.
SHAREHOLDER FEES
Class of Shares
A B M
- ---------------------------------------------------------
Maximum sales charges
(load) on purchases
(as a % of offering price) 5.50% None 1.00%
Maximum deferred
sales charge (load) None(a) 5.00% 1.00%(b)
(as a percentage of purchase price or redemption proceeds, whichever is lower)
A $10 fee will be charged twice a year for an account opened for more than 2
years with a balance below the share class minimum because of redemptions.
(Before the fee is assessed, you will be given 60 days notice to have the
opportunity to increase your balance.)
ANNUAL FUND OPERATING EXPENSES (as of 10/31/98)
% OF AVERAGE DAILY NET ASSETS Class of Shares
A B M
- ------------------------------------------------------
Management fees 0.80% 0.80% 0.80%
Distribution and service
(12b-1) fees 0.35% 1.00% 0.90%
Other expenses 0.83% 0.83% 0.83%
-----------------------
TOTAL ANNUAL FUND
OPERATING EXPENSES 1.98% 2.63% 2.53%
EXPENSE REDUCTION (c) 0.43% 0.43% 0.43%
NET OPERATING EXPENSES 1.55% 2.20% 2.10%
- -----------------------------
(a) Certain purchases of Class A shares in amounts greater than $1 million are
subject to a 1% contingent deferred sales charge for 24 months after
purchase.
(b) Purchases of Class M shares are subject to a 1% contingent deferred sales
charge if redeemed within 18 months of purchase.
(c) Contractual arrangement with Idex Management, Inc. through 4/30/2000.
EXAMPLE
This example is here to help you compare the cost of investing in this fund with
that of other mutual funds. It shows the cumulative expenses you'd pay if you
invested $10,000 and held your shares for various time periods, with a 5% annual
return and fund operating expenses remain the same. This return is for
illustration purposes and is not guaranteed. Actual costs may be higher or
lower.
If the shares are redeemed at the end of each period:
Share Class 1 year 3 years 5 years 10 years
- -------------------------------------------------------------------------
A $699 $1,098 $1,521 $2,697
B* $723 $1,077 $1,457 $2,771
M $410 $ 839 $1,394 $2,905
If the shares are not redeemed: Share Class
1 year 3 years 5 years 10 years
- --------------------------------------------------------------------------
A $699 $1,098 $1,521 $2,697
B* $223 $ 777 $1,357 $2,771
M $311 $ 839 $1,394 $2,905
- --------------------------------------------------------------------------
* EXAMPLES FOR CLASS B SHARES ASSUME THEY'LL CONVERT TO CLASS A SHARES EIGHT
YEARS AFTER YOU PURCHASE THEM.
9
<PAGE>
IDEX GE/Scottish Equitable International Equity(formerly International Equity
Portfolio)
SUMMARY OF RISKS AND RETURNS
[TARGET ICON] OBJECTIVE
THE OBJECTIVE OF IDEX GE/SCOTTISH EQUITABLE INTERNATIONAL EQUITY IS LONG-TERM
GROWTH OF CAPITAL.
This fund may be appropriate for investors who seek long- term capital growth
through foreign investments, and who are able to tolerate the significant risks
in such investments.
[CHESS PIECE ICON] STRATEGIES AND POLICIES
The fund's sub-advisers, Scottish Equitable Investment Management Limited (SEIM)
and GE Investment Management Incorporated (GEIM), seek to achieve this objective
by investing principally in:
/bullet/ common stocks and other equity securities of companies located in
developed and developing countries, other than the U.S.
/bullet/ preferred stocks, as well as convertible stocks and convertible bonds,
debentures and notes of such companies
To a lesser extent, the fund's sub-advisers may invest in:
/bullet/ warrants and rights, which are securities that entitle the fund to buy
more stock at a later date (rights expire, warrants do not)
/bullet/ Depositary receipts including American Depositary Receipts ("ADRS"),
Global Depositary Receipts ("GDRS") and European Depositary Receipts
("EDRS")
Each day, the cash that flows into the fund for investment is divided equally by
SEIM and GEIM, and they manage each portion separately from then on.
Normally, 65% of the fund's assets are invested in at least 50 stocks of
companies located in 15 to 25 different countries. The fund is never invested in
companies of fewer than 12 countries, other than the U.S. GEIM invests, under
normal market conditions, in no fewer than 3 different countries. The fund may
invest to a lesser extent in debt securities. The fund managers consider the
following factors in determining where an issuer is located: country of
organization, primary securities trading market, location of assets or where the
issuer derives at least half of its revenues and profits.
The fund invests, not only in the larger stock markets of Europe and Japan, but
also, to a lesser extent, in the smaller markets of Asia, emerging Europe and
Latin America, and other emerging markets.
Convertible securities selected by the sub-advisers may be debt or equity
securities that pay interest or dividends and that may be converted on specified
terms into the stock of the issuer. Convertible securities are often rated
below investment grade, or not rated because they fall below debt obligations
and just above common stock in order of preference or priority on the issuer's
balance sheet. The sub-advisers do not limit convertible securities by rating,
and there is no minimal acceptance rating for a convertible security to be
purchased or held by the fund.
Overseas economies usually don't move in the same direction and operate
differently. This creates situations the fund aims to take advantage of through
asset allocation among international markets. The fund may use various
investment techniques to adjust the fund's portfolio exposure, but there is no
guarantee that these techniques will work.
SEIM looks for countries where economic growth conditions are favorable and
where stock market valuations don't reflect that potential. It then looks for
companies in those countries whose earnings potential is not reflected in the
share price.
GEIM looks for companies expected to grow faster than relevent markets, and
whose security prices in those countries doesn't fully reflect that. Attributes
of such companies are low prices relative to their long-term cash earnings
potential, potential for significant improvement in the company's business,
financial strength and sufficient liquidity. Stock selection is key to the
performance of the fund.
The fund's sub-advisers may sell the fund's stocks if they have lost their
strong fundamentals.
[WARNING SIGN ICON] RISKS
The fund is subject to the following principal investment risks:
/bullet/ STOCKS
While stocks have historically outperformed investments over the long term, they
tend to go up and down more dramatically over the shorter term. These price
movements may result from factors affecting individual companies, industries or
the securities market as a whole. Because the stocks the fund holds fluctuate in
price, the value of your investment in the fund will go up and down.
/bullet/ FOREIGN SECURITIES
Investments in foreign securities involve risks relating to political, social
and economic developments abroad as well as risks resulting from difference in
regulations to which U.S. and foreign issuers and markets are subject. These
risks include:
/bullet/ Changes in currency values
/bullet/ Currency speculation
/bullet/ Currency trading costs
/bullet/ Different accounting and reporting practice
/bullet/ Less information available to the public
/bullet/ Less (or different) regulation of securities' markets
/bullet/ More complex business negotiations
/bullet/ Less liquidity
/bullet/ More fluctuations in market prices
/bullet/ Delays in settling foreign securities transactions
/bullet/ Higher transaction costs
/bullet/ Higher costs for holding foreign securities (custodial fees)
/bullet/ Vulnerability to seizure and taxes
/bullet Political instability and small markets
/bullet/ Different market trading days
/bullet/ CONVERTIBLE SECURITIES
As with all debt securities, the market value of convertible securities tends to
decline as interest rates increase and, conversely, to increase as interest
rates decline.
YOU MAY LOSE MONEY IF YOU INVEST IN THIS FUND.
These and other risks are fully described in the section entitled "Explanation
of Strategies and Risks," beginning on page 39.
- ------------------------------
10
<PAGE>
[GRAPH ICON] PAST PERFORMANCE
The bar chart and the table below show the fund's annual returns and its long-
term performance. The bar chart and table indicate the risks of investing in
the fund by showing you how the fund's performance has varied from year to year.
The bar chart does not reflect the impact of sales charges, which lower the
fund's return. The table compares how the fund's average annual returns for
different calendar periods compare to the returns of the Morgan Stanley Capital
International-Europe, Asia and Far East Index (MSCI-EAFE), a widely recognized
unmanaged index of market performance. The table reflects the impact of the
fund's sales loads for each share class. The bar chart and table assume
reinvestment of dividends and capital gain distributions. As with all mutual
funds, past performance is not a prediction of future results.
YEAR-BY-YEAR TOTAL RETURN as of 12/31 each year (%)
Class "A" Shares
6.34 11.21
1997 1998
Quarter Ended Return
- -------------------------------------------
Best Quarter: 12/31/98 15.39%
Worst Quarter: 9/30/98 (16.94)%
AVERAGE ANNUAL TOTAL RETURNS AS OF 12/31/98
(WITH SALES LOADS)
SINCE
ONE YEAR INCEPTION
- ----------------------------------------------------
A Shares 5.09% 6.01%
B Shares 5.50% 6.54%
M Shares** 8.50% 8.04%
MSCI-EAFE * 20.33% 13.39%
- --------------------------------------------------
* Since inception (2/01/97).
** Effective March 1, 1999, Class C shares became Class M shares.
[DOLLAR ICON] FEES AND EXPENSES
As an investor, you pay certain fees and expenses in connection with the fund,
which are described in the table below. Shareholder transaction fees are paid
from your account. Annual fund operating expenses are paid out from fund assets.
SHAREHOLDER FEES
Class of Shares
- --------------------------------------------------------------------
A B M
Maximum sales charges
(load) on purchases
(as a % of offering price) 5.50% None 1.00%
Maximum deferred sales charge (load) None(a) 5.00% 1.00%(b)
(as a percentage of purchase price or
redemption proceeds, whichever is lower)
A $10 fee will be charged twice a year for an account opened for more than 2
years with a balance below the share class minimum because of redemptions.
(Before the fee is assessed, you will be given 60 days notice to have the
opportunity to increase your balance.)
ANNUAL FUND OPERATING EXPENSES (as of 10/31/98)
% OF AVERAGE DAILY NET ASSETS Class of Shares
- ------------------------------------------------------------------------
A B M
Management fees 0.80% 0.80% 0.80%
Distribution and
service(12b-1) fees 0.35% 1.00% 0.90%
Other expenses 2.87% 2.87% 2.87%
-----------------------------------
TOTAL ANNUAL FUND OPERATING EXPENSES 4.02% 4.67% 4.57%
EXPENSE REDUCTION (c) 2.22% 2.22% 2.22%
NET OPERATING EXPENSES 1.80% 2.45% 2.35%
- ----------------------------------------
(a) Certain purchases of Class A shares in amounts greater than $1 million are
subject to a 1% contingent deferred sales charge for 24 months after
purchase.
(b) Class M shares are subject to a 1% contingent deferred sales charge if
redeemed within 18 months of purchase.
(c) Contractual arrangement with Idex Management, Inc. through 4/30/2000.
EXAMPLE
This example is here to help you compare the cost of investing in this fund with
that of other mutual funds. It shows the cumulative expenses you'd pay if you
invested $10,000 and held your shares for various time periods, with a 5% annual
return and fund operating expenses remain the same. This return is for
illustration purposes and is not guaranteed. Actual costs may be higher or
lower.
If the shares are redeemed at the end of each period:
Share Class 1 year 3 years 5 years 10 years
- ----------------------------------------------------------------------
A $ 723 $1,515 $2,322 $4,411
B* $ 748 $1,509 $2,276 $4,486
M $ 435 $1,269 $2,209 $4,597
- ----------------------------------------------------------------------
If the shares are not redeemed:
Share Class 1 year 3 years 5 years 10 years
- ----------------------------------------------------------------------
A $ 723 $1,515 $2,322 $4,411
B* $ 248 $1,209 $2,176 $4,486
M $ 336 $1,269 $2,209 $4,597
- ----------------------------------------------------------------------
* Examples for Class B shares assume they'll convert to Class A shares eight
years after you purchase them.
11
<PAGE>
IDEX JCC GLOBAL (FORMERLY GLOBAL PORTFOLIO)
[TARGET ICON] SUMMARY OF RISKS AND RETURNS
OBJECTIVE
THE OBJECTIVE OF IDEX JCC GLOBAL IS LONG-TERM GROWTH OF CAPITAL IN A MANNER
CONSISTENT WITH PRESERVATION OF CAPITAL.
The fund may be appropriate for investors who want capital growth without being
limited to investments in U.S. securities, and who can stand the risks
associated with foreign investing.
[CHESS PIECE ICON] STRATEGIES AND POLICIES
The sub-adviser, Janus Capital Corporation (Janus), seeks to achieve this
objective by investing principally in:
/bullet/ common stocks of foreign and domestic issuers
/bullet/ Depositary receipts including ADRs, GDRs and EDRs
The fund may invest on a worldwide basis in companies and other organizations of
any size, regardless of country of organization or place of principal business
activity.
To a lesser extent, the fund may use forward foreign currency contracts for
hedging and futures.
A forward foreign currency contract is an agreement between contracting parties
to exchange an amount of currency at some future time at an agreed upon rate.
These contracts are used as a hedge against fluctuations in foreign exchange
rates.
Janus' main strategy is to use a "bottom up" approach to build the fund's
portfolio. That is, they seek to identify individual companies with earnings
growth potential that may not be recognized by the market at large.
Foreign stocks are generally selected on a stock-by-stock basis without regard
to defined allocation among countries or geographic regions. When evaluating
foreign investments, Janus (in addition to looking at individual companies)
considers such factors as:
/bullet/ expected levels of inflation in various countries
/bullet/ government policies that might affect business conditions
/bullet/ the outlook for currency relationships
/bullet/ prospects for economic growth among countries, regions or geographic
areas
Janus sells the fund's securities when its expectations regarding growth
potential change.
[WARNING SIGN ICON]
The fund is subject to the following principal investment risks:
/bullet/ STOCKS
While stocks have historically outperformed other investments over the long
term, they tend to go up and down more dramatically over the shorter term. These
price movements may result from factors affecting individual companies,
industries or the securities market as a whole.
Because the stocks the fund holds fluctuate in price, the value of your
investment in the fund will go up and down.
/bullet/ FOREIGN STOCKS
Investments in foreign securities involve risks relating to political, social
and economic developments abroad, as well as risks resulting from the
differences between the regulations to which U.S. and foreign issuer markets are
subject.
/bullet/ Changes in currency values
/bullet/ Currency speculation
/bullet/ Currency trading costs
/bullet/ Different accounting and reporting practices
/bullet/ Less information available to the public
/bullet/ Less (or different) regulation of securities markets
/bullet/ More complex business negotiations
/bullet/ Less liquidity
/bullet/ More fluctuations in prices
/bullet/ Delays in settling foreign securities transactions
/bullet/ Higher costs for holding shares (custodial fees)
/bullet/ Higher transaction costs
/bullet/ Vulnerability to seizure and taxes
/bullet/ Political instability and small markets
/bullet/ Different market trading days
/bullet/ Forward foreign currency contracts for hedging
/bullet/ FORWARD FOREIGN CURRENCY CONTRACTS
Hedging against a decline in the value of a currency does not eliminate
fluctuations in the prices of portfolio securities or prevent losses if the
prices of portfolio securities decline.
Such hedging transactions preclude the opportunity for gain if the value of the
hedging currency should rise. Forward contracts may, from time to time, be
considered illiquid, in which case they would be subject to the fund's
limitations on investing in illiquid securities.
/bullet/ FUTURES
Futures involve additional investment risks and transactional costs, and draw
upon skills and experience which are different than those needed to pick up
other securities. Special risks include:
/bullet/ Inaccurate market prediction
/bullet/ Imperfect correlation
/bullet/ Illiquidity
/bullet/ Tax considerations
YOU MAY LOSE MONEY IF YOU INVEST IN THIS FUND.
These and other risks are fully described in the section entitled "Explanation
of Strategies and Risks," beginning on page 39.
- -----------------------------------------------
12
<PAGE>
[GRAPH ICON] PAST PERFORMANCE
The bar chart and the table below show the fund's annual returns and its
long-term performance. The bar chart and table indicates the risks of investing
in the fund by showing you how the fund's performance has varied from year to
year. The bar chart does not reflect the impact of sales charges, which lower
the fund's return. The table compares how the fund's average annual returns for
different calendar periods compare to the returns of the Morgan Stanley Capital
International World Index (MSCIW), a widely recognized unmanaged index of market
performance. The table reflects the impact of the fund's sales loads for each
share class. The bar chart and table assume reinvestment of dividends and
distributions. As with all mutual funds, past performance is not a prediction of
future results.
YEAR-BY-YEAR TOTAL RETURN as of 12/31 each year (%)
Class "A" Shares
31.28 0.62 20.03 26.76 20.44 24.86
1993 1994 1995 1996 1997 1998
Quarter Ended Return
- ------------------------------------
Best Quarter: 12/31/92 18.67%
Worst Quarter: 9/30/98 (16.02)%
AVERAGE ANNUAL TOTAL RETURNS AS OF 12/31/98
Since
One Year 5 Years Inception
- ----------------------------------------------------------------------
A Shares 17.98% 16.82% 21.59%
B Shares 19.42% N/A% 22.09%
M Shares** 22.34% 17.51% 20.07%
MSCIW* 24.80% 16.19% 16.55%
- -----------------
* Since inception of Class A shares(10/01/92). Since inception of Class B
(10/01/95) shares is 18.46% and Class M shares (10/01/93) is 15.74%.
** Effective March 1, 1999, Class C shares became Class M shares.
[DOLLAR SIGN ICON] FEES AND EXPENSES
As an investor, you pay certain fees and expenses in connection with the fund,
which are described in the table below. Shareholder transaction fees are paid
from your account. Annual fund operating expenses are paid out from fund assets.
SHAREHOLDER FEES
Class of Shares
A B M
- --------------------------------------------------------------------------------
Maximum sales charges (load) on
purchases (as a % of offering price) 5.50% None 1.00%
Maximum deferred sales charge (load) None(a) 5.00% 1.00%(b)
(as a percentage of purchase price or
redemption proceeds, whichever is lower)
A $10 fee will be charged twice a year for an account opened for more than 2
years with a balance below the share class minimum because of redemptions.
(Before the fee is assessed, you will be given 60 days notice to have the
opportunity to increase your balance.)
Annual fund operating expenses (as of 10/31/98)
% of average daily net assets
Class of Shares
A B M
- ------------------------------------------------------------------------
Management fees 1.00% 1.00% 1.00%
Distribution and service (12b-1) fees 0.35% 1.00% 0.90%
Other expenses 0.47% 0.47% 0.47%
--------------------------
TOTAL ANNUAL FUND OPERATING EXPENSES 1.82% 2.47% 2.37%
- ------------------------
(a) Certain purchases of Class A shares in amounts greater than $1 million are
subject to a 1% contingent deferred sales charge for 24 months after
purchase.
(b) Class M shares are subject to a 1% contingent deferred sales charge if
redeemed within 18 months of purchase.
EXAMPLE
This example is here to help you compare the cost of investing in this fund with
that of other mutual funds. It shows the cumulative expenses you'd pay if you
invested $10,000 and held your shares for various time periods, with a 5% annual
return and fund operating expenses remain the same. This return is for
illustration purposes and is not guaranteed. Actual costs may be higher or
lower.
If the shares are redeemed at the end of each period:
Share Class 1 year 3 years 5 years 10 years
- --------------------------------------------------------------------------
A $725 $1,091 $1,481 $2,570
B* $750 $1,070 $1,416 $2,643
M $437 $ 832 $1,353 $2,779
If the shares are not redeemed:
Share Class 1 year 3 years 5 years 10 years
- --------------------------------------------------------------------------
A $725 $1,091 $1,481 $2,570
B* $250 $ 770 $1,316 $2,643
M $338 $ 832 $1,353 $2,779
*Examples for Class B shares assume they'll convert to Class A shares eight
years after you purchase them.
13
<PAGE>
IDEX SALOMON ALL CAP
Summary of Risks and Returns
[TARGET ICON] OBJECTIVE
THE INVESTMENT OBJECTIVE OF IDEX SALOMON ALL CAP IS TO SEEK CAPITAL
APPRECIATION.
This fund may be appropriate for investors who want long-term growth of capital
and who can tolerate fluctuations in their investments.
[CHESS PIECE ICON] STRATEGIES AND POLICIES
The fund's sub-adviser, Salomon Brothers Asset Management Inc. (SBAM), seeks
to achieve this objective by investing fund assets principally in:
/bullet/ common stock
/bullet/ convertible securities
To a lesser extent, the fund may invest in:
/bullet/ cash and cash equivalents
The fund will invest principally in common stocks, or securities convertible or
exchangeable for common stocks, such as convertible preferred stocks or
convertible debentures.
This fund is non-diversified under Federal securities laws.
The fund's classification as "non-diversified" under the 1940 Act means that the
fund has the ability to take larger positions in a smaller number of issuers. To
the extent the fund invests in a greater proportion of its assets in the
securities of a smaller number of issuers, this fund's non-diversification makes
it more susceptible to any single, economic, political or regulatory occurrence
than a more widely diversified fund and may be subject to greater risk of loss
with respect to its portfolio securities. However, to meet Federal tax
requirements, at the close of each quarter the fund may not have more than 25%
of its total assets invested in any one issuer, and, with respect to 50% of its
total assets, not more than 5% of its total assets invested in any one issuer.
In seeking capital appreciation, the fund may purchase securities of: seasoned
issuers; small companies; newer companies; and new issues. The fund may be
subject to wide fluctuations in market value. The fund's portfolio securities
may have limited marketability or may be widely and publicly traded.
SBAM anticipates that the fund's investments
generally will be in securities of companies which it considers to reflect the
following characteristics:
/bullet/ Undervalued share prices
/bullet/ Special situations such as existing or possible changes in management
or management policies, corporate structure or control,
capitalization, regulatory environment, or other circumstances which
could be expected to favor earnings or market price of such company's
shares
/bullet/ Growth potential due to technological advances, new methods in
marketing or production, new or unique products or services, changes
in demands for products or services or other significant new
developments
SBAM uses a bottom-up, fundamental research process to select the fund's
securities. That is, they seek to identify individual companies with earnings
growth potential that may not be recognized by the market.
SBAM may sell the fund's securities when stocks become overvalued and its
expectations regarding earnings growth change.
SBAM may take a temporary defensive position when the securities trading markets
or the economy are experiencing excessive volatility or a prolonged general
decline, or other adverse conditions exist. Under these circumstances, the fund
will be unable to pursue its investment objective.
[WARNING SIGN ICON] RISKS
The fund is subject to the following principal investment risks:
/bullet/ STOCKS
While stocks have historically outperformed other investments over the long
term, they tend to go up and down more dramatically over the shorter term. These
price movements may result from factors affecting individual companies,
industries or the securities market as a whole. Because the fund's holdings may
fluctuate in price, the value of your investment in the fund will go up and
down.
/bullet/ CONVERTIBLE SECURITIES
As with all debt securities, the market value of convertible securities tends to
decline as interest rates increase and, conversely, to increase as interest
rates decline.
YOU MAY LOSE MONEY IF YOU INVEST IN THIS FUND.
These and other risks are fully described in the section entitled "Explanation
of Strategies and Risks," beginning on page 39.
- --------------------------------------------------------------------------------
14
<PAGE>
[GRAPH ICON] PAST PERFORMANCE
Because the fund commenced operations in 1999, it has no historical performace
information to present to you. Performance history will be available for the
fund after it has been in operation for one calendar year.
[DOLLAR SIGN ICON] FEES AND EXPENSES
As an investor, you pay certain
fees and expenses in connection with the fund, which are described in the table
below. Shareholder transaction fees are paid from your account. Annual fund
operating expenses are paid out from fund assets.
SHAREHOLDER FEES
Class of Shares
- -------------------------------------------------------
A B M
Maximum sales charges
(load) on purchases
(AS A % OF OFFERING PRICE) 5.50% None 1.00%
Maximum deferred
sales charge (load) None(a) 5.00% 1.00%(b)
(AS A % OF PURCHASE PRICE OR
REDEMPTION PROCEEDS, WHICHEVER IS LOWER)
A $10 fee will be charged twice a year for an account opened for more than 2
years with a balance below the share class minimum because of redemptions.
(Before the fee is assessed, you will be given 60 days notice to have the
opportunity to increase your balance.)
ANNUAL FUND OPERATING EXPENSES
% OF AVERAGE DAILY NET ASSETS Class of Shares
A B M
- ----------------------------------------------------------
Management fees 0.80% 0.80% 0.80%
Distribution and
service (12b-1) fees 0.35% 1.00% 0.90%
Other expenses (c) 2.70% 2.70% 2.70%
-----------------------
TOTAL ANNUAL FUND OPERATING
EXPENSES 3.85% 4.50% 4.40%
Expense Reduction (Waiver)(d) 2.30% 2.30% 2.30%
-----------------------
NET OPERATING EXPENSES 1.55% 2.20% 2.10%
- ---------------------------
(a) Certain purchases of Class A shares in amounts greater than $1 million are
subject to a 1% contingent deferred sales charge for 24 months after
purchase.
(b) Purchases of Class M shares are subject to a 1% contingent deferred sales
charge if redeemed within 18 months of purchase.
(c) Because the fund commenced operations in 1999, the "Other Expenses" are
estimates.
(d) Contractual arrangement with Idex Management, Inc. through 4/30/2000.
EXAMPLE
This example is here to help you compare the cost of investing in this fund with
that of other mutual funds. It shows the cumulative expenses you'd pay if you
invested $10,000 and held your shares for various time periods, with a 5% annual
return and fund operating expenses remain the same. This return is for
illustration purposes and is not guaranteed. Actual costs may be higher or
lower.
If the shares are redeemed at the end of each period:
Share Class 1 year 3 years
- ------------------------------------------
A $699 $1,460
B $723 $1,453
M $410 $1,213
If the shares are not redeemed:
Share Class 1 year 3 years
- ------------------------------------------
A $699 $1,460
B $223 $1,153
M $311 $1,213
- -------------------
15
<PAGE>
IDEX JCC GROWTH
(FORMERLY GROWTH PORTFOLIO)
SUMMARY OF RISKS AND RETURNS
[TARGET ICON] OBJECTIVE
THE OBJECTIVE OF IDEX JCC GROWTH IS GROWTH OF CAPITAL.
This fund may be appropriate for investors who want capital growth in a broadly
diversified stock portfolio, and who can tolerate significant fluctuations in
the value of their investment.
[CHESS PIECE ICON] STRATEGIES AND POLICIES
The fund's sub-adviser, Janus Capital Corporation (Janus), seeks to achieve this
objective by investing principally in:
/bullet/ common stocks listed on national exchanges or on NASDAQ which Janus
believes have a good potential for capital growth, some of which may
be of foreign issuers.
The fund's main strategy is to invest almost all of its assets in common stocks
at times when Janus believes the market environment favors such investing.
To a lesser extent, the fund may invest in futures and foreign securities.
Janus generally takes a "bottom up" approach to building the stock portfolio. In
other words, they look mostly for income producing securities that meet their
investment criteria one at a time. Janus seeks to identify individual companies
with earnings growth potential that may not be recognized by the stock market at
large. If Janus is unable to find such investments the fund's assets may be in
cash or other similar investments.
Janus may sell stocks when its expectations regarding earnings growth change,
there is an earnings surprise, or the earnings change.
Although themes may emerge in the fund, securities are generally selected
without regard to any defined industry sector or other similarly defined
selection procedure. Realization of income is not a significant investment
consideration for the fund and any income realized on the fund's investments is
incidental to its objective.
[WARNING SIGN ICON] RISKS
The fund is subject to the following investment risks:
/bullet/ STOCKS
While stocks have historically outperformed other investments over the long
term, they tend to go up and down more dramatically over the shorter term. These
price movements may result from factors affecting individual companies,
industries or the securities market as a whole.
Because the stocks the fund holds fluctuate in price, the value of your
investment in the fund will go up and down.
YOU MAY LOSE MONEY IF YOU INVEST IN THIS FUND.
These and other risks are fully described in the section entitled "Explanation
of Strategies and Risks," beginning on page 39.
- --------------------------------------------------------------------------------
16
<PAGE>
[GRAPH ICON] PAST PERFORMANCE
The bar chart and the table below show the fund's annual returns
and its long-term performance. The bar chart and table indicate the risks of
investing in the fund by showing you how the fund's performance has varied from
year to year. The bar chart does not reflect the impact of sales charges, which
lower the fund's return. The table compares how the fund's average annual
returns for different calendar periods compare to the returns of the S&P 500, a
widely recognized unmanaged index of stock performance. The table reflects the
impact of the fund's sales loads for each share class. The bar chart and table
assume reinvestment of dividends and capital gain distributions. As with all
mutual funds, past performance is not a prediction of future results.
Year-by-year total return as of 12/31 each year (%)
Class "A" Shares
44.54 (0.49) 58.62 1.17 3.81 (8.47) 47.12 17.06 16.82 63.98
1989 1990 1991 1992 1993 1994 1995 1996 1997 1998
Quarter Ended Return
- -------------------------------------
Best Quarter: 12/31/98 27.95%
Worst Quarter: 12/31/97 (22.05)%
- -------------------------------------
AVERAGE ANNUAL TOTAL RETURNS AS OF 12/31/98
(WITH SALES LOADS) SINCE
ONE YEAR 5 YEARS 10 YEARS INCEPTION*
A Shares 54.96% 23.33% 21.20% 19.08%
B Shares 58.76% N/A N/A 29.40%
M Shares** 61.15% 24.13% N/A 22.71%
T Shares 50.15% 22.96% 21.16% 19.26%
S&P 500* 28.58% 24.00% 19.16% 17.17%
* Since inception of Class A shares (5/08/86). Since inception of Class B
shares (10/01/95) is 28.04%; Class M shares (10/01/93) is 23.28% and Class T
(6/04/85 is 31.67%.
** Effective March 1, 1999, Class C shares became Class M shares.
[DOLLAR SIGN ICON] FEES AND EXPENSES
As an investor, you pay certain fees and expenses in
connection with the fund, which are described in the table below. Shareholder
transaction fees are paid from your account. Annual fund operating expenses are
paid out from fund assets.
SHAREHOLDER FEES
Class of Shares
A B M T*
- -----------------------------------------------------------------
Maximum sales charges
(load) on purchases
(as a % of offering price) 5.50% None 8.50% 1.00%
Maximum deferred
sales charge (load) None(a) 5.00% 1.00%(b) None
(as a percentage of purchase price or redemption proceeds, whichever is lower)
A $10 fee will be charged twice a year for an account opened for more than 2
years with a balance below the share class minimum because of redemptions.
(Before the fee is assessed, you will be given 60 days notice to have the
opportunity to increase your balance.)
*Not available to new investors.
ANNUAL FUND OPERATING EXPENSES (as of 10/31/98)
% of average daily net assets Class of Shares
A B M T
- ----------------------------------------------------------------------
Management fees 0.93% 0.93% 0.93% 0.93%
Distribution and service
(12b-1) fees 0.35% 1.00% 0.90% 0.00%
Other expenses 0.23% 0.23% 0.23% 0.23%
-------------------------------------
TOTAL ANNUAL FUND
OPERATING EXPENSES 1.51% 2.16% 2.06% 1.16%
- ----------------------------------------------------------------------
(a) Certain purchases of Class A shares in amounts greater than $1
million are subject to a 1% contingent deferred sales charge for 24 months after
purchase.
(b) Purchases of Class M shares are subject to a 1% contingent deferred sales
charge if redeemed within 18 months of purchase.
Example
This example is here to help you compare the cost of investing in this fund with
that of other mutual funds. It shows the cumulative expenses you'd pay if you
invested $10,000 and held your shares for various time periods, with a 5% annual
return and fund operating expenses remain the same. This return is for
illustration purposes and is not guaranteed. Actual costs may be higher or
lower.
If the shares are redeemed at the end of each period:
Share Class 1 year 3 years 5 years 10 years
- --------------------------------------------------------------------
A $695 $1,001 $1,328 $2,252
B* $719 $ 976 $1,259 $2,326
M $406 $ 739 $1,197 $2,466
T $958 $1,187 $1,434 $2,139
If the shares are not redeemed:
Share Class 1 year 3 years 5 years 10 years
- ---------------------------------------------------------------------
A $695 $1,001 $1,328 $2,252
B* $219 $ 676 $1,159 $2,326
M $307 $ 739 $1,197 $2,466
T $958 $1,187 $1,434 $2,139
*EXAMPLES FOR CLASS B SHARES ASSUME THEY'LL CONVERT TO CLASS A SHARES EIGHT
YEARS AFTER YOU PURCHASE THEM.
17
<PAGE>
IDEX GOLDMAN SACHS GROWTH
SUMMARY OF RISKS AND RETURNS
[TARGET ICON] OBJECTIVE
THE INVESTMENT OBJECTIVE OF IDEX GOLDMAN SACHS GROWTH IS TO SEEK LONG-TERM
GROWTH OF CAPITAL.
This fund may be appropriate for investors who seek long-term growth of capital
and who can tolerate fluctuations inherent in stock investing.
[CHESS PIECE ICON] STRATEGIES AND POLICIES
The fund's sub-adviser, Goldman Sachs Asset Management (GSAM), seeks to
achieve this objective by investing principally in:
/bullet/ stocks
This fund will invest at least 90% of total assets in a diversified portfolio of
stocks that are considered by GSAM to have long term capital
appreciation potential.
To a lesser extent, the fund may invest in:
/bullet/ Foreign equity securities (including securities of issuers in emerging
countries and securities quoted in foreign currencies (10% in the
aggregate)
Stocks for this fund are selected based on their prospects for above average
growth. GSAM will select securities of growth companies trading, in GSAM's
opinion, at a reasonable price relative to other industries, competitors and
historical price/earnings multiples.
In order to determine whether a security has favorable growth prospects, GSAM
ordinarily looks for one or more of the following characteristics in relation to
the security's prevailing price:
/bullet/ prospects for above average sales and earnings growth per share
/bullet/ high return on invested capital
/bullet/ free cash flow generation
/bullet/ sound balance sheet, financial and accounting policies, and overall
financial strength
/bullet/ strong competitive advantages
/bullet/ effective research, product development, and marketing
/bullet/ pricing flexibility
/bullet/ strength of management
/bullet/ general operating characteristics that will enable the company to
compete successfully in its marketplace
The fund generally will invest in companies whose earnings are believed to be in
a relatively strong growth trend, or, to a lesser extent, in companies in which
significant further growth is not anticipated but whose market value per share
is thought to be undervalued.
GSAM may sell fund securities when its expectations regarding growth change.
GSAM may take a temporary defensive position when the securities trading markets
or the economy are experiencing excessive volatility or a prolonged general
decline, or other adverse conditions exist. Under these circumstances, the fund
will be unable to achieve its investment objective.
[WARNING SIGN ICON] RISKS
The fund is subject to the following principal investment risks:
/bullet/ STOCKS
While stocks have historically outperformed other investments over the long
term, they tend to go up and down more dramatically over the shorter term. These
price movements may result from factors affecting individual companies,
industries or the securities market as a whole.
Because the stocks the fund holds fluctuate in price, the value of your
investment in the fund will go up and down.
You may lose money if you invest in this fund.
These and other risks are fully described in the section entitled "Explanation
of Strategies and Risks," beginning on page 39.
- --------------------------------------------------------------------------------
18
<PAGE>
[GRAPH ICON] PAST PERFORMANCE
Because the fund commenced operations in 1999, it has no historical performance
information to present to you. Performance history will be available for the
fund after it has been in operation for one calendar year.
[DOLLAR SIGN ICON] FEES AND EXPENSES
As an investor, you pay certain fees and expenses in connection with the fund,
which are described in the table below. Shareholder transaction fees are paid
from your account. Annual fund operating expenses are paid out from fund assets.
SHAREHOLDER FEES
Class of Shares
A B M
- ------------------------------------------------------
Maximum sales charges
(load) on purchases
(as a % of offering price) 5.50% None 1.00%
Maximum deferred
sales charge (load) None(a) 5.00% 1.00%(b)
(as a percentage of purchase price or redemption proceeds, whichever is lower)
A $10 fee will be charged twice a year for an account opened for more than 2
years with a balance below the share class minimum because of redemptions.
(Before the fee is assessed, you will be given 60 days notice to have the
opportunity to increase your balance.)
ANNUAL FUND OPERATING EXPENSES
% OF AVERAGE DAILY NET ASSETS Class of Shares
A B M
- -------------------------------------------------------
Management fees 0.80% 0.80% 0.80%
Distribution and service
(12b-1) fees 0.35% 1.00% 0.90%
Other expenses (c) 2.70% 2.70% 2.70%
------------------------
TOTAL ANNUAL FUND
OPERATING EXPENSES 3.85% 4.50% 4.40%
Expense Reduction (Waiver)(d) 2.30% 2.30% 2.30%
------------------------
NET OPERATING EXPENSES 1.55% 2.20% 2.10%
- -------------------------------------------------------
(a) Certain purchases of Class A shares in amounts greater than $1 million are
subject to a 1% contingent deferred sales charge for 24 months after
purchase.
(b) Purchases of Class M shares are subject to a 1% contingent deferred sales
charge if redeemed within 18 months of purchase.
(c) Because the fund commenced operations in 1999, the "Other Expenses" are
estimates.
(d) Contractual arrangement with Idex Management, Inc. through 4/30/2000.
EXAMPLE
This example is here to help you compare the cost
of investing in this fund with that of other mutual funds. It shows the
cumulative expenses you'd pay if you invested $10,000 and held your shares for
various time periods, with a 5% annual return and fund operating expenses remain
the same. This return is for illustration purposes and is not guaranteed. Actual
costs may be higher or lower.
If the shares are redeemed at the end of each period:
Share Class 1 year 3 years
- --------------------------------------
A $699 $1,460
B $723 $1,453
M $410 $1,213
If the shares are not redeemed:
Share Class 1 year 3 years
- -------------------------------------
A $699 $1,460
B $223 $1,153
M $311 $1,213
- -------------------------------------
19
<PAGE>
IDEX C.A.S.E. GROWTH
(FORMERLY C.A.S.E. PORTFOLIO)
SUMMARY OF RISKS AND RETURNS
[TARGET ICON] OBJECTIVE
THE OBJECTIVE OF IDEX C.A.S.E. GROWTH IS ANNUAL GROWTH OF CAPITAL THROUGH
INVESTMENT IN COMPANIES WHOSE MANAGEMENT, FINANCIAL RESOURCES AND FUNDAMENTALS
APPEAR ATTRACTIVE ON A SCALE MEASURED AGAINST EACH COMPANY'S PRESENT VALUE
ANNUAL GROWTH.
This fund may be appropriate for investors who seek long-term growth of
capital, with a diversified portfolio of stocks having both above-market growth
characteristics and below-market risk characteristics. Investors should be
comfortable with the price fluctuations of such a stock portfolio.
[CHESS PIECE ICON] STRATEGIES AND POLICIES
The fund's sub-adviser, C.A.S.E. Management, Inc. (C.A.S.E.), intends to achieve
this objective by primarily investing fund assets in:
/bullet/ common stocks
/bullet/ preferred stocks
/bullet/ convertible stocks
The fund's assets are invested in companies whose stocks are traded on national
exchanges or over-the-counter markets. C.A.S.E. focuses on companies that are
fundamentally strong compared to other companies in the same industry, the same
sector and the broad market. C.A.S.E. evaluates the fund's growth of capital on
a year to year basis.
Using proprietary forms of research, C.A.S.E. selects companies after evaluating
the current economic cycle, and identifying potentially attractive sectors,
industries and company-specific circumstances.
C.A.S.E. invests in common, preferred and convertible stocks of companies that
C.A.S.E. believes show below-market risk, supported by below-market multiples,
along with above-average fundamentals. These fundamentals include return on
equity, price-to-earnings ratio and other balance sheet factors that contribute
to long-term capital growth.
C.A.S.E. applies its proprietary forms of research to companies that exhibit
superior products and above-average growth rates along with sound management and
financials.
Each company selected for the fund is monitored against more than two dozen
measures of financial strength, including:
/bullet/ insiders' activity
/bullet/ market style leadership
/bullet/ earnings surprise
/bullet/ analysts' change in earnings projections
/bullet/ return on equity
/bullet/ 5-year earnings-per-share growth rate
/bullet/ price-earnings ratio
/bullet/ price-to-book ratio
/bullet/ price-to-cash flow
/bullet/ institutional activity and holdings
/bullet/ relative strength price change
/bullet/ price-to-200-day moving average
/bullet/ price-to-historical rising inflation
/bullet/ price-to-declining U.S. dollar
/bullet/ earnings projected change
/bullet/ quarterly earnings per-share growth rate
C.A.S.E. sells stocks when they view the stock to be overvalued, or when
C.A.S.E. feels the stocks have lost their strong fundamentals.
In seeking to achieve the investment objective of this fund, C.A.S.E. will make
investment decisions without giving consideration to the turnover rate of the
fund. As a result, the turnover rate of the portfolio may be higher than other
comparable funds. Consequently, the fund may incur higher transaction related
expenses than funds that do not engage in frequent trading.
[WARNING SIGN ICON] RISKS
The fund is subject to the following primary investment risks:
/bullet/ STOCKS
While stocks have historically outperformed other investment classes over the
long term, they tend to go up and down more dramatically over the shorter term.
These price movements may result from factors affecting individual companies,
industries, or the securities market as a whole.
Because the stocks the fund holds fluctuate in price, the value of your
investment in the fund will go up and down.
/bullet/ PROPRIETARY RESEARCH
C.A.S.E.'s proprietary forms of research may not be effective and may cause
overall returns to be lower than if other forms of research are used.
/bullet/ CONVERTIBLE SECURITIES
As with all debt securities, the market value of convertible securities tends to
decline as interest rates increase and, conversely, to increase as interest
rates decline.
YOU MAY LOSE MONEY IF YOU INVEST IN THIS FUND.
These and other risks are fully described in
the section entitled "Explanation of Strategies and Risks," beginning on page
39.
- --------------------------------------------------------------------------------
20
<PAGE>
[GRAPH ICON] PAST PERFORMANCE
The bar chart and the table below show the fund's annual returns and its
long-term performance. The bar chart and table indicate the risks of investing
in the fund by showing you how the fund's performance has varied from year to
year. The bar chart does not reflect the impact of sales charges, which lower
the fund's return. The table compares how the fund's average annual returns for
different calendar periods compare to the returns of the S&P 500, a widely
recognized unmanaged index of stock performance. The table reflects the impact
of the fund's sales loads for each share class. The bar chart and table assume
reinvestment of dividends and capital gain distributions. As with all mutual
funds, past performance is not a prediction of future results.
YEAR-BY-YEAR TOTAL RETURN as of 12/31 each year (%)
Class "A" Shares
21.11 (5.34)
1997 1998
Quarter Ended Return
- --------------------------------------------
Best Quarter: 12/31/98 24.98%
Worst Quarter: 9/30/98 (24.42)%
- --------------------------------------------
Average annual total returns as of 12/31/98
(with sales loads) Since
One Year Inception
- ------------------------------------------------------
A Shares (10.55)% 6.17%
B Shares (10.62)% 6.72%
M Shares** (7.70)% 7.34%
S&P 500* 28.58% 27.61%
* Since inception (2/01/96).
** Effective March 1, 1999, Class C Shares became Class M shares.
[DOLLAR SIGN ICON] FEES AND EXPENSES
As an investor, you pay certain fees and expenses in connection with the fund,
which are described in the table below. Shareholder transaction fees are paid
from your account. Annual fund operating expenses are paid out from fund assets.
SHAREHOLDER FEES
Class of Shares
A B M
- ------------------------------------------------------------
Maximum sales charges
(load) on purchases
(as a % of offering price) 5.50% None 1.00%
Maximum deferred
sales charge (load) None(a) 5.00% 1.00%(b)
(as a percentage of purchase price or redemption proceeds, whichever is lower)
A $10 fee will be charged twice a year for an account opened for more than 2
years with a balance below the share class minimum because of redemptions.
(Before the fee is assessed, you will be given 60 days notice to have the
opportunity to increase your balance.)
ANNUAL FUND OPERATING EXPENSES (as of 10/31/98)
% of average daily net assets Class of Shares
A B M
- ------------------------------------------------------------
Management fees 0.80% 0.80% 0.80%
Distribution and service
(12b-1) fees 0.35% 1.00% 0.90%
Other expenses 1.09% 1.09% 1.09%
--------------------------
TOTAL ANNUAL FUND
OPERATING EXPENSES 2.24% 2.89% 2.79%
EXPENSE REDUCTION (c) 0.69% 0.69% 0.69%
--------------------------
NET OPERATING EXPENSES 1.55% 2.20% 2.10%
- ---------------------------
(a) Certain purchases of Class A shares in amounts greater than $1 million are
subject to a 1% contingent deferred sales charge for 24 months after
purchase.
(b) Purchases of Class M shares are subject to a 1% contingent deferred sales
charge if redeemed within 18 months of purchase.
(c) Contractual arrangement with Idex Management, Inc. through 4/30/2000.
EXAMPLE
This example is here to help you compare the cost of investing in this fund with
that of other mutual funds. It shows the cumulative expenses you'd pay if you
invested $10,000 and held your shares for various time periods, with a 5% annual
return and fund operating expenses remain the same. This return is for
illustration purposes and is not guaranteed. Actual costs may be higher or
lower.
If the shares are redeemed at the end of each period:
Share Class 1 year 3 years 5 years 10 years
- -------------------------------------------------------------------------
A $699 $1,149 $1,624 $2,932
B* $723 $1,130 $1,563 $3,007
M $410 $ 892 $1,499 $3,138
If the shares are not redeemed:
Share Class 1 year 3 years 5 years 10 years
- -------------------------------------------------------------------------
A $699 $1,149 $1,624 $2,932
B* $223 $ 830 $1,463 $3,007
M $311 $ 892 $1,499 $3,138
- -------------------------------------------------------------------------
*Examples for Class B Shares assume they'll convert to Class A shares eight
years after you purchase them.
21
<PAGE>
IDEX NWQ VALUE EQUITY
(FORMERLY VALUE EQUITY PORTFOLIO)
SUMMARY OF RISKS AND RETURNS
[TARGET ICON] OBJECTIVE
THE OBJECTIVE OF IDEX NWQ VALUE EQUITY IS MAXIMUM CONSISTENT TOTAL RETURN WITH
MINIMUM RISK TO PRINCIPAL.
This fund may be appropriate for investors who seek both capital preservation
and long-term capital appreciation.
[CHESS PIECE ICON] STRATEGIES AND POLICIES
The fund's sub-adviser, NWQ Investment Management Company, Inc. (NWQ), employs
a value-oriented approach to investing.
The fund seeks to achieve its objective by investing principally in:
/bullet/ common stocks
/bullet/ money market and short-term instruments (Treasury Bills)
Value investing involves buying stocks that are out of favor and/or undervalued
in comparison to their peers and/or their prospects for growth. Generally, value
stock valuation levels are lower than growth stocks.
NWQ will use statistical measures to look for above-average stock valuations,
screening for below-average price-to-earnings and price-to-book ratios,
above-average dividend yields and strong financial stability.
NWQ also identifies those market sectors believed to benefit from long-term
positive fundamentals, and focuses on the companies within these sectors which
represent above-average statistical value and are undervalued when purchased.
Under normal market conditions, 65% of the fund's assets will be invested in
equity securities.
The fund consists primarily of mid-capitalization to large capitalization
companies. When making a security selection NWQ:
/bullet/ uses earnings averaged over both strong and weak periods in evaluating
cyclical companies
/bullet/ focuses on quality of earnings
/bullet/ invests in relative value
/bullet/ focuses in industries and sectors that have strong long-term
fundamentals
NWQ may sell the fund's securities when the stocks become overvalued or the
stocks lose their strong fundamentals.
[WARNING SIGN ICON] RISKS
The fund is subject to the following principal investment risks:
/bullet/ STOCKS
While stocks have historically outperformed other investments over the long
term, they tend to go up and down more dramatically over the shorter term. These
price movements may result from factors affecting individual companies,
industries, or the securities market as a whole.
Because the stocks the fund holds fluctuate in price, the value of your
investment in the fund will go up and down.
/bullet/ MEDIUM SIZED COMPANIES
These companies present additional risks because their earnings are less
predictable, their share price more volatile, and their securities less liquid
than larger more established companies.
Undervalued stocks may not realize their perceived value for extended periods of
time. Value stocks may respond differently to market and other developments than
other types of stocks. Value oriented funds will typically underperform when
growth investing is in favor.
YOU MAY LOSE MONEY IF YOU INVEST IN THIS FUND.
These and other risks are fully described in the
section entitled "Explanation of Strategies and Risks," beginning on page 39.
- --------------------------------------------------------------------------------
22
<PAGE>
[GRAPH ICON] PAST PERFORMANCE
The bar chart and the table below show the fund's annual returns
and its long-term performance. The bar chart and table indicates the risks of
investing in the fund by showing you how the fund's performance has varied from
year to year. The bar chart does not reflect the impact of sales charges, which
lower the fund's return. The table compares how the fund's average annual
returns for different calendar periods compare to the returns of the S&P 500, a
widely recognized unmanaged index of stock performance. The table reflects the
impact of the fund's sales loads for each share class. Both the bar chart and
table assume reinvestment of dividends and capital gain distributions. As with
all mutual funds, past performance is not a prediction of future results.
YEAR-BY-YEAR TOTAL RETURN as of 12/31 each year (%)
Class "A" Shares
(7.24)
1998
Quarter Ended Return
- --------------------------------------------
Best Quarter: 6/30/97 13.62%
Worst Quarter: 9/30/98 (18.47)%
- ---------------------------------------------
Average annual total returns as of 12/31/98
(with sales loads) Since
One Year Inception
A Shares (12.34)% 2.43%
B Shares (12.46)% 2.85%
M Shares** (9.59)% 4.42%
S&P 500* 28.58% 28.37%
- --------------------------------------------
* Since inception (2/01/97).
** Effective March 1, 1999, Class C became Class M shares.
[DOLLAR SIGN ICON] FEES AND EXPENSES
As an investor, you pay certain fees and expenses in connection with the fund,
which are described in the table below. Shareholder transaction fees are paid
from your account. Annual fund operating expenses are paid out from fund assets.
SHAREHOLDER FEES
Class of Shares
A B M
- ------------------------------------------------------
Maximum sales charges
(load) on purchases
(as a % of offering price) 5.50% None 1.00%
Maximum deferred
sales charge (load) None(a) 5.00% 1.00%(b)
(as a percentage of purchase price or redemption proceeds, whichever is lower)
A $10 fee will be charged twice a year for an account opened for more than 2
years with a balance below the share class minimum because of redemptions.
(Before the fee is assessed, you will be given 60 days notice to have the
opportunity to increase your balance.)
ANNUAL FUND OPERATING EXPENSES (as of 10/31/98)
% OF AVERAGE DAILY NET ASSETS Class of Shares
A B M
- --------------------------------------------------------
Management fees 0.80% 0.80% 0.80%
Distribution and service
(12b-1) fees 0.35% 1.00% 0.90%
Other expenses 1.16% 1.16% 1.16%
------------------------
TOTAL ANNUAL FUND
OPERATING EXPENSES 2.31% 2.96% 2.86%
EXPENSE REDUCTION (c) 0.76% 0.76% 0.76%
------------------------
NET OPERATING EXPENSES 1.55% 2.20% 2.10%
- -------------------------
(a) Certain purchases of Class A shares in amounts greater than $1 million are
subject to a 1% contingent deferred sales charge for 24 months after
purchase.
(b) Purchases of Class M shares are subject to a 1% contingent deferred sales
charge if redeemed within 18 months of purchase.
(c) Contractual arrangement with Idex Management, Inc. through
4/30/2000.
EXAMPLE
This example is here to help you compare the cost of investing in this fund with
that of other mutual funds. It shows the cumulative expenses you'd pay if you
invested $10,000 and held your shares for various time periods, with a 5% annual
return and fund operating expenses remain the same. This return is for
illustration purposes and is not guaranteed. Actual costs may be higher or
lower.
If the shares are redeemed at the end of each period:
Share Class 1 year 3 years 5 years 10 years
- --------------------------------------------------------------------------------
A $699 $1,163 $1,652 $2,995
B* $723 $1,144 $1,591 $3,069
M $410 $ 906 $1,527 $3,200
If the shares are not redeemed:
Share Class 1 year 3 years 5 years 10 years
- --------------------------------------------------------------------------------
A $699 $1,163 $1,652 $2,995
B* $223 $ 844 $1,491 $3,069
M $410 $ 906 $1,527 $3,200
- ------------------------
*EXAMPLES FOR CLASS B SHARES ASSUME THEY'LL CONVERT TO CLASS A SHARES EIGHT
YEARS AFTER YOU PURCHASE THEM.
23
<PAGE>
IDEX T. ROWE PRICE DIVIDEND GROWTH
Summary of Risks and Returns
[TARGET ICON] OBJECTIVE
THE INVESTMENT OBJECTIVE OF IDEX T. ROWE PRICE DIVIDEND GROWTH IS TO PROVIDE AN
INCREASING LEVEL OF DIVIDEND INCOME, LONG-TERM CAPITAL APPRECIATION, AND
REASONABLE CURRENT INCOME THROUGH INVESTMENTS PRIMARILY IN DIVIDEND-PAYING
STOCKS.
This fund may be appropriate for investors who want reasonable level of current
income from equity investments that has the potential to rise faster than
inflation and who can tolerate significant fluctuations in the value of their
investments in an effort to achieve long-term capital growth.
[CHESS PIECE ICON] STRATEGIES AND POLICIES
The fund's sub-adviser, T. Rowe Price Associates, Inc. (T. Rowe Price), seeks
to achieve this objective by investing principally in:
/bullet/ dividend-paying common stocks with favorable prospects for increasing
dividends and long-term appreciation
To a lesser extent, T. Rowe Price may invest in:
/bullet/ foreign securities
/bullet/ futures
T. Rowe Price typically invests at least 65% of total assets in common
stocks of dividend-paying companies when it expects these companies to increase
their dividends over time and also provide long-term appreciation.
T. Rowe Price believes that a track record of dividend increases is an excellent
indicator of financial health and growth prospects, and over the long-term,
income can contribute significantly to total return. Dividends can also help
reduce the fund's volatility during periods of market turbulence and help offset
losses when stock prices are falling.
T. Rowe Price looks for stocks with sustainable, above-average growth in
earnings and dividends, and attempts to buy them when they are temporarily out
of favor or undervalued by the market. In selecting investments, T. Rowe Price
favors companies with one or more of the following:
/bullet/ Either a track record of, or the potential for, above-average earnings
and dividend growth
/bullet/ A competitive current dividend yield
/bullet/ A sound balance sheet and solid cash flow to support future dividend
increases
/bullet/ A sustainable competitive advantage and leading market position
/bullet/ Attractive valuations such as a relatively high dividend yield
While the fund invests principally in common stocks, T. Rowe Price may also
purchase other securities such as foreign securities, convertible securities,
warrants, preferred stocks, and corporate and government debt when considered
consistent with the fund's objective. Futures and options may be used for any
number of reasons, including: managing the fund's exposure to securities prices
and foreign currencies; to enhance income; to manage cash flows efficiently; or
to protect the value of portfolio securities.
The fund may sell securities for a variety of reasons such as to secure gains,
limit losses or redeploy assets into more promising opportunities.
[WARNING SIGN ICON] RISKS
The fund is subject to the following principal investment risks:
/bullet/ STOCKS
While stocks have historically outperformed other investments over the long
term, they tend to go up and down more dramatically over the shorter term. These
price movements may result from factors affecting individual companies,
industries or the securities market as a whole.
Because the stocks the fund may hold fluctuate in price, the value of your
investment in the fund will go up and down.
/bullet/ FOREIGN SECURITIES
Investments in foreign securities involve risks relating to political, social
and economic developments abroad as well as risks resulting from differences in
regulations to which U.S. and foreign issuers and markets are subject. These
risks include:
/bullet/ Changes in currency values
/bullet/ Currency speculation
/bullet/ Currency trading costs
/bullet/ Different accounting and reporting practices
/bullet/ Less information available to the public
/bullet/ Less (or different), regulation of securities markets
/bullet/ More complex business negotiations
/bullet/ Less liquidity
/bullet/ More fluctuations in market prices
/bullet/ Delays in settling foreign securities transactions
/bullet/ Higher transaction costs
/bullet/ Higher costs for holding foreign securities (custodial fees)
/bullet/ Vulnerability to seizure and taxes
/bullet/ Political instability and small markets
/bullet/ Different market trading days
You may lose money if you invest in this fund.These and other risks are fully
described in the section entitled "Explanation of Strategies and Risks,"
beginning on page 39.
- --------------------------------------------------------------------------------
24
<PAGE>
[GRAPH ICON] PAST PERFORMANCE
Because the fund commenced operations in 1999, it
has no historical performance information to present to you. Performance history
will be available for the fund after it has been in operation for one calendar
year.
[DOLLAR SIGN ICON] FEES AND EXPENSES
As an investor, you pay certain fees and expenses in
connection with the fund, which are described in the table below. Shareholder
transaction fees are paid from your account. Annual fund operating expenses are
paid out from fund assets.
Shareholder fees
Class of Shares
A B M
- ---------------------------------------------------------
Maximum sales charges
(load) on purchases 5.50% None 1.00%
(AS A % OF OFFERING PRICE)
Maximum deferred sales
charge (load) None(a) 5.00% 1.00%(b)
- ---------------------------------------------------------
(AS A % OF PURCHASE PRICE OR REDEMPTION PROCEEDS, WHICHEVER IS LOWER)
A $10 fee will be charged twice a year for an account opened more than 2 years
with a balance below the share class minimum because of redemptions. (Before the
fee is assessed, you will be given 60 days notice to have the opportunity to
increase your balance.)
ANNUAL FUND OPERATING EXPENSES
% OF AVERAGE DAILY NET ASSETS Class of Shares
A B M
- -------------------------------------------------------
Management fees 0.80% 0.80% 0.80%
Distribution and service
(12b-1) fees 0.35% 1.00% 0.90%
Other expenses (c) 2.70% 2.70% 2.70%
-------------------------
TOTAL ANNUAL FUND
OPERATING EXPENSES 3.85% 4.50% 4.40%
Expense Reduction (Waiver)(d) 2.30% 2.30% 2.30%
-------------------------
NET OPERATING EXPENSES 1.55% 2.20% 2.10%
- ---------------------------------------------------------
(a) Certain purchases of Class A shares in amounts greater than $1 million are
subject to a 1% contingent deferred sales charge for 24 months after purchase.
(b) Purchases of Class M shares are subject to a 1% contingent deferred sales
charge if redeemed within 18 months of purchase.
(c) Because the fund commenced operations in 1999, the "Other expenses" are
estimates.
(d) Contractual arrangement with Idex Management, Inc. through 4/30/2000.
EXAMPLE
This example is here to help you compare the cost of investing in this fund with
that of other mutual funds. It shows the cumulative expenses you'd pay if you
invested $10,000 and held your shares for various time periods, with a 5% annual
return and fund operating expenses remain the same. This return is for
illustration purposes and is not guaranteed. Actual costs may be higher or
lower.
If the shares are redeemed at the end of each period:
Share Class 1 year 3 years
- --------------------------------------
A $699 $1,460
B $723 $1,453
M $410 $1,213
If the shares are not redeemed:
Share Class 1 year 3 years
- --------------------------------------
A $699 $1,460
B $223 $1,153
M $311 $1,213
- --------------------------------------
25
<PAGE>
IDEX DEAN ASSET ALLOCATION
(FORMERLY TACTICAL ASSET ALLOCATION PORTFOLIO)
SUMMARY OF RISKS AND RETURNS
[TARGET ICON] OBJECTIVE
The objective of IDEX Dean Allocation is preservation of capital and competitive
investment returns.
This fund may be appropriate for investors who want a combination of capital
growth and income, and who can tolerate the risks associated with an
actively-traded portfolio which shifts assets between equity and debt.
[CHESS PIECE ICON] STRATEGIES AND POLICIES
The fund's sub-adviser, Dean Investment Associates (Dean), seeks to achieve the
fund's objective by investing fund assets principally in:
/bullet/ income-producing common and preferred stocks
/bullet/ debt obligations of U.S. issuers, some of which will be convertible
into common stocks
/bullet/ U.S. Treasury bonds, notes and bills
/bullet/ money market funds
In selecting stocks, Dean focuses on high-quality, liquid,
large capitalization stocks, using a "bottom-up" screening process to identify
stocks that are statistically undervalued. Dean's ultimate goal is to choose
stocks whose price has been driven down by a market that has "over-reacted" to
perceived risks. With this approach, the fund seeks to achieve a dividend
income yield higher than that of the Russell 1000 Index, a widely recognized
unmanaged index of market performance which measures the performance of the
1,000 largest companies in the Russell 3000 Index, which represents
approximately 89% of the total market capitalization of the Russell 3000 Index.
As of the latest reconstitution, the average market capitalization was
approximately $9.9 billion; the medium market capitalization was approximately
$3.7 billion. The smallest company in the index had an approximate market
capitalization of $1,404.7 million.
Dean employs an investment technique called "asset allocation," which shifts
assets from one class of investment to another (such as from equity to debt)
when Dean anticipates changes in market direction.
Dean will seek to enhance returns in rising stock markets by increasing its
allocation to equity, then protect itself in falling stock markets by reducing
equity exposure and shifting into fixed-income investments, as well as into
money market funds (up to 10% of total assets).
Dean has developed forecasting models to predict movements in the stock market
for both short (12 to 18-month) and long (3 to 5-year) time periods. These
models help compare the risks and rewards Dean anticipates in holding stocks
versus debt instruments and money market funds. Such techniques may result in
increased fund expenses such as brokerage fees.
Thus, the models determine when Dean is to "tactically" adjust the fund's asset
allocation among stocks, bonds, U.S. debt obligations and money market funds.
Dean increases equity holdings in rising stock markets, then reduces equity in
falling stock markets and increases fixed-income and money market holdings. Dean
switches from equity to debt securities when it anticipates changes in the
market direction. Dean also sells stocks when they become overvalued.
[WARNING SIGN ICON] RISKS
The fund is subject to the following principal investment risks:
/bullet/ STOCKS
While stocks have historically outperformed other investments over the long
term, they tend to go up and down more dramatically over the shorter term. These
price movements may result from factors affecting individual companies,
industries, or the securities market as a whole.
Because the stocks the fund holds fluctuate in price, the value of your
investment in the fund will go up and down.
/bullet/ Convertible Securities
As with all debt securities, the market value of convertible securities tends to
decline as interest rates increase and, conversely, to increase as the interest
rates decline.
/bullet/ Fixed-Income Securities The value of these securities may change daily
based on changes in the interest rates, and other market conditions and
factors. The risks include:
/bullet/ Changes in interest rates
/bullet/ Length of time to maturity
/bullet/ Issuers defaulting on their obligations to pay interest or return
principal
/bullet/ STATISTICAL MODELS
Securities selected using statistical models may result in incorrect asset
allocations causing overall returns to be lower than if other methods of
selection were used.
You may lose money if you invest in this fund.
These and other risks are fully described in the section entitled "Explanation
of Strategies and Risks," beginning on page 39.
- --------------------------------------------------------------------------------
26
<PAGE>
[GRAPH ICON] PAST PERFORMANCE
The bar chart and the table below show the fund's annual returns and its
long-term performance. The bar chart and table indicate the risks of investing
in the fund by showing you how the fund's performance has varied from year to
year. The bar chart does not reflect the impact of sales charges, which lower
the fund's return. The table compares how the fund's average annual returns for
different calendar periods compare to the returns of the Lehman Brothers
Intermediate Government Corporate Bond Index (LBIGCB) (primary benchmark) and
the Russsell 1000 Index ("Russell 1000") widely recognized unmanaged indexes of
market performance. The table reflects the impact of the fund's sales loads for
each share class. The bar chart and table assume reinvestment of dividends and
capital gain distributions. As with all mutual funds, past performance is not a
prediction of future results.
YEAR-BY-YEAR TOTAL RETURN as of 12/31 each year (%)
Quarter Ended Return
- --------------------------------------
Best Quarter: 6/30/97 8.95%
Worst Quarter: 9/30/98 (6.21)%
Class "A" Shares
13.16 17.06 6.87
1996 1997 1998
Average annual total returns as of 12/31/98
(with sales loads)
Since
One Year Inception*
- -----------------------------------------
A Shares 0.99% 10.66%
B Shares 1.17% 11.40%
M Shares** 4.21% 11.65%
LBIGCB 8.43% 7.36%
Russell 1000 15.63% 22.42%
* Since inception (10/01/95).
**Effective March 1, 1999, Class C shares became Class M shares.
[DOLLAR SIGN ICON] FEES AND EXPENSES
As an investor, you pay certain fees and expenses in connection with the fund,
which are described in the table below. Shareholder transaction fees are paid
from your account. Annual fund operating expenses are paid out from fund assets.
SHAREHOLDER FEES
Class of Shares
A B M
- ---------------------------------------------------------
Maximum sales charges
(load) on purchases
(as a % of offering price) 5.50% None 1.00%
Deferred sales
charge (load) None(a) 5.00% 1.00%(b)
(as a percentage of purchase price or redemption proceeds, whichever is lower)
A $10 fee will be charged twice a year for an account opened for more than 2
years with a balance below the share class minimum because of redemptions.
(Before the fee is assessed, you will be given 60 days notice to have the
opportunity to increase your balance.)
ANNUAL FUND OPERATING EXPENSES (as of 10/31/98)
% OF AVERAGE DAILY NET ASSETS Class of Shares
A B M
- ------------------------------------------------------------
Management fees 0.80% 0.80% 0.80%
Distribution and service
(12b-1) fees 0.35% 1.00% 0.90%
Other expenses 0.52% 0.52% 0.52%
-------------------------
TOTAL ANNUAL FUND
OPERATING EXPENSES 1.67% 2.32% 2.22%
EXPENSE REDUCTION (c) 0.12% 0.12% 0.12%
-------------------------
NET OPERATING EXPENSES 1.55% 2.20% 2.10%
- ------------------------------------------------------------
(a) Certain purchases of Class A shares in amounts greater than $1 million are
subject to a 1% contingent deferred sales charge for 24 months after
purchase.
(b) Purchases of Class M shares are subject to a 1% contingent deferred sales
charge if redeemed within 18 months of purchase.
(c) Contractual arrangement with Idex Management, Inc. through 4/30/2000.
EXAMPLE
This example is here to help you compare the cost of investing in this fund with
that of other mutual funds. It shows the cumulative expenses you'd pay if you
invested $10,000 and held your shares for various time periods, with a 5% annual
return and fund operating expenses remain the same. This return is for
illustration purposes and is not guaranteed. Actual costs may be higher or
lower.
If the shares are redeemed at the end of each period:
Share Class 1 year 3 years 5 years 10 years
- -------------------------------------------------------------------
A $699 $1,036 $1,397 $2,408
B* $723 $1,013 $1,329 $2,482
M $410 $ 776 $1,267 $2,620
If the shares are not redeemed:
Share Class 1 year 3 years 5 years 10 years
- --------------------------------------------------------------------
A $699 $1,036 $1,397 $2,408
B* $223 $ 713 $1,229 $2,482
M $410 $ 776 $1,267 $2,620
*EXAMPLES FOR CLASS B SHARES ASSUME THEY'LL CONVERT TO CLASS A SHARES EIGHT
YEARS AFTER YOU PURCHASE THEM.
27
<PAGE>
IDEX LKCM STRATEGIC TOTAL RETURN
(FORMERLY STRATEGIC TOTAL RETURN PORTFOLIO)
SUMMARY OF RISKS AND RETURNS
[TARGET ICON] OBJECTIVE
The objective of IDEX LKCM Strategic Total Return is current income, long-term
growth of income, and capital appreciation.
This fund may be appropriate for investors who seek capital appreciation and
income growth through a strategic blend of stocks and bonds, and who desire a
fundamentally-oriented investment approach, emphasizing risk management.
[CHESS PIECE ICON] STRATEGIES AND POLICIES
Its sub-adviser, Luther King Capital Management Corporation (Luther King), seeks
to achieve this objective by principally investing fund assets in both equity
and fixed-income securities:
/bullet/ common stocks
/bullet/ corporate bonds
/bullet/ U.S. Treasury Notes
To a lesser extent, Luther King may invest fund assets in:
/bullet/ convertible preferred stock
/bullet/ corporate convertible bonds
The fund seeks to invest in both equity and fixed-income securities to achieve a
balance of capital appreciation and investment income while limiting volatility.
The fund will also invest in convertible securities, which have both equity and
fixed-income characteristics. In choosing such securities, Luther King looks for
companies with strong fundamental characteristics. It considers factors such as:
/bullet/ balance sheet quality
/bullet/ cash flow generation
/bullet/ earnings and dividend growth record and outlook
/bullet/ profitability levels
In some cases, Luther King bases its selections on other factors. For example,
some securities may be bought at an apparent discount to their appropriate
value, with the anticipation that they'll increase in value over time.
The fund seeks to achieve an income yield greater than the average yield of the
stocks in the S&P 500.
The fund invests mainly in the stocks and bonds of companies with established
operating histories and strong fundamental characteristics. The majority of the
stocks the fund buys will be listed on a national exchange or traded on NASDAQ
or domestic over-the-counter markets.
LKCM closely analyzes a company's financial status and a security's valuation
in an effort to control risk at the individual level. In addition, the growth
elements of the fund's equity investments drive capital appreciation.
As part of its income-oriented strategy, Luther King expects to invest about 25%
of the fund's assets in fixed income securities, some of which will be
convertible into common stocks, and no more than 20% of its assets in stocks
that don't pay a dividend.
Luther King may sell fund securities when its stocks become overvalued or when
the stocks lose their strong fundamentals.
[WARNING SIGN ICON] RISKS
The fund is subject to the following principal investment risks:
/bullet/ STOCKS
While stocks have historically outperformed other investments over the long
term, they tend to go up and down more dramatically over the short term. These
price movements may result from factors affecting individual companies,
industries or the securities market as a whole.
Because the stocks the fund holds fluctuate in price, the value of your
investment in the fund will go up and down.
/bullet/ FIXED-INCOME SECURITIES
The value of these securities may change daily based on changes in the interest
rates, and other market conditions and factors. The risks include:
/bullet/ Changes in interest rates
/bullet/ Length of time to maturity
/bullet/ Issuers defaulting on their obligations to pay interest or return
principal
YOU MAY LOSE MONEY IF YOU INVEST IN THIS FUND.
These and other risks are fully described in the section entitled "Explanation
of Strategies and Risks," beginning on page 39.
- --------------------------------------------------------------------------------
28
<PAGE>
[GRAPH ICON] PAST PERFORMANCE
The bar chart and the table below show the fund's annual returns and its
long-term performance. The bar chart and table indicate the risks of investing
in the fund by showing you how the fund's performance has varied from year to
year. The table compares how the fund's average annual returns for different
calendar periods compare to the returns of the S&P 500(primary benchmark), and
the Lehman Brothers Intermediate Government Corporate Bond (CBIGC) Index, widely
recognized unmanaged indexes of stock performance. The bar chart and table
assume reinvestment of dividends and capital gain distributions. As with all
mutual funds, past performance is not a prediction of future results.
Year-by-year total return as of 12/31 each year (%)
Class "A" Shares
22.81 16.42 21.99 10.09
1995 1996 1997 1998
Quarter Ended Return
- ----------------------------------------
Best Quarter: 6/30/97 12.74%
Worst Quarter: 9/30/98 (7.39)%
- ----------------------------------------
Average annual total returns as of 12/31/98
(with sales loads) Since
One Year Inception
- ----------------------------------------------------
A Shares 4.02% 16.22%
B Shares 4.36% 15.51%
M Shares** 7.37% 16.93%
S&P 500* 28.58% 30.20%
LBIGC* 8.43% 8.75%
* Since inception of Class A and M shares (12/02/94). Since inception of
Class B shares (10/01/95) is 28.04%.
** Effective March 1, 1999, Class C shares became Class M shares.
[DOLLAR SIGN ICON] FEES AND EXPENSES
As an investor, you pay certain fees and expenses in connection with the fund,
which are described in the table below. Shareholder transaction fees are paid
from your account. Annual fund operating expenses are paid out from fund assets.
Shareholder fees
Class of Shares
A B M
- ------------------------------------------------------
Maximum sales charges
(load) on purchases
(as a % of offering price) 5.50% None 1.00%
Maximum deferred sales
charge (load) None(a) 5.00% 1.00%(b)
(as a percentage of purchase price or redemption proceeds, whichever is lower)
A $10 fee will be charged twice a year for an account opened for more than 2
years with a balance below the share class minimum because of redemptions.
(Before the fee is assessed, you will be given 60 days notice to have the
opportunity to increase your balance.)
ANNUAL FUND OPERATING EXPENSES (as of 10/31/98)
% OF AVERAGE DAILY NET ASSETS Class of Shares
A B M
- ----------------------------------------------------------
Management fees 0.80% 0.80% 0.80%
Distribution and service
(12b-1) fees 0.35% 1.00% 0.90%
Other expenses 0.57% 0.57% 0.57%
-----------------------
Total annual fund
operating expenses 1.72% 2.37% 2.27%
EXPENSE REDUCTION (WAIVER)(c) 0.17% 0.17% 0.17%
-----------------------
NET OPERATING EXPENSES 1.55% 2.20% 2.10%
- ----------------------------------------------------------
(a) Certain purchases of Class A shares in amounts greater than $1 million are
subject to a 1% contingent deferred sales charge for 24 months after
purchase.
(b) Purchases of Class M shares are subject to a 1% contingent deferred sales
charge if redeemed within 18 months of purchase.
(c) Contractual arrangement with Idex Management, Inc. through 4/30/2000.
EXAMPLE
This example is here to help you compare the cost of investing in this fund with
that of other mutual funds. It shows the cumulative expenses you'd pay if you
invested $10,000 and held your shares for various time periods, with a 5% annual
return and fund operating expenses remain the same. This return is for
illustration purposes and is not guaranteed. Actual costs may be higher or
lower.
If the shares are redeemed at the end of each period:
Share Class 1 year 3 years 5 years 10 years
- ---------------------------------------------------------------------
A $699 $1,046 $1,417 $2,455
B* $723 $1,023 $1,350 $2,529
M $410 $ 786 $1,288 $2,666
If the shares are not redeemed:
Share Class 1 year 3 years 5 years 10 years
- -------------------------------------------------------------------
A $699 $1,046 $1,417 $2,455
B* $223 $ 723 $1,250 $2,529
M $311 $ 786 $1,288 $2,666
- -------------------------------------------------------------------
*EXAMPLES FOR CLASS B SHARES ASSUME THEY'LL CONVERT TO CLASS A SHARES EIGHT
years after you purchase them.
29
<PAGE>
IDEX JCC BALANCED
(FORMERLY BALANCED PORTFOLIO)
SUMMARY OF RISKS AND RETURNS
[TARGET ICON] OBJECTIVE
The objective of IDEX JCC Balanced is long-term capital growth, consistent
with preservation of capital and balanced by current income.
This fund may be appropriate for investors who seek capital growth and income
from the same investment, but who also want an investment that sustains value by
maintaining a balance between equity and debt (stocks and bonds). The fund is
not for investors who desire a consistent level of income.
[CHESS PIECE ICON] STRATEGIES AND POLICIES
The fund's sub-adviser, Janus Capital Corporation (Janus), seeks to achieve the
fund's objective by investing principally in:
/bullet/ 40% to 60% in securities selected primarily for growth potential - such
as common stocks
/bullet/ 40% to 60% in securites selected primarily for income potential - both
equity and debt
/bullet/ high-yield/high-risk securities (commonly known as "junk bonds")
The basic strategy of the fund is to maintain a growth component and an income
component. Normally, 40% to 60% of the fund's securities are chosen primarily
for their growth potential, and the remaining 40% to 60% are chosen primarily
for their income potential. These securities may include some of foreign
issuers.
The growth component is expected to consist mainly of common stocks in companies
and industries that Janus believes are experiencing favorable demand for their
products and services, and that are operating in a favorable competitive and
regulatory climate. In its analysis, Janus looks for companies with earnings
growth potential that may not be recognized by the market.
The income component will consist of securities that Janus believes have income
potential. Such securities may include equity securities, convertible securities
and all types of debt securities.
At least 25% of the fund's assets will normally be invested in fixed-income
securities, including bonds and preferred stock. The fund may also invest, to a
lesser extent in futures and foreign securities.
The sub-adviser uses a "bottom up" approach by seeking to identify individual
companies with earning potential that may not be recognized by the market at
large. In other words, Janus looks mostly for income producing securities that
meet its investment criteria one at a time.
If Janus is unable to find such investments, the fund's assets may be in cash or
similar investments. Securities are selected without regard to any industry
sector or other similarly defined selection procedure.
Up to 35% of the fund's assets may be invested in high/yield/high-risk bonds
(commonly known as "junk bonds"). These bonds are rated below investment grade
by the primary rating agencies.
The fund may shift assets between the growth and income portions of its
portfolio, based on Janus' analysis of the market and conditions in the economy.
If Janus believes that at a particular time growth investments will provide
better returns than the yields from income-producing investments, the fund may
put a greater emphasis on growth. The reverse may also take place.
Janus may sell the fund's securities when its expectations regarding earnings
change.
[WARNING SIGN ICON] RISKS
The fund is subject to the following principal investment risks:
/bullet/ STOCKS
While stocks have historically outperformed other investments over the long
term, they tend to go up and down more dramatically over the shorter term. These
price movements may result from factors affecting individual companies,
industries, or the securities market as a whole.
Because the stocks the fund holds fluctuate in price, the value of your
investment in the fund will go up and down.
/bullet/ FIXED-INCOME SECURITIES
The value of these securities may change daily based on changes in the interest
rates, and other market conditions and factors. The risks include:
/bullet/ Changes in interest rates
/bullet/ Length of time to maturity
/bullet/ Issuers defaulting on their obligations to pay interest or return
principal
/bullet/ HIGH-YIELD/HIGH-RISK SECURITIES
/bullet/ Credit risk
/bullet/ Greater sensitivity to interest rate movements
/bullet/ Speculative
/bullet/ Greater vulnerability to economic changes
/bullet/ Decline in market value in event of default
/bullet/ Less liquidity
YOU MAY LOSE MONEY IF YOU INVEST IN THIS FUND.
These and other risks are fully described in the section entitled "Explanation
of Strategies and Risks," beginning on page 39.
30
<PAGE>
[GRAPH ICON] PAST PERFORMANCE
The bar chart and table below show the fund's annual returns and its long-term
performance. The bar chart and table indicate the risks of showing you how the
fund's performance has varied from year to year. The bar chart does not reflect
the impact of sales charges, which lower the fund's return. The table compares
how the fund's average annual return for different calendar periods compare to
the returns of the Lehman Brothers Government/Corporate Bond Index (LBGCB), a
widely recognized unmanaged index of market performance. The table reflects the
impact of the fund's sales loads for each share class. The bar chart and table
assume reinvestment of dividends and capital gain distributions. As with all
mutual funds, past performance is not a prediction of future results.
Year-by-year total return as of 12/31 each year (%)
Class "A" Shares
25.20 16.60 21.17 30.78
1995 1996 1997 1998
Quarter Ended Return
- --------------------------------------------
Best Quarter: 12/31/98 18.31 %
Worst Quarter: 9/30/98 (3.63)%
- --------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS AS OF 12/31/98
(WITH SALES LOADS) Since
One Year Inception
- ------------------------------------------------
A Shares 23.58% 21.07%
B Shares 24.96% 22.68%
M Shares** 27.79% 21.81%
LBGCB* 9.49% 10.15%
* Since inception of Class "A" shares and Class M shares (12/02/94). Since
inception of Class B shares (10/01/95) is 8.26%
** Effective March 1, 1999, Class C shares became Class M shares.
[DOLLAR SIGN ICON] FEES AND EXPENSES
As an investor, you pay certain fees and expenses in connection with the fund,
which are described in the table below. Shareholder transaction fees are paid
from your account. Annual fund operating expenses are paid out from fund assets.
Shareholder fees
Class of Shares
A B M
Maximum sales charges
(load) on purchases
(as a % of offering price) 5.50% None 1.00%
Maximum deferred
sales charge (load) None(a) 5.00% 1.00%(b)
(as a percentage of purchase price or redemption proceeds, whichever is lower)
A $10 fee will be charged twice a year for an account opened for more than 2
years with a balance below the share class minimum because of redemptions.
(Before the fee is assessed, you will be given 60 days notice to have the
opportunity to increase your balance.)
ANNUAL FUND OPERATING EXPENSES (as of 10/31/98)
% OF AVERAGE DAILY NET ASSETS Class of Shares
A B M
- -----------------------------------------------------------
Management fees 1.00% 1.00% 1.00%
Distribution and service
(12b-1) fees 0.35% 1.00% 0.90%
Other expenses 0.69% 0.69% 0.69%
--------------------------
TOTAL ANNUAL FUND
OPERATING EXPENSES 2.04% 2.69% 2.59%
EXPENSE REDUCTION (WAIVER) (c) 0.19% 0.19% 0.19%
--------------------------
NET OPERATING EXPENSES 1.85% 2.50% 2.40%
- -----------------------------------------------------------
(a) Certain purchases of Class A shares in amounts greater than $1 million are
subject to a 1% contingent deferred sales charge for 24 months after
purchase.
(b) Purchases of Class M shares are subject to a 1% contingent deferred sales
charge if redeemed within 18 months of purchase.
(c) Contractual arrangement with Idex Management, Inc. through 4/30/2000.
EXAMPLE
This example is here to help you compare the cost of investing in this fund with
that of other mutual funds. It shows the cumulative expenses you'd pay if you
invested $10,000 and held your shares for various time periods, with a 5% annual
return and fund operating expenses remain the same. This return is for
illustration purposes and is not guaranteed. Actual costs may be higher or
lower.
If the shares are redeemed at the end of each period:
Share Class 1 year 3 years 5 years 10 years
- --------------------------------------------------------------------
A $728 $1,137 $1,571 $2,774
B* $753 $1,117 $1,508 $2,848
M $440 $ 880 $1,445 $2,981
If the shares are not redeemed:
Share Class 1 year 3 years 5 years 10 years
- --------------------------------------------------------------------
A $728 $1,137 $1,571 $2,774
B* $253 $ 817 $1,408 $2,848
M $341 $ 880 $1,445 $2,981
*EXAMPLES FOR CLASS B SHARES ASSUME THEY'LL CONVERT TO CLASS A SHARES EIGHT
YEARS AFTER YOU PURCHASE THEM.
31
<PAGE>
IDEX JCC FLEXIBLE INCOME
(FORMERLY FLEXIBLE INCOME PORTFOLIO)
SUMMARY OF RISKS AND RETURNS
[TARGET ICON] OBJECTIVE
THE OBJECTIVE OF IDEX JCC FLEXIBLE INCOME IS MAXIMUM TOTAL RETURN FOR
SHAREHOLDERS, CONSISTENT WITH PRESERVATION OF CAPITAL, BY ACTIVELY MANAGING A
PORTFOLIO OF INCOME-PRODUCING SECURITIES.
This fund may be appropriate for investors who want current income
enhanced by the potential for capital growth, and who are willing to tolerate
fluctuation in principal value caused by changes in interest rates as well as
the risks associated with substantial investments in high-yield/high-risk bonds
(commonly known as "junk bonds"), or unrated bonds of domestic or foreign
issuers.
[CHESS PIECE ICON] STRATEGIES AND POLICIES
The fund normally invests at least 80% of its total assets in income-producing
securities of both foreign and domestic companies. The fund's sub-adviser, Janus
Capital Corporation (Janus), seeks to achieve the fund's objective by
investing principally in
/bullet/ corporate debt securities
To a lesser extent Janus may invest fund assets in:
/bullet/ lower-rated securities, including bonds considered less than investment
grade (high-yield/high risk bonds) of both foreign and domestic issuers
/bullet/ mortgage-and other asset-backed securities
/bullet/ convertible securities
/bullet/ preferred stock
/bullet/ income-producing common stock
The fund seeks maximum current income by investing principally in corporate
bonds that offer higher yields, but more risk than higher rated bonds.
While the fund may buy bonds of any maturity, the fund's average maturity may
vary substantially, depending upon Janus' analysis of market, economic and
financial conditions at the time. To increase the potential of higher returns,
the fund has no pre-established standards for the quality of the debt
instruments it buys.
The fund may buy unrated debt securities of both domestic and foreign issuers,
and may at times have substantial holdings of such high-yield/high-risk bonds.
In addition to considering economic factors such as the affect of interest rates
on the fund's investments, Janus applies a "bottom up" approach in choosing
investments. In other words, they look mostly for income-producing securities
that meet their investment criteria one at a time. If Janus is unable to find
such investments, a fund's assets may be in cash or other similar investments.
In determining the creditworthiness of bond issuers, Janus uses, but doesn't
rely solely on, credit ratings.
Janus seeks to diversify the fund's investments across many securities, sectors
and countries. Currency risk is generally avoided through hedging and other
means.
Janus may sell the fund's securities when its expectations regarding market
interest rates change or the quality or return changes on investment.
[WARNING SIGN ICON] RISKS
The fund is subject to the following principal investment risks:
/bullet/ FIXED-INCOME SECURITIES
The value of these securities may change daily based on changes in interest
rates, and other market conditions and factors. Risks include:
/bullet/ Changes in interest rates
/bullet/ Length of time to maturity
/bullet/ Issuers defaulting on their obligations to pay interest or return
principal
/bullet/ STOCKS
While stocks have historically outperformed other investments over the long
term, they tend to go up and down more dramatically over the shorter term. These
price movements may result from factors affecting individual companies,
industries, or the securities market as a whole.
Because the stocks the fund holds fluctuate in price, the value of your
investment in the fund will go up and down.
YOU MAY LOSE MONEY IF YOU INVEST IN THIS FUND.
These and other risks are fully described in the section entitled "Explanation
of Strategies and Risks," beginning on page 39.
- --------------------------------------------------------------------------------
32
<PAGE>
[GRAPH ICON] PAST PERFORMANCE
The bar chart and the table below show the fund's annual returns and its
long-term performance. The bar chart and the table indicate the risks of
investing in the fund by showing you how the fund's performance has varied from
year to year. The bar chart does not reflect the impact of sales charges, which
lower the fund's return. The table compares how the fund's average annual
returns for different calendar periods compare to the returns of the Lehman
Brothers Government/ Corporate Bond Index (LBGCB), a widely recognized unmanaged
index of market performance. The table reflects the impact of the fund's sales
loads for each share class. The bar chart and table assume reinvestment of
dividends and capital gain distributions. As with all mutual funds, past
performance is not a prediction of future results.
YEAR-BY-YEAR TOTAL RETURN as of 12/31 each year (%)
Class "A" Shares
3.67 (5.11) 25.01 11.00 13.90 (4.28) 18.89 5.44 11.57 7.89
1989 1990 1991 1992 1993 1994 1995 1996 1997 1998
Quarter Ended Return
- ------------------------------------------
Best Quarter: 3/31/91 7.92%
Worst Quarter: 3/31/90 (8.59)%
- ------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS AS OF 12/31/98
(WITH SALES LOADS)
Since
One Year 5 Years 10 Yrs Inception
- --------------------------------------------------------------------
A Shares 2.76% 6.59% 7.90% 8.06%
B Shares 2.18% N/A N/A 7.99%
M Shares** 5.21% 6.82% N/A 6.68%
LBGCB* 9.49% 7.31% 9.34% 9.02%
- -------------------------------------------------------------------
* Since inception of Class A shares (6/29/87). Since inception of Class B shares
(10/01/95) is 8.26%, and Class M shares (10/01/93) is 6.89%.
**Effective March 1, 1999, Class C shares became Class M shares.
[DOLLAR SIGN ICON] FEES AND EXPENSES
As an investor, you pay certain fees and expenses in connection with the fund,
which are described in the table below. Shareholder transaction fees are paid
from your account. Annual fund operating expenses are paid out from fund assets.
SHAREHOLDER FEES
Class of Shares
A B M
- ---------------------------------------------------------
Maximum sales charges
(load) on purchases
(as a % of offering price) 4.75% None 1.00%
Maximum deferred
sales charge (load) None(a) 5.00% 1.00%(b)
(as a percentage of purchase price or redemption proceeds, whichever is lower)
A $10 fee will be charged twice a year for an account opened for more than 2
years with a balance below the share class minimum because of redemptions.
(Before the fee is assessed, you will be given 60 days notice to have the
opportunity to increase your balance.)
ANNUAL FUND OPERATING EXPENSES (as of 10/31/98)
% OF AVERAGE DAILY NET ASSETS Class of Shares
A B M
- --------------------------------------------------------
Management fees 0.90% 0.90% 0.90%
Distribution and service
(12b-1) fees 0.35% 1.00% 0.90%
Other expenses 0.73% 0.73% 0.73%
------------------------
TOTAL ANNUAL FUND
OPERATING EXPENSES 1.98% 2.63% 2.53%
EXPENSE REDUCTION (WAIVER) (c) 0.13% 0.13% 0.13%
------------------------
NET OPERATING EXPENSES 1.85% 2.50% 2.40%
- ---------------------------------------------------------
(a) Certain purchases of Class A shares in amounts greater than $1 million are
subject to a 1% contingent deferred sales charge for 24 months after
purchase.
(b) Purchases of Class M shares are subject to a 1% contingent deferred sales
charge if redeemed within 18 months of purchase.
(c) Contractual arrangement with Idex Management, Inc. through 4/30/2000.
EXAMPLE
This example is here to help you compare the cost of investing in this fund with
that of other mutual funds. It shows the cumulative expenses you'd pay if you
invested $10,000 and held your shares for various time periods, with a 5% annual
return and fund operating expenses remain the same. This return is for
illustration purposes and is not guaranteed. Actual costs may be higher or
lower.
If the shares are redeemed at the end of each period:
Share Class 1 year 3 years 5 years 10 years
- ---------------------------------------------------------------
A $654 $1,055 $1,480 $2,662
B* $753 $1,105 $1,484 $2,793
M $440 $ 867 $1,421 $2,927
If the shares are not redeemed:
Share Class 1 year 3 years 5 years 10 years
- ---------------------------------------------------------------
A $654 $1,055 $1,480 $2,662
B* $253 $ 805 $1,384 $2,793
M $341 $ 867 $1,421 $2,927
*Examples for Class B Shares assume they'll convert to Class A shares
eight years after you purchase them.
33
<PAGE>
IDEX AEGON INCOME PLUS
(FORMERLY INCOME PLUS PORTFOLIO)
SUMMARY OF RISKS AND RETURNS
[TARGET ICON] OBJECTIVE
THE OBJECTIVE OF IDEX AEGON INCOME PLUS IS TO SEEK AS HIGH A LEVEL OF CURRENT
INCOME AS IS CONSISTENT WITH THE AVOIDANCE OF EXCESSIVE RISK.
This fund may be appropriate for investors who
seek high current income and are willing to tolerate the fluctuation in
principal value associated with changes in interest rates.
[CHESS PIECE ICON] STRATEGIES AND POLICIES
The fund's sub-adviser, AEGON USA Investment Management, Inc. (AIMI), seeks to
achieve this objective by principally investing fund assets in a diversified
portfolio of:
/bullet/ fixed-income securities including investment grade bonds and
high-yield/high-risk bonds (commonly known as "junk bonds").
When investing in rated securities, the fund buys those rated B or better by
Moody's or S&P. When investing in rated commercial paper, the fund buys those
rated Prime-2 or better by Moody's or A-2 or better by S&P.
The fund may invest in unrated securities which, in AIMI's judgment, are of
equivalent quality. If the rated securities held by the fund are downgraded,
AIMI will consider whether to keep these securities.The fund may not invest in
rated corporate securities that are rated below investment grade, if such
holdings are more than 50% of its total holdings of securities (other than
commercial paper).
AIMI's strategy is to achieve yields as high as possible while managing risk.
AIMI uses a "top down/bottom up" approach in managing the fund's assets. The
"top down" approach is to adjust the risk profile of the fund. AIMI analyzes
four factors that affect the movement of fixed-income bond prices which include:
economic indicators; technical indicators that are specific to the high-yield
market; investor sentiment and valuation. Analysis of these factors assists AIMI
in its decisions regarding the fund's portfolio allocations.
AIMI has developed a proprietary credit model that is the foundation of its
"bottom up" analysis. The model tracks historical cash flow numbers and
calculates credit financial ratios. Because high-yield companies are of higher
financial risk, AIMI does a thorough credit analysis of all companies in the
fund's portfolio, as well as all potential acquisitions.
Each potential buy and sell candidate is analyzed by AIMI from both the "top
down" and "bottom up" strategies. An industry may look attractive in one area,
but not the other. They can then review the results of their analysis and decide
whether or not to proceed with a transaction.For temporary defensive purposes,
the fund may invest some or all of its assets in short-term obligations.
AIMI may sell fund securities when it determines there are changes in economic
indicators, technical indicators or valuation.
[WARNING SIGN ICON] RISKS
The fund is subject to the following principal investment risks:
/bullet/ Fixed-Income Securities
The value of these securities may change daily
based on changes in the interest rates, and other market conditions and factors.
Risks include:
/bullet/ Changes in interest rates
/bullet/ Length of time to maturity
/bullet/ Issuers defaulting on their obligations to pay interest or return
principal
/bullet/ HIGH-YIELD/HIGH-RISK SECURITIES
/bullet/ Credit risk
/bullet/ Greater sensitivity to interest rate movements
/bullet/ Greater vulnerability to economic changes
/bullet/ Decline in market value in event of default
/bullet/ Less liquidity
/bullet/ Proprietary Research
AIMI's proprietary forms of research may not be effective and may cause overall
returns to be lower than if other forms of research are used.
YOU MAY LOSE MONEY IF YOU INVEST IN THIS FUND.
These and other risks are fully described in the section entitled "Explanation
of Strategies and Risks," beginning on page 39.
34
<PAGE>
[GRAPH ICON] PAST PERFORMANCE
The bar chart and the table below show the fund's annual returns and its
long-term performance. The bar chart and table indicate the risks of investing
in the fund by showing you how the fund's performance has varied from year to
year. The bar chart does not reflect the impact of sales charges, which lower
the fund's return. The table compares how the fund's average annual returns for
different calendar periods compare to the returns of the Merrill Lynch High
Yield Master Index (MLHYM), a widely recognized unmanaged index of market
performance. The table reflects the impact of the fund's sales loads for each
share class. The bar chart and table assume reinvestment of dividends and
capital gain distributions. As with all mutual funds, past performance is not a
prediction of future results.
YEAR-BY-YEAR TOTAL RETURN as of 12/31 each year (%)
Class "A" Shares
12.28 2.85 22.28 12.63 13.35 (4.02) 18.43 9.45 11.53 4.33
1989 1990 1991 1992 1993 1994 1995 1996 1997 1998
QUARTER ENDED RETURN
- ---------------------------------------------------------------
Best Quarter: 12/31/85 8.73%
Worst Quarter: 9/30/87 (3.41)%
- ---------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS AS OF 12/31/98(WITH SALES LOADS)
Since
One Year 5 Years 10 Yrs Inception
- --------------------------------------------------------------
A Shares (0.63)% 6.64% 9.55% 9.83%
B Shares (1.42)% -- N/A 7.32%
M Shares** 1.66% 6.75% N/A 6.61%
MLHYM* 3.65% 9.36% 11.26% 11.61%
* Since inception of Class A shares (6/14/85). Since inception of Class B shares
(10/01/93) is 8.61% and Class M shares (10/01/95) is 8.04%.
**Effective March 1, 1999, Class C shares became Class M shares.
[DOLLAR SIGN ICON] FEES AND EXPENSES
As an investor, you pay certain fees and expenses in connection with the fund,
which are described in the table below. Shareholder transaction fees are paid
from your account. Annual fund operating expenses are paid out from fund assets.
SHAREHOLDER FEES
Class of Shares
A B M
- --------------------------------------------------------
Maximum sales charges
(load) on purchases
(as a % of offering price) 4.75% None 1.00%
Maximum deferred
sales charge (load) None(a) 5.00% 1.00%(b)
(as a percentage of purchase price or redemption proceeds, whichever is lower)
A $10 fee will be charged twice a year for an account opened for more than 2
years with a balance below the share class minimum because of redemptions.
(Before the fee is assessed, you will be given 60 days notice to have the
opportunity to increase your balance.)
ANNUAL FUND OPERATING EXPENSES (as of 10/31/98)
% OF AVERAGE DAILY NET ASSETS Class of Shares
A B M
- --------------------------------------------------------
Management fees 0.60% 0.60% 0.60%
Distribution and service
(12b-1) fees 0.35% 1.00% 0.90%
Other expenses 0.29% 0.29% 0.29%
------------------------
TOTAL ANNUAL FUND
OPERATING EXPENSES 1.24% 1.89% 1.79%
- ----------------------------------------------------------
(a) Certain purchases of Class A shares in amounts greater than $1 million are
subject to a 1% contingent deferred sales charge for 24 months after purchase.
(b) Purchases of Class M shares are subject to a 1% contingent deferred sales
charge if redeemed within 18 months of purchase.
EXAMPLE
This example is here to help you compare the cost of investing in this fund with
that of other mutual funds. It shows the cumulative expenses you'd pay if you
invested $10,000 and held your shares for various time periods, with a 5% annual
return and fund operating expenses remain the same. This return is for
illustration purposes and is not guaranteed. Actual costs may be higher or
lower.
If the shares are redeemed at the end of each period:
Share Class 1 year 3 years 5 years 10 years
A $595 $850 $1,124 $1,904
B* $692 $894 $1,121 $2,040
M $379 $658 $1,060 $2,184
If the shares are not redeemed:
Share Class 1 year 3 years 5 years 10 years
A $595 $850 $1,124 $1,904
B* $192 $594 $1,021 $2,040
M $280 $658 $1,060 $2,184
- -------------------------
*EXAMPLES FOR CLASS B SHARES ASSUME THEY'LL CONVERT TO CLASS A SHARES EIGHT
YEARS AFTER YOU PURCHASE THEM.
35
<PAGE>
IDEX AEGON TAX EXEMPT
(FORMERLY TAX-EXEMPT PORTFOLIO)
SUMMARY OF RISKS AND RETURNS
[TARGET ICON] OBJECTIVE
THE OBJECTIVE OF IDEX AEGON TAX EXEMPT IS MAXIMUM CURRENT INTEREST INCOME EXEMPT
FROM FEDERAL INCOME TAX, CONSISTENT WITH PRESERVATION OF CAPITAL.
This fund may be appropriate for investors who seek high current federal
tax-free income and are willing to tolerate the fluctuation in principal value
associated with changes in interest rates. Yields on municipal obligations are
typically lower than on similar taxable securities. Such investors will
generally have higher taxable incomes.
The fund is not for tax-exempt retirement programs, since they would receive no
benefit from the tax-exempt nature of most of the fund's income.
[CHESS PIECE ICON] STRATEGIES AND POLICIES
Its sub-adviser, AEGON USA Investment Management, Inc. (AIMI), seeks to achieve
this objective by investing at least 80% of the funds net assets in:
/bullet/ municipal obligations rated in the four highest grades of Moody's or
S&P
/bullet/ municipal commercial paper rated the highest by Moody's or S&P
/bullet/ unrated municipal notes (6-month to 3-year maturity) of issuers with at
least one issue of bonds outstanding that are rated in Moody's or S&P's
four highest grades
These securities must be tax exempt and not subject to alternative minimum tax.
Also, the fund may buy unrated municipal obligations that AIMI considers equal
in quality to the four highest ratings of Moody's or S&P. Unrated municipal
securities may be less liquid than rated securities, and therefore may be
riskier than rated municipal securities.
Bonds in the fourth category are speculative. The fund's policies do not limit
how much of the portfolio may be bonds in these categories, as long as AIMI
believes the objective of preserving capital is being met.
These obligations are issued by states, territories or possessions of the U.S.,
the District of Columbia and their political subdivisions, agencies, etc., and
the fund will invest in them only if the interest they pay is based on the
opinion of bond counsel, exempt from Federal income tax.
The average maturity of securities in the fund may vary based on the
sub-adviser's analysis of interest rate trends and municipal market factors.
AIMI takes an approach it believes to be conservative, striving to participate
in the market's advances while preserving capital on the downside, in an attempt
to provide solid risk-adjusted returns for the shareholders of the fund. The
fund is managed by assessing key factors for the tax-exempt environment. The
duration and maturity structure of the fund's portfolio generally reflects the
interest rate outlook of AIMI's Fixed Income Strategy Committee.
Yields on municipal obligations depend upon:
/bullet/ Type or classification of the issuer
/bullet/ Maturity
/bullet/ Size and structure of the deal
/bullet/ Creditworthiness
Continuous changes in these areas are monitored by AIMI, to evaluate when the
rewards are appropriate for the degree of risk taken. The fund's portfolio is
broadly diversifed among all municipal obligations.
AIMI may take a temporary defensive position by investing up to 20% of its
assets in lower-yielding and taxable instruments when the securities trading
markets or the economy are experiencing excessive volatility or a prolonged
general decline, or other adverse conditions exist. Under these circumstances,
the fund will be unable to achieve its investment objective.
[WARNING SIGN ICON] RISKS
The fund is subject to the following investment risks:
/bullet/ MUNICIPAL OBLIGATIONS
/bullet/ Their yields are usually lower than on similar, but taxable securities
/bullet/ The income may be subject to state and local taxes
/bullet/ The income may be a preference item for determining the Federal
alternative minimum tax
/bullet/ Unrated municipal securities may be less liquid than rated securities
/bullet/ Congress occasionally considers restricting or eliminating the Federal
tax exemption
/bullet/ Obligations could ultimately be Federally taxable
/bullet/ FIXED-INCOME SECURITIES
The value of these securities may change daily based on
changes in the interest rates, and other market conditions and factors. These
risks include:
/bullet/ Fluctuations in market value
/bullet/ Changes in interest rates
/bullet/ Length of time to maturity
/bullet/ Issuers defaulting on their obligations to pay interest or return
principal
YOU MAY LOSE MONEY IF YOU INVEST IN THIS FUND.
These and other risks are fully described in the section entitled "Explanation
of Strategies and Risks," beginning on page 39.
36
<PAGE>
[GRAPH ICON] PAST PERFORMANCE
The bar chart and the table below show the fund's annual returns and its
long-term performance. The bar chart and table indicate the risks of investing
in the fund by showing you how the fund's performance has varied from year to
year. The bar chart does not reflect the impact of sales charges, which lower
the fund's return. The table compares how the fund's average annual returns for
different calendar periods compared to the returns of the Lehman Brothers
General Municipal Bond Index (LBGMB), a widely recognized unmanaged index of
market performance. The table reflects the impact of the fund's sales loads for
each share class. The bar chart and table assume reinvestment of dividends and
capital gain distributions. As with all mutual funds, past performance is not a
prediction of future results.
YEAR-BY-YEAR TOTAL RETURN as of 12/31 each year (%)
Class "A" Shares
10.57 5.57 10.24 6.60 8.66 (2.25) 12.86 3.89 10.12 4.58
1989 1990 1991 1992 1993 1994 1995 1996 1997 1998
QUARTER ENDED RETURN
- ------------------------------------------
Best Quarter: 6/30/85 9.13%
Worst Quarter: 6/30/87 (5.51)%
- ------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS AS OF 12/31/98
(WITH SALES LOADS)
Since
One Year 5 Years 10 Yrs Inception*
- ------------------------------------------------------------------
A Shares (0.39)% 4.68% 6.48% 7.66%
B Shares (1.17)% N/A N/A 5.66%
M Shares** 2.19% 5.21% N/A 5.14%
LBGMB 6.54% 6.24% 8.22% 9.29%
- -------------------------------------------------------------------
* Since inception of Class A Shares (4/01/85). Since inception of Class B
shares(10/01/95) is 6.20% and Class M shares (10/01/93) is 6.20%.
** Effective March 1, 1999, Class C shares became Class M shares.
[DOLLAR SIGN ICON] FEES AND EXPENSES
As an investor, you pay certain fees and expenses in connection with the fund,
which are described in the table below. Shareholder transaction fees are paid
from your account. Annual fund operating expenses are paid out from fund assets.
SHAREHOLDER FEES
Class of Shares
A B M
- -------------------------------------------------
Maximum sales charges
(load) on purchases
(as a % of offering price) 4.75% None 1.00%
Maximum deferred
sales charge (load) None(a) 5.00% 1.00%(b)
(as a percentage of purchase price or redemption proceeds, whichever is lower)
A $10 fee will be charged twice a year for an account opened for more than 2
years with a balance below the share class minimum because of redemptions.
(Before the fee is assessed, you will be given 60 days notice to have the
opportunity to increase your balance.)
ANNUAL FUND OPERATING EXPENSES (as of 10/31/98)
% OF AVERAGE DAILY NET ASSETS Class of Shares
A B M
- ----------------------------------------------------------
Management fees 0.60% 0.60% 0.60%
Distribution and service
(12b-1) fees 0.35% 1.00% 0.60%
Other expenses 0.53% 0.52% 0.53%
------------------------
TOTAL ANNUAL FUND
OPERATING EXPENSES 1.48% 2.12% 1.73%
EXPENSE REDUCTION (WAIVER) (c) 0.13% 0.12% 0.13%
------------------------
NET OPERATING EXPENSES 1.35% 2.00% 1.60%
- ----------------------------------------------------------
(a) Certain purchases of Class A shares in amounts greater than $1 million are
subject to a 1% contingent deferred sales charge for 24 months after
purchase.
(b) Purchases of Class M shares are subject to a 1% contingent deferred sales
charge if redeemed within 18 months of purchase.
(c) Contractual arrangement with Idex Management, Inc. through 4/30/2000.
EXAMPLE
This example is here to help you compare the cost of investing in this fund with
that of other mutual funds. It shows the cumulative expenses you'd pay if you
invested $10,000 and held your shares for various time periods, with a 5% annual
return and fund operating expenses remain the same. This return is for
illustration purposes and is not guaranteed. Actual costs may be higher or
lower.
If the shares are redeemed at the end of each period:
Share Class 1 year 3 years 5 years 10 years
- --------------------------------------------------------------------
A $606 $909 $1,233 $2,149
B* $703 $954 $1,232 $2,284
M $360 $627 $1,017 $2,110
If the shares are not redeemed:
Share Class 1 year 3 years 5 years 10 years
- --------------------------------------------------------------------
A $606 $909 $1,233 $2,149
B* $203 $654 $1,132 $2,284
M $261 $627 $1,017 $2,110
- --------------------------------------------------------------------
*EXAMPLES FOR CLASS B SHARES ASSUME THEY'LL CONVERT TO CLASS A SHARES EIGHT
YEARS AFTER YOU PURCHASE THEM.
37
<PAGE>
AS AN INFORMED INVESTOR, YOU SHOULD KNOW
All of the 18 funds involve risk, and all of them offer the potential for
reward. This means you can lose money and you can make money. At IDEX, we've
structured the funds so that each offers a slightly different degree of risk and
reward than the others.
In this prospectus, we've arranged the funds in order of risk/reward from
highest to lowest. Notice the scale at the right. It represents the full range
of risks and rewards, along with the types of securities associated with each
level. This scale appears near the explanation of each fund, with an arrow
pointing to the risk/reward level of that fund.
What risk/reward level is for you? Here's how you can tell:
HOW WELL DO YOU HANDLE FLUCTUATIONS IN SHARE PRICE (ACCOUNT VALUE)? The higher a
fund is on the risk/reward scale, the more its price is likely to move up and
down from day to day. If this makes you uncomfortable, you might prefer an
investment at the lower end of the scale that doesn't fluctuate in price as
much.
ARE YOU LOOKING FOR A HIGHER RATE OF RETURN? Generally, the higher the potential
return, the higher the risk. If you find the potential to make more money to be
worth the possibility of losing more, then a fund at the higher end of the scale
may be right for you.
A final note: Except for money market funds, MUTUAL FUNDS ARE LONG-TERM
INVESTMENTS. For best results, you should be prepared to commit to this
investment for at least several years due to market cycles.
Each fund has an investment objective that it tries to achieve through
investing. The objective can be changed without shareholder vote.
AGGRESSIVE EQUITY
IDEX T. ROWE PRICE SMALL CAP
IDEX JCC CAPITAL APPRECIATION
IDEX PILGRIM BAXTER MID CAP GROWTH
IDEX ALGER AGGRESSIVE GROWTH
FOREIGN EQUITY
IDEX GE/SCOTTISH EQUITABLE INTERNATIONAL EQUITY
IDEX JCC GLOBAL
GROWTH EQUITY
IDEX SALOMON ALL CAP
IDEX JCC GROWTH
IDEX GOLDMAN SACHS GROWTH
IDEX C.A.S.E. GROWTH
IDEX NWQ VALUE EQUITY
IDEX T. ROWE PRICE DIVIDEND GROWTH
BALANCED
IDEX DEAN ASSET ALLOCATION
IDEX LKCM STRATEGIC TOTAL RETURN
IDEX JCC BALANCED
FIXED-INCOME
IDEX JCC FLEXIBLE INCOME
IDEX AEGON INCOME PLUS
IDEX AEGON TAX EXEMPT
CAPITAL PRESERVATION
HIGHER /arrow/ RISK/REWARD /arrow/ LOWER
38
<PAGE>
EXPLANATION OF STRATEGIES AND RISKS
HOW TO USE THIS SECTION
In the discussions of the individual funds on pages 2 through 38, you found
descriptions of the strategies and risks associated with each. In those pages,
you were referred to this section for a more complete description of the risks.
For best understanding, first read the description of the fund you are
interested in. Then refer to this section and read about the risks particular to
that fund. For even more discussions of strategies and risks, see the Statement
of Additional Information (SAI), which is available upon request. See the back
cover of this prospectus for information on how to order the SAI.
[CHESS PIECE ICON]
DIVERSIFICATION AND CONCENTRATION. The 1940 Act classifies investment companies
as either diversified or non-diversified.
Diversification is the practice of spreading a fund's assets over a number of
investments, investment types, industries or countries to reduce risk. A
non-diversified fund has the ability to take larger positions in fewer issuers.
Because the appreciation or depreciation of a single security may have a greater
impact on the net asset value of a non-diversified portfolio, its share price
can be expected to fluctuate more than a comparable portfolio.
All of the funds (except IDEX Salomon All Cap and IDEX JCC Capital Appreciation)
qualify as diversified funds under the 1940 Act. The diversified portfolios are
subject to the following diversification requirements (which are set forth in
full in the SAI);
/bullet/ As a fundamental policy, with respect to 75% of the total assets of a
fund, the fund may not own more than 10% of the outstanding voting shares of any
issuer (other than U.S. government securities) as defined in the 1940 Act and,
with respect to some funds, in other types of cash items.
/bullet/ As a fundamental policy with respect to 75% of the total assets of a
fund, the fund will not purchase a security of any issuer if such would cause
the portfolio's holdings of that issuer to amount to more than 5% of the fund's
total assets.
/bullet/ As a fundamental policy governing concentration, no fund will invest
more than 25% of its assets in any one particular industry, other than U.S.
government securities.
IDEX Salomon All Cap and IDEX JCC Capital Appreciation each reserves the right
to become a diversified investment company (as defined by the 1940 Act).
[WARNING SIGN ICON]
INVESTING IN COMMON STOCKS. Many factors cause common stocks to go up and down
in price. A major one is the financial performance of the company that issues
the stock. Other factors include the overall economy, conditions in a particular
industry, and monetary factors like interest rates. When your fund holds stocks,
there's a risk that some or all of them may be down in price when you choose to
sell fund shares, causing you to lose money. This is called MARKET RISK.
[WARNING SIGN ICON]
INVESTING IN PREFERRED STOCKS. Because these stocks come with a promise to pay a
stated dividend, their price depends more on the size of the dividend than on
the company's performance. But if a company fails to pay the dividend, its
preferred stock is likely to drop in price. Changes in interest rates can also
affect their price. (See "Investing in Bonds", below.)
[WARNING SIGN ICON]
INVESTING IN "CONVERTIBLES", PREFERRED STOCKS, AND BONDS. Since preferred stocks
and corporate bonds pay a stated return, their prices usually don't depend on
the price of the company's common stock. But some companies issue preferred
stocks and bonds that are convertible into their common stocks. Linked to the
common stock in this way, convertible securities go up and down in price as the
common stock does, adding to their market risk.
[WARNING SIGN ICON]
VOLATILITY. The more an investment goes up and down in price, the more
volatile it's said to be. Volatility increases the market risk because even
though your fund may go up more than the market in good times, it may also go
down more than the market in bad times. If you decide to sell when a volatile
fund is down, you could lose more.
[WARNING SIGN ICON]
INVESTING IN BONDS. Like common stocks, bonds fluctuate in value, though the
factors causing this are different, including:
/bullet/ Changes in interest rates. Bond prices tend to move the opposite of
interest rates. Why? Because when interest rates on new bond issues go
up, rates on existing bonds stay the same and they become less
desirable. When rates go down, the reverse happens. This is also true
for most preferred stocks and some convertibles.
/bullet/ Length of time to maturity. When a bond matures, the issuer must pay
the owner its face value. If the maturity date is a long way off, many
things can affect its value, so a bond is more volatile the farther it
is from maturity. As that date approaches, fluctuations
39
<PAGE>
usually become smaller and the price gets closer to face value.
/bullet/ DEFAULTS. All bond issuers make at least two promises: (1) to pay
interest during the bond's term and (2) to return principal when it
matures. If an issuer fails to keep one or both of these promises, the
bond will probably drop in price dramatically, and may even become
worthless.
/bullet/ DECLINES IN RATINGS. At the time of issue, most bonds are rated by
professional rating services, such as Moody's and S&P. The stronger the
financial backing behind the bond, the higher the rating. If this
backing is weakened or lost, the rating service may downgrade the
bond's rating. This is virtually certain to cause the bond to drop in
price.
/bullet/ LOW RATING. High-yield/high-risk securities (commonly known
as "junk bonds") have greater credit risk, are more sensitive to
interest rate movements, are considered more speculative, have a
greater vulnerability to economic changes and are less liquid.
/bullet/ LACK OF RATING. Some bonds are considered speculative, or for other
reasons are not rated. Such bonds must pay a higher interest rate in
order to attract investors. They're considered riskier because of the
higher possibility of default or loss of liquidity.
/bullet/ LOSS OF LIQUIDITY. If a
bond is downgraded, or for other reasons drops in price, the market
demand for it may "dry up." In that case, the bond may be hard to sell
or "liquidate" (convert to cash).
[WARNING SIGN ICON]
INVESTING IN FOREIGN SECURITIES. These are investments offered by foreign
companies, governments and government agencies. They involve risks not usually
associated with U.S. securities, including:
/bullet/ Changes in currency values. Foreign securities are sold in currencies
other than U.S. dollars. If a currency's value drops, the value of your
fund shares could drop too, even if the securities are strong. Dividend
and interest payments may be lower. Factors affecting exchange rates
are: differing interest rates among countries; balances of trade;
amount of a country's overseas investments; and any currency
manipulation by banks.
/bullet/ CURRENCY SPECULATION. The foreign currency market is largely
unregulated and subject to speculation.
/bullet/ CURRENCY TRADING COSTS. Some funds also invest in ADRs and American
Depositary Shares (ADSs). They represent securities of foreign
companies traded on U.S. exchanges, and their values are expressed in
U.S. dollars. Changes in the value of the underlying foreign currency
will change the value of the ADR or ADS. The fund incurs costs when it
converts other currencies into dollars, and vice-versa.
/bullet/ Euro Conversion. On January 1, 1999, certain participating countries in
the European Economic Monetary Union adopted the "Euro" as their
official currency. Other EU member countries may convert to the Euro at
a later date. As of January 1, 1999, governments in participating
countries are issuing debt and redenominate existing debt in Euros;
corporations may choose to issue stocks or bonds in Euros or national
currency. The new European Central Bank, (the "ECB") will assume
responsibility for a uniform monetary policy in participating
countries. Euro conversion risks that could affect a fund's foreign
investments include: (1) the readiness of Euro payment, clearing, and
other operational systems; (2) the legal treatment of debt instruments
and financial contracts in existing national currencies rather than the
Euro; (3) exchange-rate fluctuations between the Euro and non-Euro
currencies during the transition period of January 1, 1999 through
December 31, 2001 and beyond; (4) potential U.S. tax issues with
respect to fund securities; and (5) the ECB's abilities to manage
monetary policies among the participating countries.
/bullet/ DIFFERING ACCOUNTING AND REPORTING PRACTICES. Foreign tax laws are
different, as are laws, practices and standards for accounting,
auditing and reporting data to investors.
/bullet/ LESS INFORMATION AVAILABLE TO THE PUBLIC. Foreign companies usually
make far less information available to the public.
/bullet/ LESS REGULATION. Securities regulations in many foreign countries are
more lax than in the U.S.
/bullet/ More complex negotiations. Because of differing business and legal
procedures, the fund might find it hard to enforce obligations or
negotiate favorable brokerage commission rates.
/bullet/ LESS LIQUIDITY/MORE VOLATILITY. Some foreign securities are harder to
convert to cash than U.S. securities,and their prices may fluctuate
more dramatically.
/bullet/ SETTLEMENT DELAYS. "Settlement" is the process of completing a
securities transaction. In many countries, this process takes longer
than it does in the U.S.
/bullet/ HIGHER CUSTODIAL CHARGES. Fees charged by the fund's custodian for
holding shares are higher for foreign securities than those for
domestic securities.
/bullet/ VULNERABILITY TO SEIZURE AND TAXES. Some governments can seize assets.
They may also limit movement of assets from the country. Fund interest,
40
<PAGE>
dividends and capital gains may be subject to foreign withholding
taxes.
/bullet/ POLITICAL INSTABILITY AND SMALL MARKETS. Developing countries
can be politically unstable. Economies can be dominated by a few
industries, and markets may trade a small number of securities.
Regulation of banks and capital markets can be weak.
/bullet/ DIFFERENT MARKET TRADING DAYS. Foreign markets may not be open for
trading as U.S. markets are and asset values can change before your
transaction occurs.
/bullet/ HEDGING. A fund may enter into forward currency contracts to
hedge against declines in the value of securities denominated in, or
whose value is tied to, a currency other than the U.S. dollar or to
reduce the impact of currency fluctuation on purchases, and sales of
such securities.
/bullet/ EMERGING MARKETS RISK. Investing in the securities of issuers located
in or principally doing business in emerging markets bear FOREIGN
EXPOSURE RISKS as discussed above. In addition, the risks associated
with investing in emerging markets are often greater than investing in
developed foreign markets. Specifically, the economic structures in
emerging markets countries are less diverse and mature than those in
developed countries, and their political systems are less stable.
Investments in emerging markets countries may be affected by national
policies that restrict foreign investments. Emerging markest countries
may have less developed legal structures, and the small size of their
securities markets and low trading volumes can make investments
illiquid and more volatile than investments in developed countries. As
a result, a fund investing in emerging market countries may be required
to establish special custody or other arrangements before investing.
[WARNING SIGN ICON]
INVESTING IN FUTURES, OPTIONS AND DERIVATIVES. Besides conventional securities,
your fund may seek to increase returns by investing in financial contracts
related to its primary investments. Such contracts involve additional risks and
costs. Risks include:
/bullet/ INACCURATE MARKET PREDICTIONS. If the sub-adviser is wrong in its
expectation, for example, with respect to interest rates, securities
prices or currency markets, the contracts could produce losses instead
of gains.
/bullet/ PRICES MAY NOT MATCH. Movements in the price of the financial contracts
may be used to offset movements in the price of other securities you
own. If those prices don't correlate or match closely, the benefits of
the transaction might be diminished.
/bullet/ ILLIQUID MARKETS. If there's no market for the contracts, the fund may
not be able to control losses.
/bullet/ TAX CONSEQUENCES. Sometimes the possibility of incurring high taxes on
a transaction may delay closing out a position and limit the gains it
would have produced.
[WARNING SIGN ICON]
INVESTING IN TAX-EXEMPT SECURITIES. Some municipal obligations pay interest
that, while tax-exempt, may be considered a "preference item" for determining
the Federal alternative minimum tax. This may result in your paying more tax
than you would have otherwise. Also, Congress periodically threatens to limit or
do away with the tax exemption or municipal obligations. If that happened, it
would substantially reduce the value of your fund's assets.
[WARNING SIGN ICON]
INVESTING IN SPECIAL SITUATIONS. Each fund may invest in "special situations"
from time to time. Special situations arise when, in the opinion of a fund
manager, a company's securities may be recognized, then increase considerably in
price, due to:
/bullet/ A NEW PRODUCT OR PROCESS
/bullet/ A MANAGEMENT CHANGE
/bullet/ A TECHNOLOGICAL BREAKTHROUGH
/bullet/ AN EXTRAORDINARY CORPORATE EVENT
/bullet/ A TEMPORARY IMBALANCE IN THE SUPPLY OF, AND DEMAND FOR, THE SECURITIES
OF AN ISSUER
Investing in a special situation carries an additional risk of loss if the
expected development does not happen or does not attract the expected attention.
The impact of special situation investing to a fund will depend on the size of
the fund's investment in a situation.
[WARNING SIGN ICON]
PORTFOLIO TURNOVER. A fund may engage in a significant number of short-term
transactions, which may lower fund performance. High turnover rate will not
limit a manager's ability to buy or sell securities for these funds, although
certain tax rules may restrict a fund's ability to sell securities when the
security has been held for less than three months. Increased turnover (100% or
more) results in higher brokerage costs or mark-up charges for a fund. The funds
ultimately pass these charges on to shareholders. Short-term trading may also
result in short-term capital gains, which are taxed as ordinary income to
shareholders. IDEX Alger Aggressive Growth, IDEX JCC Capital Appreciation and
IDEX C.A.S.E. Growth had turnover rates greater than 100% for the fiscal year
ended October 31, 1998.
41
<PAGE>
THIS PAGE INTENTIONALLY LEFT BLANK
42
<PAGE>
[QUESTION MARK ICON] HOW THE IDEX FUNDS ARE MANAGED AND ORGANIZED
IDEX Mutual Funds is run by a Board of Trustees. The assets of each fund are
managed by an investment adviser, who in turn selects sub-advisers, who have
hired Fund managers. All such advisers to the funds are supervised by the Board
of Trustees. You can find information about the Trustees and officers of the
Fund in the SAI.
IDEX MANAGEMENT, INC. (IMI), located at 570 Carillon Parkway, St. Petersburg,
Florida 33716, serves as INVESTMENT ADVISER to the Fund.
The Investment Adviser hires sub-advisers to furnish investment advice and
recommendations and has entered into Investment Counsel Agreements with each
SUB-ADVISER. The Investment Adviser also supervises the sub-advisers' buying
and selling of securities and administration of the funds. For these services,
it is paid an ADVISORY FEE. This fee is based on the average daily net assets of
each fund, and is paid at the rates shown in the table below.
IMI is a wholly-owned direct subsidiary of AUSA Holding Company ("AUSA"). AUSA
is a holding company which is wholly-owned by AEGON USA, Inc. ("AEGON USA"), a
financial services holding company whose primary emphasis is on life and health
insurance, and annuity and investment products. AEGON USA is a wholly-owned
indirect subsidiary of AEGON nv, a Netherlands corporation and publicly traded
international insurance group.
Here is a listing of the sub-advisers and the funds they manage:
- ----------------------------------------------------------------
SUB-ADVISER FUND NAME
Alger IDEX Alger Aggressive Growth
SEIM IDEX GE/Scottish Equitable
International Equity
GEIM IDEX GE/Scottish Equitable
International Equity
Janus IDEX JCC Capital Appreciation
IDEX JCC Global
IDEX JCC Growth
IDEX JCC Balanced
IDEX JCC Flexible Income
C.A.S.E. IDEX C.A.S.E. Growth
NWQ IDEX NWQ Value Equity
Luther King IDEX LKCM Strategic Total Return
Dean IDEX Dean Asset Allocation
AIMI IDEX AEGON Income Plus
IDEX AEGON Tax Exempt
T. Rowe Price IDEX T. Rowe Price Dividend Growth
IDEX T. Rowe Price Small Cap
SBAM IDEX Salomon All Cap
GSAM IDEX Goldman Sachs Growth
Pilgrim IDEX Pilgrim Baxter Mid Cap Growth
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------------
ADVISORY FEE SCHEDULE-ANNUAL RATES
- ---------------------------------------------------------------------------------------------------------------------------------
JCC* JCC** AEGON AEGON
Capital JCC JCC* JCC* Flexible Income Tax
Average Daily Net Assets Appreciation Global Growth Balanced Income Plus Exempt
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
First $750 million 1.00% 1.00% 1.00% 1.00% N/A 0.60% 0.60%
- ---------------------------------------------------------------------------------------------------------------------------------
the next $250 million 0.90% 0.90% 0.90% 0.90% N/A 0.60% 0.60%
- ---------------------------------------------------------------------------------------------------------------------------------
over $1 billion 0.85% 0.85% 0.85% 0.85% N/A 0.60% 0.60%
- ---------------------------------------------------------------------------------------------------------------------------------
First $100 million 0.90%
- ---------------------------------------------------------------------------------------------------------------------------------
the next $150 million 0.80%
- ---------------------------------------------------------------------------------------------------------------------------------
over $250 million 0.70%
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
* IMI has agreed to waive a portion of its advisory fee through 6/30/2000 for
this fund as follows:0.0250% of average daily net assets from $100 - 500 million
(net 0.9750%); 0.0750% of assets from $500 - 750 million (net 0.9250%); 0.0250%
of assets from $750 million - $1 billion (net 0.8750%); and 0.0250% of assets
above $1 billion (net 0.8250%).
** For IDEX JCC Flexible Income, IMI has agreed to waive a portion of its
advisory fee through 6/30/2000 as follows: 0.0250% of the first $100 million of
average daily net assets (net 0.8750%); 0.0250% of assets from $100 - $250
million (net 0.7750%); and 0.0250% of assets above $250 million (net 0.6750%).
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------
T. Rowe Price Pilgrim Baxter Alger
Average Daily Dividend T. Rowe Price Salomon Goldman Sachs Mid Cap Aggressive
Net Assets Growth Small Cap All Cap Growth Growth Growth
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
First $500 million 0.80% 0.80% 0.80% 0.80% 0.80% 0.80%
- ----------------------------------------------------------------------------------------------------------------------------
Over $500 million 0.70% 0.70% 0.70% 0.70% 0.70% 0.70%
- ----------------------------------------------------------------------------------------------------------------------------
GE/Scottish
Equitable NWQ LKCM
Average Daily International C.A.S.E. Value Strategic Dean
Net Assets Equity Growth Equity Total Return Asset Allocation
- -----------------------------------------------------------------------------------------------------------------
First $500 million 0.80% 0.80% 0.80% 0.80% 0.80%
- -----------------------------------------------------------------------------------------------------------------
over $500 million 0.70% 0.70% 0.70% 0.70% 0.70%
- -----------------------------------------------------------------------------------------------------------------
</TABLE>
43
<PAGE>
Day-to-day management of the investments in each fund is the responsibility of
the fund manager. The fund managers for IDEX Mutual Funds are:
IDEX T. ROWE PRICE SMALL CAP
RICHARD T. WHITNEY, CFA, has managed this fund since inception and heads the
Investment Team for this Fund. He joined T. Rowe Price in 1985.
IDEX JCC CAPITAL APPRECIATION
JAMES P. GOFF has managed this fund since its inception. He joined Janus in
1988.
IDEX PILGRIM BAXTER MID CAP GROWTH
JEFFREY A. WRONA, CFA, has managed this fund since inception. Prior to joining
Pilgrim in 1997, he was a senior portfolio manager at Munder Capital Management.
IDEX ALGER AGGRESSIVE GROWTH
DAVID D. ALGER has been employed by Alger since 1971 and has served as president
since 1995. He has managed this fund since inception.
DAVID HYUN has served as co-manager of this fund since February 1998. He has
been employed by Alger as a senior research analyst since 1991 and a portfolio
manager since 1997.
IDEX GE/SCOTTISH EQUITABLE INTERNATIONAL EQUITY
At SEIM, investment strategy is formulated by the Investment Strategy Group.
RUSSELL HOGAN leads the investment strategy team. Mr. Hogan is the Investment
Director of Scottish Equitable plc, parent company of SEIM. He oversees all
aspects of asset management. He has been with SEIM for 14 years and has been the
team leader since the fund's inception.
At GEIM, RALPH R. LAYMAN is a Director and executive vice president and leads a
team of portfolio managers. Mr. Layman has served in that capacity since the
fund's inception. Mr. Layman joined GEIM in 1991 as executive vice president for
international investments.
IDEX JCC GLOBAL
HELEN YOUNG HAYES has been employed by Janus since 1987 and has managed this
fund since its inception.
IDEX SALOMON ALL CAP
ROSS S. MARGOLIES, has managed this fund since inception. Mr. Margolies joined
Salomon in 1992.
IDEX JCC Growth
SCOTT W. SCHOELZEL AND EDWARD KEELY serve as co-managers of this fund. Mr.
Schoelzel has managed this fund since January 1996. Before that, he was
co-manager of this fund since 1995. He has been employed by Janus since 1994.
From 1991 to 1993, Mr. Schoelzel was a portfolio manager with Founders Asset
Management, Denver, CO.
Mr. Keely has managed this fund since January, 1999. He has been employed by
Janus since 1998. Prior to joining Janus, he was a senior vice president of
investments at Founders.
IDEX GOLDMAN SACHS GROWTH
HERBERT E. EHLERS, has served as head of a six person investment team that has
managed the fund since inception. Prior to joining GSAM in 1997, he was chief
investment officer at Liberty Investment Management, Inc. from 1994-1997.
IDEX C.A.S.E. GROWTH
This fund is managed by a team of professionals, called the Portfolio Management
Committee. WILLIAM E. LANGE is the head manager on this committee. He has been
president of C.A.S.E. since 1984.
IDEX NWQ VALUE EQUITY
EDWARD C. FRIEDEL, CFA, has been the senior manager of this fund since
inception. He has been a managing director and investment strategist with NWQ
since 1983.
IDEX T. ROWE PRICE DIVIDEND GROWTH
WILLIAM J. STROMBERG, CFA, has managed this fund since inception and heads the
Investment Team for this fund. He joined T. Rowe Price in 1986.
IDEX Dean Asset Allocation
JOHN C. RIAZZI, CFA is the senior fund manager of this fund. He joined Dean in
1989.
ARVIND SACHDEVA, CFA is the senior equity strategist of this fund. He joined
Dean in 1993. They have co-managed this fund since inception.
IDEX LKCM STRATEGIC TOTAL RETURN
LUTHER KING,JR., CFA AND SCOT C. HOLLMANN, CFA have co-managed this fund since
its inception. Mr. King has been the president of Luther King since 1979. Mr.
Hollmann has been a vice president since 1983.
IDEX JCC BALANCED
BLAINE P. ROLLINS assisted in the management of this fund from its inception
until February 1996, when he was named fund manager. He has been with Janus
since 1990.
IDEX JCC FLEXIBLE INCOME
RONALD V. SPEAKER has managed this fund since October 1993. He has been with
Janus since 1986. On January 13, 1997, Mr. Speaker settled an SEC administrative
action involving two personal trades that he made in January 1993. Without
admitting or denying the allegations, he agreed to civil monetary penalty,
disgorgement and interest payments totaling $37,199 and a 90-day suspension
starting January 29, 1997.
IDEX AEGON INCOME PLUS
DAVID R. HALFPAP, CFA, has served as manager of this fund since its inception.
He has been employed by AIMI since 1975 and currently is a senior vice
president.
BRADLEY BEMAN, CFA became a co-manager of this fund in August 1998. He joined
AIMI in 1988 after working in various capacities with AEGON USA, Inc. and Life
Investors Insurance Company of America.
CRAIG ENRIGHT, became a co-manager of this fund in August 1998. He joined AIMI
in 1996. His prior work experience includes ten years with the Chicago Board of
Trade, two years with the Securities Corporation of Iowa and five years at
Northern Trust Company.
IDEX AEGON TAX EXEMPT
JARRELL D. FREY, CFA, is a senior securities analyst and has managed this fund
since August 1998. Mr Frey joined AIMI in June 1994. Prior to joining AIMI, Mr.
Frey was employed for five years by Woodmen Accident and Life Company in
Lincoln, NE.
44
<PAGE>
SHAREHOLDER INFORMATION
[QUESTION MARK ICON] OPENING AN ACCOUNT
If you are opening an account through an IDEX representative, he or she can
assist you with all phases of your investment.
If you are investing through an authorized dealer, the dealer is responsible for
opening your account and providing your taxpayer ID number. If you already have
an IDEX account, you do not need additional documentation.
CHOOSING A SHARE CLASS
The Fund offers three share classes, each with its own sales charge and expense
structure. (An additional class, Class T, is offered through IDEX JCC Growth but
Class T shares are not available to new investors.) Also, effective March 1,
1999, Class C shares become Class M shares. They have an initial sales charge of
1.00% and a deferred sales charge of 1.00% if you sell within 18 months of
purchase. The sales charges only apply to shares purchased after February 28,
1999.
If you are investing a large amount and plan to hold your shares for a long
period, Class A shares may make the most sense for you. If you are investing a
lesser amount, you may want to consider Class B shares (if you plan to invest
for a period of at least 5 years) or Class M shares (if you plan to invest for a
period less than 5 years).
Because all of your future investments in your account will be in the same share
class you designate when opening an account, you should make this decision
carefully. Your financial professional can help you choose the share class that
makes the best sense for you.
IDEX may, at any time and in its sole discretion, add, delete, or change the
sales charges for any share class.
CLASS A SHARES - FRONT LOAD
With Class A shares, you pay an initial sales charge only when you buy shares.
(The offering price includes the sales charge.)
If you are investing $1 million or more (either as a lump sum or through any of
the methods described above), you can purchase Class A shares without any sales
charge. However, if you redeem any of those shares within the first 24 months
after buying them, you will pay a 1% redemption charge, unless they were
purchased through a qualified retirement plan.
Also, IDEX will treat Class A share purchases in an amount of less than
$1,000,000 by defined contribution plans, other than 403(b) plans, that are
sponsored by employers with 100 or more eligible employees as if such purchases
were equal to an amount more than $1,000,000. Such purchases may be subject to a
contingent deferred sales charge of 1% on shares redeemed within one year of the
date of purchase.
CLASS B SHARES - BACK LOAD
Class B shares are sold in amounts up to $500,000.With Class B shares, you pay
no initial sales charge when you invest, but you are charged a "contingent
deferred sales charge" (CDSC) when you sell shares you have held for six years
or less, as described in the table on page 46.
Class B shares automatically convert to Class A shares after 8 years, lowering
annual expenses from that time on.
CLASS M SHARES
Class M shares are sold in amounts up to $1,000,000. With Class M shares, you
pay an initial sales charge of 1.00% based on offering price. (The offering
price includes the sales charge.) There are distribution and service fees of
0.90% per year. If you redeem within 18 months from the date of purchase, you
may incur a CDSC of 1.00%.
CONTINGENT DEFERRED SALES CHARGE
Class B and Class M shares are subject to a CDSC.
- --------------------------------------------------------------------------------
CLASS A SHARES -FRONT LOAD
- --------------------------------------------------------------------------------
/bullet/ Initial sales charge of 5.50% or less for all funds except IDEX JCC
Flexible Income, IDEX AEGON Income Plus, and IDEX AEGON Tax Exempt
which have a sales charge of 4.75%; see table regarding Class A Share
Quantity Discounts Table.
/bullet/ Discounts of sales charge for larger investments
/bullet/ Distribution and service 12b-1 fees of 0.35%
/bullet/ Lower annual expenses than Class B or M shares due to lower
distribution and service fees of 0.35%
- --------------------------------------------------------------------------------
CLASS B SHARES - BACK LOAD
- --------------------------------------------------------------------------------
/bullet/ No up-front sales charge
/bullet/ Deferred sales charge of 5% or less on shares you sell within 6 years
(see deferred sales charge table)
/bullet/ 12b-1 distribution and service fees of 1.00%
/bullet/ Automatic conversion to Class A shares after 8 years, reducing future
annual expenses
- --------------------------------------------------------------------------------
CLASS M SHARES
- --------------------------------------------------------------------------------
/bullet/ Initial sales charge of 1%
/bullet/ Distribution and service 12b-1 fees of 0.90% per year (except for the
IDEX AEGON Tax Exempt which the distribution and service fee is
0.60%)
/bullet/ Deferred sales charge of 1% if you sell within 18 months of purchase
/bullet/ No conversion to Class A shares after 8 years, so annual expenses do
not decrease
- --------------------------------------------------------------------------------
CLASS T SHARES (closed to new investors)
/bullet/ Initial sales charge of 8.5% or less
/bullet/ No distribution and service 12b-1 fees
/bullet/ Sales charge percentage can be reduced in the same four ways as Class
A shares (see Class A Share Quantity Discounts Table)
- --------------------------------------------------------------------------------
45
<PAGE>
Dividends and capital gains are not subject to the sales charge. There is no
charge on any increase in the value of your shares. To ensure that you pay the
lowest CDSC possible, IDEX will always use the shares with the lowest CDSC to
fill your redemption requests. If your shares are worth less than when you
bought them, the charge will be assessed on their current, lower value. In some
cases, the sales charge may be waived. See the SAI for complete information
about waivers.
CLASS T SHARES (IDEX JCC GROWTH ONLY)
(CLOSED TO NEW INVESTORS)
When you buy Class T shares of IDEX JCC Growth, you pay an up-front sales
charge. You can reduce the sales charge percentage in the same four ways that
are described under Class A shares. Class T shares are not subject to annual
distribution and service fees.
You pay no sales charge when you redeem Class T shares. As with Class A shares,
if you pay no up-front sales charge because you are purchasing $1 million or
more of Class T shares, you will pay a deferred sales charge of 1% if you redeem
any of those shares within the first 24 months after buying them, unless they
were purchased through a qualified retirement plan. The charge is assessed on an
amount equal to the lesser of the then current market value or the original cost
of the shares being redeemed. No sales charge is imposed on net asset value
above the initial purchase.
Waivers of the sale charges are granted under certain conditions. Please see the
SAI for a description of these waivers. Persons eligible to buy Class T shares
at NAV may not impose a sales charge when they re-sell those shares.
NEW ACCOUNT APPLICATION
Fill out the New Account Application form which is included in this prospectus.
IRAs and other retirement accounts require a different application, which you
can request by calling or writing IDEX. You can avoid future inconvenience by
signing up for any services you think you may later use.
Note: On your application, be sure to include your social security number or
taxpayer identification number. If you don't, your account may be subject to
backup withholding, or be closed.
There are many ways that you can pay for your shares (shown below). The minimum
initial purchase is $500 for Class A, B and T Shares, and $1000 for Class M
shares and shares purchased through authorized dealers. Later purchases are at
least $50. Purchases through regular investment plans, like the Automatic
Investment Plan, have no minimum to open an account, but you must invest at
least $50 monthly per account.
CONTINGENT DEFERRED SALES CHARGES - CLASS B SHARES
AS A % OF DOLLAR AMOUNT
YEAR SINCE PURCHASE SUBJECT TO CHANGE
First 5%
Second 4%
Third 3%
Fourth 2%
Fifth and Sixth 1%
Seventh and Later 0%
[Question Mark Icon] HOW TO BUY SHARES
Depending on privileges established on your account, you may buy, sell or
exchange shares in several ways. You may do so in writing, by phone request or
you may access your account through the internet. You may make payments, or
receive payment for your redemptions, via an electronic funds transfer or by
check.
If you are a new investor to IDEX, you must first open an account by mailing a
completed application to IDEX or you may open your account through a securities
dealer that represents IDEX.
- --------------------------------------------------------------------------------
HOW TO BUY SHARES TO OPEN A NEW ACCOUNT (FIRST-TIME IDEX INVESTORS)
- --------------------------------------------------------------------------------
By Mail Send your completed application and check payable
[LETTER BOX ICON] to: Idex Investor Services, Inc. P.O. Box 9015
Clearwater, Florida 33758-9015;For Overnight
Delivery: 570 Carillon Parkway St. Petersburg,
Florida 33716
- --------------------------------------------------------------------------------
Through an Authorized Dealer The dealer is responsible for opening your
[DEALER ICON] account and providing IDEX with your Taxpayer ID
Number. The minimum order from an authorized
dealer is $1000.
- --------------------------------------------------------------------------------
By Automatic Investment Plan Send your completed application, along with a
[CALENDAR ICON] check for your initial investment, payable to
IDEX Investor Services, Inc. P.O. Box 9015,
Clearwater, Florida 33758-9015.
- --------------------------------------------------------------------------------
46
<PAGE>
- --------------------------------------------------------------------------------
HOW TO BUY SHARES TO ADD TO YOUR EXISTING ACCOUNT
- --------------------------------------------------------------------------------
By Check Make your check payable to Idex Investor Services
[CHECK ICON] Inc. and mail it to: P.O. Box 9015 Clearwater, FL
33758-9015; or, for overnight delivery: 570
Carillon Parkway, St. Petersburg, FL 33716.
- --------------------------------------------------------------------------------
By Automatic Investment Plan With an Automatic Investment Plan (AIP), a level
[CALENDAR ICON] dollar amount is invested monthly and payment is
deducted electronically from your bank account.
Call or write IDEX to establish an AIP.
- --------------------------------------------------------------------------------
By Telephone The electronic funds transfer privilege must be
[TELEPHONE ICON] established in advance. You may do so when you
open your account, or you may add this feature to
your existing account. Select "Telephone
Purchase" on the Application or write to IDEX.
Funds can then be transferred electronically from
your bank to IDEX. Call IDEX to invest by phone,
either through our automated touch-tone system
IDEX InTouch/SM/, or by person-to person request.
- --------------------------------------------------------------------------------
Through Authorized Dealers: If your dealer has already established your IDEX
[DEALER ICON] account for you, no additional documentation is
needed. Call your dealer to place your order. The
dealer's bank may charge you for a wire transfer.
(IDEX currently does not charge for this
service.) The Fund must receive your payment
within three business days after your order is
accepted.
- --------------------------------------------------------------------------------
By the Internet You may reqest a transfer of funds from your bank
[PC ICON] account to IDEX. Visit our website at
www.idexfunds.com. Payment will be transferred
from your bank account electronically.
- --------------------------------------------------------------------------------
By Payroll deduction: You may have money transferred regularly from
[WINGED MONEY BAG ICON] your payroll to IDEX. Please instruct your
employer's payroll department to do so. Call IDEX
to establish this deduction.
- --------------------------------------------------------------------------------
[QUESTION MARK ICON] HOW TO SELL SHARES
Your request to sell your shares and receive payment may be affected by:
/bullet/ The privileges or features established on your account
/bullet/ The type of account you have and if there are several account owners
/bullet/ The dollar amount you are requesting
/bullet/ If there have been recent changes made to your account, such as an
address change, or other circumstances that may require written
request or signature guarantees (see "Policies for Selling Shares")
There are several ways to request redemption of your shares:
/bullet/ In writing (by mail or fax)
/bullet/ By internet access to your account(s) at www.idexfunds.com
/bullet/ By telephone request using our touch-tone automated system, IDEX
InTouch/sm/, or by a person-to-person verbal request
- --------------------------------------------------------------------------------
The proceeds of your redemption will be paid by check, or by direct deposit to
your bank account (electronic funds transfer by ACH or Federal Funds Bank Wire),
subject to any restrictions that may be applicable.
47
<PAGE>
- --------------------------------------------------------------------------------
TO RECEIVE PAYMENT BY HOW TO REQUEST YOUR REDEMPTION
- --------------------------------------------------------------------------------
Direct Deposit - ACH (only for Call IDEX to be sure this feature is in place
accounts that are not on your account. Maximum amount per day is
qualified retirement plans) the lesser of your available balance or
[WINGED MONEY BAG ICON] $50,000. REQUEST AN "ACH REDEMPTION" IN
WRITING, OR BY PHONE (AUTOMATED INTOUCH/SM/
OR PERSON-TO-PERSON), OR BY INTERNET ACCESS
TO YOUR ACCOUNT. Payment should usually be
received by your bank account in 3-5 banking
days after your request. There is no charge
by IDEX for this payment option.
- --------------------------------------------------------------------------------
Direct Deposit(electronic Call IDEX to be sure this feature is in place
funds transfer-federal funds on your account. Maximum amount per day is
bank wire) the lesser of your available balance or
[WINGED MONEY BAG ICON] $50,000. Request an "Expedited Redemption" in
writing, or by phone (person-to-person
request). Payment should usually be received
into your bank account the next banking day
after your request. IDEX charges $10 for this
service. Your bank may charge a fee as well.
- --------------------------------------------------------------------------------
Check to the address of record WRITTEN REQUEST:
[CHECK ICON] Send a letter of instruction
to IDEX and include any share certificates
you may have. Specify the fund, account
number, and dollar amount or number of shares
you wish to redeem. Mail to: Idex Investor
Services, Attention: Redemptions. Be sure to
include all account owners' signatures and
any additional documents, as well as a
signature guarantee(s) if required (see
"How to Sell Shares").
TELEPHONE OR INTERNET REQUEST:
If your request is not required to be in
writing (see "How to Sell Shares"),
you may call IDEX and make your request by
automated IDEX InTouch/SM/ system, by
person-to-person, or by accessing your
account on the internet. Maximum amount per
day is the lesser of your available balance
or $50,000.
- --------------------------------------------------------------------------------
Check to another party/address THIS MUST BE REQUESTED IN WRITING, regardless
[CHECK ICON] of amount, with all account owners'
signatures guaranteed. Mail to: Idex Investor
Services, Attention: Redemptions
- --------------------------------------------------------------------------------
Periodic automatic payment (by You can establish a SYSTEMATIC WITHDRAWAL
direct deposit-ACH or check) PLAN (SWP) either at the time you open your
account or at a later date. Call IDEX for
assistance.
- --------------------------------------------------------------------------------
By Exchange No payment to, or from you, is made. You are
[TELEPHONE ICON] buying shares of one fund and selling shares
of another fund (an"exchange
purchase/redemption"). REQUEST AN EXCHANGE IN
WRITING, OR BY PHONE (AUTOMATED IDEX
INTOUCH/SM/ SYSTEM OR PERSON-TO-PERSON), OR
BY INTERNET ACCESS TO YOUR ACCOUNT.
- --------------------------------------------------------------------------------
Through an Authorized Dealer You may redeem your shares through an
[DEALER ICON] authorized dealer that represents IDEX. (They
may impose a service charge.) Contact your
Registered Representative or call IDEX for
assistance.
- --------------------------------------------------------------------------------
48
<PAGE>
HOW TO EXCHANGE SHARES
You can exchange $50 or more of one fund for shares in the same class of another
fund. You may also exchange your shares into any one of the Money Market funds
without a sales charge. Any CDSC will be calculated from the date you bought
your original shares. This means your new shares will be the same age as your
old shares, so your sales charge will not increase because of the exchange.
Prior to making exchanges into a fund that you do not own, read this prospectus
carefully. You can exchange shares over the telephone unless you have declined
the privilege on your application. You can also exchange shares of the same
class automatically at regular intervals, from one fund to another. The
Systematic Exchange is set up similarly to that of a SWP.
MONEY MARKET EXCHANGE PRIVILEGE
You can exchange Class A and T shares for any of the Money Market Funds. You may
exchange Class B and M shares only into the Cash Equivalent Fund ("CEF") Money
Market Portfolio.
SPECIAL RULES FOR CLASS B OR M SHARES IN MONEY MARKET FUND EXCHANGES
When exchanging Class B or M shares for shares of the CEF Money Market Fund, you
will not be charged a CDSC. If you later sell the Class B or M shares of the
CEF, you will be charged the sales charge, but the time that you held those
Class B or M shares of the CEF will not count toward calculating the sales
charge.
There is no fee for exchanges; however, if three or more exchanges occur in a
calendar quarter, a $10 service fee per exchange will be assessed to your
account, on the account from which shares are being exchanged, for each exchange
after three.
SPECIAL SITUATIONS FOR EXCHANGING SHARES
/bullet/ Class T shares may be exchanged for only Class A shares of any IDEX
fund, other than IDEX JCC Growth. Class A shares of all IDEX funds
are subject to distribution and service (12b-1) fees.
/bullet/ You may not exchange other classes of shares of the IDEX funds for
Class T shares.
/bullet/ The Fund reserves the right to modify or terminate the exchange
privilege at any time.
[QUESTION MARK ICON] OTHER ACCOUNT INFORMATION
MINIMUM INITIAL PURCHASE
/bullet/ $500 for Class A, B and T shares; $1,000 for Class M shares;
purchases are a minimum of $50.
IF YOUR CHECK, DRAFT OR ELECTRONIC TRANSFER IS RETURNED UNPAID BY YOUR BANK, THE
FUND MAY CHARGE A $15 FEE.
PRICING OF SHARES
Price is calculated on each day the New York Stock Exchange (NYSE) is open for
business. The share price of each class is calculated by dividing its net assets
less liabilities by the number of its shares outstanding.
If IDEX receives your order by closing time of the NYSE (usually 4 pm ET),
you'll pay or you will receive that day's NAV. If later, it will be priced at
the next day's NAV. Shares prices may change when a fund holds shares in
companies traded on foreign exchanges that are open on days the NYSE is closed.
In determining NAV, portfolio investments are valued at market value.
Investments for which quotations are not readily available are valued at fair
value determined in good faith under the supervision of the Board of Trustees.
CLASS A SALES CHARGE REDUCTIONS AND WAIVERS
YOU CAN LOWER THE SALES CHARGE PERCENTAGE IN FOUR WAYS:
/bullet/ Substantial investments receive lower sales charge rates; see the
table below.
/bullet/ The "right of accumulation" allows you to include your existing Class
A Shares (or Class T shares of IDEX JCC Growth) as part of your
current investments for sales charge purposes.
/bullet/ A "letter of intent" allows you to count all Class A share
investments in an IDEX fund over the next 13 months, as if you were
making them all at once, to qualify for reduced sales charges.
/bullet/ By investing as part of a qualified group.
For a complete description of discounts and how they work, see the SAI.
- --------------------------------------------------------------------------------
CLASS A SHARE QUANTITY DISCOUNTS
(ALL FUNDS EXCEPT IDEX JCC FLEXIBLE INCOME,
IDEX AEGON INCOME PLUS AND IDEX AEGON TAX EXEMPT)
SALES CHARGE AS % SALES CHARGE AS %
AMOUNT OF PURCHASE OF OFFERING PRICE OF AMOUNT INVESTED
- --------------------------------------------------------------------------------
Under $50,000 5.50% 5.82%
$50,000 to under $100,000 4.75% 4.99%
$100,000 to under $250,000 3.50% 3.63%
$250,000 to under $500,000 2.75% 2.83%
$500,000 to under $1,000,000 2.00% 2.04%
$1,000,000 and over 0.00% 0.00%
- --------------------------------------------------------------------------------
CLASS A SHARE QUANTITY DISCOUNTS
(IDEX JCC FLEXIBLE INCOME, IDEX AEGON INCOME
PLUS & IDEX AEGON TAX EXEMPT)
SALES CHARGE AS % SALES CHARGE AS %
AMOUNT OF PURCHASE OF OFFERING PRICE OF AMOUNT INVESTED
- --------------------------------------------------------------------------------
Under $50,000 4.75% 4.99%
$50,000 to under $100,000 4.00% 4.17%
$100,000 to under $250,000 3.50% 3.63%
$250,000 to under $500,000 2.25% 2.30%
$500,000 to under $1,000,000 1.25% 1.27%
$1,000,000 and over 0.00% 0.00%
- --------------------------------------------------------------------------------
49
<PAGE>
MINIMUM ACCOUNT BALANCE
IDEX will provide a 60-day notification to you prior to assessing a minimum
account fee to any account. The following describes the fees assessed to
accounts with low balances:
- --------------------------------------------------------------------------------
ACCOUNT BALANCE FEE ASSESSMENT
- --------------------------------------------------------------------------------
If your balance is below $500 $10 fee assessed every 6 months, until
due to redemptions (Class A, B balance reaches $500 for Class A, B & T and
& T shares)($1,000 for Class M $1,000 for Class T shares
shares)
If your balance is below $250, Your account will be charged a fee, be
due to redemptions liquidated, and any applicable CDSC will be
deducted, and a check will be mailed
- --------------------------------------------------------------------------------
No fees will be charged on:
/bullet/ Accounts opened within the preceding 24 months
/bullet/ Accounts with an active monthly Automatic Investment Plan ($50 minimum
per account)
/bullet/ Accounts owned by individuals which, combined, have a balance of
$10,000 or more
TELEPHONE TRANSACTIONS
The Fund, ISI and IDEX are not liable for complying with telephone instructions
which are believed by the Fund, ISI and IDEX to be genuine. The Fund, ISI and
IDEX will employ reasonable procedures to make sure telephone instructions are
genuine. In situations where the Fund, ISI and IDEX reasonably believe they were
acting on genuine telephone instructions, you bear the risk of loss. These
procedures may include requiring personal identification, providing written
confirmation of transactions, and tape recording conversations. The Fund has the
right to modify the telephone redemption privilege.
Telephone redemption with payment by check is not allowed within 10 days of a
change of registration/address. Call Customer Service or see the SAI for
details. You may redeem up to $50,000 worth of shares by phone and get your
money by direct deposit electronically to a pre-authorized bank account. No fee
is charged. To receive this privilege, complete the appropriate section of the
Application.
WIRE TRANSACTIONS
In most cases, the Fund can send your redemption money via Federal Funds bank
wire. IDEX charges a $10 fee for this service, in addition to any fee your bank
may charge. For more details, call Customer Service or see the SAI.
REINVESTMENT PRIVILEGE
Within a 90 day period after you sell your Class A, B
or M shares, you have the right to "reinvest" your shares in any fund of the
same class. You will not incur a new sales charge by using this privilege within
the allotted time frame. Any CDSC you paid on Class B or M shares will be
credited to your account. You may reinvest the proceeds of a Class B share sale
(less the sales charge) in Class A shares without paying the up-front sales
charge. Send your written request to IDEX along with your check for your
reinvestment privileges.
STATEMENTS AND REPORTS
The Fund will send you a confirmation statement after every transaction that
affects your account balance or registration. If you are enrolled in the
Automatic Investment Plan and invest on a monthly basis, you will receive a
quarterly confirmation. Information about the tax status of income dividends and
capital gains distributions will be mailed to shareholders early each year.
Financial reports for the funds, which include a list of the holdings, will be
mailed twice a year to all shareholders.
A Historical Statement may be ordered for transactions of prior years.
SHARE CERTIFICATES
The majority of shareholders prefer their shares to be recorded on the Fund's
books and no certificates issued.
If you would like certificates representing your shares, call or write IDEX to
request them. You may return share certificates to IDEX for re-deposit at any
time. If your share certificates are lost or stolen, notify IDEX immediately.
There may be a charge for canceling and replacing lost or stolen share
certificates. Remember, if you ask for a certificate for your shares, you will
not be able to redeem or exchange your shares by telephone. You will have to
send your share certificates to IDEX in order to redeem or exchange your shares.
Share certificates can be issued with the following limitations:
50
<PAGE>
/bullet/ No certificates issued for fractional shares
/bullet/ No certificates issued for less than 30 shares, with the exception of
sales or transfers from other funds that have issued you certificates
/bullet/ No certificates issued for retirement plan accounts with Investors
Fiduciary Trust as custodian
/bullet/ Certificates are issued to the owner of the account on file
PERSONAL SECURITIES TRADING
The Fund permits "Access Persons" as defined by Rule 17j-1 under the 1940 Act to
engage in personal securities transactions, subject to the terms of the Code of
Ethics and Insider Trading Policy that has been adopted by the Board of Trustees
of the Fund. Access Persons must use the guidelines established by this Policy
for all personal securities transactions and are subject to certain prohibitions
on personal trading. The Fund's sub-advisers, pursuant to Rule 17j-1 and other
applicable laws, and pursuant to the terms of the Policy, must adopt and enforce
their own Code of Ethics and Insider Trading Policies appropriate to their
particular business needs. Each sub-adviser must report to the Board of Trustees
on a quarterly basis with respect to the administration and enforcement of such
Policy, including any violations thereof which may potentially affect the Fund.
[QUESTION MARK ICON] DISTRIBUTION AND TAXES
Each of our funds intend to elect and qualify as a regulated investment company
under the Internal Revenue Code. As a regulated investment company, a fund will
not be subject to Federal income tax on net investment income and capital gains,
if any, that it distributes to its shareholders.
TAXES ON DISTRIBUTIONS FROM THE FUNDS
The following summary does not apply to:
/bullet/ qualified retirement accounts
/bullet/ tax-exempt investors; or
/bullet/ exempt-interest distributions from IDEX AEGON Tax Exempt
Fund distributions are taxable to you as ordinary income to the extent they are
attributable to the Fund's net investment income, certain net realized foreign
exchange gains, and net short-term capital gains. They are taxable to you as
long-term capital gain (at the Federal rate of 20%) to the extent they are
attributable to the Fund's excess of net long-term capital gains over net
short-term capital losses. The tax status of any distribution is the same
regardless of how long you have been a shareholder of the Fund and whether you
elect to reinvest the distributions in additional fund shares or to take them as
cash. Certain distributions paid by the Fund in January of a given year may be
taxable to shareholders as if they were received on the prior December 31. The
tax status of dividends and distributions for each calendar year will be
detailed in your annual tax statement from the Fund.
DISTRIBUTIONS FROM IDEX AEGON TAX EXEMPT
IDEX AEGON Tax Exempt expects to distribute primarily exempt-interest
dividends. These dividends will be exempt income for federal income tax
purposes, whether received in the form of cash or additional shares. However,
dividends from the fund may not be entirely tax-exempt and any distributions by
the fund of net long-term capital gains will generally be taxable to you as
long-term capital gains. Distributions from the fund may be subject to state and
local taxes.
Your annual statements will provide you with information about the
exempt-interest dividends you have received. You must disclose this information
on your federal tax return. The statement will also report the amount that
relates to private activity bonds which could be subject to the alternative
minimum tax (AMT). If you are subject to the AMT, please consult your tax
adviser regarding the implications of holding shares in IDEX AEGON Tax Exempt.
If you receive Social Security or railroad retirement benefits, please consult
your tax adviser and be aware that exempt-interest dividends will be considered
for the purpose of determining to what extent your benefits will be taxed.
Interest on indebtedness incurred by you to purchase or carry shares of IDEX
AEGON Tax Exempt generally will not be deductible for federal income tax
purposes.
51
<PAGE>
TAXES ON THE SALE OF SHARES
Any sale or exchange or redemption of Fund shares may generate tax liability
(unless you are a tax exempt investor or your investment is in qualified
retirement or other tax-advantaged account.) You will generally recognize
taxable gain or loss on a sale, exchange or redemption of your shares based upon
the difference between your tax basis in the shares and the amount you receive
for them. Any loss recognized on shares held for six months or less will be
treated as long-term capital loss to the extent of any capital gain dividends
that were received with respect to the shares.
If you receive an exempt-interest dividend on shares that are held by you for
six months or less, any loss on the sale or exchange of the shares will be
disallowed to the extent of such dividend amount.
WITHHOLDING TAXES
The Fund will be required to withhold 31% of any reportable income payments made
to a shareholder (which may include dividends, capital gain distributions, and
share redemption proceeds) if the shareholder has not provided an accurate
taxpayer identification number to the Fund in the manner as required by IRS
regulations.
OTHER TAX INFORMATION
This tax discussion is for general information only. In addition to Federal
income taxes, you may be subject to state, local or foreign taxes on payments
received from the funds. More information is provided in the Statement of
Additional Information. You should also consult your own tax adviser for
information regarding all tax consequences applicable to your investments in the
Fund.
PREPARING FOR YEAR 2000
Like all financial service providers, the Fund and the investment adviser
utilize systems that may be affected by Year 2000 transition issues. The Fund
also relies on service providers, including the Fund's custodian and the
sub-advisers, which may be affected. The Fund and the investment adviser have
developed, and are in the process of implementing, a Year 2000 transition plan.
Management of the Fund is in the process of confirming that the service
providers to the Fund are also engaged in similar transition plans.
While the investment adviser and each sub-adviser has made a representation to
Management that each party is implementing a Year 2000 transition plan, the
resources that are being devoted to this effort are substantial and it is
difficult to predict with precision whether the amount of resources ultimately
devoted, or the outcome of these efforts, will have any negative impact on the
Fund or the investment adviser. If systems of the investment adviser,
sub-advisers, or other service providers fail at Year 2000, the Funds could be
unable to process portfolio or shareholder transactions or provide accurate
results to investors.
The Fund and the investment adviser currently anticipate that their systems will
be Year 2000 compliant prior to the end of 1999, but there can be no assurance
that the Fund or investment adviser will be successful, or that interaction with
other service providers will not impair the Fund's or investment advisers'
services in year 2000.
52
<PAGE>
DISTRIBUTION ARRANGEMENTS
[QUESTION MARK ICON] UNDERWRITING AGREEMENT
[DOLLAR SIGN ICON]
IDEX Mutual Funds has an Underwriting Agreement with ISI, a registered broker/
dealer. Under this agreement, ISI underwrites and distributes all three classes
of fund shares and bears the expenses of offering these shares to the public.
The funds pay ISI fees for its services.
Of the distribution and service fees it receives for Class A and B shares, ISI
reallows, or pays, to brokers or dealers who sold them, 0.25% of the average
daily net assets of those shares. In the case of Class M shares, ISI reallows
its entire fee to those sellers.
[DOLLAR SIGN ICON] DISTRIBUTION PLANS
DISTRIBUTION OF CLASS A SHARES. ISI receives the sales fees or loads imposed on
these shares (up to 5.5% of the offering price, which includes the sales load)
and reallows a portion of those fees to the sellers of the shares. ISI also
receives fees under a Rule 12b-1 Plan of Distribution. Under its Plan for Class
A shares, the funds may pay ISI a distribution fee of up to 0.35% annually and a
service fee of 0.25%. Fees are based on the average daily net assets of Class A
shares. However, if the service fees rise, the distribution fee is lowered so
that the total fees payable don't exceed 0.35% annually.
DISTRIBUTION OF CLASS B SHARES. For these shares, the funds may pay ISI an
annual distribution fee of up to 0.75% and an annual service fee of 0.25%.
DISTRIBUTION OF CLASS M SHARES. The fees paid to ISI for these shares may go as
high as for Class B (0.75% and 0.25%), but the total annual fee may not exceed
0.90% of the average daily net assets of the funds.
GROWTH FUND CLASS T SHARES. This class of shares does not have a 12b-1 Plan of
Distribution, and is closed to new shareholders.
THE EFFECT OF RULE 12b-1. Because these funds have a 12b-1 Plan, even though
Class B shares don't carry an up-front sales load, the higher distribution and
service fees payable by those shares may, over time, be higher than the total
fees paid by the owners of A shares. For a complete description of the funds'
12b-1 Plans, see the SAI.
53
<PAGE>
The Financial Highlights table is intended to help you to understand each fund's
performance for as long as it's been operating, or for five years, whichever is
longer. Certain information reflects financial results for a single fund share.
The total returns in the table represent the rate an investor would have earned
(or lost) on an investment in the fund for the period shown, assuming
reinvestment of all dividends and distributions. This information has been
audited by PricewaterhouseCoopers LLP, whose report, along with the Fund's
financial statements, is included in the Annual Report, which is available to
you upon request.
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
Investment Operations Distributions
-------------------------------------------- --------------------------------------
Year or Net Asset Value Net Net Realized From Net From Net
Period Beginning Investment & Unrealized Total Investment Realized Total
Ended of Period Income (Loss) Gain (Loss) Operations Income Capital Gains Distributions
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
IDEX ALGER AGGRESSIVE GROWTH*
Class A 10/31/98 $ 18.77 $ 0.03 $ 4.02 $ 4.05 $ 0.00 $ (0.58) $ (0.58)
10/31/97 15.70 0.05 3.69 3.74 0.00 (0.67) (0.67)
10/31/96 (1) 15.75 (0.01) (0.04) (0.05) 0.00 0.00 0.00
9/30/96 (2) 17.68 (0.15) (0.76) (0.91) 0.00 (1.02) (1.02)
9/30/95 (3) 10.00 (0.14) 7.82 7.68 0.00 0.00 0.00
Class B 10/31/98 18.58 (0.09) 4.02 3.93 0.00 (0.58) (0.58)
10/31/97 15.58 (0.02) 3.69 3.67 0.00 (0.67) (0.67)
10/31/96 (1) 15.63 (0.01) (0.04) (0.05) 0.00 0.00 0.00
9/30/96 (2) 17.64 (0.23) (0.76) (0.99) 0.00 (1.02) (1.02)
Class C 10/31/98 18.61 (0.07) 4.02 3.95 0.00 (0.58) (0.58)
10/31/97 15.60 (0.01) 3.69 3.68 0.00 (0.67) (0.67)
10/31/96 (1) 15.65 (0.01) (0.04) (0.05) 0.00 0.00 0.00
9/30/96 (2) 17.64 (0.21) (0.76) (0.97) 0.00 (1.02) (1.02)
9/30/95 (3) 10.00 (0.18) 7.82 7.64 0.00 0.00 0.00
- -----------------------------------------------------------------------------------------------------------------------------------
IDEX GE/SCOTTISH EQUITABLE
INTERNATIONAL EQUITY*
Class A 10/31/98 (2) 10.57 0.07 0.20 0.27 (0.07) 0.00 (0.07)
10/31/97 (4) 10.00 0.07 0.50 0.57 0.00 0.00 0.00
Class B 10/31/98 (2) 10.52 0.00 0.20 0.20 (0.01) 0.00 (0.01)
10/31/97 (4) 10.00 0.02 0.50 0.52 0.00 0.00 0.00
Class C 10/31/98 (2) 10.53 0.01 0.20 0.21 (0.02) 0.00 (0.02)
10/31/97 (4) 10.00 0.03 0.50 0.53 0.00 0.00 0.00
- -----------------------------------------------------------------------------------------------------------------------------------
IDEX JCC CAPITAL
APPRECIATION*
Class A 10/31/98 15.90 0.01 1.51 1.52 0.00 (0.45) (0.45)
10/31/97 15.49 0.04 0.58 0.62 0.00 (0.21) (0.21)
10/31/96 (1) 15.75 (0.02) (0.24) (0.26) 0.00 0.00 0.00
9/30/96 (2) 13.54 (0.02) 3.12 3.10 (0.07) (0.82) (0.89)
9/30/95 (3) 10.00 (0.03) 3.57 3.54 0.00 0.00 0.00
Class B 10/31/98 15.74 (0.08) 1.51 1.43 0.00 (0.45) (0.45)
10/31/97 15.42 (0.05) 0.58 0.53 0.00 (0.21) (0.21)
10/31/96 (1) 15.69 (0.03) (0.24) (0.27) 0.00 0.00 0.00
9/30/96 13.49 (0.10) 3.12 3.02 0.00 (0.82) (0.82)
Class C 10/31/98 15.77 (0.07) 1.51 1.44 0.00 (0.45) (0.45)
10/31/97 15.43 (0.03) 0.58 0.55 0.00 (0.21) (0.21)
10/31/96 (1) 15.70 (0.03) (0.24) (0.27) 0.00 0.00 0.00
9/30/96 (2) 13.49 (0.08) 3.12 3.04 (0.01) (0.82) (0.83)
9/30/95 (3) 10.00 (0.08) 3.57 3.49 0.00 0.00 0.00
- -----------------------------------------------------------------------------------------------------------------------------------
IDEX JCC GLOBAL*
Class A 10/31/98 (2) 23.74 0.08 2.34 2.42 0.00 (2.07) (2.07)
10/31/97 21.39 0.07 4.38 4.45 0.00 (2.10) (2.10)
10/31/96 (1) 21.40 (0.02) 0.01 (0.01) 0.00 0.00 0.00
9/30/96 17.73 (0.09) 4.38 4.29 0.00 (0.62) (0.62)
9/30/95 15.93 (0.06) 2.42 2.36 0.00 (0.56) (0.56)
Class B 10/31/98 (2) 23.38 (0.03) 2.34 2.31 0.00 (2.07) (2.07)
10/31/97 21.13 (0.03) 4.38 4.35 0.00 (2.10) (2.10)
10/31/96 (1) 21.14 (0.02) 0.01 (0.01) 0.00 0.00 0.00
9/30/96 17.57 (0.19) 4.38 4.19 0.00 (0.62) (0.62)
Class C 10/31/98 (2) 23.30 (0.01) 2.34 2.33 0.00 (2.07) (2.07)
10/31/97 21.03 (0.01) 4.38 4.37 0.00 (2.10) (2.10)
10/31/96 (1) 21.04 (0.02) 0.01 (0.01) 0.00 0.00 0.00
9/30/96 17.46 (0.18) 4.38 4.20 0.00 (0.62) (0.62)
9/30/95 15.74 (0.14) 2.42 2.28 0.00 (0.56) (0.56)
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
*PLEASE SEE NOTES TO FINANCIAL HIGHLIGHTS ON PAGE 62
54
<PAGE>
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS
Ratio of Expenses to Average Net Assets(8)(9)
Year or Net Asset Net Assets ---------------------------------------------
Period Value at End Total at End of Excluding Including
Ended of Period Return(7) Period (000's) Credits Gross Credits
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
IDEX ALGER AGGRESSIVE GROWTH*
Class A 10/31/98 $ 22.24 22.48% $ 46,413 1.85% 2.18% 1.85%
10/31/97 18.77 24.71 31,260 1.85 2.44 1.85
10/31/96 (1) 15.70 (0.32) 21,938 1.85 2.62 1.85
9/30/96 (2) 15.75 (4.91) 22,078 1.85 2.60 1.85
9/30/95 (3) 17.68 76.80 16,747 2.85 3.35 2.85
Class B 10/31/98 21.93 22.04 10,564 2.50 2.83 2.50
10/31/97 18.58 24.47 4,880 2.50 3.09 2.50
10/31/96 (1) 15.58 (0.32) 1,992 2.50 3.27 2.50
9/30/96 (2) 15.63 (5.33) 1,800 2.50 3.25 2.50
Class C 10/31/98 21.98 22.11 5,573 2.40 2.73 2.40
10/31/97 18.61 24.50 3,468 2.40 2.99 2.40
10/31/96 (1) 15.60 (0.32) 2,129 2.40 3.17 2.40
9/30/96 (2) 15.65 (5.22) 2,250 2.40 3.15 2.40
9/30/95 (3) 17.64 76.40 1,736 3.40 3.91 3.40
- -------------------------------------------------------------------------------------------------------------------------------
IDEX GE/SCOTTISH EQUITABLE
INTERNATIONAL EQUITY*
Class A 10/31/98 (2) 10.77 2.58 4,981 2.03 4.22 2.03
10/31/97 (4) 10.57 5.70 3,076 1.70 8.93 1.70
Class B 10/31/98 (2) 10.71 1.89 1,198 2.68 4.87 2.68
10/31/97 (4) 10.52 5.20 589 2.35 9.58 2.35
Class C 10/31/98 (2) 10.72 1.99 397 2.58 4.77 2.58
10/31/97 (4) 10.53 5.30 399 2.25 9.48 2.25
- -------------------------------------------------------------------------------------------------------------------------------
IDEX JCC CAPITAL
APPRECIATION*
Class A 10/31/98 16.97 9.87 23,798 1.85 2.24 1.85
10/31/97 15.90 4.09 20,605 1.85 2.66 1.85
10/31/96 (1) 15.49 (1.59) 19,350 1.85 2.48 1.85
9/30/96 (2) 15.75 24.35 18,713 1.85 2.72 1.85
9/30/95 (3) 13.54 35.40 6,241 2.90 4.17 2.85
Class B 10/31/98 16.72 9.35 3,734 2.50 2.89 2.50
10/31/97 15.74 3.56 2,866 2.50 3.31 2.50
10/31/96 (1) 15.42 (1.66) 2,132 2.50 3.13 2.50
9/30/96 15.69 23.63 2,022 2.50 3.37 2.50
Class C 10/31/98 16.76 9.43 1,382 2.40 2.79 2.40
10/31/97 15.77 3.64 1,751 2.40 3.21 2.40
10/31/96 (1) 15.43 (1.66) 2,243 2.40 3.03 2.40
9/30/96 (2) 15.70 23.81 2,369 2.40 3.27 2.40
9/30/95 (3) 13.49 34.90 2,565 3.45 4.72 3.40
- -------------------------------------------------------------------------------------------------------------------------------
IDEX JCC GLOBAL*
Class A 10/31/98 (2) 24.09 11.30 296,450 1.82 0.00 1.82
10/31/97 23.74 22.72 218,681 1.91 0.00 1.91
10/31/96 (1) 21.39 (0.05) 135,837 2.08 0.00 2.07
9/30/96 21.40 25.04 131,347 2.09 0.00 2.06
9/30/95 17.73 15.47 89,397 2.10 0.00 1.97
Class B 10/31/98 (2) 23.62 10.93 110,630 2.47 0.00 2.47
10/31/97 23.38 22.53 43,951 2.56 0.00 2.56
10/31/96 (1) 21.13 (0.05) 5,966 2.73 0.00 2.72
9/30/96 21.14 24.70 5,000 2.74 0.00 2.71
Class C 10/31/98 (2) 23.56 11.08 63,552 2.37 0.00 2.37
10/31/97 23.30 22.72 27,210 2.46 0.00 2.46
10/31/96 (1) 21.03 (0.05) 8,624 2.63 0.00 2.62
9/30/96 21.04 24.91 8,081 2.64 0.00 2.61
9/30/95 17.46 15.14 3,567 2.65 0.00 2.52
- -------------------------------------------------------------------------------------------------------------------------------
</TABLE>
*PLEASE SEE NOTES TO FINANCIAL HIGHLIGHTS ON PAGE 62
54(a)
<PAGE>
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS
Net Investment
Year or Income (Loss) Portfolio
Period to Average Turnover
Ended (1) Net Assets(9) Rate(10)
- ---------------------------------------------------------------
<S> <C> <C> <C>
IDEX ALGER AGGRESSIVE GROWTH*
Class A 10/31/98 (1.11)% 142.08%
10/31/97 (1.07) 120.96
10/31/96 (1) (1.06) 9.40
9/30/96 (2) (1.15) 127.49
9/30/95 (3) (2.39) 88.28
Class B 10/31/98 (1.76) 142.08
10/31/97 (1.71) 120.96
10/31/96 (1) (1.71) 9.40
9/30/96 (2) (1.80) 127.49
Class C 10/31/98 (1.66) 142.08
10/31/97 (1.62) 120.96
10/31/96 (1) (1.62) 9.40
9/30/96 (2) (1.70) 127.49
9/30/95 (3) (2.94) 88.28
- ---------------------------------------------------------------
IDEX GE/SCOTTISH EQUITABLE
INTERNATIONAL EQUITY*
Class A 10/31/98 (0.21) 50.01
10/31/97 (4) 0.19 21.85
Class B 10/31/98 (0.86) 50.01
10/31/97 (4) (0.45) 21.85
Class C 10/31/98 (0.76) 50.01
10/31/97 (4) (0.35) 21.85
- ---------------------------------------------------------------
IDEX JCC CAPITAL
APPRECIATION*
Class A 10/31/98 (1.37) 136.59
10/31/97 (1.27) 130.48
10/31/96 (1) (1.41) 10.11
9/30/96 (2) (0.35) 160.72
9/30/95 (3) 0.75 262.97
Class B 10/31/98 (2.02) 136.59
10/31/97 (1.92) 130.48
10/31/96 (1) (2.06) 10.11
9/30/96 (1.00) 160.72
Class C 10/31/98 0.07 136.59
10/31/97 (1.82) 130.48
10/31/96 (1) (1.96) 10.11
9/30/96 (2) (0.90) 160.72
9/30/95 (3) 0.20 262.97
- ---------------------------------------------------------------
IDEX JCC GLOBAL*
Class A 10/31/98 (0.45) 87.68
10/31/97 (0.50) 91.02
10/31/96 (1) (1.15) 2.59
9/30/96 (0.67) 97.94
9/30/95 (0.43) 161.48
Class B 10/31/98 (1.10) 87.68
10/31/97 (1.15) 91.02
10/31/96 (1) (1.80) 2.59
9/30/96 (1.32) 97.94
Class C 10/31/98 (1.00) 87.68
10/31/97 (1.05) 91.02
10/31/96 (1) (1.70) 2.59
9/30/96 (1.22) 97.94
9/30/95 (0.98) 161.48
- ---------------------------------------------------------------
</TABLE>
*PLEASE SEE NOTES TO FINANCIAL HIGHLIGHTS ON PAGE 62
54(b)
<PAGE>
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS
Investment Operations Distributions
-------------------------------------------- --------------------------------------
Year or Net Asset Value Net Net Realized From Net From Net
Period Beginning Investment & Unrealized Total Investment Realized Total
Ended of Period Income (Loss) Gain (Loss) Operations Income Capital Gains Distributions
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
IDEX JCC GROWTH*
Class A 10/31/98 $ 25.04 $ (0.02) $ 7.64 $ 7.62 $ 0.00 $ (3.31) $ (3.31)
10/31/97 21.97 (0.02) 3.56 3.54 0.00 (0.47) (0.47)
10/31/96 (1) 22.21 0.00 (0.24) (0.24) 0.00 0.00 0.00
9/30/96 22.84 (0.11) 4.66 4.55 0.00 (5.18) (5.18)
9/30/95 16.78 (0.05) 6.18 6.13 0.00 (0.07) (0.07)
Class B 10/31/98 24.55 (0.25) 7.64 7.39 0.00 (3.31) (3.31)
10/31/97 21.60 (0.14) 3.56 3.42 0.00 (0.47) (0.47)
10/31/96 (1) 21.85 (0.01) (0.24) (0.25) 0.00 0.00 0.00
9/30/96 22.64 (0.27) 4.66 4.39 0.00 (5.18) (5.18)
Class C 10/31/98 24.62 (0.21) 7.64 7.43 0.00 (3.31) (3.31)
10/31/97 21.65 (0.12) 3.56 3.44 0.00 (0.47) (0.47)
10/31/96 (1) 21.91 (0.02) (0.24) (0.26) 0.00 0.00 0.00
9/30/96 22.64 (0.21) 4.66 4.45 0.00 (5.18) (5.18)
9/30/95 16.68 (0.15) 6.18 6.03 0.00 (0.07) (0.07)
Class T 10/31/98 (2) 25.31 0.13 7.64 7.77 (0.03) (3.31) (3.34)
10/31/97 22.17 0.05 3.56 3.61 0.00 (0.47) (0.47)
10/31/96 (3) 22.41 0.00 (0.24) (0.24) 0.00 0.00 0.00
9/30/96 (5) 22.23 0.00 0.18 0.18 0.00 0.00 0.00
- ----------------------------------------------------------------------------------------------------------------------------------
IDEX C.A.S.E. GROWTH*
Class A 10/31/98 12.90 0.03 (1.84) (1.81) 0.00 (0.95) (0.95)
10/31/97 (2) 10.56 (0.01) 2.86 2.85 (0.51) 0.00 (0.51)
10/31/96 (1) 10.46 (0.07) 0.17 0.10 0.00 0.00 0.00
9/30/96 (6) 10.00 0.61 (0.15) 0.46 0.00 0.00 0.00
Class B 10/31/98 12.85 (0.04) (1.84) (1.88) 0.00 (0.95) (0.95)
10/31/97 (2) 10.51 (0.07) 2.86 2.79 (0.45) 0.00 (0.45)
10/31/96 (1) 10.41 (0.07) 0.17 0.10 0.00 0.00 0.00
9/30/96 (6) 10.00 0.56 (0.15) 0.41 0.00 0.00 0.00
Class C 10/31/98 12.86 (0.03) (1.84) (1.87) 0.00 (0.95) (0.95)
10/31/97 (2) 10.52 (0.06) 2.86 2.80 (0.46) 0.00 (0.46)
10/31/96 (1) 10.42 (0.07) 0.17 0.10 0.00 0.00 0.00
9/30/96 (6) 10.00 0.57 (0.15) 0.42 0.00 0.00 0.00
- ----------------------------------------------------------------------------------------------------------------------------------
ICEX NWQ VALUE EQUITY*
Class A 10/31/98 11.71 0.03 (0.61) (0.58) 0.00 (0.04) (0.04)
10/31/97 (4) 10.00 0.02 1.69 1.71 0.00 0.00 0.00
Class B 10/31/98 11.67 (0.04) (0.61) (0.65) 0.00 (0.04) (0.04)
10/31/97 (4) 10.00 (0.02) 1.69 1.67 0.00 0.00 0.00
Class C 10/31/98 11.67 (0.02) (0.61) (0.63) 0.00 (0.04) (0.04)
10/31/97 (4) 10.00 (0.02) 1.69 1.67 0.00 0.00 0.00
- ----------------------------------------------------------------------------------------------------------------------------------
IDEX LKCM STRATEGIC
TOTAL RETURN
Class A 10/31/98 15.91 0.21 0.94 1.15 (0.21) (0.67) (0.88)
10/31/97 13.43 0.20 2.79 2.99 (0.19) (0.32) (0.51)
10/31/96 (1) 13.27 0.01 0.15 0.16 0.00 0.00 0.00
9/30/96 11.74 0.20 1.65 1.85 (0.17) (0.15) (0.32)
9/30/95 (3) 10.00 0.09 1.75 1.84 (0.10) 0.00 (0.10)
Class B 10/31/98 15.89 0.11 0.94 1.05 (0.10) (0.67) (0.77)
10/31/97 13.42 0.10 2.79 2.89 (0.10) (0.32) (0.42)
10/31/96 (1) 13.27 0.00 0.15 0.15 0.00 0.00 0.00
9/30/96 11.73 0.13 1.65 1.78 (0.09) (0.15) (0.24)
Class C 10/31/98 15.90 0.12 0.94 1.06 (0.12) (0.67) (0.79)
10/31/97 13.42 0.12 2.79 2.91 (0.11) (0.32) (0.43)
10/31/96 (1) 13.27 0.00 0.15 0.15 0.00 0.00 0.00
9/30/96 11.73 0.15 1.65 1.80 (0.11) (0.15) (0.26)
9/30/95 (3) 10.00 0.03 1.75 1.78 (0.05) 0.00 (0.05)
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
*PLEASE SEE NOTES TO FINANCIAL HIGHLIGHTS ON PAGE 62
55
<PAGE>
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS
Ratio of Expenses to Average Net Assets(8)(9)
Year or Net Asset Net Assets --------------------------------------------
Period Value at End Total at End of Excluding Including
Ended of Period Return(7) Period (000's) Credits Gross Credits
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
IDEX JCC GROWTH*
Class A 10/31/98 $ 29.35 35.21% $817,749 1.51% 0.00% 1.51%
10/31/97 25.04 16.40 614,544 1.61 0.00 1.61
10/31/96 (1) 21.97 (1.09) 565,032 1.68 0.00 1.68
9/30/96 22.21 22.41 567,564 1.83 0.00 1.82
9/30/95 22.84 36.70 485,935 1.86 0.00 1.84
Class B 10/31/98 28.63 34.96 40,809 2.16 0.00 2.16
10/31/97 24.55 16.11 13,046 2.26 0.00 2.26
10/31/96 (1) 21.60 (1.14) 5,242 2.32 0.00 2.32
9/30/96 21.85 21.87 4,536 2.46 0.00 2.45
Class C 10/31/98 28.74 35.00 58,265 2.06 0.00 2.06
10/31/97 24.62 16.19 14,295 2.16 0.00 2.16
10/31/96 (1) 21.65 (1.19) 11,016 2.23 0.00 2.23
9/30/96 21.91 22.15 11,167 2.34 0.00 2.33
9/30/95 22.64 36.32 5,593 2.41 0.00 2.38
Class T 10/31/98 (1) 29.74 35.53 755,770 1.16 0.00 1.16
10/31/97 25.31 16.54 603,129 1.26 0.00 1.26
10/31/96 (3) 22.17 (1.03) 573,884 1.33 0.00 1.33
9/30/96 (5) 22.41 0.81 585,505 1.18 0.00 1.17
- -------------------------------------------------------------------------------------------------------------------------------
IDEX C.A.S.E. GROWTH*
Class A 10/31/98 10.14 (14.83) 4,284 1.85 2.44 1.85
10/31/97 (2) 12.90 28.31 3,920 1.85 4.62 1.85
10/31/96 (1) 10.56 0.96 1,675 1.85 6.79 1.84
9/30/96 (6) 10.46 4.60 1,455 2.85 5.89 2.85
Class B 10/31/98 10.02 (15.40) 2,460 2.50 3.09 2.50
10/31/97 (2) 12.85 27.62 2,436 2.50 5.27 2.50
10/31/96 (1) 10.51 0.96 1,159 2.50 7.44 2.49
9/30/96 (6) 10.41 4.10 1,100 3.50 6.54 3.50
Class C 10/31/98 10.04 (15.31) 879 2.44 2.99 2.99
10/31/97 (2) 12.86 27.73 2,028 2.40 5.17 2.40
10/31/96 (1) 10.52 0.96 687 2.40 7.34 2.39
9/30/96 (6) 10.42 4.20 613 3.40 6.44 3.40
- -------------------------------------------------------------------------------------------------------------------------------
IDEX NWQ VALUE EQUITY*
Class A 10/31/98 11.09 (4.96) 8,035 1.85 2.51 1.85
10/31/97 (4) 11.71 17.14 5,305 1.50 4.05 1.50
Class B 10/31/98 10.98 (5.55) 5,020 2.50 3.16 2.50
10/31/97 (4) 11.67 16.65 2,850 2.15 4.70 2.15
Class C 10/31/98 11.00 (5.46) 2,013 2.40 3.06 2.40
10/31/97 (4) 11.67 16.73 1,607 2.05 4.60 2.05
- -------------------------------------------------------------------------------------------------------------------------------
IDEX LKCM STRATEGIC
TOTAL RETURN
Class A 10/31/98 16.18 7.43 32,055 1.85 1.92 1.85
10/31/97 15.91 22.80 21,629 1.85 2.28 1.85
10/31/96 (1) 13.43 1.20 11,744 1.85 2.76 1.82
9/30/96 13.27 16.00 11,314 1.85 2.79 1.79
9/30/95 (3) 11.74 18.43 5,167 2.99 4.57 2.85
Class B 10/31/98 16.17 6.74 9,789 2.50 2.57 2.50
10/31/97 15.89 22.03 4,698 2.50 2.93 2.50
10/31/96 (1) 13.42 1.13 1,684 2.50 3.40 2.47
9/30/96 13.27 15.38 1,537 2.50 3.44 2.44
Class C 10/31/98 16.17 6.85 6,977 2.40 2.47 2.40
10/31/97 15.90 22.15 4,332 2.40 2.83 2.40
10/31/96 (1) 13.42 1.13 1,792 2.40 3.30 2.37
9/30/96 13.27 15.49 1,728 2.40 3.34 2.34
9/30/95 (3) 11.73 17.95 281 3.54 5.12 3.40
- -------------------------------------------------------------------------------------------------------------------------------
</TABLE>
*PLEASE SEE NOTES TO FINANCIAL HIGHLIGHTS ON PAGE 62
55(a)
<PAGE>
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS
Net Investment
Year or Income (Loss) Portfolio
Period to Average Turnover
Ended Net Assets(9) Rate(10)
- --------------------------------------------------------------
<S> <C> <C> <C>
IDEX JCC GROWTH*
Class A 10/31/98 (0.55)% 27.19%
10/31/97 (0.10) 91.52
10/31/96 (1) (0.13) 9.40
9/30/96 (0.22) 57.80
9/30/95 (0.26) 123.26
Class B 10/31/98 (1.20) 27.19
10/31/97 (0.75) 91.52
10/31/96 (1) (0.78) 9.40
9/30/96 (0.86) 57.80
Class C 10/31/98 (1.10) 27.19
10/31/97 (0.65) 91.52
10/31/96 (1) (0.68) 9.40
9/30/96 (0.77) 57.80
9/30/95 (0.81) 123.26
Class T 10/31/98 (2) (0.20) 27.19
10/31/97 0.25 91.52
10/31/96 (3) (0.20) 9.40
9/30/96 (5) 0.36 57.80
- --------------------------------------------------------------
IDEX C.A.S.E. GROWTH*
Class A 10/31/98 (0.73) 147.01
10/31/97 (2) (0.34) 183.06
10/31/96 (1) 0.27 20.69
9/30/96 (6) 10.00 654.49
Class B 10/31/98 (1.38) 147.01
10/31/97 (2) (0.99) 183.06
10/31/96 (1) 0.38 20.69
9/30/96 (6) 9.35 654.49
Class C 10/31/98 (1.28) 147.01
10/31/97 (2) (0.89) 183.06
10/31/96 (1) 0.28 20.69
9/30/96 (6) 9.45 654.49
- --------------------------------------------------------------
ICEX NWQ VALUE EQUITY*
Class A 10/31/98 0.00 30.43
10/31/97 (4) 0.38 6.40
Class B 10/31/98 (0.65) 30.43
10/31/97 (4) (0.28) 6.40
Class C 10/31/98 (0.55) 30.43
10/31/97 (4) (0.18) 6.40
- --------------------------------------------------------------
IDEX LKCM STRATEGIC
TOTAL RETURN
Class A 10/31/98 1.30 32.12
10/31/97 1.41 51.44
10/31/96 (1) 1.47 5.50
9/30/96 1.67 40.58
9/30/95 (3) 0.85 34.67
Class B 10/31/98 0.65 32.12
10/31/97 0.76 51.44
10/31/96 (1) 0.82 5.50
9/30/96 1.02 40.58
Class C 10/31/98 0.75 32.12
10/31/97 0.86 51.44
10/31/96 (1) 0.92 5.50
9/30/96 1.12 40.58
9/30/95 (3) 0.30 34.67
- --------------------------------------------------------------
</TABLE>
*PLEASE SEE NOTES TO FINANCIAL HIGHLIGHTS ON PAGE 62
55(b)
<PAGE>
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS
Investment Operations Distributions
-------------------------------------------- --------------------------------------
Year or Net Asset Value Net Net Realized From Net From Net
Period Beginning Investment & Unrealized Total Investment Realized Total
Ended of Period Income (Loss) Gain (Loss) Operations Income Capital Gains Distributions
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
IDEX DEAN ASSET ALLOCATIONS*
Class A 10/31/98 $ 13.19 $ 0.22 $ 0.67 $ 0.89 $ (0.21) $ (0.73) $ (0.94)
10/31/97 11.19 0.19 2.02 2.21 (0.17) (0.04) (0.21)
10/31/96 (1) 11.03 0.02 0.14 0.16 0.00 0.00 0.00
9/30/96 10.00 0.08 1.03 1.11 (0.08) 0.00 (0.08)
Class B 10/31/98 13.18 0.14 0.67 0.81 (0.13) (0.73) (0.86)
10/31/97 11.18 0.11 2.02 2.13 (0.09) (0.04) (0.13)
10/31/96 (1) 11.02 0.02 0.14 0.16 0.00 0.00 0.00
Class C 10/31/98 13.18 0.15 0.67 0.82 (0.14) (0.73) (0.87)
10/31/97 11.18 0.12 2.02 2.14 (0.10) (0.04) (0.14)
10/31/96 (1) 11.03 0.01 0.14 0.15 0.00 0.00 0.00
9/30/96 10.00 0.02 1.03 1.05 (0.02) 0.00 (0.02)
- ----------------------------------------------------------------------------------------------------------------------------------
IDEX JCC BALANCED*
Class A 10/31/98 14.34 0.15 1.76 1.91 (0.15) (1.35) (1.50)
10/31/97 13.58 0.19 2.52 2.71 (0.20) (1.75) (1.95)
10/31/96 (1) 13.47 0.01 0.10 0.11 0.00 0.00 0.00
9/30/96 11.47 0.24 2.25 2.49 (0.21) (0.28) (0.49)
9/30/95 (3) 10.00 0.05 1.47 1.52 (0.05) 0.00 (0.05)
Class B 10/31/98 14.33 0.06 1.76 1.82 (0.06) (1.35) (1.41)
10/31/97 13.56 0.12 2.52 2.64 (0.12) (1.75) (1.87)
10/31/96 (3) 13.46 0.00 0.10 0.10 0.00 0.00 0.00
9/30/96 11.47 0.15 2.25 2.40 (0.13) (0.28) (0.41)
Class C 10/31/98 14.33 0.07 1.76 1.83 (0.07) (1.35) (1.42)
10/31/97 13.57 0.12 2.52 2.64 (0.13) (1.75) (1.88)
10/31/96 (1) 13.46 0.01 0.10 0.11 0.00 0.00 0.00
9/30/96 11.47 0.16 2.25 2.41 (0.14) (0.28) (0.42)
9/30/95 (3) 10.00 0.01 1.47 1.48 (0.01) 0.00 (0.01)
- ----------------------------------------------------------------------------------------------------------------------------------
IDEX JCC FLEXIBLE INCOME*
Class A 10/31/98 9.75 0.61 0.10 0.71 (0.62) 0.00 (0.62)
10/31/97 9.33 0.61 0.42 1.03 (0.61) 0.00 (0.61)
10/31/96 (1) 9.19 0.05 0.14 0.19 (0.05) 0.00 (0.05)
9/30/96 9.17 0.60 0.00 0.60 (0.58) 0.00 (0.58)
9/30/95 8.83 0.61 0.37 0.98 (0.64) 0.00 (0.64)
Class B 10/31/98 9.75 0.54 0.10 0.64 (0.56) 0.00 (0.56)
10/31/97 9.32 0.56 0.42 0.98 (0.55) 0.00 (0.55)
10/31/96 (1) 9.18 0.05 0.14 0.19 (0.05) 0.00 (0.05)
9/30/96 9.17 0.53 0.00 0.53 (0.52) 0.00 (0.52)
Class C 10/31/98 9.75 0.56 0.10 0.66 (0.57) 0.00 (0.57)
10/31/97 9.32 0.57 0.42 0.99 (0.56) 0.00 (0.56)
10/31/96 (1) 9.18 0.05 0.14 0.19 (0.05) 0.00 (0.05)
9/30/96 9.17 0.54 0.00 0.54 (0.53) 0.00 (0.53)
9/30/95 8.83 0.56 0.37 0.93 (0.59) 0.00 (0.59)
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
*PLEASE SEE NOTES TO FINANCIAL HIGHLIGHTS ON PAGE 62
56
<PAGE>
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS
Ratio of Expenses to Average Net Assets(8)(9)
Year or Net Asset Net Assets --------------------------------------------
Period Value at End Total at End of Excluding Including
Ended of Period Return(7) Period (000's) Credits Gross Credits
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
IDEX DEAN ASSET ALLOCATIONS*
Class A 10/31/98 $ 13.14 7.25% $ 15,747 1.85% 1.87% 1.85%
10/31/97 13.19 19.84 12,291 1.85 2.30 1.85
10/31/96 (1) 11.19 1.45 8,396 1.85 2.65 1.85
9/30/96 11.03 11.07 7,401 2.85 3.20 2.85
Class B 10/31/98 13.13 6.56 14,679 2.50 2.52 2.50
10/31/97 13.18 19.08 9,747 2.50 2.95 2.50
10/31/96 (1) 11.18 1.45 5,013 2.50 3.30 2.50
Class C 10/31/98 13.13 6.67 7,342 2.40 2.42 2.40
10/31/97 13.18 19.20 5,088 2.40 2.85 2.40
10/31/96 (1) 11.18 1.36 4,758 2.40 3.20 2.40
9/30/96 11.03 10.50 4,641 3.40 3.75 3.40
- --------------------------------------------------------------------------------------------------------------------------------
IDEX JCC BALANCED*
Class A 10/31/98 14.75 14.69 22,995 1.85 2.04 1.85
10/31/97 14.34 22.96 13,414 1.85 2.88 1.85
10/31/96 (1) 13.58 0.81 8,402 1.85 3.44 1.85
9/30/96 13.47 22.12 8,056 1.85 3.11 1.85
9/30/95 (3) 11.47 15.27 3,670 2.92 4.48 2.85
Class B 10/31/98 14.74 13.97 11,916 2.50 2.69 2.50
10/31/97 14.33 22.19 2,583 2.50 3.53 2.50
10/31/96 (3) 13.56 0.74 878 2.50 4.09 2.50
9/30/96 13.46 21.38 687 2.50 3.76 2.50
Class C 10/31/98 14.74 14.08 4,897 2.40 2.59 2.40
10/31/97 14.33 22.31 1,561 2.40 3.43 2.40
10/31/96 (1) 13.57 0.81 967 2.40 3.99 2.40
9/30/96 13.46 21.49 943 2.40 3.66 2.40
9/30/95 (3) 11.47 14.77 3,365 3.47 5.03 3.40
- --------------------------------------------------------------------------------------------------------------------------------
IDEX JCC FLEXIBLE INCOME*
Class A 10/31/98 9.84 7.43 14,970 1.83 0.00 1.83
10/31/97 9.75 11.53 15,532 1.85 2.40 1.85
10/31/96 (1) 9.33 2.08 17,001 1.85 2.98 1.85
9/30/96 9.19 6.73 17,065 1.85 2.07 1.85
9/30/95 9.17 11.57 19,786 1.87 1.94 1.85
Class B 10/31/98 9.83 6.74 2,387 2.48 0.00 2.48
10/31/97 9.75 10.79 746 2.50 3.05 2.50
10/31/96 (1) 9.32 2.04 522 2.50 3.63 2.50
9/30/96 9.18 5.94 494 2.50 2.72 2.50
Class C 10/31/98 9.84 6.84 2,207 2.38 0.00 2.38
10/31/97 9.75 10.91 928 2.40 2.95 2.40
10/31/96 (1) 9.32 2.04 846 2.40 3.53 2.40
9/30/96 9.18 6.03 883 2.40 2.62 2.40
9/30/95 9.17 10.95 558 2.42 2.49 2.40
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
*PLEASE SEE NOTES TO FINANCIAL HIGHLIGHTS ON PAGE 62
56(a)
<PAGE>
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS
Net Investment
Year or Income (Loss) Portfolio
Period to Average Turnover
Ended Net Assets(9) Rate(10)
- -------------------------------------------------------------
<S> <C> <C> <C>
IDEX DEAN ASSET ALLOCATIONS*
Class A 10/31/98 1.82% 55.45%
10/31/97 1.57 71.63
10/31/96 (1) 1.26 2.38
9/30/96 0.72 56.22
Class B 10/31/98 1.17 55.45
10/31/97 0.92 71.63
10/31/96 (1) 0.61 2.38
Class C 10/31/98 1.27 55.45
10/31/97 1.02 71.63
10/31/96 (1) 0.71 2.38
9/30/96 0.17 56.22
- -------------------------------------------------------------
IDEX JCC BALANCED*
Class A 10/31/98 1.12 61.50
10/31/97 1.29 127.08
10/31/96 (1) 1.84 9.08
9/30/96 1.87 175.78
9/30/95 (3) 0.56 82.48
Class B 10/31/98 0.47 61.50
10/31/97 0.64 127.08
10/31/96 (3) 1.18 9.08
9/30/96 1.22 175.78
Class C 10/31/98 0.57 61.50
10/31/97 0.74 127.08
10/31/96 (1) 1.28 9.08
9/30/96 1.32 175.78
9/30/95 (3) 0.01 82.48
- -------------------------------------------------------------
IDEX JCC FLEXIBLE INCOME*
Class A 10/31/98 6.22 90.63
10/31/97 6.41 135.53
10/31/96 (1) 6.15 16.16
9/30/96 6.46 135.38
9/30/95 7.03 149.58
Class B 10/31/98 5.57 90.63
10/31/97 5.76 135.53
10/31/96 (1) 5.50 16.16
9/30/96 5.81 135.38
Class C 10/31/98 5.67 90.63
10/31/97 5.86 135.53
10/31/96 (1) 5.60 16.16
9/30/96 5.91 135.38
9/30/95 6.48 149.58
- -------------------------------------------------------------
</TABLE>
*PLEASE SEE NOTES TO FINANCIAL HIGHLIGHTS ON PAGE 62
56(b)
<PAGE>
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS
Investment Operations Distributions
-------------------------------------------- --------------------------------------
Year or Net Asset Value Net Net Realized From Net From Net
Period Beginning Investment & Unrealized Total Investment Realized Total
Ended of Period Income (Loss) Gain (Loss) Operations Income Capital Gains Distributions
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
IDEX AEGON INCOME PLUS*
Class A 10/31/98 $ 10.96 $ 0.69 $ (0.30) $ 0.39 $ (0.70) $ (0.22) $ (0.92)
10/31/97 10.61 0.76 0.44 1.20 (0.75) (0.10) (0.85)
10/31/96 (1) 10.41 0.04 0.22 0.26 (0.06) 0.00 (0.06)
9/30/96 10.36 0.72 0.04 0.76 (0.71) 0.00 (0.71)
9/30/95 9.75 0.75 0.71 1.46 (0.75) (0.10) (0.85)
Class B 10/31/98 10.96 0.61 (0.30) 0.31 (0.63) (0.22) (0.85)
10/31/97 10.61 0.69 0.44 1.13 (0.68) (0.10) (0.78)
10/31/96 (1) 10.40 0.05 0.22 0.27 (0.06) 0.00 (0.06)
9/30/96 10.35 0.65 0.04 0.69 (0.64) 0.00 (0.64)
Class C 10/31/98 10.96 0.62 (0.30) 0.32 (0.64) (0.22) (0.86)
10/31/97 10.61 0.70 0.44 1.14 (0.69) (0.10) (0.79)
10/31/96 (1) 10.40 0.05 0.22 0.27 (0.06) 0.00 (0.06)
9/30/96 10.35 0.66 0.04 0.70 (0.65) 0.00 (0.65)
9/30/95 9.74 0.69 0.71 1.40 (0.69) (0.10) (0.79)
- -----------------------------------------------------------------------------------------------------------------------------------
IDEX AEGON TAX EXEMPT*
Class A 10/31/98 11.75 0.48 0.34 0.82 (0.48) (0.15) (0.63)
10/31/97 11.40 0.53 0.43 0.96 (0.53) (0.08) (0.61)
10/31/96 (1) 11.36 0.05 0.04 0.09 (0.05) 0.00 (0.05)
9/30/96 11.34 0.55 0.10 0.65 (0.56) (0.07) (0.63)
9/30/95 11.10 0.55 0.29 0.84 (0.56) (0.04) (0.60)
Class B 10/31/98 11.74 0.41 0.34 0.75 (0.40) (0.15) (0.55)
10/31/97 11.40 0.44 0.43 0.87 (0.45) (0.08) (0.53)
10/31/96 (1) 11.36 0.04 0.04 0.08 (0.04) 0.00 (0.04)
9/30/96 11.34 0.48 0.10 0.58 (0.49) (0.07) (0.56)
Class C 10/31/98 11.75 0.45 0.34 0.79 (0.45) (0.15) (0.60)
10/31/97 11.40 0.50 0.43 0.93 (0.50) (0.08) (0.58)
10/31/96 (1) 11.36 0.04 0.04 0.08 (0.04) 0.00 (0.04)
9/30/96 11.34 0.52 0.10 0.62 (0.53) (0.07) (0.60)
9/30/95 11.10 0.52 0.29 0.81 (0.53) (0.04) (0.57)
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
*PLEASE SEE NOTES TO FINANCIAL HIGHLIGHTS ON PAGE 62
57
<PAGE>
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS
Ratio of Expenses to Average Net Assets(8)(9)
Year or Net Asset Net Assets ----------------------------------------------
Period Value at End Total at End of Excluding Including
Ended of Period Return(7) Period (000's) Credits Gross Credits
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
IDEX AEGON INCOME PLUS*
Class A 10/31/98 $ 10.43 3.54% $ 63,494 1.24% 0.00% 1.24%
10/31/97 10.96 11.86 65,612 1.27 0.00 1.27
10/31/96 (1) 10.61 2.53 66,285 1.33 0.00 1.32
9/30/96 10.41 7.64 65,252 1.33 0.00 1.31
9/30/95 10.36 15.85 68,746 1.29 0.00 1.26
Class B 10/31/98 10.42 2.87 5,041 1.89 0.00 1.89
10/31/97 10.96 11.10 1,761 1.92 0.00 1.92
10/31/96 (1) 10.61 2.59 804 1.98 0.00 1.97
9/30/96 10.40 6.95 774 1.98 0.00 1.96
Class C 10/31/98 10.42 2.97 4,073 1.79 0.00 1.79
10/31/97 10.96 11.22 3,480 1.82 0.00 1.82
10/31/96 (1) 10.61 2.59 2,781 1.88 0.00 1.87
9/30/96 10.40 7.05 2,684 1.88 0.00 1.86
9/30/95 10.35 15.08 1,980 1.84 0.00 1.81
- --------------------------------------------------------------------------------------------------------------------------------
IDEX AEGON TAX EXEMPT*
Class A 10/31/98 11.94 7.19 22,313 1.23 1.27 1.23
10/31/97 11.75 8.68 23,320 1.00 1.63 1.00
10/31/96 (1) 11.40 0.76 24,439 1.00 1.89 1.00
9/30/96 11.36 5.89 24,708 1.00 1.46 1.00
9/30/95 11.34 7.75 27,401 1.02 1.35 1.00
Class B 10/31/98 11.94 6.50 654 1.88 1.92 1.88
10/31/97 11.74 7.93 377 1.65 2.28 1.65
10/31/96 (1) 11.40 0.71 198 1.65 2.54 1.65
9/30/96 11.36 5.21 189 1.65 2.11 1.65
Class C 10/31/98 11.94 6.92 1,607 1.48 1.52 1.48
10/31/97 11.75 8.39 921 1.25 1.88 1.25
10/31/96 (1) 11.40 0.74 939 1.25 2.14 1.25
9/30/96 11.36 5.63 907 1.25 1.71 1.25
9/30/95 11.34 7.48 454 1.27 1.60 1.25
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
*PLEASE SEE NOTES TO FINANCIAL HIGHLIGHTS ON PAGE 62
57(a)
<PAGE>
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS
Net Investment
Year or Income (Loss) Portfolio
Period to Average Turnover
Ended Net Assets(9) Rate(10)
- --------------------------------------------------------------
<S> <C> <C> <C>
IDEX AEGON INCOME PLUS*
Class A 10/31/98 6.38% 53.09%
10/31/97 7.14 62.28
10/31/96 (1) 5.60 1.58
9/30/96 6.89 65.96
9/30/95 7.53 25.07
Class B 10/31/98 5.73 53.09
10/31/97 6.49 62.28
10/31/96 (1) 4.95 1.58
9/30/96 6.24 65.96
Class C 10/31/98 5.83 53.09
10/31/97 6.59 62.28
10/31/96 (1) 5.05 1.58
9/30/96 6.34 65.96
9/30/95 6.98 25.07
- --------------------------------------------------------------
IDEX AEGON TAX EXEMPT*
Class A 10/31/98 4.08 42.42
10/31/97 4.60 71.29
10/31/96 (1) 4.60 3.79
9/30/96 4.88 71.05
9/30/95 4.83 126.48
Class B 10/31/98 3.43 42.42
10/31/97 3.95 71.29
10/31/96 (1) 3.94 3.79
9/30/96 4.23 71.05
Class C 10/31/98 3.83 42.42
10/31/97 4.35 71.29
10/31/96 (1) 4.34 3.79
9/30/96 4.63 71.05
9/30/95 4.58 126.48
- --------------------------------------------------------------
</TABLE>
*PLEASE SEE NOTES TO FINANCIAL HIGHLIGHTS ON PAGE 62
57(b)
<PAGE>
Notes to Financial Highlights
(1) For the month ended October 31, 1996. On October 1, 1996, each fund
changed its fiscal year end from September 30 to October 31.
(2) Distributions from net realized capital gains include distributions in
excess of current net realized capital gains for the IDEX Alger
Aggressive Growth Classes A, B and C, for the period ended 9/30/96, in
the amount of $1.02 and for the IDEX JCC Global Classes A, B and C, for
the period ended 10/31/98 in the amount of $0.17. Dividends from net
investment income include distributions in excess of current net
investment income for the IDEX GE/Scottish Equitable International Equity
Classes A, B and C, for the period ended 10/31/98 in the amount of $0.06,
$0.01 and $0.02, respectively and for the IDEX JCC Capital Appreciation
Classes A and C, for the period ended 9/30/96 in the amount of $.01 and
for the IDEX JCC Growth Class T for the period ended 10/31/98 in the
amount of $0.03 and for the IDEX C.A.S.E. Growth Classes A, B and C, for
the period ended 10/31/97 in the amount of $.08.
(3) From commencement of investment operations, December 2, 1994.
(4) From commencement of investment operations, February 1, 1997.
(5) From commencement of investment operations, September 20, 1996.
(6) From commencement of investment operations, February 1, 1996.
(7) Total return has been calculated for the applicable period without
deduction of a sales load, if any, on an initial purchase for Class A or
Class T Shares. Periods of less than one year are not annualized.
(8) Ratio of expenses to average net assets shows: Excluding Credits (total
expenses less fee waivers and reimbursements by the investment adviser).
Gross (total expenses not taking into account fee waivers and
reimbursements by the investment adviser or affiliated brokerage and
custody earnings credits, if any), including Credits (expenses less fee
waivers and reimbursements by the investment adviser and reduced by
affiliated brokerage and custody earnings credits, if any).
(9) Periods of less than one year are annualized. The ratio of Net Investment
Income (Loss) to Average Net Assets is based upon Net Investment Income
(Loss) prior to certain reclassifications as discussed in Note 1 of the
Notes to the Financial Statements.
(10) Periods of less than one year are not annualized.
58
<PAGE>
ADDITIONAL INFORMATION about
these funds is contained in the
Statement of Additional
Information, dated March 1,
1999, and the Annual Report,
dated October 31, 1998, which
are incorporated by reference
into this prospectus. Other
information about these funds
has been filed with and is
available from the U.S.
Securities and Exchange
Commission. Information about
the funds (including the
Statement of Additional
Information) can be reviewed and
copied at the Securities and
Exchange Commission's Public
Reference Room in Washington,
D.C. Information on the
operation of the public
reference room may be obtained
by calling the Commission at
1-800-SEC-0330. Copies of this
information may be obtained,
upon payment of a duplicating
fee, by writing the Public
Reference Section of the
Commission, Washington, D.C.
20549-6009. Reports and other
information about the funds are
also available on the
Commission's Internet site at
http://www.sec.gov. For more
information about these funds,
you may obtain a copy of the
Statement of Additional
Information or the Annual and
Semi-Annual Reports, without
charge, or to make other
inquiries about these funds,
call or write to IDEX Mutual
Funds at the phone number or
address at the bottom of this
page.
[LOGO]
P.O. Box 9015 /diamond/ Clearwater, FL /diamond/ 33758-9015
Customer Service 1-888-233-IDEX (4339)
Principal Underwriter: InterSecurities, Inc.
File No. 811-4556
www.idexfunds.com
1999 InterSecurities, Inc. ID00835-3/99
<PAGE>
IDEX MUTUAL FUNDS
IDEX T. ROWE PRICE SMALL CAP
IDEX JCC CAPITAL APPRECIATION
IDEX PILGRIM BAXTER MID CAP GROWTH
IDEX ALGER AGGRESSIVE GROWTH
IDEX GE/SCOTTISH EQUITABLE INTERNATIONAL EQUITY
IDEX JCC GLOBAL
IDEX SALOMON ALL CAP
IDEX JCC GROWTH
IDEX GOLDMAN SACHS GROWTH
IDEX C.A.S.E. GROWTH
IDEX NWQ VALUE EQUITY
IDEX T. ROWE PRICE DIVIDEND GROWTH
IDEX DEAN ASSET ALLOCATION
IDEX LKCM STRATEGIC TOTAL RETURN
IDEX JCC BALANCED
IDEX JCC FLEXIBLE INCOME
IDEX AEGON INCOME PLUS
IDEX AEGON TAX EXEMPT
STATEMENT OF ADDITIONAL INFORMATION
MARCH 1, 1999
IDEX MUTUAL FUNDS
570 Carillon Parkway
St. Petersburg, Florida 33716
Customer Service (888) 233-4339 (toll free)
IDEX Alger Aggressive Growth, IDEX GE/Scottish Equitable International Equity,
IDEX JCC Capital Appreciation, IDEX JCC Global, IDEX JCC Growth, IDEX
C.A.S.E. Growth, IDEX NWQ Value Equity, IDEX LKCM Strategic Total Return, IDEX
Dean Asset Allocation, IDEX JCC Balanced, IDEX JCC Flexible Income, IDEX
AEGON Income Plus, IDEX AEGON Tax Exempt, IDEX Goldman Sachs Growth, IDEX T.
Rowe Price Dividend Growth, IDEX Salomon All Cap, IDEX Pilgrim Baxter Mid Cap
Growth and IDEX T. Rowe Price Small Cap are series of IDEX Mutual Funds (the
"Fund"), an open-end management investment company that offers a selection of
investment funds. The Fund is registered under the Investment Company Act of
1940 (the "1940 Act"). All funds, other than the IDEX JCC Capital Appreciation
and IDEX Salomon All Cap are diversified.
This Statement of Additional Information is not a prospectus, and should be read
in conjunction with the Fund's prospectus dated March 1, 1999 which may be
obtained free of charge by writing or calling the Fund at the above address or
telephone number. This Statement of Additional Information ("SAI") contains
additional and more detailed information about the Fund's operations and
activities than that set forth in the prospectus. The Fund's annual report to
shareholders is incorporated by reference into this SAI.
<PAGE>
IDEX MUTUAL FUNDS
STATEMENT OF ADDITIONAL INFORMATION
TABLE OF CONTENTS
Page
-----
INVESTMENT OBJECTIVES .......................................................1
Investment Restrictions, Policies and Practices ............................1
Investment Restrictions of IDEX T. Rowe Price Dividend Growth and
IDEX T. Rowe Price Small Cap .............................................1
Investment Restrictions of IDEX JCC Capital Appreciation
and IDEX JCC Balanced ....................................................2
Investment Restrictions of IDEX Pilgrim Baxter Mid Cap Growth ..............2
Investment Restrictions of IDEX Alger Aggressive Growth ....................3
Investment Restrictions of IDEX GE/Scottish Equitable International Equity .4
Investment Restrictions of IDEX JCC Global .................................6
Investment Restrictions of IDEX Salomon All Cap ............................8
Investment Restrictions of IDEX JCC Growth and
IDEX JCC Flexible Income .................................................8
Investment Restrictions of IDEX Goldman Sachs Growth .......................10
Investment Restrictions of IDEX C.A.S.E. Growth ............................10
Investment Restrictions of IDEX NWQ Value Equity ...........................12
Investment Restrictions of IDEX Dean Asset Allocation ......................13
Investment Restrictions of IDEX LKCM Strategic Total Return ................13
Investment Restrictions of IDEX AEGON Income Plus ..........................15
Investment Restrictions of IDEX AEGON Tax Exempt ...........................16
OTHER POLICIES AND PRACTICES OF THE FUND ....................................19
Futures, Options and Other Derivative Instruments ..........................19
Futures Contracts ..........................................................19
Options on Futures Contracts ...............................................21
Options on Securities ......................................................22
Options on Foreign Currencies ..............................................24
Forward Contracts ..........................................................25
Swaps and Swap-Related Products ............................................26
Euro Instruments ...........................................................27
Special Investment Considerations and Risks ................................27
Additional Risks of Options on Foreign Currencies,
Forward Contracts and Foreign Instruments ................................27
Other Investment Companies .................................................28
Zero Coupon, Pay-In-Kind and Step Coupon Securities ........................28
Income-Producing Securities ................................................29
Lending of Fund Securities .................................................29
Joint Trading Accounts .....................................................30
Illiquid Securities ........................................................30
Repurchase and Reverse Repurchase Agreements ...............................30
Pass-through Securities ....................................................31
High-Yield/High-Risk Bonds .................................................31
Warrants and Rights ........................................................32
U.S. Government Securities .................................................32
Money Market Reserves (IDEX T. Rowe Price Small Cap and IDEX T. Rowe Price
Dividend Growth)
Fund Turnover ..............................................................33
INVESTMENT ADVISORY AND OTHER SERVICES ......................................33
Additional Investment Advisory or Sub-Advisory Services
Provided by the Sub-Advisers .............................................33
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Page
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DISTRIBUTOR .............................................................38
ADMINISTRATIVE SERVICES .................................................38
CUSTODIAN, TRANSFER AGENT AND OTHER AFFILIATES ..........................39
FUND TRANSACTIONS AND BROKERAGE .........................................40
TRUSTEES AND OFFICERS ...................................................42
PURCHASE OF SHARES ......................................................44
DISTRIBUTION PLANS ......................................................46
DISTRIBUTION FEES .......................................................47
NET ASSET VALUE DETERMINATION ...........................................49
DIVIDENDS AND OTHER DISTRIBUTIONS .......................................49
SHAREHOLDER ACCOUNTS ....................................................49
RETIREMENT PLANS ........................................................49
REDEMPTION OF SHARES ....................................................49
TAXES ...................................................................50
PRINCIPAL SHAREHOLDERS ..................................................52
MISCELLANEOUS ...........................................................52
Organization ...........................................................52
Shares of Beneficial Interest ..........................................52
Legal Counsel and Auditors .............................................53
Registration Statement .................................................53
PERFORMANCE INFORMATION .................................................53
FINANCIAL STATEMENTS ....................................................57
APPENDIX A-CERTAIN SECURITIES IN WHICH THE FUND MAY INVEST ..............A-1
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INVESTMENT OBJECTIVES
The prospectus discusses the investment objective of each fund of the IDEX
Mutual Funds, the principal types of securities in which each fund will invest,
and the policies and practices of each fund. The following discussion of
Investment Restrictions, Policies and Practices supplements that set forth in
the prospectus.
There can be no assurance that a fund will, in fact, achieve its objective. A
fund's investment objective may be changed by the Board of Trustees without
shareholder approval. A change in the investment objective of a fund may result
in the fund having an investment objective different from that which the
shareholder deemed appropriate at the time of investment. A fund will not
change its objective without 30 days prior notice to its shareholders, nor will
it charge shareholders an exchange fee or redemption fee after such notice and
prior to the expiration of such 30-day notice period. However, should a
shareholder decide to redeem fund shares because of a change in the objective,
the shareholder may realize a taxable gain or loss.
INVESTMENT RESTRICTIONS, POLICIES AND PRACTICES
As indicated in the prospectus, each fund is subject to certain fundamental
policies and restrictions which as such may not be changed without shareholder
approval. Shareholder approval would be the approval by the lesser of (i) more
than 50% of the outstanding voting securities of a fund, or (ii) 67% or more of
the voting securities present at a meeting if the holders of more than 50% of
the outstanding voting securities of a fund are present or represented by
proxy.
INVESTMENT RESTRICTIONS OF IDEX T. ROWE PRICE SMALL CAP AND
IDEX T. ROWE PRICE DIVIDEND GROWTH
IDEX T. Rowe Price Small Cap and IDEX T. Rowe Price Dividend Growth each may
not, as a matter of fundamental policy:
1. With respect to 75% of the fund's total assets, purchase the
securities of any one issuer (other than Government securities as defined in
the 1940 Act) if immediately after and as a result of such purchase (a) the
value of the holdings of the fund in the securities of such issuer exceeds 5%
of the value of the fund's total assets, or (b) the Fund owns more than 10% of
the outstanding voting securities of any one class of securities of such
issuer.
2. Borrow money except for temporary or emergency purposes (not for
leveraging or investment) in an amount exceeding 33 1/3% of the value of the
fund's total assets (including amount borrowed) less liabilities (other than
borrowings). Any borrowings that exceed 33 1/3% of the value of the fund's total
assets by reason of a decline in net assets will be reduced within three
business days to the extent necessary to comply with the 33 1/3% limitation.
This policy shall not prohibit reverse repurchase agreements or deposits of
assets to margin or guarantee positions in futures, options, swaps or forward
contracts, or the segregation of assets in connection with such contracts.
3. Purchase or sell physical commodities (but this shall not prevent the
fund from entering into future contracts and options thereon).
4. Invest more than 25% of the fund's total assets in the securities of
issuers primarily engaged in the same industry. Utilities will be divided
according to their services; for example, gas, gas transmission, electric and
telephone, and each will be considered a separate industry for purposes of this
restriction, provided that there shall be no limitation on the purchase of
obligations issued or guaranteed by the U.S. Government or its agencies or
instrumentalities, or of certificates of deposit.
5. Make loans, although the funds may lend fund securities provided that
the aggregate of such loans do not exceed 33 1/3% of the value of the fund's
total assets. The fund may purchase money market securities, enter into
repurchase agreements and acquire publicly distributed or privately placed debt
securities, and purchase debt.
6. Purchase or sell real estate (but this shall not prevent the fund from
investing in securities or other instruments backed by real estate, including
mortgage-backed securities, or securities of companies engaged in the real
estate business).
7. Issue senior securities, except as permitted by the 1940 Act.
8. Underwrite securities issued by other persons, except to the extent
that the fund may be deemed to be an underwriter within the meaning of the
Securities Act of 1933 in connection with the purchase and sale of its fund
securities in the ordinary course of pursuing its investment objective.
Furthermore, the funds have adopted the following non-fundamental restrictions
which may be changed by the Board of Trustees of the funds without shareholder
approval:
(A) A fund may not purchase additional securities when money borrowed
exceeds 5% of its total assets.
(B) A fund may not purchase a futures contract or an option thereon,
if, with respect to positions in futures or options on futures which do not
represent bona fide hedging, the aggregate initial margin and premiums on such
options would exceed 5% of the fund's net asset value.
(C) A fund may not invest more than 15% of its net assets in illiquid
securities. This does not include securities eligible for resale pursuant to
Rule 144A under the Securities Act of 1933 or any other securities as to which
a determination as to liquidity has been made pursuant to guidelines adopted by
the Board of Trustees, as permitted under the 1940 Act.
(D) A fund may not invest in companies for the purpose of exercising
control or management.
(E) A fund may not purchase securities of open-end or closed-end
investment companies except (i) in compliance with the Investment Company Act of
1940; or (ii) securities of the T. Rowe Price Reserve Investment or Government
Reserve Investment Funds.
(F) A fund may not purchase securities on margin, except (i)for use of
short-term credit necessary for clearance of purchases of fund securities; and
(ii) it may make margin deposits in connection with futures contracts or other
permissible investments.
(G) A fund may not mortgage, pledge, hypothecate or, in any manner,
transfer any security owned by the fund as security for indebtedness except as
may be necessary in connection with permissible borrowings or investments and
then such mortgaging, pledging or hypothecating may not exceed 33 1/3% of the
fund's total assets at the time of borrowing or investment.
(H) A fund may not sell securities short, except short sales "against
the box."
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INVESTMENT RESTRICITONS OF
IDEX JCC CAPITAL APPRECIATION
AND IDEX JCC BALANCED
(FORMERLY CAPITAL APPRECIATION PORTFOLIO AND
BALANCED PORTFOLIO)
IDEX JCC Capital Appreciation and IDEX JCC Balanced each may not, as a matter of
fundamental policy:
1. With respect to 75% of its total assets in the case of IDEX JCC
Balanced, and 50% of its total assets in the case of IDEX JCC Capital
Appreciation, purchase the securities of any one issuer (except cash items and
"government securities" as defined under the 1940 Act, if immediately after and
as a result of such purchase the value of the holdings of the fund in the
securities of such issuer exceeds 5% of the value of such fund's total assets or
the fund owns more than 10% of the outstanding voting securities of such issuer.
With respect to the remaining 50% of the value of its total assets, IDEX JCC
Capital Appreciation may invest in the securities of as few as two issuers;
2. Invest more than 25% of the value of its assets in any particular
industry (other than U.S. government securities);
3. Invest directly in real estate or interests in real estate; however, a
fund may own debt or equity securities issued by companies engaged in those
businesses;
4. Purchase or sell physical commodities other than foreign currencies
unless acquired as a result of ownership of securities (but this limitation
shall not prevent a fund from purchasing or selling options, futures, swaps and
forward contracts or from investing in securities or other instruments backed
by physical commodities);
5. Lend any security or make any other loan if, as a result, more than
25% of its total assets would be lent to other parties (but this limitation
does not apply to purchases of commercial paper, debt securities or repurchase
agreements);
6. Act as underwriter of securities issued by others, except to the
extent that a fund may be deemed an underwriter in connection with the
disposition of portfolio securities of that fund; and
7. The fund may borrow money for temporary or emergency purposes (not for
leveraging or investment) in an amount not exceeding 25% of the value of the
fund's total assets (including the amount borrowed) less liabilities (other than
borrowings). If borrowings exceed 25% of the value of the fund's total assets by
reason of a decline in net assets, the fund will reduce its borrowings within
three business days to the extent necessary to comply with the 25% limitation.
This policy shall not prohibit reverse repurchase agreements, or deposits of
assets to margin or guarantee positions in futures, options, swaps or forward
contracts, and the segregation of assets in connection with such contracts.
8. Issue senior securities, except as permitted by the 1940 Act.
Furthermore, the funds have adopted the following non-fundamental investment
restrictions which may be changed by the Board of Trustees without shareholder
approval:
(A) A fund may not: (i) enter into any futures contracts and related
options for purposes other than bona fide hedging transactions within the
meaning of Commodity Futures Trading Commission ("CFTC") regulations if the
aggregate initial margin and premiums required to establish positions in
futures contracts and related options that do not fall within the definition of
bona fide hedging transactions will exceed 5% of the fair market value of a
fund's net assets, after taking into account unrealized profits and unrealized
losses on any such contracts it has entered into; and (ii) enter into any
futures contracts if the aggregate amount of such fund's commitments under
outstanding futures contracts positions of that funds would exceed the market
value of its total assets;
(B) A fund may not sell securities short, unless it owns or has the
right to obtain securities equivalent in kind and amount to the securities sold
short without the payment of any additional consideration therefore, and
provided that transactions in futures, options, swaps and forward contracts are
not deemed to constitute selling securities short;
(C) A fund may not purchase securities on margin, except that a fund
may obtain such short-term credits as are necessary for the clearance of
transactions, and provided that margin payments and other deposits in
connection with transactions in futures, options, contracts, swaps, and forward
contracts, shall not be deemed to constitute purchasing securities on margin;
(D) A fund may not (i) purchase securities of other investment
companies, except in the open market where no commission except the ordinary
broker's commission is paid, or (ii) purchase or retain securities issued by
other open-end investment companies. Limitations (i) and (ii) do not apply to
money market funds or to securities received as dividends, through offers of
exchange, or as a result of consolidation, merger or other reorganization;
(E) A fund may not mortgage or pledge any securities owned or held by
a fund in amounts that exceed, in the aggregate, 15% of that fund's net asset
value, provided that this limitation does not apply to reverse repurchase
agreements, deposits of assets to margin, guarantee positions in futures,
options, swaps or forward contracts or segregation of assets in connection with
such contracts;
(F) A fund may not invest directly in oil, gas or other mineral
development or exploration programs or leases; however, the fund may own debt
or equity securities of companies engaged in those businesses;
(G) A fund may not purchase any security or enter into a repurchase
agreement, if as a result, more than 15% of its net assets would be invested in
repurchase agreements not entitling the holder to payment of principal and
interest within seven days and in securities that are illiquid by virtue of
legal or contractual restrictions on resale or the absence of a readily
available market. The Trustees, or the fund's investment adviser or sub-adviser
acting pursuant to authority delegated by the Trustees, may determine that a
readily available market exists for securities eligible for resale pursuant to
Rule 144A under the 1933 Act, or any successor to such Rule, Section 4(2)
commercial paper and municipal lease obligations. Accordingly, such securities
may not be subject to the foregoing limitation;
(H) A fund may not invest in companies for the purpose of exercising
control or management; and
(I) With respect to IDEX JCC Balanced only, at least 25% of the total
assets of that fund will normally be invested in fixed-income senior securities,
which include corporate debt securities and preferred stock.
INVESTMENT RESTRICTIONS OF
IDEX PILGRIM BAXTER MID CAP GROWTH
IDEX Pilgrim Baxter Mid Cap Growth may not, as a matter of fundamental policy:
1. With respect to 75% of the fund's total assets, purchase the
securities of any one issuer (other than government securities as defined in
the 1940 Act) if immediately after and as a result of such purchase (a) the
value of the holdings of the fund in the securities of such issuer exceeds 5%
of the value of the fund's total assets, or (b) the fund owns more than 10% of
the outstanding voting securities of any one class of securities of such
issuer.
2. Borrow money except for temporary or emergency purposes (not for
leveraging or investment) in an amount exceeding 10% of the value of the fund's
total assets. This borrowing provision is included solely to facilitate the
orderly sale of fund securities to accommodate substantial redemption requests
if they should occur and is not for investment purposes. All borrowings in
excess of 5% of the fund's total assets will be repaid before making
investments.
3. Make loans, except that the fund, in accordance with its investment
objectives and policies, may purchase or hold debt securities, and enter into
repurchase agreements as described in the fund's prospectus and this SAI.
4. Purchase or sell real estate, real estate limited partnership
interests, futures contracts, commodities or commodity contracts, except that
this shall not prevent the fund from (i) investing in readily marketable
securities of issuers which can invest in real estate or commodities,
institutions that issue mortgages, or real estate investment trusts which deal
in real estate or interests therein, pursuant to the fund's investment
objective and policies, and (ii) entering into futures contracts and options
thereon that are listed on a national securities or commodities exchange where,
as a result thereof, no more than 5% of the fund's total assets (taken at
market value at the time of entering into the futures contracts) would be
committed to margin deposits on such futures contracts and premiums paid for
unexpired options on such futures contracts; provided that, in the case of an
option that is "in-the-money" at the time of purchase, the "in-the-money"
amount, as defined under the Commodities Futures Trading Commission
regulations, may be excluded in computing the 5% limit. The fund (as a matter
of operating policy) will utilize only listed futures contracts and options
thereon.
5. Act as an underwriter of securities of other issuers except as it may
be deemed an underwriter in selling a fund security.
6. Issue senior securities, except as permitted by the 1940 Act.
7. Invest more than 25% of the fund's assets in the securities of issuers
primarily engaged in the same industry. Utilities will be divided according to
their services, for example, gas, gas transmission, electric and telephone, and
each will be considered a separate industry for purposes of this restriction.
In addition, there shall be no limitation on the purchase of obligations issued
or guaranteed by the U.S. government or its agencies or instrumentalities, or
of certificates of deposit and bankers' acceptances.
Furthermore, the fund has adopted the following non-fundamental restrictions
which may be changed by the Board of Trustees without shareholder approval:
(A) The fund may not invest in companies for the purpose of exercising
control.
(B) The fund may not pledge, mortgage or hypothecate assets, except (i)
to secure temporary borrowings as permitted by the fund's limitation on
permitted borrowings, or (ii) in connection with permitted transactions
regarding options and futures contracts.
(C) The fund may not invest more than 15% of its net assets in illiquid
securities. This does not include securities eligible for resale pursuant to
Rule 144A under the 1933 Act, or any successor to such Rule, Section 4(2)
commercial paper or any other securities as to which the Board of Trustees has
made a determination as to liquidity, as permitted under the 1940 Act.
(D) The fund may not purchase securities of other investment companies
except as permitted by the 1940 Act and the rules and regulations thereunder.
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<PAGE>
INVESTMENT RESTRICTIONS OF
IDEX ALGER AGGRESSIVE GROWTH
(FORMERLY AGGRESSIVE GROWTH PORTFOLIO)
IDEX Alger Aggressive Growth may not, as a matter of fundamental policy:
1. With respect to 75% of the fund's total assets, purchase the
securities of any one issuer (other than government securities as defined in
the Investment Company Act of 1940, as amended (the "1940 Act")), if
immediately after and as a result of such purchase (a) the value of the
holdings of the fund in the securities of such issuer exceeds 5% of the value
of the fund's total assets, or (b) the fund owns more than 10% of the
outstanding voting securities of any one class of securities of such issuer;
2. Purchase any securities that would cause more than 25% of the value of
the fund's total assets to be invested in the securities of issuers conducting
their principal business activities in the same industry; provided that there
shall be no limit on the purchase of U.S. government securities;
3. Purchase or sell real estate or real estate limited partnerships,
except that the fund may purchase and sell securities secured by real estate,
mortgages or interests therein and securities that are issued by companies that
invest or deal in real estate;
4. Invest in commodities, except that the fund may purchase or sell stock
index futures contracts and related options thereon if thereafter no more than
5% of its total assets are invested in aggregate initial margin and premiums;
5. Make loans to others, except through purchasing qualified debt
obligations, lending fund securities or entering into repurchase agreements;
6. Act as an underwriter of securities issued by others, except to the
extent that it may be deemed an underwriter in connection with the disposition
of its fund securities;
7. Borrow money, except that the fund may borrow from banks for
investment purposes as set forth in the prospectus and may also engage in
reverse repurchase agreements. Immediately after any borrowing, including
reverse repurchase agreements, the Fund will maintain asset coverage of not
less than 300% with respect to all borrowings; and
8. Issue senior securities, except that the fund may borrow from banks
for investment purposes so long as the fund maintains the required coverage.
Furthermore, the fund has adopted the following non-fundamental investment
restrictions which may be changed by the Board of Trustees of the funds without
shareholder approval:
(A) The fund may not sell securities short or purchase securities on
margin, except that the fund may obtain any short-term credit necessary for the
clearance of purchases and sales of securities. These restrictions shall not
apply to transactions involving selling securities "short against the box";
(B) The fund may not pledge, hypothecate, mortgage or otherwise encumber
more than 15% of the value of the fund's total assets except in connection with
borrowings described in number 7 above. These restrictions shall not apply to
transactions involving reverse repurchase agreements or the purchase of
securities subject to firm commitment agreements or on a when-issued basis;
(C) The fund may not invest directly in oil, gas, or other mineral
development or exploration programs or leases; however, the fund may own debt
or equity securities of companies engaged in those businesses;
(D) The fund may not (i) purchase securities of other investment
companies, except in the open market where no commission except the ordinary
broker's commission is paid, or (ii) purchase or retain securities
3
<PAGE>
issued by other open-end investment companies. Limitations (i) and (ii) do not
apply to money market funds or to securities received as dividends, through
offers of exchange, or as a result of consolidation, merger or other
reorganization;
(E) The fund may not invest in companies for the purpose of exercising
control or management; and
(F) The fund may not invest more than 15% of its net assets in illiquid
securities. This does not include securities eligible for resale pursuant to
Rule 144A under the Securities Act of 1933 (the "1933 Act"), or any successor
to such Rule, Section 4(2) commercial paper or any other securities as to which
the Board of Trustees has made a determination as to liquidity, as permitted
under the 1940 Act.
INVESTMENT RESTRICITONS OF
IDEX GE/SCOTTISH EQUITABLE
INTERNATIONAL EQUITY
(FORMERLY INTERNATIONAL EQUITY PORTFOLIO)
IDEX GE/Scottish Equitable International Equity may not, as a matter of
fundamental policy:
1. With respect to 75% of the fund's total assets, purchase the
securities of any one issuer (other than government securities as defined in
the 1940 Act) if immediately after and as a result of such purchase (a) the
value of the holdings of the fund in the securities of such issuer exceeds 5%
of the value of the fund's total assets, or (b) the fund owns more than 10% of
the outstanding voting securities of any one class of securities of such
issuer. All securities of a foreign government and its agencies will be treated
as a single issuer for purposes of this restriction;
2. Invest 25% or more of the value of the fund's total assets in any
particular industry (other than U.S. government securities). For purposes of
this restriction, the term industry shall include (a) the government of any one
country other than the U.S., but not the U.S. government and (b) all
supranational organizations;
3. Purchase or sell physical commodities other than foreign currencies
unless acquired as a result of ownership of securities (but this restriction
shall not prevent the fund from purchasing or selling options, futures
contracts, caps, floors and other derivative instruments, engaging in swap
transactions or investing in securities or other instruments backed by physical
commodities);
4. Invest directly in real estate or interests in real estate, including
limited partnership interests; however, the fund may own securities or other
instruments backed by real estate, including mortgage-backed securities, or
debt or equity securities issued by companies engaged in those businesses;
5. Act as an underwriter of securities issued by others, except to the
extent that it may be deemed an underwriter in connection with the disposition
of portfolio securities of the fund;
6. Lend any security or make any other loan if, as a result, more than
30% of its total assets would be lent to other parties (but this limitation
does not apply to purchases of commercial paper, debt securities or to
repurchase agreements);
7. The fund may borrow money only for temporary or emergency purposes
(not for leveraging or investment) in an amount not exceeding 33 1/3% of the
value of the fund's total assets (including the amount borrowed) less
liabilities (other than borrowings). Any borrowings that exceed 33 1/3% of the
value of the fund's total assets by reason of a decline in net assets will be
reduced within three business days to the extent necessary to comply with the
33 1/3% limitation. This policy shall not prohibit reverse repurchase agreements
or deposits of assets to provide margin or guarantee positions in connection
with transactions in options, futures contracts, swaps, forward contracts, or
other derivative instruments or the segregation of assets in connection with
such transactions; and
8. Issue senior securities, except as permitted by the 1940 Act.
Furthermore, the fund has adopted the following non-fundamental investment
restrictions which may be changed by the Board of Trustees of the Funds without
shareholder approval:
(A) The fund may not, as a matter of non-fundamental policy (i) enter into any
futures contracts or options on futures contracts for purposes other than bona
fide hedging transactions within the meaning of Commodity Futures Trading
Commission regulations if the aggregate initial margin deposits and premiums
required to establish positions in futures contracts and related options that
do not fall within the definition of bona fide hedging transactions would
exceed 5% of the fair market value of the fund's net assets, after taking into
account unrealized profits and losses on such contracts it has entered into and
(ii) enter into any futures contracts or options on futures contracts if the
aggregate amount of the fund's commitments under outstanding futures contracts
positions and options on futures contracts would exceed the market value of its
total assets;
(B) The fund may not mortgage or pledge any securities owned or held by
the fund in amounts that exceed, in the aggregate, 15% of the fund's net
assets, provided that this limitation does not apply to reverse repurchase
agreements or in the case of assets deposited to provide margin or guarantee
positions in options, futures contracts, swaps, forward contracts or other
derivative instruments or the segregation of assets in connection with such
transactions;
(C) The fund may not sell securities short, unless it owns or has the
right to obtain securities equivalent in kind and amount to the securities sold
short, and provided that transactions in options, futures contracts,
4
<PAGE>
swaps, forward contracts and other derivative instruments are not deemed to
constitute selling securities short;
(D) The fund may not purchase securities on margin, except that the fund
may obtain such short-term credits as are necessary for the clearance of
transactions, and provided that margin payments and other deposits made in
connection with transactions in options, futures contracts, swaps, forward
contracts, and other derivative instruments shall not be deemed to constitute
purchasing securities on margin;
(E) The fund may not invest more than 15% of its net assets in illiquid
securities. This does not include securities eligible for resale pursuant to
Rule 144A under the 1933 Act, or any successor to such Rule, Section 4(2)
commercial paper or other securities for which the Board of Trustees has made a
determination of liquidity, as permitted under the 1940 Act;
(F) The fund may not (i) purchase securities of other investment
companies, except in the open market where no commission except the ordinary
broker's commission is paid, or (ii) purchase or retain securities issued by
other open-end investment companies. Limitations (i) and (ii) do not apply to
money market funds or to securities received as dividends, through offers of
exchange, or as a result of consolidation, merger or other reorganization. The
fund may also invest in the GEI Short-Term Investment Fund, an investment fund
advised by GE Investment Management Incorporated ("GEIM"), created specifically
to serve as a vehicle for the collective investment of cash balances of the
fund and other accounts advised by GEIM or General Electric Investment
Corporation. Investments in GEI Short-Term Investment Fund are not considered
investments in another investment company for the purposes of this restriction;
(G) The fund may not invest directly in oil, gas or other mineral
development or exploration programs or leases; however, the fund may own debt
or equity securities of companies engaged in those businesses; and
(H) The fund may not invest in companies for the purpose of exercising
control or management.
With respect to investment restriction No. 2 above, the fund may use the
industry classifications reflected by the S&P 500 Composite Stock Index, if
applicable at the time of determination. For all other fund holdings the fund
may use the Directory of Companies Required to File Annual Reports with the SEC
and Bloomberg, Inc. In addition, the fund may select its own industry
classifications, provided such classifications are reasonable.
5
<PAGE>
INVESTMENT RESTRICTIONS OF
IDEX JCC GLOBAL
(FORMERLY GLOBAL PORTFOLIO)
IDEX JCC Global may not, as a matter of fundamental policy:
1. Own more than 10% of the outstanding voting securities of any one
issuer and, as to seventy-five percent (75%) of the value of its total assets,
purchase the securities of any one issuer (except cash items and "government
securities" as defined under the 1940 Act), if immediately after and as a
result of such purchase, the value of the holdings of the fund in the
securities of such issuer exceeds 5% of the value of the fund's total assets;
2. Invest more than 25% of the value of its assets in any particular
industry (other than government securities);
3. Invest directly in real estate or interests in real estate; however,
the fund may own debt or equity securities issued by companies engaged in those
businesses;
4. Purchase or sell physical commodities other than foreign currencies
unless acquired as a result of ownership of securities (but this shall not
prevent the fund from purchasing or selling options, futures, swaps and forward
contracts or from investing in securities or other instruments backed by
physical commodities);
5. Lend any security or make any other loan if, as a result, more than
25% of its total assets would be lent to
6
<PAGE>
other parties (but this limitation does not apply to purchases of commercial
paper, debt securities or to repurchase agreements);
6. Act as an underwriter of securities issued by others, except to the
extent that it may be deemed an underwriter in connection with the disposition
of its portfolio securities; and
7. The fund may borrow money only for temporary or emergency purposes
(not for leveraging or investment) in an amount not exceeding 25% of the value
of the fund's total assets (including the amount borrowed) less liabilities
(other than borrowings). Any borrowings that exceed 25% of the value of the
fund's total assets by reason of a decline in net assets will be reduced within
three business days to the extent necessary to comply with the 25% limitation.
This policy shall not prohibit reverse repurchase agreements or deposits of
assets to margin or guarantee positions in futures, options, swaps or forward
contracts, or the segregation of assets in connection with such contacts.
8. Issue senior securities, except as permitted by the 1940 Act.
Furthermore, the fund has adopted the following non-fundamental investment
restrictions which may be changed by the Board of Trustees without shareholder
approval:
(A) The fund may not (i) enter into any futures contracts or options on
futures contracts for purposes other than bona fide hedging transactions within
the meaning of Commodity Futures Trading Commission regulations if the
aggregate initial margin deposits and premiums required to establish positions
in futures contracts and related options that do not fall within the definition
of bona fide hedging transactions would exceed 5% of the fair market value of
the fund's net assets, after taking into account unrealized profits and losses
on such contracts it has entered into; and (ii) enter into any futures
contracts or options on futures contracts if the aggregate amount of the fund's
commitments under outstanding futures contracts positions and options on
futures contracts would exceed the market value of its total assets;
(B) The fund may not sell securities short, unless it owns or has the
right, without the payment of any additional compensation, to obtain securities
equivalent in kind and amount to the securities sold short, and provided that
transactions in options, swaps and forward futures contracts are not deemed to
constitute selling securities short;
(C) The fund may not purchase securities on margin, except that the fund
may obtain such short-term credits as are necessary for the clearance of
transactions, and provided that margin payments and other deposits in
connection with transactions in options, futures, swaps and forward contracts
shall not be deemed to constitute purchasing securities on margin;
(D) The fund may not (i) purchase securities of other investment
companies, except in the open market where no commission except the ordinary
broker's commission is paid, or (ii) purchase or retain securities issued by
other open-end investment companies. Limitations (i) and (ii) do not apply to
money market funds or to securities received as dividends, through offers of
exchange, or as a result of a consolidation, merger or other reorganization;
(E) The fund may not mortgage or pledge any securities owned or held by
the fund in amounts that exceed, in the aggregate, 15% of the fund's net
assets, provided that this limitation does not apply to reverse repurchase
agreements or in the case of assets deposited to provide margin or guarantee
positions in options, futures contracts, swaps, forward contracts or other
derivative instruments or the segregation of assets in connection with such
transactions;
(F) The fund may not invest directly in oil, gas or other mineral
development or exploration programs or leases; however, the fund may own debt
or equity securities of companies engaged in those businesses;
7
<PAGE>
(G) The fund may not invest more than 15% of its net assets in illiquid
securities. This does not include securities eligible for resale pursuant to
Rule 144A under the 1933 Act, or any successor to such Rule, Section 4(2)
commercial paper or any other securities as to which the Board of Trustees have
made a determination as to liquidity, as permitted under the 1940 Act; and
(H) The fund may not invest in companies for the purpose of exercising
control or management.
INVESTMENT RESTRICTIONS OF
IDEX SALOMON ALL CAP
IDEX Salomon All Cap may not, as a matter of fundamental policy:
1. Purchase or sell real estate, real estate mortgages, commodities or
commodity contracts; however, the fund may: (a) purchase interests in real
estate investment trusts or companies which invest in or own real estate if the
securities of such trusts or companies are registered under the Securities Act
of 1933 and are readily marketable or holding or selling real estate received
in connection with securities it holds; and (b) may enter into futures
contracts, including futures contracts on interest rates, stock indices and
currencies, and options thereon, and may engage in forward currency contracts
and buy, sell and write options on currencies. This policy shall not prohibit
reverse repurchase agreements or deposits of assets to margin or guarantee
positions in futures, options, swaps or forward contracts, or the segregation
of assets in connection with such contracts.
2. Invest more than 25% of the fund's assets in the securities of issuers
primarily engaged in the same industry. Utilities will be divided according to
their services; for example, gas, gas transmission, electric and telephone, and
each will be considered a separate industry for purposes of this restriction.
In addition, there shall be no limitation on the purchase of obligations issued
or guaranteed by the U.S. Government or its agencies or instrumentalities, or
of certificates of deposit and bankers' acceptances.
3. Borrow money, except that the fund may borrow from banks for
investment purposes up to an aggregate of 15% of the value of its total assets
taken at the time of borrowing. The fund may borrow for temporary or emergency
purposes an aggregate amount not to exceed 5% of the value of its total assets
at the time of borrowing.
4. Issue senior securities, except as permitted by the 1940 Act.
5. Underwrite securities issued by other persons, except to the extent
that the fund may be deemed to be an underwriter within the meaning of the
Securities Act of 1933 in connection with the purchase and sale of its fund
securities in the ordinary course of pursuing its investment objective.
6. Make loans, except that the fund may purchase debt obligations in
which the fund may invest consistent with its investment objectives and
policies or enter into, and make loans of, its portfolio securities, as
permitted under the 1940 Act.
Furthermore, the fund has adopted the following non-fundamental restrictions
that may be changed by the Board of Trustees without shareholder approval:
(A) The fund may not invest more than 15% of its net assets in illiquid
securities. This does not include securities eligible for resale pursuant to
Rule 144A under the Securities Act of 1933 or any other securities as to which
a determination as to liquidity has been made pursuant to guidelines adopted by
the Board of Trustees, as permitted under the 1940 Act.
(B) The fund may not invest in companies for the purpose of exercising
control or management.
(C) The fund may not sell securities short.
INVESTMENT RESTRICTIONS OF
IDEX JCC GROWTH AND
IDEX JCC FLEXIBLE INCOME
(FORMERLY GROWTH PORTFOLIO AND FLEXIBLE INCOME PORTFOLIO)
IDEX JCC Growth and IDEX JCC Flexible Income each may not, as a matter of
fundamental policy:
1. With respect to 75% of the fund's total assets, purchase the
securities of any one issuer (other than cash items and "government securities"
as defined under the 1940 Act), if immediately after and as a result of such
purchase (a) the value of the holdings of the fund in the securities of such
issuer exceeds 5% of the value of the fund's total assets, or (b) the fund owns
more than 10% of the outstanding voting securities of such issuer;
2. Invest more than 25% of the value of its assets in any particular
industry (other than government securities);
3. Purchase or sell physical commodities other than foreign currencies
unless acquired as a result of ownership of securities (but this restriction
shall not prevent the fund from purchasing or selling options, futures
contracts, caps, floors and other derivative instruments,
8
<PAGE>
engaging in swap transactions or investing in securities or other instruments
backed by physical commodities);
4. Invest directly in real estate or interests in real estate, including
limited partnership interests; however, the fund may own debt or equity
securities issued by companies engaged in those businesses;
5. Act as underwriter of securities issued by others, except to the
extent that it may be deemed an underwriter in connection with the disposition
of portfolio securities of the fund;
6. Lend any security or make any other loan if, as a result, more than
25% of its total assets would be lent to other parties (but this limitation
does not apply to purchases of commercial paper, debt securities or to
repurchase agreements); and
7. The fund may borrow money only for temporary or emergency purposes
(not for leveraging or investment) in an amount not exceeding 25% of the value
of the fund's total assets (including the amount borrowed) less liabilities
(other than borrowings). Any borrowings that exceed 25% of the value of the
fund's total assets by reason of a decline in net assets will be reduced within
three business days to the extent necessary to comply with the 25% limitation.
This policy shall not prohibit reverse repurchase agreements or deposits of
assets to provide margin or guarantee positions in connection with transactions
in options, futures contracts, swaps, forward contracts, and other derivative
instruments or the segregation of assets in connection with such transactions.
8. Issue senior securities, except as permitted by the 1940 Act.
As a fundamental policy governing concentration, the fund will not invest 25%
or more of its total assets in any one particular industry, other than U.S.
government securities.
Furthermore, each fund has adopted the following non-fundamental investment
restrictions which may be changed by the Board of Trustees without shareholder
approval:
(A) A fund may not: (i) enter into any futures contracts or options on
futures contracts for purposes other than bona fide hedging transactions within
the meaning of Commodity Futures Trading Commission regulations if the
aggregate initial margin deposits and premiums required to establish positions
in futures contracts and related options that do not fall within the definition
of bona fide hedging transactions would exceed 5% of the fair market value of
the fund's net assets, after taking into account unrealized profits and losses
on such contracts it has entered into; and (ii) enter into any futures
contracts or options on futures contracts if the aggregate amount of the fund's
commitments under outstanding futures contracts positions and options on
futures contracts would exceed the market value of its total assets;
(B) A fund may not mortgage or pledge any securities owned or held by
the fund in amounts that exceed, in the aggregate, 15% of the fund's net
assets, provided that this limitation does not apply to reverse repurchase
agreements or in the case of assets deposited to provide margin or guarantee
positions in options, futures contracts, swaps, forward contracts or other
derivative instruments or the segregation of assets in connection with such
transactions;
(C) A fund may not sell securities short, unless it owns or has the
right to obtain securities equivalent in kind and amount to the securities sold
short, and provided that transactions in options, futures contracts, swaps,
forward contracts, and other derivative instruments are not deemed to
constitute selling securities short;
(D) A fund may not purchase securities on margin, except that each fund
may obtain such short-term credits as are necessary for the clearance of
transactions, and provided that margin payments and other deposits made in
connection with transactions in options, futures contracts, swaps, forward
contracts, and other derivative instruments shall not be deemed to constitute
purchasing securities on margin;
(E) A fund may not invest more than 15% of its net assets in illiquid
securities. This does not include securities eligible for resale pursuant to
Rule 144A under the 1933 Act, or any successor to such Rule, Section 4(2)
commercial paper or any securities which the Board of Trustees or the
investment sub-adviser, as appropriate, has made a determination of liquidity,
as permitted under the 1940 Act;
(F) A fund may not invest in companies for the purpose of exercising
control or management;
(G) A fund may not (i) purchase securities of other investment
companies, except in the open market where no commission except the ordinary
broker's commission is paid, or (ii) purchase or retain securities issued by
other open-end investment companies. Limitations (i) and (ii) do not apply to
money market funds or to securities received as dividends, through offers of
exchange, or as a result of consolidation, merger or other reorganization; and
(H) A fund may not invest directly in oil, gas or other mineral
development or exploration programs or leases; however, the funds may own debt
or equity securities of companies engaged in those businesses.
9
<PAGE>
In making all investments for IDEX JCC Flexible Income, the sub-adviser
will emphasize economic or financial factors or circumstances of the issuer,
rather than opportunities for short-term arbitrage.
INVESTMENT RESTRICTIONS OF IDEX GOLDMAN SACHS GROWTH
IDEX Goldman Sachs Growth may not, as a matter of fundamental policy:
1. With respect to 75% of the fund's total assets, purchase the
securities of any one issuer (other than government securities as defined in
the 1940 Act) if immediately after and as a result of such purchase (a) the
value of the holdings of the fund in the securities of such issuer exceeds 5%
of the value of the fund's total assets, or (b) the fund owns more than 10% of
the outstanding voting securities of any one class of securities of such
issuer.
2. Borrow money except (a) the fund may borrow from banks (as defined in
the 1940 Act) or through reverse repurchase agreements in amounts up to 33 1/3%
of its total assets (including the amount borrowed), (b) the fund may, to the
extent permitted by applicable law, borrow up to an additional 5% of its total
assets for temporary purposes, (c) the fund may obtain such short-term credits
as may be necessary for the clearance of purchases and sales of fund
securities, (d) the fund may purchase securities on margin to the extent
permitted by applicable law and (e) the fund may engage in mortgage dollar
rolls which are accounted for as financings.
3. Purchase or sell physical commodities (but this shall not prevent the
fund from investing in currency and financial instruments and contracts that
are commodities or commodity contracts).
4. Invest more than 25% of the fund's assets in the securities of issuers
primarily engaged in the same industry. Utilities will be divided according to
their services; for example, gas, gas transmission, electric and telephone, and
each will be considered a separate industry for purposes of this restriction,
provided that there shall be no limitation on the purchase of obligations
issued or guaranteed by the U.S. Government or its agencies or
instrumentalities, or of certificates of deposit and bankers' acceptance.
5. Make loans, except through (a) the purchase of debt obligations in
accordance with the fund's investment objective and policies, (b) repurchase
agreements with banks, brokers, dealers and other financial institutions, and
(c) loans of securities as permitted by applicable law.
6. Purchase or sell real estate (but this shall not prevent the fund from
investing in securities or other instruments backed by real estate, including
mortgage-backed securities, or securities of companies engaged in the real
estate business).
7. Issue senior securities, except as permitted by the 1940 Act.
8. Underwrite securities issued by other persons, except to the extent
that the fund may be deemed to be an underwriter within the meaning of the
Securities Act of 1933 in connection with the purchase and sale of its fund
securities in the ordinary course of pursuing its investment objective.
Furthermore, the fund has adopted the following non-fundamental restrictions
which may be changed by the Board of Trustees without shareholder approval:
(A) The fund may not invest in companies for the purpose of exercising
control or management.
(B) The fund may not invest more than 15% of its net assets in illiquid
securities. This does not include securities eligible for resale pursuant to
Rule 144A under the Securities Act of 1933 or any other securities as to
which a determination as to liquidity has been made pursuant to guidelines
adopted by the Board of Trustees, as permitted under the 1940 Act.
(C) The fund may not purchase additional securities when money borrowed
exceeds 5% of its total assets.
(D) The fund may not make short sales of securities, except short sales
"against the box."
INVESTMENT RESTRICTIONS OF
IDEX C.A.S.E. GROWTH
(FORMERLY C.A.S.E. PORTFOLIO)
IDEX C.A.S.E. Growth may not, as a matter of fundamental policy:
10
<PAGE>
1. With respect to 75% of the fund's total assets, purchase the
securities of any one issuer (other than cash items and "government securities"
as defined in the 1940 Act) if immediately after and as a result of such
purchase (a) the value of the holdings of the fund in the securities of such
issuer exceeds 5% of the value of the fund's total assets, or (b) the fund owns
more than 10% of the outstanding voting securities of any one class of
securities of such issuer.
2. Invest 25% or more of the value of the fund's assets in any particular
industry (other than government securities);
3. Purchase or sell physical commodities other than foreign currencies
unless acquired as a result of ownership of securities (but this restriction
shall not prevent the fund from purchasing or selling options, futures
contracts, caps, floors and other derivative instruments, engaging in swap
transactions or investing in securities or other instruments backed by physical
commodities);
4. Invest directly in real estate or interests in real estate, including
limited partnership interests; however, the fund may own debt or equity
securities issued by companies engaged in those businesses;
5. Act as an underwriter of securities issued by others, except to the
extent that it may be deemed an underwriter in connection with the disposition
of portfolio securities of the fund;
6. Lend any security or make any other loan if, as a result, more than
25% of its total assets would be lent to other parties (but this limitation
does not apply to purchases of commercial paper, debt securities or to
repurchase agreements);
7. The fund may borrow money only for temporary or emergency purposes
(not for leveraging or investment) in an amount not exceeding 25% of the value
of the fund's total assets (including the amount borrowed) less liabilities
(other than borrowings). Any borrowings that exceed 25% of the value of the
fund's total assets by reason of a decline in net assets will be reduced within
three business days to the extent necessary to comply with the 25% limitation.
This policy shall not prohibit reverse repurchase agreements or deposits of
assets to provide margin or guarantee positions in connection with transactions
in options, futures contracts, swaps, forward contracts, or other derivative
instruments or the segregation of assets in connection with such transactions;
and
8. Issue senior securities, except as permitted by the 1940 Act.
Furthermore, the fund has adopted the following non-fundamental investment
restrictions which may be changed by the Board of Trustees without shareholder
approval:
(A) The fund may not, as a matter of non-fundamental policy (i) enter into any
futures contracts or options on futures contracts for purposes other than bona
fide hedging transactions within the meaning of Commodity Futures Trading
Commission regulations if the aggregate initial margin deposits and premiums
required to establish positions in futures contracts and related options that
do not fall within the definition of bona fide hedging transactions would
exceed 5% of the fair market value of the fund's net assets, after taking into
account unrealized profits and losses on such contracts it has entered into and
(ii) enter into any futures contracts or options on futures contracts if the
aggregate amount of the fund's commitments under outstanding futures contracts
positions and options on futures contracts would exceed the market value of its
total assets;
(B) The fund may not mortgage or pledge any securities owned or held by
the fund in amounts that exceed, in the aggregate, 15% of the fund's net
assets, provided that this limitation does not apply to reverse repurchase
agreements or in the case of assets deposited to provide margin or guarantee
positions in options, futures contracts, swaps, forward contracts or other
derivative instruments or the segregation of assets in connection with such
transactions;
(C) The fund may not sell securities short, unless it owns or has the
right to obtain securities equivalent in kind and amount to the securities sold
short, and provided that transactions in options, futures contracts, swaps,
forward contracts and other derivative instruments are not deemed to constitute
selling securities short;
(D) The fund may not purchase securities on margin, except that the fund
may obtain such short-term credits as are necessary for the clearance of
transactions, and provided that margin payments and other deposits made in
connection with transactions in options, futures contracts, swaps, forward
contracts, and other derivative instruments shall not be deemed to constitute
purchasing securities on margin;
(E) The fund may not invest more than 15% of its net assets in illiquid
securities. This does not include securities eligible for resale pursuant to
Rule 144A under the 1933 Act, or any successor to such Rule, Section 4(2)
commercial paper or other securities for which the Board of Trustees has made a
determination of liquidity, as permitted under the 1940 Act;
(F) The fund may not (i) purchase securities of other investment
companies, except in the open market where no commission except the ordinary
broker's commission is paid, or (ii) purchase or retain securities issued by
other open-end investment companies. Limitations (i) and (ii) do not apply to
money market funds or to securities received as dividends, through offers of
exchange, or as a result of consolidation, merger or other reorganization;
(G) The fund may not invest directly in oil, gas or other mineral
development or exploration programs or
11
<PAGE>
leases; however, the fund may own debt or equity securities of companies
engaged in those businesses;
(H) The fund may not invest more than 25% of its net assets at the time
of purchase in the securities of foreign issuers and obligors; and
(I) The fund may not invest in companies for the purpose of exercising
control or management.
INVESTMENT RESTRICTIONS OF
IDEX NWQ VALUE EQUITY
(FORMERLY VALUE EQUITY PORTFOLIO)
IDEX NWQ Value Equity may not, as a matter of fundamental policy:
1. With respect to 75% of the fund's total assets, purchase the
securities of any one issuer (other than government securities as defined in
the 1940 Act) if immediately after and as a result of such purchase (a) the
value of the holdings of the fund in the securities of such issuer exceeds 5%
of the value of the fund's total assets, or (b) the fund owns more than 10% of
the outstanding voting securities of any one class of securities of such
issuer;
2. Invest 25% or more of the value of the fund's total assets in any
particular industry (other than U.S. government securities);
3. Purchase or sell physical commodities other than foreign currencies
unless acquired as a result of ownership of securities (but this restriction
shall not prevent the fund from purchasing or selling options, futures
contracts, caps, floors and other derivative instruments, engaging in swap
transactions or investing in securities or other instruments backed by physical
commodities);
4. Invest directly in real estate or interests in real estate, including
limited partnership interests; however, the fund may own debt or equity
securities issued by companies engaged in those businesses;
5. Act as an underwriter of securities issued by others, except to the
extent that it may be deemed an underwriter in connection with the disposition
of portfolio securities of the fund;
6. Lend any security or make any other loan if, as a result, more than
25% of its total assets would be lent to other parties (but this limitation
does not apply to purchases of commercial paper, debt securities or to
repurchase agreements);
7. The fund may borrow money only for temporary or emergency purposes
(not for leveraging or investment) in an amount not exceeding 10% of the value
of the Fund's total assets (including the amount borrowed) less liabilities
(other than borrowings). Any borrowings that exceed 10% of the value of the
fund's total assets by reason of a decline in net assets will be reduced within
three business days to the extent necessary to comply with the 10% limitation.
The fund may not purchase additional securities when borrowings exceed 5% of
total assets. This policy shall not prohibit reverse repurchase agreements or
deposits of assets to provide margin or guarantee positions in connection with
transactions in options, futures contracts, swaps, forward contracts, or other
derivative instruments or the segregation of assets in connection with such
transactions; and
8. Issue senior securities, except as permitted by the 1940 Act.
Furthermore, the fund has adopted the following non-fundamental investment
restrictions which may be changed by the Board of Trustees without shareholder
approval:
(A) The fund may not, as a matter of non-fundamental policy (i) enter into any
futures contracts or options on futures contracts for purposes other than bona
fide hedging transactions within the meaning of Commodity Futures Trading
Commission regulations if the aggregate initial margin deposits and premiums
required to establish positions in futures contracts and related options that
do not fall within the definition of bona fide hedging transactions would
exceed 5% of the fair market value of the fund's net assets, after taking into
account unrealized profits and losses on such contracts it has entered into and
(ii) enter into any futures contracts or options on futures contracts if the
aggregate amount of the fund's commitments under outstanding futures contracts
positions and options on futures contracts would exceed the market value of its
total assets;
(B) The fund may not mortgage or pledge any securities owned or held by
the fund in amounts that exceed, in the aggregate, 15% of the fund's net
assets, provided that this limitation does not apply to reverse repurchase
agreements or in the case of assets deposited to provide margin or guarantee
positions in options, futures contracts, swaps, forward contracts or other
derivative instruments or the segregation of assets in connection with such
transactions;
(C) The fund may not sell securities short, unless it owns or has the
right to obtain securities equivalent in kind and amount to the securities sold
short, and provided that transactions in options, futures contracts, swaps,
forward contracts and other derivative instruments are not deemed to constitute
selling securities short;
(D) The fund may not purchase securities on margin, except that the fund
may obtain such short-term credits as are necessary for the clearance of
transactions, and provided that margin payments and other deposits made in
connection with transactions in options, futures contracts, swaps, forward
contracts, and other derivative instruments shall not be deemed to constitute
purchasing securities on margin;
(E) The fund may not invest more than 15% of its net assets in illiquid
securities. This does not include securities eligible for resale pursuant to
Rule 144A under
12
<PAGE>
the 1933 Act, or any successor to such Rule, Section 4(2) commercial paper or
other securities for which the Board of Trustees has made a determination of
liquidity, as permitted under the 1940 Act;
(F) The fund may not (i) purchase securities of other investment
companies, except in the open market where no commission except the ordinary
brokers commission is paid, or (ii) purchase or retain securities issued by
other open-end investment companies. Limitations (i) and (ii) do not apply to
money market funds or to securities received as dividends, through offers of
exchange, or as a result of consolidation, merger or other reorganization;
(G) The fund may not invest directly in oil, gas or other mineral
development or exploration programs or leases; however, the fund may own debt
or equity securities of companies engaged in those businesses;
(H) The fund may not invest more than 25% of its net assets at the time
of purchase in the securities of foreign issuers and obligors; and
(I) The fund may not invest in companies for the purpose of exercising
control or management.
INVESTMENT RESTRICTIONS OF
IDEX DEAN ASSET ALLOCATION
(FORMERLY TACTICAL ASSET ALLOCATION PORTFOLIO)
IDEX Dean Asset Allocation may not, as a matter of fundamental policy:
1. With respect to 75% of the fund's total assets, purchase the
securities of any one issuer (other than government securities as defined in
the 1940 Act) if immediately after and as a result of such purchase (a) the
value of the holdings of the fund in the securities of such issuer exceeds 5%
of the value of the fund's total assets, or (b) the fund owns more than 10% of
the outstanding voting securities of such issuer;
2. Invest more than 25% of the fund's assets in the securities of issuers
primarily engaged in the same industry. Utilities will be divided according to
their services, for example, gas, gas transmission, electric and telephone, and
each will be considered a separate industry for purposes of this restriction.
In addition, there shall be no limitation on the purchase of obligations issued
or guaranteed by the U.S. government or its agencies or instrumentalities, or
of certificates of deposit and bankers acceptances;
3. Purchase or sell physical commodities unless acquired as a result of
ownership of securities or other instruments (but this limitation shall not
prevent the fund from investing in securities or other instruments backed by
physical commodities);
4. Purchase or sell real estate (but this shall not prevent the fund from
investing in securities or other instruments backed by real estate, including
mortgage-backed securities, or securities of companies engaged in the real
estate business);
5. Lend any security or make any other loan if, as a result, more than
25% of its total assets would be lent to other parties (but this limitation
does not apply to purchases of commercial paper or debt securities);
6. Act as an underwriter of securities issued by others, except to the
extent that it may be deemed an underwriter in connection with the disposition
of its portfolio securities;
7. The fund may borrow money only for temporary or emergency purposes
(not for leveraging or investment) in an amount not exceeding 25% of the value
of the fund's total assets (including the amount borrowed) less liabilities
(other than borrowings). Any borrowings that exceed 25% of the value of the
fund's total assets by reason of a decline in net assets will be reduced within
three business days to the extent necessary to comply with the 25% limitation;
and
8. Issue senior securities, except as permitted by the 1940 Act.
Furthermore, the fund has adopted the following non-fundamental investment
restrictions which may be changed by the Board of Trustees without shareholder
approval:
(A) The fund may not sell securities short, unless it owns or has the
right to obtain securities equivalent in kind and amount to the securities sold
short, and provided that margin payments and other deposits in connection with
transactions in options, swaps and forward and futures contracts are not deemed
to constitute selling securities short;
(B) The fund may not purchase securities on margin, except that the fund
may obtain such short-term credits as are necessary for the clearance of
transactions, and provided that margin payments and other deposits in
connection with transactions in options, futures, swaps and forward contracts
shall not be deemed to constitute purchasing securities on margin;
(C) The fund may not (i) purchase securities of other investment
companies, except in the open market where no commission except the ordinary
broker's commission is paid, or (ii) purchase or retain securities issued by
other open-end investment companies. Limitations (i) and (ii) do not apply to
money market funds or to securities received as dividends, through offers of
exchange, or as a result of a consolidation, merger or other reorganization;
(D) The fund may not mortgage or pledge any securities owned or held by
the fund in amounts that exceed, in the aggregate, 15% of the fund's net
assets, provided that this limitation does not apply to reverse repurchase
agreements, deposits of assets to margin, guarantee positions in futures,
options, swaps or forward contracts or segregation of assets in connection with
such contracts;
(E) The fund may not invest directly in oil, gas, or other mineral
development or exploration programs or leases; however, the fund may own debt
or equity securities of companies engaged in those businesses;
(F) The fund may not invest in companies for the purpose of exercising
control or management; and
(G) The fund may not invest more than 15% of its net assets in illiquid
securities. This does not include securities eligible for resale pursuant to
Rule 144A under the 1933 Act, or any successor to such Rule, Section 4(2)
commercial paper or any other securities as to which the Board of Trustees has
made a determination as to liquidity, as permitted under the 1940 Act.
INVESTMENT RESTRICTIONS OF
IDEX LKCM STRATEGIC TOTAL RETURN
(FORMERLY STRATEGIC TOTAL RETURN PORTFOLIO)
IDEX LKCM Strategic Total Return may not, as a matter of fundamental policy:
1. With respect to 75% of the fund's total assets, purchase the
securities of any one issuer (other than government securities as defined in
the 1940 Act) if immediately after and as a result of such purchase (a) the
value of the holdings of the fund in the securities of such issuer exceeds 5%
of the value of the fund's total assets, or (b) the fund owns more than 10% of
the outstanding voting securities of such issuer;
2. Invest more than 25% of the fund's assets in the securities of issuers
primarily engaged in the same industry. Utilities will be divided according to
their services; for example: gas, gas transmission, electric and telephone, and
each will be considered a separate industry for purposes of this restriction.
In addition, there shall be no limitation on the purchase of obligations issued
or guaranteed by the U.S. government or its agencies or instrumentalities, or
of certificates of deposit and bankers' acceptances;
13
<PAGE>
3. Purchase or sell real estate (but this shall not prevent the fund from
investing in securities or other instruments backed by real estate, including
mortgage-backed securities, or securities of companies engaged in the real
estate business);
4. Purchase or sell physical commodities unless acquired as a result of
ownership of securities or other instruments (but this shall not prevent the
fund from investing in securities or other instruments backed by physical
commodities);
5. Lend any security or make any other loan if, as a result, more than
25% of its total assets would be lent to other parties (but this limitation
does not apply to purchases of commercial paper or debt securities);
6. Act as an underwriter of securities issued by others, except to the
extent that it may be deemed an underwriter in connection with the disposition
of its portfolio securities;
7. The fund may borrow money only for temporary or emergency purposes
(not for leveraging or investment) in an amount not exceeding 25% of the value
of the fund's total assets (including the amount borrowed) less liabilities
(other than borrowings). Any borrowings that exceed 25% of the value of the
fund's total assets by reason of a decline in net assets will be reduced within
three business days to the extent necessary to comply with the 25% limitation;
and
8. Issue senior securities, except as permitted by the 1940 Act.
Furthermore, the fund has adopted the following non-fundamental investment
restrictions which may be changed by the Board of Trustees without shareholder
approval:
(A) The fund may not mortgage or pledge any securities owned or held by
the fund in amounts that exceed, in the aggregate, 15% of the fund's net
assets, provided that this limitation does not apply in the case of assets
deposited to margin or guarantee positions in options, futures contracts and
options on futures contracts or placed in a segregated account in connection
with such contracts;
(B) The fund may not sell securities short, unless it owns or has the
right to obtain securities equivalent in kind and amount to the securities sold
short, and provided that margin payments and other deposits in connection with
transactions in options, swaps and forward futures contracts are not deemed to
constitute selling securities short;
(C) The fund may not purchase securities on margin, except that the fund
may obtain such short-term credits as are necessary for the clearance of
transactions, and provided that margin payments and other deposits in
connection with transactions in options, futures, swaps and forward contracts
shall not be deemed to constitute purchasing securities on margin;
(D) The fund may not (i) purchase securities of other investment
companies, except in the open market where no commission except the ordinary
broker's commission is paid, or (ii) purchase or retain securities issued by
other open-end investment companies. Limitations (i) and (ii) do not apply to
money market funds or to securities received as dividends, through offers of
exchange, or as a result of a consolidation, merger or other reorganization;
(E) The fund may not invest directly in oil, gas, or other mineral
development or exploration programs or
leases; however, the fund may own debt or equity securities of companies
engaged in those businesses;
(F) The fund may not invest more than 15% of its net assets in illiquid
securities. This does not include securities eligible for resale pursuant to
Rule 144A under the 1933 Act, or any successor to such Rule, Section 4(2)
commercial paper or any other securities as to which the Board of Trustees has
made a determination as to liquidity, as permitted under the 1940 Act;
(G) The fund may not invest in companies for the purpose of exercising
control or management; and
(H) The fund may not invest in securities of foreign issuers denominated
in foreign currency and not publicly traded in the United States if at the time
of acquisition more than 10% of the fund's total assets would be invested in
such securities.
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INVESTMENT RESTRICITONS OF
IDEX AEGON INCOME PLUS
(FORMERLY INCOME PLUS PORTFOLIO)
IDEX AEGON Income Plus may not, as a matter of fundamental policy:
1. Borrow money, except from a bank for temporary or emergency purposes
(not for leveraging or investment) in an amount not to exceed 1/3 of the
current value of the fund's total assets (including the amount borrowed) less
liabilities (not including the amount borrowed) at the time the borrowing is
made. If at any time the fund's borrowings exceed this limitation due to a
decline in net assets, such borrowings will be reduced within 3 business days
to the extent necessary to comply with the limitation. The fund will borrow
only to facilitate redemptions requested by shareholders which might otherwise
require untimely disposition of portfolio securities and will not purchase
securities while borrowings are outstanding;
2. Pledge assets, except that the fund may pledge not more than 1/3 of
its total assets (taken at current value) to secure borrowings made in
accordance with paragraph 1 above. Initial margin deposits under interest rate
futures contracts, which are made to guarantee the fund's performance under
such contracts, shall not be deemed a pledging of fund assets for the purpose
of this investment restriction. As a matter of non-fundamental operating
policy, in order to permit the sale of shares of the fund under certain state
laws, the fund will not pledge its assets in excess of an amount equal to 10%
of its net assets unless such state restrictions are changed;
3. Invest more than 25% of its assets, measured at the time of investment, in a
single industry (which term shall not include governments or their political
subdivisions), outside the industries of the fund's public utilities portfolio
concentration, except that the fund may, for temporary defensive purposes,
invest more than 25% of its total assets in the obligations of banks;
4. Purchase the securities (other than government securities) of any
issuer if, as a result, more than 5% of the fund's total assets would be
invested in the securities of such issuer, provided that up to 25% of the
fund's total net assets may be invested without regard to this 5% limitation
and in the case of certificates of deposit, time deposits and banker's
acceptances, up to 25% of total fund assets may be invested without regard to
such 5% limitation, but shall instead be subject to a 10% limitation;
5. Invest in mineral leases;
6. Invest in bank time deposits with maturities of over 7 calendar days,
or invest more than 10% of the fund's total assets in bank time deposits with
maturities of from 2 business days through 7 calendar days;
7. Issue senior securities, except to the extent that senior securities
may be deemed to arise from bank borrowings and purchases of government
securities on a "when-issued" or "delayed delivery" basis, as described in the
prospectus;
8 .Underwrite any issue of securities, except to the extent the fund may
be deemed to be an underwriter in connection with the sale of its portfolio
securities, although the fund may purchase securities directly from the issuers
thereof for investment in accordance with the fund's investment objective and
policies;
9. Purchase or sell commodities or commodity contracts, except that the
fund may purchase and sell interest rate futures contracts for hedging purposes
as set forth in the prospectus;
10. Purchase securities on margin or sell "short," but the fund may
obtain such short-term credits as may be necessary for the clearance of
purchases and sales of securities. (Initial and maintenance margin deposits and
payment with respect to interest rate futures contracts are not considered the
purchase of securities on margin);
11. Purchase or retain the securities of any issuer, if, to the fund's
knowledge, those officers and directors of the manager and sub-adviser who
individually own beneficially more than 0.5% of the outstanding securities of
such issuer together own beneficially more than 5% of such outstanding
securities;
12. Invest in securities of other investment companies, except in the
event of merger or reorganization with another investment company;
13. Make loans, except to the extent the purchase of notes, bonds,
bankers' acceptances or other evidence of indebtedness or the entry into
repurchase agreements or deposits (including time deposits and certificates of
deposit) with banks may be considered loans;
14. Invest in companies for the purpose of exercising management control;
15. Invest in oil, gas or other mineral exploration or development
programs;
16. Purchase or hold any real estate or mortgage loans thereon, except
that the fund may invest in securities secured by real estate or interests
therein or issued by persons (such as real estate investment trusts) which deal
in real estate or interests therein; and
17. Purchase the securities (other than government securities) of any
issuer if, as a result, the fund would hold more than 10% of any class of
securities (including
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any class of voting securities) of such issuer; for this purpose, all debt
obligations of an issuer, and all shares of stock of an issuer other than
common stock, are treated as a single class of securities.
Furthermore, the fund has adopted the following non-fundamental investment
restrictions which may be changed by the Board of Trustees without shareholder
approval. IDEX AEGON Income Plus may not:
(A) Write or purchase put, call, straddle or spread options, or
combinations thereof;
(B) Invest more than 10% of its net assets in illiquid securities;
(C) Invest in real estate limited partnerships;
(D) Invest more than 25% of its net assets at the time of purchase in the
securities of foreign issuers and obligors; and
(E) Purchase or sell interest rate futures contracts (a) involving
aggregate delivery or purchase obligations in excess of 30% of the fund's net
assets, or aggregate margin deposits made by the fund in excess of 5% of the
fund's net assets, (b) which are not for hedging purposes only, or (c) which
are executed under custodial, reserve and other arrangements inconsistent with
regulations and policies adopted or positions taken (i) by the Securities and
Exchange Commission for exemption from enforcement proceedings under Section
17(f) or 18(f) of the 1940 Act, (ii) by the CFTC for exemption of investment
companies registered under the 1940 Act from registration as "commodity pool
operators" and from certain provisions of Subpart B of Part 4 of the CFTC's
regulations, or (iii) by state securities commissioners or administrators in
the states in which the fund's shares have been qualified for public offering.
INVESTMENT RESTRICTIONS OF
IDEX AEGON TAX EXEMPT
(FORMERLY TAX-EXEMPT PORTFOLIO)
IDEX AEGON Tax Exempt may not, as a matter of fundamental policy:
1. Underwrite any issue of securities, except to the extent the fund may
be deemed to be an underwriter in connection with the sale of its portfolio
securities, although the fund may purchase Municipal Obligations directly from
the issuers thereof for investment in accordance with the fund's investment
objective and policies.
2. Purchase the securities (other than government securities) of any
issuer if, as a result, more than 5% of the fund's total assets would be
invested in the securities of such issuer, provided that up to 25% of the
fund's total net assets may be invested without regard to this 5% limitation;
3. Invest in any direct interest in an oil, gas or other mineral
exploration or development program;
4. Purchase securities on margin or sell "short," but the fund may obtain
such short-term credits as may be necessary for the clearance of purchases and
sales of securities;
5. Purchase or hold any real estate or mortgage loans thereon, except
that the fund may invest in securities secured by real estate or interests
therein or issued by persons (such as real estate investment trusts) which deal
in real estate or interests therein;
6. Purchase or retain the securities of any issuer, if, to the fund's
knowledge, those officers and directors of the manager or sub-adviser who
individually own beneficially more than 0.5% of the outstanding securities of
such issuer together own beneficially more than 5% of such outstanding
securities;
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7. Invest in securities of other investment companies, except in the
event of merger or reorganization with another investment company;
8. Make loans, except to the extent the purchase of notes, bonds, or
other evidences of indebtedness or the entry into repurchase agreements or
deposits with banks may be considered loans;
9. Invest in companies for the purpose of exercising management or
control;
10. Write, purchase or sell put, call, straddle or spread options, except
for hedging purposes only, in accordance with such non-fundamental policies
that the Board may from time to time adopt;
11. Purchase or sell commodities or commodity contracts; and
12. The fund may borrow money only for temporary or emergency purposes
(not for leveraging or investment) in an amount not exceeding 1/3 of the
current value of the fund's total assets (including the amount borrowed) less
liabilities (not including the amount borrowed at the time the borrowing is
made). For purposes of this limitation, reverse repurchase agreements would not
constitute borrowings.
As a fundamental policy governing concentration, the fund will not invest 25%
or more of its total assets in any one particular industry, other than U.S.
government securities.
Furthermore, the fund has adopted the following non-fundamental restrictions
which may be changed by the Board of Trustees without shareholder approval:
(A) The fund may not invest more than 10% of its net assets in illiquid
securities;
(B) The fund may not invest in oil, gas or mineral leases;
(C) The fund may not invest in real estate limited partnerships; and
(D) For hedging purposes only, IDEX AEGON Tax Exempt may adopt policies
permitting:
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(1) the purchase and sale of interest rate futures contracts, the
purchase of put and call options thereon, and the writing of
covered call or secured put options thereon, not involving
delivery or purchase obligations in excess of 30% of the
fund's net assets, and
(2) the purchase of put and call options related to portfolio
securities and securities to be purchased for IDEX AEGON Tax
Exempt, the writing of secured put and covered call options,
and the entering into of closing purchase transactions with
respect to such options, where such transactions will not
involve futures contract margin deposits and premiums on
option purchases which, in the aggregate, exceed 5% of the
fund's net assets, in the judgment of the sub-adviser are
economically appropriate to the reduction of risks inherent in
the ongoing management of the fund, and are executed under
custodial, reserve and other arrangements consistent with
regulations and policies adopted or positions taken (i) by the
Securities and Exchange Commission for exemption from
enforcement proceedings under Section 17(f) or 18(f) of the
Investment Company Act of 1940, as amended (the "1940 Act"),
(ii) by the Commodity Futures Trading Commission (the "CFTC")
for exemption of investment companies registered under the
1940 Act from registration as "commodity pool operators" and
from certain provisions of Subpart B of Part 4 of the CFTC's
regulations, and (iii) by state securities commissioners or
administrators in the states in which the fund's shares have
been qualified for public offering.
IDEX AEGON Tax Exempt does not intend in the foreseeable future to adopt the
foregoing investment policies to permit trading in interest rate futures
contracts, options thereon, and options on portfolio securities.
As a matter of fundamental policy, IDEX AEGON Tax Exempt will invest 80% of its
assets in tax exempt securities that are not subject to alternate minimum tax.
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Except with respect to borrowing money, if a percentage limitation set forth
above is complied with at the time of the investment, a subsequent change in
the percentage resulting from any change in value of the net assets of any of
the funds will not result in a violation of such restriction. Additional
limitations on borrowing that are imposed by state law and regulations may
apply.
In addition to the above, as a fundamental policy, each of the funds, other than
IDEX AEGON Tax Exempt and IDEX AEGON Income Plus, may, notwithstanding any other
investment policy or limitation (whether or not fundamental), invest all of its
assets in the securities of a single open-end management investment company with
substantially the same fundamental investment objectives, policies and
limitations as such fund.
OTHER POLICIES AND PRACTICES OF THE FUNDS
FUTURES, OPTIONS AND OTHER DERIVATIVE INSTRUMENTS
The following investments are subject to limitations as set forth in each
fund's investment restrictions and policies:
Futures Contracts. A fund may enter into futures contracts. Futures contracts
are for the purchase or sale, for future delivery, of equity or fixed-income
securities, foreign currencies or contracts based on financial indices,
including indices of U.S. government securities, foreign government securities
and equity or fixed-income securities. The IDEX AEGON Income Plus may enter into
interest rate futures contracts. These contracts are for the purchase or sale
of fixed-income securities. U.S. futures contracts are traded on exchanges
which have been designated "contract markets" by the Commodity Futures Trading
Commission ("CFTC") and must be executed through a Futures Trading Commission
merchant ("FCM"), or brokerage firm, which is a member of the relevant contract
market. Through their clearing corporations, the exchanges guarantee
performance of the contracts as between the clearing members of the exchange.
When a fund buys or sells a futures contract, it must receive or deliver the
underlying instrument (or a cash payment based on the difference between the
underlying instrument's closing price and the price at which the contract was
entered into) at a specified price on a specified date. Transactions in futures
contracts may be made to attempt to hedge against potential changes in interest
or currency exchange rates, or the price of a security or a securities index
which might correlate with, or otherwise adversely affect, either the value of
the fund's securities or the prices of securities which the fund is considering
buying at a later date.
The buyer or seller of a futures contract is not required to deliver or pay for
the underlying instrument unless the contract is held until the delivery date.
However, both the buyer and seller are required to deposit "initial margin" for
the benefit of the FCM when the contract is entered into. Initial margin
deposits are equal to a percentage of the contract's value, as set by the
exchange on which the contract is traded, and may be maintained in cash or
liquid assets by the fund's custodian for the benefit of the FCM. Initial
margin payments are similar to good faith deposits or performance bonds.
Unlike margin extended by a securities broker, initial margin payments do not
constitute purchasing securities on margin for purposes of a fund's investment
limitations. If the value of either party's position declines, that party will
be required to make additional "variation margin" payments with the FCM to
settle the change in value on a daily basis. The party that has a gain may be
entitled to receive all or a portion of this amount. In the event of the
bankruptcy of the FCM that holds margin on behalf of a fund, that fund may be
entitled to return of the margin owed to such fund only in proportion to the
amount received by the FCM's other customers. The fund's sub-adviser will
attempt to minimize the risk by careful monitoring of the creditworthiness of
the FCMs with which a fund does business and by segregating margin payments
with the custodian.
Although a fund would segregate with the custodian cash and liquid assets in an
amount sufficient to cover its open futures obligations, the segregated assets
would be available to that fund immediately upon closing out the futures
position, while settlement of securities transactions could take several days.
However, because a fund's cash that may otherwise be invested would be held
uninvested or invested in liquid assets so long as
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the futures position remains open, such fund's return could be diminished due
to the opportunity losses of foregoing other potential investments.
The acquisition or sale of a futures contract may occur, for example, when a
fund holds or is considering purchasing equity or debt securities and seeks to
protect itself from fluctuations in prices or interest rates without buying or
selling those securities. For example, if stock or debt prices were expected to
decrease, a fund might sell equity index futures contracts, thereby hoping to
offset a potential decline in the value of equity securities in the fund by a
corresponding increase in the value of the futures contract position held by
that fund and thereby preventing the fund's net asset value from declining as
much as it otherwise would have.
Similarly, if interest rates were expected to rise, a fund might sell bond
index futures contracts, thereby hoping to offset a potential decline in the
value of debt securities in the fund by a corresponding increase in the value
of the futures contract position held by the fund. A fund also could seek to
protect against potential price declines by selling fund securities and
investing in money market instruments. However, since the futures market is
more liquid than the cash market, the use of futures contracts as an investment
technique allows a fund to maintain a defensive position without having to sell
fund securities.
Likewise, when prices of equity securities are expected to increase, or
interest rates are expected to fall, futures contracts may be bought to attempt
to hedge against the possibility of having to buy equity securities at higher
prices. This technique is sometimes known as an anticipatory hedge. Since the
fluctuations in the value of futures contracts should be similar to those of
equity securities, a fund could take advantage of the potential rise in the
value of equity or debt securities without buying them until the market has
stabilized. At that time, the futures contracts could be liquidated and such
fund could buy equity or debt securities on the cash market. To the extent a
fund enters into futures contracts for this purpose, the segregated assets
maintained to cover such fund's obligations (with respect to futures contracts)
will consist of liquid assets from its portfolio in an amount equal to the
difference between the contract price and the aggregate value of the initial
and variation margin payments made by that fund.
The ordinary spreads between prices in the cash and futures markets, due to
differences in the nature of those markets, are subject to distortions:
First, all participants in the futures market are subject to initial margin and
variation margin requirements. Rather than meeting additional variation margin
requirements, investors may close out futures contracts through offsetting
transactions which could distort the normal price relationship between the cash
and futures markets.
Second, the liquidity of the futures market depends on participants entering
into offsetting transactions rather than making or taking delivery. To the
extent participants decide to make or take delivery, liquidity in the futures
market could be reduced and prices in the futures market distorted.
Third, from the point of view of speculators, the margin deposit requirements
in the futures market are less onerous than margin requirements in the
securities market. Therefore, increased participation by speculators in the
futures market may cause temporary price distortions.
Due to the possibility of the foregoing distortions, a correct forecast of
general price trends by the fund manager still may not result in a successful
use of futures contracts.
Futures contracts entail risks. Although each of the funds that invests in such
contracts believes that their use will benefit the fund, if the fund
sub-adviser's investment judgment proves incorrect, the fund's overall
performance could be worse than if the fund had not entered into futures
contracts.
For example, if a fund has hedged against the effects of a possible decrease in
prices of securities held in its fund and prices increase instead, that fund
may lose part or all of the benefit of the increased value of the securities
because of offsetting losses in the fund's futures positions. In addition, if a
fund has insufficient cash, it may have to sell securities from its fund to
meet daily variation margin requirements. Those sales may, but will not
necessarily, be at increased prices which reflect the rising market and may
occur at a time when the sales are disadvantageous to the fund.
The prices of futures contracts depend primarily on the value of their
underlying instruments. Because there are a limited number of types of futures
contracts, it is possible that the standardized futures contracts available to
a fund will not exactly match that fund's current or potential investments. A
fund may buy and sell futures contracts based on underlying instruments with
different characteristics from the securities in which it typically invests.
For example, by hedging investments in fund securities with a futures contract
based on a broad index of securities may involve a risk that the futures
position will not correlate precisely with such performance of the fund's
investments.
Futures prices can also diverge from the prices of their underlying
instruments, even if the underlying instruments correlate with a fund's
investments. Futures prices are affected by factors such as: current and
anticipated short-term interest rates; changes in volatility of the underlying
instruments; and the time remaining until expiration of the contract. Those
factors may affect securities prices differently from futures prices.
Imperfect correlations between a fund's investments and its futures positions
may also result from: differing levels
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of demand in the futures markets and the securities markets; from structural
differences in how futures and securities are traded; and from imposition of
daily price fluctuation limits for futures contracts.
A fund may buy or sell futures contracts with a greater or lesser value than
the securities it wishes to hedge or is considering purchasing in order to
attempt to compensate for differences in historical volatility between the
futures contract and the securities. This may not be successful in all cases.
If price changes in a fund's futures positions are poorly correlated with its
other investments, its futures positions may fail to produce desired gains or
may result in losses that are not offset by the gains in that fund's other
investments.
Because futures contracts are generally settled within a day from the date they
are closed out, compared with a settlement period of seven days for some types
of securities, the futures markets can provide superior liquidity to the
securities markets. Nevertheless, there is no assurance a liquid secondary
market will exist for any particular futures contract at any particular time.
In addition, futures exchanges may establish daily price fluctuation limits for
futures contracts and may halt trading if a contract's price moves upward or
downward more than the limit in a given day. On volatile trading days when the
price fluctuation limit is reached, it may be impossible for a fund to enter
into new positions or close out existing positions. If the secondary market for
a futures contract is not liquid because of price fluctuation limits or
otherwise, the fund may not be able to promptly liquidate unfavorable futures
positions and potentially could be required to continue to hold a futures
position until the delivery date, regardless of changes in its value. As a
result, such fund's access to other assets held to cover its futures positions
also could be impaired.
Although futures contracts by their terms call for the delivery or acquisition
of the underlying commodities, or a cash payment based on the value of the
underlying commodities, in most cases the contractual obligation is offset
before the delivery date of the contract. This is accomplished by buying, in
the case of a contractual obligation to sell, or selling, in the case of a
contractual obligation to buy, an identical futures contract on a commodities
exchange. Such a transaction cancels the obligation to make or take delivery of
the commodities.
If applicable each fund intends to comply with guidelines of eligibility for
exclusion from the definition of the term "commodity pool operator" with the
CFTC and the National Futures Association, which regulate trading in the
futures markets. The funds will use futures contracts and related options
primarily for bona fide hedging purposes within the meaning of CFTC
regulations. In addition, the funds may hold positions in futures contracts and
related options that do not fall within the definition of bona fide hedging
transactions, provided that the aggregate initial margin and premiums required
to establish such positions will not exceed 5% of the fair market value of a
fund's net assets, after taking into account unrealized profits and unrealized
losses on any such contracts it has entered into.
IDEX Alger Aggressive Growth may not enter into a futures contract or related
option (except for closing transactions) if, immediately thereafter, the sum of
the amount of its initial margin and premiums on open futures contracts and
options thereon would exceed 5% of IDEX Alger Aggressive Growth's total assets
(taken at current value); however, in the case of an option that is
"in-the-money" at the time of the purchase, the "in-the-money" amount may be
excluded in calculating the 5% limitation.
Options on Futures Contracts. A fund may buy and write put and call options on
futures contracts. An option on a futures contract gives a fund the right (but
not the obligation) to buy or sell the contract at a specified price on or
before a specified date. Transactions in options on futures contracts may be
made to attempt to hedge against potential changes in interest rates or
currency exchange rates, or the price of a security or a securities index which
might correlate with, or otherwise adversely affect, either the value of the
fund's securities or the prices of securities which the fund is considering
buying at a later date. Transactions in options on future contracts will not be
made for speculation.
The purchase of a call option on a futures contract is similar in some respects
to the purchase of a call option on an individual security. Depending on the
pricing of the option compared to either the price of the futures contract upon
which it is based or the price of the underlying instrument, ownership of the
option may or may not be less risky than ownership of the futures contract or
the underlying instrument. As with the purchase of futures contracts, when a
fund is not fully invested it may buy a call option on a futures contract to
hedge against a market advance.
The writing of a call option on a futures contract constitutes a partial hedge
against declining prices of the security or foreign currency which is
deliverable under, or of the index comprising, the futures contract. If the
futures price at the expiration of the option is below the exercise price, a
fund will retain the full amount of the option premium which provides a partial
hedge against any decline that may have occurred in such fund's holdings.
The writing of a put option on a futures contract constitutes a partial hedge
against increasing prices of the security or foreign currency which is
deliverable under, or of the index comprising, the futures contract. If the
futures price at expiration of the option is higher than the exercise price, a
fund will retain the full amount of the option premium which provides a partial
hedge against any increase in the price of securities which that fund is
considering buying.
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If a call or put option a fund has written is exercised, such fund will incur a
loss which will be reduced by the amount of the premium it received. Depending
on the degree of correlation between the change in the value of its fund
securities and changes in the value of the futures positions, that fund's
losses from existing options on futures may to some extent be reduced or
increased by changes in the value of fund securities.
The purchase of a put option on a futures contract is similar in some respects
to the purchase of protective put options on fund securities. For example, a
fund may buy a put option on a futures contract to hedge its fund securities
against the risk of falling prices or rising interest rates.
The amount of risk a fund assumes when it buys an option on a futures contract
is the premium paid for the option plus related transaction costs. In addition
to the correlation risks discussed above, the purchase of an option also
entails the risk that changes in the value of the underlying futures contract
will not be fully reflected in the value of the options bought.
Options on Securities. In an effort to increase current income and to reduce
fluctuations in net asset value, each of the funds, other than IDEX AEGON Tax
Exempt and IDEX AEGON Income Plus, may write covered put and call options and
buy put and call options on securities that are traded on United States and
foreign securities exchanges, and over-the-counter. A fund also may write call
options that are not covered for cross-hedging purposes. A fund may write and
buy options on the same types of securities that the fund may purchase directly.
There are no specific limitations on a fund's writing and buying of options on
securities.
A put option gives the holder the right, upon payment of a premium, to deliver
a specified amount of a security to the writer of the option on or before a
fixed date at a predetermined price. A call option gives the holder the right,
upon payment of a premium, to call upon the writer to deliver a specified
amount of a security on or before a fixed date at a predetermined price.
A put option written by a fund is "covered" if the fund: (i) segregates cash
not available for investment or other liquid assets with a value equal to the
exercise price with its custodian; or (ii) continues to own an equivalent
number of puts of the same "series" (that is, puts on the same underlying
securities having the same exercise prices and expiration dates as those
written by the fund), or an equivalent number of puts of the same "class" (that
is, puts on the same underlying securities) with exercise prices greater than
those it has written (or if the exercise prices of the puts it holds are less
than the exercise prices of those it has written, the difference is segregated
with the custodian).
The premium paid by the buyer of an option will reflect, among other things,
the relationship of the exercise price to the market price and the volatility
of the underlying security, the remaining term of the option, supply and demand
and interest rates.
A call option written by a fund is "covered" if the fund owns the underlying
security covered by the call or has an absolute and immediate right to acquire
that security without additional cash consideration (or has segregated
additional cash with its custodian) upon conversion or exchange of other
securities held in its fund. A call option written by a fund is also deemed to
be covered: (i) if that fund holds a call at the same exercise price for the
same exercise period and on the same securities as the call written; (ii) in
the case of a call on a stock index, if the fund owns a fund of securities
substantially replicating the movement of the index underlying the call option;
or (iii) if at the time the call is written an amount of cash, U.S. government
securities or other liquid assets equal to the fluctuating market value of the
optioned securities is segregated with the custodian.
A fund may also write call options that are not covered for cross-hedging
purposes. A fund collateralizes its obligation under a written call option for
cross-hedging purposes by segregating cash or other liquid assets in an amount
not less than the market value of the underlying security, marked-to-market
daily. A fund would write a call option for cross-hedging purposes, instead of
writing a covered call option, when the premium to be received from the
cross-hedge transaction would exceed that which would be received from writing
a covered call option and the fund manager believes that writing the option
would achieve the desired hedge.
If a put or call option written by a fund were exercised, the fund would be
obligated to buy or sell the underlying security at the exercise price. Writing
a put option involves the risk of a decrease in the market value of the
underlying security, in which case the option could be exercised and the
underlying security would then be sold by the option holder to the fund at a
higher price than its current market value. Writing a call option involves the
risk of an increase in the market value of the underlying security, in which
case the option could be exercised and the underlying security would then be
sold by the fund to the option holder at a lower price than its current market
value. Those risks could be reduced by entering into an offsetting transaction.
A fund retains the premium received from writing a put or call option whether
or not the option is exercised.
The writer of an option may have no control when the underlying security must
be sold, in the case of a call option, or bought, in the case of a put option,
since with regard to certain options, the writer may be assigned an exercise
notice at any time prior to the termination of the obligation. Whether or not
an option expires unexercised, the writer retains the amount of the premium.
This amount, of course, may, in the case of a covered call option, be offset by
a decline in the market value of
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the underlying security during the option period. If a call option is
exercised, the writer experiences a profit or loss from the sale of the
underlying security. If a put option is exercised, the writer must fulfill the
obligation to buy the underlying security at the exercise price, which will
usually exceed the then market value of the underlying security.
The writer of an option that wishes to terminate its obligation may effect a
"closing purchase transaction." This is accomplished by buying an option of the
same series as the option previously written. The effect of the purchase is
that the writer's position will be canceled by the clearing corporation.
However, a writer may not effect a closing purchase transaction after being
notified of the exercise of an option. Likewise, an investor who is the holder
of an option may liquidate its position by effecting a "closing sale
transaction." This is accomplished by selling an option of the same series as
the option previously bought. There is no guarantee that either a closing
purchase or a closing sale transaction can be effected.
In the case of a written call option, effecting a closing transaction will
permit a fund to write another call option on the underlying security with
either a different exercise price or expiration date or both. In the case of a
written put option, such transaction will permit the fund to write another put
option to the extent that the exercise price thereof is secured by deposited
other liquid assets. Effecting a closing transaction also will permit the cash
or proceeds from the concurrent sale of any securities subject to the option to
be used for other fund investments. If a fund desires to sell a particular
security on which the fund has written a call option, such fund will effect a
closing transaction prior to or concurrent with the sale of the security.
A fund will realize a profit from a closing transaction if the price of a
purchase transaction is less than the premium received from writing the option
or the price received from a sale transaction is more than the premium paid to
buy the option. The fund will realize a loss from a closing transaction if the
price of the purchase transaction is more than the premium received from
writing the option or the price received from a sale transaction is less than
the premium paid to buy the option. Because increases in the market price of a
call option will generally reflect increases in the market price of the
underlying security, any loss resulting from the repurchase of a call option is
likely to be offset in whole or in part by appreciation of the underlying
security owned by the fund.
An option position may be closed out only where a secondary market for an
option of the same series exists. If a secondary market does not exist, a fund
may not be able to effect closing transactions in particular options and that
fund would have to exercise the options in order to realize any profit. If a
fund is unable to effect a closing purchase transaction in a secondary market,
it will not be able to sell the underlying security until the option expires or
it delivers the underlying security upon exercise. Reasons for the absence of a
liquid secondary market may include the following: (i) there may be
insufficient trading interest in certain options; (ii) restrictions may be
imposed by a national securities exchange on which the option is traded
("Exchange") on opening or closing transactions or both; (iii) trading halts,
suspensions or other restrictions may be imposed with respect to particular
classes or series of options or underlying securities; (iv) unusual or
unforeseen circumstances may interrupt normal operations on an Exchange; (v)
the facilities of an Exchange or the Options Clearing Corporation ("OCC") may
not at all times be adequate to handle current trading volume; or (vi) one or
more Exchanges could, for economic or other reasons, decide or be compelled at
some future date to discontinue the trading of options (or a particular class
or series of options). In that case, the secondary market on that Exchange (or
in that class or series of options) would cease to exist, although outstanding
options on that Exchange that had been issued by the OCC as a result of trades
on that Exchange would continue to be exercisable in accordance with their
terms.
A fund may, subject to its investment restrictions, write options in connection
with buy-and-write transactions. In other words, the fund may buy a security
and then write a call option against that security. The exercise price of such
call will depend upon the expected price movement of the underlying security.
The exercise price of a call option may be below ("in-the-money"), equal to
("at-the-money"), or above ("out-of-the-money") the current value of the
underlying security at the time the option is written.
Buy-and-write transactions using "in-the-money" call options may be used when it
is expected that the price of the underlying security will remain flat or
decline moderately during the option period. Buy-and-write transactions using
"at-the-money" call options may be used when it is expected that the price of
the underlying security will remain fixed or advance moderately during the
option period. Buy-and-write transactions using "out-of-the-money" call options
may be used when it is expected that the premiums received from writing the call
option plus the appreciation in the market price of the underlying security up
to the exercise price will be greater than the appreciation in the price of the
underlying security alone.
If the call options are exercised in such transactions, the fund's maximum gain
will be the premium received by it for writing the option, adjusted upwards or
downwards by the difference between that fund's purchase price of the security
and the exercise price. If the options are not exercised and the price of the
underlying security declines, the amount of such decline will be offset by the
amount of premium received.
The writing of covered put options is similar in terms of risk and return
characteristics to buy-and-write transactions. If the market price of the
underlying security rises
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or otherwise is above the exercise price, the put option will expire worthless
and a fund's gain will be limited to the premium received. If the market price
of the underlying security declines or otherwise is below the exercise price, a
fund may elect to close the position or take delivery of the security at the
exercise price and that fund's return will be the premium received from the put
options minus the amount by which the market price of the security is below the
exercise price.
A fund may buy put options to hedge against a decline in the value of its fund.
By using put options in this way, a fund will reduce any profit it might
otherwise have realized in the underlying security by the amount of the premium
paid for the put option and by transaction costs.
A fund may buy call options to hedge against an increase in the price of
securities that it may buy in the future. The premium paid for the call option
plus any transaction costs will reduce the benefit, if any, realized by such
fund upon exercise of the option, and, unless the price of the underlying
security rises sufficiently, the option may expire worthless to that fund.
In purchasing an option, a fund would be in a position to realize a gain if,
during the option period, the price of the underlying security increased (in
the case of a call) or decreased (in the case of a put) by an amount in excess
of the premium paid. The fund would realize a loss if the price of the
underlying security did not increase (in the case of a call) or decrease (in
the case of a put) during the period by more than the amount of the premium. If
a put or call option purchased by a fund were permitted to expire without being
sold or exercised, the fund would lose the amount of the premium.
Although they entitle the holder to buy equity securities, warrants on and
options to purchase equity securities do not entitle the holder to dividends or
voting rights with respect to the underlying securities, nor do they represent
any rights in the assets of the issuer of those securities.
In addition to options on securities, a fund may also purchase and sell call
and put options on securities indexes. A stock index reflects in a single
number the market value of many different stocks. Relative values are assigned
to the stocks included in an index and the index fluctuates with changes in the
market values of the stocks. The options give the holder the right to receive a
cash settlement during the term of the option based on the difference between
the exercise price and the value of the index. By writing a put or call option
on a securities index, a fund is obligated, in return for the premium received,
to make delivery of this amount. A fund may offset its position in stock index
options prior to expiration by entering into a closing transaction on an
exchange or it may let the option expire unexercised.
Use of options on securities indexes entails the risk that trading in the
options may be interrupted if trading in certain securities included in the
index is interrupted. A fund will not purchase these options unless a fund's
sub-adviser is satisfied with the development, depth and liquidity of the
market and believes the options can be closed out.
Price movements in a fund's securities may not correlate precisely with
movements in the level of an index and, therefore, the use of options on
indexes cannot serve as a complete hedge and will depend, in part, on the
ability of its sub-adviser to predict correctly movements in the direction of
the stock market generally or of a particular industry. Because options on
securities indexes require settlement in cash, a fund's sub-adviser may be
forced to liquidate fund securities to meet settlement obligations.
The amount of risk a fund assumes when it buys an option on a futures contract
is the premium paid for the option plus related transaction costs. In addition
to the correlation risks discussed above, the purchase of an option also
entails the risk that changes in the value of the underlying futures contract
will not be fully reflected in the value of the options bought.
Options on Foreign Currencies. Subject to any investment restrictions, a fund
may buy and write options on foreign currencies in a manner similar to that in
which futures contracts or forward contracts on foreign currencies will be
utilized. For example, a decline in the U.S. dollar value of a foreign currency
in which fund securities are denominated will reduce the U.S. dollar value of
such securities, even if their value in the foreign currency remains constant.
In order to protect against such diminutions in the value of fund securities, a
fund may buy put options on the foreign currency. If the value of the currency
declines, such fund will have the right to sell such currency for a fixed
amount in U.S. dollars and will offset, in whole or in part, the adverse effect
on its portfolio.
Conversely, when a rise in the U.S. dollar value of a currency in which
securities to be acquired are denominated is projected, thereby increasing the
cost of such securities, a fund may buy call options thereon. The purchase of
such options could offset, at least partially, the effects of the adverse
movements in exchange rates. As in the case of other types of options, however,
the benefit to a fund from purchases of foreign currency options will be
reduced by the amount of the premium and related transaction costs. In
addition, if currency exchange rates do not move in the direction or to the
extent desired, a fund could sustain losses on transactions in foreign currency
options that would require such fund to forego a portion or all of the benefits
of advantageous changes in those rates. In addition, in the case of other types
of options, the benefit to the fund from purchases of foreign currency options
will be reduced by the amount of the premium and related transaction costs.
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A fund may also write options on foreign currencies. For example, in attempting
to hedge against a potential decline in the U.S. dollar value of foreign
currency denominated securities due to adverse fluctuations in exchange rates,
a fund could, instead of purchasing a put option, write a call option on the
relevant currency. If the expected decline occurs, the option will most likely
not be exercised and the diminution in value of fund securities will be offset
by the amount of the premium received.
Similarly, instead of purchasing a call option to attempt to hedge against a
potential increase in the U.S. dollar cost of securities to be acquired, a fund
could write a put option on the relevant currency which, if rates move in the
manner projected, will expire unexercised and allow that fund to hedge the
increased cost up to the amount of premium. As in the case of other types of
options, however, the writing of a foreign currency option will constitute only
a partial hedge up to the amount of the premium. If exchange rates do not move
in the expected direction, the option may be exercised and a fund would be
required to buy or sell the underlying currency at a loss which may not be
offset by the amount of the premium. Through the writing of options on foreign
currencies, a fund also may lose all or a portion of the benefits which might
otherwise have been obtained from favorable movements in exchange rates.
A fund may write covered call options on foreign currencies. A call option
written on a foreign currency by a fund is "covered" if that fund owns the
underlying foreign currency covered by the call or has an absolute and
immediate right to acquire that foreign currency without additional cash
consideration (or for additional cash consideration that is segregated by its
custodian) upon conversion or exchange of other foreign currency held in its
fund. A call option is also covered if: (i) the fund holds a call at the same
exercise price for the same exercise period and on the same currency as the
call written; or (ii) at the time the call is written, an amount of cash, U.S.
government securities or other liquid assets equal to the fluctuating market
value of the optioned currency is segregated with the custodian.
A fund may write call options on foreign currencies for cross-hedging purposes
that would not be deemed to be covered. A call option on a foreign currency is
for cross-hedging purposes if it is not covered but is designed to provide a
hedge against a decline due to an adverse change in the exchange rate in the
U.S. dollar value of a security which the fund owns or has the right to acquire
and which is denominated in the currency underlying the option. In such
circumstances, a fund collateralizes the option by segregating cash or other
liquid assets in an amount not less than the value of the underlying foreign
currency in U.S. dollars marked-to-market daily.
Forward Contracts. A forward contract is an agreement between two parties in
which one party is obligated to deliver a stated amount of a stated asset at a
specified time in the future, and the other party is obligated to pay a
specified invoice amount for the assets at the time of delivery. A fund may
enter into forward contracts to purchase and sell government securities,
foreign currencies or other financial instruments. Forward contracts generally
are traded in an interbank market conducted directly between traders (usually
large commercial banks) and their customers. Unlike futures contracts, which
are standardized contracts, forward contracts can be specifically drawn to meet
the needs of the parties that enter into them. The parties to a forward
contract may agree to offset or terminate the contract before its maturity, or
may hold the contract to maturity and complete the contemplated exchange.
The following discussion summarizes a fund's principal uses of forward foreign
currency exchange contracts ("forward currency contracts"):
A fund may enter into forward currency contracts with stated contract values of
up to the value of that fund's assets. A forward currency contract is an
obligation to buy or sell an amount of a specified currency for an agreed price
(which may be in U.S. dollars or another currency). A fund will exchange
foreign currencies for U.S. dollars and for other foreign currencies in the
normal course of business.
They may buy and sell currencies through forward currency contracts in order to
fix a price for securities it has agreed to buy or sell ("transaction hedge").
A fund also may hedge some or all of its investments denominated in foreign
currency, or exposed to foreign currency fluctuations against a decline in the
value of that currency relative to the U.S. dollar. This is accomplished by
entering into forward currency contracts to sell an amount of that currency (or
a proxy currency whose performance is expected to replicate or exceed the
performance of that currency relative to the U.S. dollar) approximating the
value of some or all of its fund securities denominated in that currency
("position hedge"), or by participating in options or futures contracts with
respect to the currency.
A fund also may enter into a forward currency contract with respect to a
currency where such fund is considering the purchase or sale of investments
denominated in that currency but has not yet selected the specific investments
("anticipatory hedge"). In any of these circumstances a fund may,
alternatively, enter into a forward currency contract to purchase or sell one
foreign currency for a second currency that is expected to perform more
favorably relative to the U.S. dollar if the fund's sub-adviser believes there
is a reasonable degree of correlation between movements in the two currencies
("cross-hedge").
These types of hedging seek to minimize the effect of currency appreciation as
well as depreciation, but do not eliminate fluctuations in the underlying U.S.
dollar equivalent value of the proceeds of, or rates of return on, a fund's
foreign currency denominated fund securities.
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The matching of the increase in value of a forward contract and the decline in
the U.S. dollar equivalent value of the foreign currency denominated asset that
is the subject of the hedge generally will not be precise. Shifting a fund's
currency exposure from one foreign currency to another removes that fund's
opportunity to profit from increases in the value of the original currency and
involves a risk of increased losses to such fund if the fund's sub-adviser's
position projection of future exchange rates is inaccurate. Proxy hedges and
cross-hedges may result in losses if the currency used to hedge does not
perform similarly to the currency in which hedged securities are denominated.
Unforeseen changes in currency prices may result in poorer overall performance
for a fund than if it had not entered into such contracts.
A fund will cover outstanding forward currency contracts by maintaining liquid
fund securities denominated in the currency underlying the forward contract or
the currency being hedged. To the extent that a fund is not able to cover its
forward currency positions with underlying fund securities, its custodian will
segregate cash or other liquid assets having a value equal to the aggregate
amount of such fund's commitments under forward contracts entered into with
respect to position hedges, cross-hedges and anticipatory hedges. If the value
of the securities used to cover a position or the value of segregated assets
declines, the fund will find alternative cover or segregate additional cash or
other liquid assets on a daily basis so that the value of the covered and
segregated assets will be equal to the amount of a fund's commitments with
respect to such contracts.
As an alternative to segregating assets, a fund may buy call options permitting
the fund to buy the amount of foreign currency being hedged by a forward sale
contract, or a fund may buy put options permitting it to sell the amount of
foreign currency subject to a forward buy contact.
While forward contracts are not currently regulated by the CFTC, the CFTC may
in the future assert authority to regulate forward contracts. In such event, a
fund's ability to utilize forward contracts may be restricted. In addition, a
fund may not always be able to enter into forward contracts at attractive
prices and may be limited in its ability to use these contracts to hedge its
assets.
Swaps and Swap-Related Products. In order to attempt to protect the value of
its investments from interest rate or currency exchange rate fluctuations, a
fund may, subject to its investment restrictions, enter into interest rate and
currency exchange rate swaps, and may buy or sell interest rate and currency
exchange rate caps and floors. A fund's sub-adviser may enter into these
transactions primarily to attempt to preserve a return or spread on a
particular investment or portion of its portfolio. A fund also may enter into
these transactions to attempt to protect against any increase in the price of
securities the fund may consider buying at a later date.
The funds do not intend to use these transactions as a speculative investment.
Interest rate swaps involve the exchange by a fund with another party of their
respective commitments to pay or receive interest, e.g., an exchange of
floating rate payments for fixed rate payments. The exchange commitments can
involve payments to be made in the same currency or in different currencies.
The purchase of an interest rate cap entitles the purchaser, to the extent that
a specified index exceeds a predetermined interest rate, to receive payments of
interest on a contractually based principal amount from the party selling the
interest rate cap. The purchase of an interest rate floor entitles the
purchaser, to the extent that a specified index falls below a predetermined
interest rate, to receive payments of interest on a contractually based
principal amount from the party selling the interest rate floor.
A fund, subject to its investment restrictions, enter into interest rate swaps,
caps and floors on either an asset-based or liability-based basis, depending
upon whether it is hedging its assets or its liabilities, and will usually
enter into interest rate swaps on a net basis (i.e., the two payment streams
are netted out, with a fund receiving or paying, as the case may be, only the
net amount of the two payments). The net amount of the excess, if any, of a
fund's obligations over its entitlements with respect to each interest rate
swap, will be calculated on a daily basis. An amount of cash or other liquid
assets having an aggregate net asset at least equal to the accrued excess will
be segregated by its custodian.
If a fund enters into an interest rate swap on other than a net basis, it will
maintain a segregated account in the full amount accrued on a daily basis of
its obligations with respect to the swap. A fund will not enter into any
interest rate swap, cap or floor transaction unless the unsecured senior debt
or the claims-paying ability of the other party thereto is rated in one of the
three highest rating categories of at least one nationally recognized
statistical rating organization at the time of entering into such transaction.
A fund's sub-adviser will monitor the creditworthiness of all counterparties on
an ongoing basis. If there is a default by the other party to such a
transaction, the fund will have contractual remedies pursuant to the agreements
related to the transaction.
The swap market has grown substantially in recent years with a large number of
banks and investment banking firms acting both as principals and as agents
utilizing standardized swap documentation. The sub-advisers have determined
that, as a result, the swap market has become relatively liquid. Caps and
floors are more recent innovations for which standardized documentation has not
yet been developed and, accordingly, they are less liquid than swaps. To the
extent a fund sells (i.e., writes) caps and floors, it will segregate cash or
other liquid assets having an aggregate net asset
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value at least equal to the full amount, accrued on a daily basis, of its
obligations with respect to any caps or floors.
There is no limit on the amount of interest rate swap transactions that may be
entered into by a fund, unless so stated in its investment objectives, although
none of the funds presently intends to engage in such transactions in excess of
5% of its total assets. These transactions may in some instances involve the
delivery of securities or other underlying assets by a fund or its counterparty
to collateralize obligations under the swap.
Under the documentation currently used in those markets, the risk of loss with
respect to interest rate swaps is limited to the net amount of the interest
payments that a fund is contractually obligated to make. If the other party to
an interest rate swap that is not collateralized defaults, a fund would risk
the loss of the net amount of the payments that it contractually is entitled to
receive. A fund may buy and sell (i.e., write) caps and floors without
limitation, subject to the segregation requirement described above.
In addition to the instruments, strategies and risks described in this SAI and
in the prospectus, there may be additional opportunities in connection with
options, futures contracts, forward currency contracts and other hedging
techniques that become available as a fund's sub-adviser develops new
techniques, as regulatory authorities broaden the range of permitted
transactions, and as new instruments are developed. The funds' sub-advisers may
use these opportunities to the extent they are consistent with each fund's
investment objective and as are permitted by a fund's investment limitations and
applicable regulatory requirements.
Euro Instruments. The funds may each make investments in Euro instruments. Euro
instruments are U.S. dollar-denominated futures contracts, or options thereon,
which are linked to the London Interbank Offered Rate (the "LIBOR"), although
foreign currency-denominated instruments are available from time to time. Euro
futures contracts enable purchasers to obtain a fixed rate for the lending of
funds, and sellers to obtain a fixed rate for borrowings. A fund might use Euro
futures contracts and options thereon to hedge against changes in LIBOR, which
may be linked to many interest rate swaps and fixed income instruments.
Special Investment Considerations and Risks. The successful use of the
investment practices described above with respect to futures contracts, options
on futures contracts, forward contracts, options on securities, options on
foreign currencies and swaps and swap-related products draws upon skills and
experience which are different from those needed to select the other
instruments in which a fund may invest. Should interest or exchange rates, or
the prices of securities or financial indices move in an unexpected manner, a
fund may not achieve the desired benefits of the foregoing instruments or may
realize losses and thus be in a worse position than if such strategies had not
been used. Unlike many exchange-traded futures contracts and options on futures
contracts, there are no daily price fluctuation limits with respect to options
on currencies, forward contracts and other negotiated or over-the-counter
instruments, and adverse market movements could therefore continue to an
unlimited extent over a period of time. In addition, the correlation between
movements in the price of the securities and currencies hedged or used for
cover will not be perfect and could produce unanticipated losses.
A fund's ability to dispose of its positions in the foregoing instruments will
depend on the availability of liquid markets in the instruments. Markets in a
number of the instruments are relatively new and still developing, and it is
impossible to predict the amount of trading interest that may exist in those
instruments in the future.
Particular risks exist with respect to the use of each of the foregoing
instruments and could result in such adverse consequences to a fund as: the
possible loss of the entire premium paid for an option bought by a fund; the
inability of the fund, as the writer of a covered call option, to benefit from
the appreciation of the underlying securities above the exercise price of the
option; and the possible need to defer closing out positions in certain
instruments to avoid adverse tax consequences. As a result, no assurance can be
given that a fund will be able to use those instruments effectively for their
intended purposes.
In connection with certain of its hedging transactions, a fund must segregate
assets with the fund's custodian bank to ensure that such fund will be able to
meet its obligations pursuant to these instruments. Segregated assets generally
may be not be disposed of for so long as a fund maintains the positions giving
rise to the segregation requirement. Segregation of a large percentage of a
fund's assets could impede implementation of that fund's investment policies or
its ability to meet redemption requests or other current obligations.
Additional Risks of Options on Foreign Currencies, Forward Contracts and
Foreign Instruments. Unlike transactions entered into by a fund in futures
contracts, options on foreign currencies and forward contracts are not traded
on contract markets regulated by the CFTC or (with the exception of certain
foreign currency options) by the SEC. To the contrary, such instruments are
traded through financial institutions acting as market-makers, although foreign
currency options are also traded on certain national securities exchanges, such
as the Philadelphia Stock Exchange and the Chicago Board Options Exchange,
subject to SEC regulation.
Options on currencies may be traded over-the-counter. In an over-the-counter
trading environment, many of the
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protections afforded to exchange participants will not be available. For
example, there are no daily price fluctuation limits, and adverse market
movements could therefore continue to an unlimited extent over a period of
time. Although the buyer of an option cannot lose more than the amount of the
premium plus related transaction costs, this entire amount could be lost.
Moreover, an option writer and a buyer or seller of futures or forward
contracts could lose amounts substantially in excess of any premium received or
initial margin or collateral posted due to the potential additional margin and
collateral requirements associated with such positions.
Options on foreign currencies traded on national securities exchanges are
within the jurisdiction of the SEC, as are other securities traded on such
exchanges. As a result, many of the protections provided to traders on
organized exchanges will be available with respect to such transactions. In
particular, all foreign currency option positions entered into on a national
securities exchange are cleared and guaranteed by the OCC, thereby reducing the
risk of counterparty default. Further, a liquid secondary market in options
traded on a national securities exchange may be more readily available than in
the over-the-counter market, potentially permitting a fund to liquidate open
positions at a profit prior to exercise or expiration, or to limit losses in
the event of adverse market movements.
The purchase and sale of exchange-traded foreign currency options, however, is
subject to the risks of the availability of a liquid secondary market described
above, as well as the risks regarding adverse market movements, margining of
options written, the nature of the foreign currency market, possible
intervention by governmental authorities and the effects of other political and
economic events.
In addition, exchange-traded options on foreign currencies involve certain
risks not presented by the over-the-counter market. For example, exercise and
settlement of such options must be made exclusively through the OCC, which has
established banking relationships in applicable foreign countries for this
purpose. As a result, the OCC may, if it determines that foreign government
restrictions or taxes would prevent the orderly settlement of foreign currency
option exercises, or would result in undue burdens on the OCC or its clearing
member, impose special procedures on exercise and settlement. These include
such things as technical changes in the mechanics of delivery of currency, the
fixing of dollar settlement prices or prohibitions on exercise.
In addition, options on U.S. government securities, futures contracts, options
on futures contracts, forward contracts and options on foreign currencies may
be traded on foreign exchanges and over-the-counter in foreign countries. Such
transactions are subject to the risk of governmental actions affecting trading
in or the prices of foreign currencies or securities. The value of such
positions also could be adversely affected by: (i) other complex foreign
political and economic factors; (ii) less availability than that available in
the United States of data on which to make trading decisions; (iii) delays in a
fund's ability to act upon economic events occurring in foreign markets during
nonbusiness hours in the United States; (iv) the imposition of different
exercise and settlement terms and procedures and margin requirements than in
the United States; and (v) low trading volume.
OTHER INVESTMENT COMPANIES
Subject to its investment restrictions, a fund may invest in securities issued
by other investment companies as permitted. A fund may indirectly bear a
portion of any investment advisory fees and expenses paid by funds in which it
invests, in addition to the advisory fees and expenses paid by the fund.
IDEX GE/Scottish Equitable International Equity may not purchase securities of
other investment companies, other than a security acquired in connection with a
merger, consolidation, acquisition, reorganization or offer of exchange and
except as otherwise permitted under the 1940 Act. An investment by IDEX GE/
Scottish Equitable International Equity in GEI Short-Term Investment Fund, is
not considered an investment in another investment company for purposes of this
resctriction. The GEI Short-Term Investment Fund is an investment Fund advised
by GEIM, created specifically to serve as a vehicle for the collective
investment of cash balances of the Fund and other accounts advised by GEIM or
its affiliate, General Electric Investment Corporation.
ZERO COUPON, PAY-IN-KIND AND
STEP COUPON SECURITIES
Subject to each fund's investment restrictions, a fund may invest in zero
coupon, pay-in-kind and step-coupon securities. Zero-coupon bonds are issued and
traded at a discount from their face value. They do not entitle the holder to
any periodic payment of interest prior to maturity. Step coupon bonds trade at a
discount from their face value and pay coupon interest. The coupon rate is low
for an initial period and then increases to a higher coupon rate thereafter. The
discount from the face amount or par value depends on the time remaining until
cash payments begin, prevailing interest rates, liquidity of the security and
the perceived credit quality of the issuer. Pay-in-kind bonds give the issuer an
option to pay cash at a coupon payment date or give the holder of the security a
similar bond with the same coupon rate and a face value equal to the amount of
the coupon payment that would have been made. The IDEX JCC Flexible Income may
also invest in "strips," which are debt securities that are stripped of their
interest after the securities are issued, but otherwise are comparable to zero
coupon bonds.
Current Federal income tax law requires holders of zero-coupon securities and
step-coupon securities to report the portion of the original issue discount on
such securities that accrues that year as interest income, even
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<PAGE>
though the holders receive no cash payments of interest during the year. In
order to qualify as a "regulated investment company" under the Internal Revenue
Code of 1986 ("Code"), a fund must distribute its investment company taxable
income, including the original issue discount accrued on zero-coupon or
step-coupon bonds. Because it will not receive cash payments on a current basis
in respect of accrued original-issue discount on zero-coupon bonds or
step-coupon bonds during the period before interest payments begin, in some
years a fund may have to distribute cash obtained from other sources in order
to satisfy the distribution requirements under the Code. A fund might obtain
such cash from selling other portfolio holdings. These actions may reduce the
assets to which fund expenses could be allocated and may reduce the rate of
return for such fund. In some circumstances, such sales might be necessary in
order to satisfy cash distribution requirements even though investment
considerations might otherwise make it undesirable for a fund to sell the
securities at the time.
Generally, the market prices of zero-coupon bonds and strip securities are more
volatile than the prices of securities that pay interest periodically in cash
and they are likely to respond to changes in interest rates to a greater degree
than other types of debt securities having similar maturities and credit
quality.
INCOME PRODUCING SECURITIES
IDEX JCC Flexible Income focuses its investments in income-producing securities.
IDEX JCC Flexible Income will purchase defaulted securities only when the
sub-adviser believes, based upon analysis of the financial condition, results of
operations and economic outlook of an issuer, that there is potential for
resumption of income payments and that the securities offer an unusual
opportunity for capital appreciation. Notwithstanding the sub-adviser's belief
as to the resumption of income payments, however, the purchase of any security
on which payment of interest or dividends is suspended involves a high degree of
risk. Such risk includes, among other things, the following:
Financial and Market Risks. Investments in securities that are in
default involve a high degree of financial and market risks that can
result in substantial, or at times even total, losses. Issuers of
defaulted securities may have substantial capital needs and may become
involved in bankruptcy or reorganization proceedings. Among the problems
involved in investments in such issuers is the fact that it may be
difficult to obtain information about the condition of such issuers. The
market prices of such securities also are subject to abrupt and erratic
movements and above average price volatility, and the spread between the
bid and asked prices of such securities may be greater than normally
expected.
Disposition of Portfolio Securities. IDEX JCC Flexible Income
generally intends to purchase securities for which its sub-adviser expects
an active market to be maintained, defaulted securities may be less
actively traded than other securities making it more difficult to dispose
of substantial holdings of such securities at prevailing market prices.
IDEX JCC Flexible Income will limit its holdings of any such securities
to amounts that the sub-adviser believes could be readily sold, and its
holdings of such securities would, in any event, be limited so as not to
limit IDEX JCC Flexible Income's ability to readily dispose of its
securities to meet redemptions.
Other. Defaulted securities require active monitoring and may, at
times, require participation in bankruptcy or receivership proceedings on
behalf of the IDEX JCC Flexible Income.
Other types of income producing securities that the funds may purchase include,
but are not limited to, the following:
Variable and Floating Rate Obligations. These types of securities are
relatively long-term instruments that often carry demand features
permitting the holder to demand payment of principal at any time or at
specified intervals prior to maturity.
Standby Commitments. These instruments, which are similar to a put,
give a fund the option to obligate a broker, dealer or bank to repurchase
a security held by a fund at a specified price.
Tender Option Bonds. Tender option bonds are relatively long-term bonds
that are coupled with the agreement of a third party (such as a broker,
dealer or bank) to grant the holders of such securities the option to
tender the securities to the institution at periodic intervals.
Inverse Floaters. Inverse floaters are instruments whose interest bears
an inverse relationship to the interest rate on another security. The
funds will not invest more than 5% of their respective assets in inverse
floaters.
The funds will purchase instruments with demand features, standby commitments
and tender option bonds primarily for the purpose of increasing the liquidity
of their portfolios.
LENDING OF FUND SECURITIES
Subject to any applicable investment restriction relating to lending, a fund
may lend securities from its portfolio. Under applicable regulatory
requirements (which are subject to change), the following conditions apply to
securities loans: a) the loan must be continuously secured by liquid assets
maintained on a current basis in an amount at least equal to the market value
of the securities loaned; b) a fund must receive any dividends or interest paid
by the issuer on such securities; c) a
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<PAGE>
fund must have the right to call the loan and obtain the securities loaned at
any time upon notice of not more than five business days, including the right
to call the loan to permit voting of the securities; and d) a fund must receive
either interest from the investment of collateral or a fixed fee from the
borrower. Securities loaned by a fund remain subject to fluctuations in market
value. A fund may pay reasonable finders, custodian and administrative fees in
connection with a loan. Securities lending, as with other extensions of credit,
involves the risk that the borrower may default. Although securities loans will
be fully collateralized at all times, a fund may experience delays in, or be
prevented from, recovering the collateral. During a period that a fund seeks to
enforce its rights against the borrower, the collateral and the securities
loaned remain subject to fluctuations in market value. A fund may also incur
expenses in enforcing its rights. If a fund has sold the loaned security, it
may not be able to settle the sale of the security and may incur potential
liability to the buyer of the security on loan for its costs to cover the
purchase. A fund will not lend securities to any advisers or sub-advisers to
the funds or their affiliates. By lending its securities, a fund can increase
its income by continuing to receive interest or dividends on the loaned
securities as well as by either investing the cash collateral in short-term
securities or by earning income in the form of interest paid by the borrower
when U.S. government securities are used as collateral.
JOINT TRADING ACCOUNTS
IDEX JCC Growth, IDEX JCC Global, IDEX JCC Flexible Income, IDEX JCC Balanced
and IDEX JCC Capital Appreciation, and other clients of Janus and its
affiliates, may place assets in joint trading accounts for the purpose of making
short-term investments in money market instruments. The Board of Trustees must
approve the participation of each of these funds in these joint trading accounts
and procedures pursuant to which the joint accounts will operate. The joint
trading accounts are to be operated pursuant to an exemptive order issued to
Janus and certain of its affiliates by the SEC. All joint account participants,
including these funds, will bear the expenses of the joint trading accounts in
proportion to their investments. Financial difficulties of other participants in
the joint accounts could cause delays or other difficulties for the funds in
withdrawing their assets from joint trading accounts.
ILLIQUID SECURITIES
Subject to each fund's investment restrictions, a fund may invest its assets in
illiquid securities (i.e., securities that are not readily marketable). The
Board of Trustees has authorized the sub-advisers to make liquidity
determinations with respect to its securities, including Rule 144A securities,
commercial paper and municipal lease obligations in accordance with the
guidelines established by the Board of Trustees. Under the guidelines, the sub-
adviser will consider the following factors in determining whether a Rule 144A
security or a municipal lease obligation is liquid: 1) the frequency of trades
and quoted prices for the security; 2) the number of dealers willing to purchase
or sell the security and the number of other potential purchasers; 3) the
willingness of dealers to undertake to make a market in the security; and 4) the
nature of the marketplace trades, including the time needed to dispose of the
security, the method of soliciting offers and the mechanics of the transfer.
With respect to municipal lease obligations, the sub-adviser of IDEX AEGON Tax
Exempt and IDEX JCC Flexible Income will also consider factors unique to
municipal lease obligations including the general creditworthiness of the
municipality, the importance of the property covered by the lease obligation and
the likelihood that the marketability of the obligation will be maintained
throughout the time the obligation is held by the fund. The sale of illiquid
securities often requires more time and results in higher brokerage charges or
dealer discounts and other selling expenses than does the sale of securities
eligible for trading on national securities exchanges or in the over-the-counter
markets. A fund may be restricted in its ability to sell such securities at a
time when the sub-adviser deems it advisable to do so. In addition, in order to
meet redemption requests, a fund may have to sell other assets, rather than such
illiquid securities, at a time which is not advantageous.
REPURCHASE AND REVERSE REPURCHASE
AGREEMENTS
Subject to each fund's investment restrictions, a fund may enter into repurchase
and reverse repurchase agreements. In a repurchase agreement, a fund purchases a
security and simultaneously commits to resell that security to the seller at an
agreed upon price on an agreed upon date within a number of days (usually not
more than seven) from the date of purchase. The resale price reflects the
purchase price plus an agreed upon incremental amount which is unrelated to the
coupon rate or maturity of the purchased security. A repurchase agreement
involves the obligation of the seller to pay the agreed upon price, which
obligation is in effect secured by the value (at least equal to the amount of
the agreed upon resale price and marked-to-market daily) of the underlying
security or collateral). A fund may engage in a repurchase agreement with
respect to any security in which it is authorized to invest. While it does not
presently appear possible to eliminate all risks from these transactions
(particularly the possibility of a decline in the market value of the underlying
securities, as well as delays and costs to a fund in connection with bankruptcy
proceedings), it is the policy of each fund to limit repurchase agreements to
those parties whose creditworthiness has been reviewed and found satisfactory by
the sub-adviser for that fund and approved by the Board of Trustees. In
addition, the funds currently intend to invest primarily in repurchase
agreements collateralized by cash, U.S. government securities, or money market
instruments whose value equals at least 100% of the repurchase price,
marked-to-market daily.
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In a reverse repurchase agreement, a fund sells a portfolio instrument to
another party, such as a bank or broker-dealer, in return for cash and agrees
to repurchase the instrument at a particular price and time. While a reverse
repurchase agreement is outstanding, a fund will segregate with its custodian
cash and appropriate liquid assets with the funds' custodian to cover its
obligation under the agreement. The funds will enter into reverse repurchase
agreements only with parties the investment sub-adviser for each fund deems
creditworthy and that have been reviewed by the Board of Trustees.
The IDEX Goldman Sachs Growth may, together with other registered investment
companies managed by GSAM or its affiliates, transfer uninvested cash balances
into a single joint account, the daily aggregate balance of which will be
invested in one or more repurchase agreements.
PASS-THROUGH SECURITIES
Each of the funds may, in varying degrees, invest in various types of
pass-through securities, such as mortgage-backed securities, asset-backed
securities and participation interests. A pass-through security is a share or
certificate of interest in a pool of debt obligations that have been repackaged
by an intermediary, such as a bank or broker-dealer. The purchaser receives an
undivided interest in the underlying pool of securities. The issuers of the
underlying securities make interest and principal payments to the intermediary
which are passed through to purchasers, such as the funds.
The most common type of pass-through securities are mortgage-backed securities.
Government National Mortgage Association ("GNMA") Certificates are mortgage-
backed securities that evidence an undivided interest in a pool of mortgage
loans. GNMA Certificates differ from traditional bonds in that principal is
paid back monthly by the borrowers over the term of the loan rather than
returned in a lump sum at maturity. A fund will generally purchase "modified
pass-through" GNMA Certificates, which entitle the holder to receive a share of
all interest and principal payments paid and owned on the mortgage pool, net of
fees paid to the "issuer" and GNMA, regardless of whether or not the mortgagor
actually makes the payment. GNMA Certificates are backed as to the timely
payment of principal and interest by the full faith and credit of the U.S.
government.
The Federal Home Loan Mortgage Corporation ("FHLMC") issues two types of
mortgage pass-through securities: mortgage participation certificates ("PCs")
and guaranteed mortgage certificates ("GMCs"). PCs resemble GNMA Certificates
in that each PC represents a pro rata share of all interest and principal
payments made and owned on the underlying pool. FHLMC guarantees timely
payments of interest on PCs and the full return of principal. GMCs also
represent a pro rata interest in a pool of mortgages. However, these
instruments pay interest semi-annually and return principal once a year in
guaranteed minimum payments. This type of security is guaranteed by FHLMC as to
timely payment of principal and interest, but is not backed by the full faith
and credit of the U.S. government.
The Federal National Mortgage Association ("FNMA") issues guaranteed mortgage
pass-through certificates ("FNMA Certificates"). FNMA Certificates resemble
GNMA Certificates in that each FNMA Certificate represents a pro rata share of
all interest and principal payments made and owned on the underlying pool. This
type of security is guaranteed by FNMA as to timely payment of principal and
interest, but it is not backed by the full faith and credit of the U.S.
government.
Each of the mortgage-backed securities described above is characterized by
monthly payments to the holder, reflecting the monthly payments made by the
borrowers who received the underlying mortgage loans. The payments to the
security holders (such as a fund), like the payments on the underlying loans,
represent both principal and interest. Although the underlying mortgage loans
are for specified periods of time, such as 20 or 30 years, the borrowers can,
and typically do, pay them off sooner. Thus, the security holders frequently
receive prepayments of principal in addition to the principal that is part of
the regular monthly payments. A borrower is more likely to prepay a mortgage
that bears a relatively high rate of interest. This means that in times of
declining interest rates, some of a fund's higher yielding mortgage-backed
securities may be converted to cash. That fund will then be forced to accept
lower interest rates when that cash is used to purchase additional securities
in the mortgage-backed securities sector or in other investment sectors.
Mortgage and asset-backed securities may have periodic income payments or may
pay interest at maturity (as is the case with Treasury bills or zero-coupon
bonds).
Asset-backed securities represent interests in pools of consumer loans and are
backed by paper or accounts receivables originated by banks, credit card
companies or other providers of credit. Generally, the originating bank or
credit provider is neither the obligor or guarantor of the security and
interest and principal payments ultimately depend upon payment of the
underlying loans by individuals. Tax-exempt asset-backed securities include
units of beneficial interests in pools of purchase contracts, financing leases,
and sales agreements that may be created when a municipality enters into an
installment purchase contract or lease with a vendor. Such securities may be
secured by the assets purchased or leased by the municipality; however, if the
municipality stops making payments, there generally will be no recourse against
the vendor. The market for tax-exempt asset-backed securities is still
relatively new. These obligations are likely to involve unscheduled prepayments
of principal.
HIGH YIELD/HIGH-RISK BONDS
High-yield/high-risk, below investment grade securities (commonly known as
"junk bonds") involve significant credit and liquidity concerns and fluctuating
yields, and are not suitable for short-term investing. Higher yields
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<PAGE>
are ordinarily available on fixed-income securities which are unrated or are
rated in the lower rating categories of recognized rating services such as
Moody's and Standard & Poor's.
Lower rated bonds also involve the risk that the issuer will not make interest
or principal payments when due. In the event of an unanticipated default, a
fund owning such bonds would experience a reduction in its income, and could
expect a decline in the market value of the securities so affected. Such funds,
furthermore, may incur additional costs in seeking the recovery of the
defaulted securities. More careful analysis of the financial condition of each
issuer of lower rated securities is therefore necessary. During an economic
downturn or substantial period of rising interest rates, highly leveraged
issuers may experience financial stress which would adversely affect their
ability to service their principal and interest payments obligations, to meet
projected business goals and to obtain additional financing.
The market prices of lower grade securities are generally less sensitive to
interest rate changes than higher rated investments, but more sensitive to
adverse economic or political changes or individual developments specific to
the issuer. Periods of economic or political uncertainty and change can be
expected to result in volatility of prices of these securities. Since the last
major economic recession, there has been a substantial increase in the use of
high-yield debt securities to fund highly leveraged corporate acquisitions and
restructurings, so past experience with high-yield securities in a prolonged
economic downturn may not provide an accurate indication of future performance
during such periods. Lower rated securities also may have less liquid markets
than higher rated securities, and their liquidity as well as their value may be
more severely affected by adverse economic conditions. Adverse publicity and
investor perceptions as well as new or proposed laws may also have a greater
negative impact on the market for lower rated bonds.
Unrated securities are not necessarily of lower quality than rated securities,
but the markets for lower rated and nonrated securities are more limited than
those in which higher rated securities are traded. In addition, an economic
downturn or increase in interest rates is likely to have a greater negative
effect on: (i) the market for lower rated and nonrated securities; (ii) the
value of high yield debt securities held by a fund; (iii) the new asset value
of a fund holding such securities; and (iv) the ability of the bonds' issuers
to repay principal and interest, meet projected business goals and obtain
additional financing than on higher rated securities.
WARRANTS AND RIGHTS
Subject to its investment restrictions, a fund may invest in warrants and
rights. A warrant is a type of security that entitles the holder to buy a
proportionate amount of common stock at a specified price, usually higher than
the market price at the time of issuance, for a period of years or to
perpetuity. In contrast, rights, which also represent the right to buy common
shares, normally have a subscription price lower than the current market value
of the common stock and a life of two to four weeks.
U.S. GOVERNMENT SECURITIES
Examples of the types of U.S. Government securities that a fund may hold
include, in addition to those described in the prospectus and direct
obligations of the U.S. Treasury, the obligations of the Federal Housing
Administration, Farmers Home Administration, Small Business Administration,
General Services Administration, Central Bank for Cooperatives, Federal Farm
Credit Banks, Federal Home Loan Bank, Federal Intermediate Credit Banks,
Federal Land Banks and Maritime Administration. U.S. Government securities may
be supported by the full faith and credit of the U.S. Government (such as
securities of the Small Business Administration); by the right of the issuer to
borrow from the Treasury (such as securities of the Federal Home Loan Bank); by
the discretionary authority of the U.S. Government to purchase the agency's
obligations (such as securities of the Federal National Mortgage Association);
or only by the credit of the issuing agency.
MONEY MARKET RESERVES
(IDEX T. ROWE PRICE SMALL CAP AND IDEX T. ROWE PRICE DIVIDEND GROWTH)
It is expected that the funds will invest its cash reserves primarily in a money
market fund established for the exclusive use of the T. Rowe Price family of
mutual funds and other clients of T. Rowe Price and Price-Fleming. The Reserve
Investment Fund ("RIF") is a series of Reserve Investment Funds, Inc. Additional
series may be created in the future. This fund was created and operated under an
Exemptive Order issued by the Securities and Exchange Commission (Investment
Company Act Release No. IC-22770, July 29, 1997).
The fund must comply with the requirements of Rule 2a-7 under the 1940 Act
governing money market funds. The RIF invests at least 95% of its total assets
in prime money market instruments receiving the highest credit rating.
The RIF provides a very efficient means of managing the cash reserves of the
funds. While the RIF does not pay an advisory fee to the Investment Manager, it
will incur other expenses. However, the RIF is expected by T. Rowe Price to
operate at a very low expense ratio. The funds will only invest in RIF to the
extent it is consistent with their objectives and programs.
RIF is not insured or guaranteed by the U.S. government, and there is no
assurance it will maintain a stable net asset value of $1.00 per share.
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TURNOVER RATE
<TABLE>
<CAPTION>
OCTOBER 31,
1998 OCTOBER 31, 1997
FUND* ------------ -----------------
<S> <C> <C>
IDEX Alger Aggressive Growth 142.08% 120.96%
IDEX GE/Scottish Equitable International Equity 50.01% 21.85%
IDEX JCC Capital Appreciation 136.59% 130.48%
IDEX JCC Global 87.68% 91.02%
IDEX JCC Growth 27.19% 91.52%
IDEX C.A.S.E. Growth 147.01% 183.06%
IDEX NWQ Value Equity 30.43% 6.40%
IDEX LKCM Strategic Total Return 32.12% 51.44%
IDEX Dean Asset Allocation 55.45% 71.63%
IDEX JCC Balanced 61.50% 127.08%
IDEX JCC Flexible Income 90.63% 135.53%
IDEX AEGON Income Plus 53.09% 62.28%
IDEX AEGON Tax Exempt 42.42% 71.29%
</TABLE>
- ------------------------------
* No information is included for IDEX Goldman Sachs Growth, IDEX T. Rowe Price
Dividend Growth, IDEX Salomon All Cap, IDEX Pilgrim Baxter Mid Cap Growth or
IDEX T. Rowe Price Small Cap as these funds commenced operations on March 1,
1999.
As stated in the prospectus, each of the funds generally intends to purchase and
sell securities as deemed appropriate by the fund's sub-adviser to further a
fund's stated investment objective, and the rate of fund turnover is not
expected to be a limiting factor when changes are deemed to be appropriate. Fund
transactions for IDEX AEGON Tax Exempt and IDEX AEGON Income Plus are ordinarily
undertaken to achieve each fund's investment objective in light of anticipated
movements in the level of interest rates. The investment policies of IDEX AEGON
Tax Exempt and IDEX AEGON Income Plus may lead to frequent changes in
investments, particularly in periods of rapidly fluctuating interest rates.
These percentages are calculated by dividing the lesser of purchases or sales
of fund securities during the fiscal year by the monthly average of the value
of such securities (excluding from the computation all securities, including
options, with maturities at the time of acquisition of one year or less). For
example, a fund turnover rate of 100% would mean that all of a fund's
securities (except those excluded from the calculation) were replaced once in a
period of one year. A high rate of fund turnover generally involves
correspondingly greater brokerage commission expenses.
Turnover rates may vary greatly from year to year, as well as within a
particular year, and may also be affected by cash requirements for redemptions
of a fund's shares and by requirements, the satisfaction of which enable the
fund to receive favorable tax treatment. Because the rate of fund turnover is
not a limiting factor, particular holdings may be sold at any time if
investment judgment or fund operations make a sale advisable. As a result, the
annual fund turnover rate in future years may exceed the percentage shown
above.
INVESTMENT ADVISORY AND OTHER SERVICES
IDEX Mutual Funds has entered into a Management and Investment Advisory
Agreement ("Advisory Agreement") on behalf of each fund with Idex Management,
Inc. ("IMI"), located at 570 Carillon Parkway, St. Petersburg, Florida 33716
and each of the funds. IMI supervises each respective fund's investments and
conducts its investment program.
The Advisory Agreement provides that IMI will perform the following services or
cause them to be performed by others: (i) furnish to the fund investment advice
and recommendations; (ii) supervise the purchase and sale of securities as
directed by appropriate fund officers, and (iii) be responsible for the
administration of each fund. For services to IDEX JCC Capital Appreciation,
IDEX JCC Global, IDEX JCC Growth and IDEX JCC Balanced, IMI receives an
annual fee, computed daily and paid monthly, equal to 1.00% of the first $750
million of each fund's average daily net assets, 0.90% of the next $250 million
of each fund's average daily net assets, and 0.85% of the average daily net
assets of that fund in excess of $1 billion. For services to IDEX JCC
Flexible Income, IMI receives 0.90% of the first $100 million, 0.80% of the
next $150 million and 0.70% of assets over $250 million; for IDEX AEGON Income
Plus and IDEX AEGON Tax Exempt, IMI receives 0.60% of each fund's average daily
net assets; and for IDEX Alger Aggressive Growth, IDEX GE/Scottish Equitable
International Equity, IDEX C.A.S.E. Growth, IDEX NWQ Value Equity, IDEX LKCM
Strategic Total Return, IDEX Dean Asset Allocation, IDEX Goldman Sachs Growth,
IDEX T. Rowe Price Dividend Growth, IDEX Salomon All Cap, IDEX Pilgrim Baxter
Mid Cap Growth, and IDEX T. Rowe Price Small
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<PAGE>
Cap, IMI receives 0.80% of the first $500 million in assets and 0.70% of assets
over $500 million.
The duties and responsibilities of the investment adviser are specified in the
Advisory Agreement. The Agreement was approved by the Board of Trustees
(including a majority of trustees who are not parties to the Agreement or
interested persons, as defined by the 1940 Act, of any such party). The
Agreement is not assignable and may be terminated without penalty upon 60 days
written notice at the option of either the Fund, IMI or by a vote of
shareholders of each fund. The Advisory Agreement provides that it can be
continued from year to year so long as such continuance is specifically approved
annually (a) by the Board of Trustees or by a majority of the outstanding shares
of the fund and (b) by a majority vote of the Trustees who are not parties to
the Agreement or interested persons of any such party cast in person at a
meeting. Prior to March 1, 1999, InterSecurities, Inc. served as investment
adviser to IDEX AEGON Tax Exempt, IDEX AEGON Income Plus, IDEX GE/Scottish
Equitable International Equity, IDEX C.A.S.E. GROWTH, IDEX NWQ Value Equity,
IDEX LKCM Strategic Total Return, IDEX Dean Asset Allocation and IDEX Alger
Aggressive Growth.
The Agreement also provides that IMI shall not be liable to the funds or to any
shareholder for any error of judgment or mistake of law or for any loss
suffered by a fund or by any shareholder in connection with matters to which
the Agreements relates, except for a breach of fiduciary duty or a loss
resulting from willful misfeasance, bad faith, gross negligence, or reckless
disregard on the part of IMI in the performance of its duties thereunder.
The Advisory Agreement became effective as follows: IDEX Alger Aggressive Growth
- - September 30, 1994; IDEX GE/Scottish Equitable International Equity - February
1, 1997; IDEX C.A.S.E. Growth - November 15, 1995; IDEX NWQ Value Equity -
October 30, 1996; IDEX LKCM Strategic Total Return - September 30, 1994; IDEX
Dean Asset Allocation - June 1, 1995; IDEX AEGON Income Plus - April 22, 1992;
IDEX AEGON Tax Exempt - April 22, 1991; IDEX JCC Capital Appreciation, IDEX
JCC Global, IDEX JCC Growth, IDEX JCC Balanced and IDEX JCC Flexible
Income - June 25, 1998; and IDEX Goldman Sachs Growth, IDEX T. Rowe Price
Dividend Growth, IDEX Salomon All Cap, IDEX Pilgrim Baxter Mid-Cap Growth and
IDEX T. Rowe Price Small Cap - March 1, 1999.
Each fund pays its allocable share of the fees and expenses of the funds'
non-interested trustees, custodian and transfer agent fees, brokerage
commissions and all other expenses in connection with the execution of its
portfolio transactions, administrative, clerical, recordkeeping, bookkeeping,
legal, auditing and accounting expenses, interest and taxes, expenses of
preparing tax returns, expenses of shareholders' meetings and preparing,
printing and mailing proxy statements (unless otherwise agreed to by the funds
or IMI, expenses of preparing and typesetting periodic reports to shareholders
(except for those reports the fund permits to be used as sales literature), and
the costs, including filing fees, of renewing or maintaining registration of
fund shares under federal and state law. The investment adviser will reimburse
a fund, or waive fees, or both, whenever, in any fiscal year, the total cost to
a fund of normal operating expenses chargeable to its income account, including
the investment advisory fee but excluding brokerage commissions, interest,
taxes and 12b-1 fees, exceeds, in the case of the IDEX JCC Capital
Appreciation, IDEX JCC Growth, IDEX JCC Balanced and IDEX JCC Flexible
Income, 1.50% of each fund's average daily net assets; in the case of IDEX
GE/Scottish Equitable International Equity 1.45%; in the case of the IDEX AEGON
Tax Exempt, 1.00% of average daily net assets; and 1.20% of a fund's average
daily net assets for all others in the fund. The IDEX JCC Global does not
have an expense limitation.
<TABLE>
<CAPTION>
ADVISORY FEE AFTER REIMBURSEMENT
----------------------------------------------------------------
OCTOBER 31 SEPTEMBER 30
------------------------------------------------- ------------
FUND ADVISER 1998 1997 1996 1996
- ---- ------- ----------- ----------- --------- ------------
<S> <C> <C> <C> <C> <C>
IDEX Alger Aggressive Growth** IMI $ 344,018 $ 130,896 $ 5,163 $ 56,761
IDEX GE/Scottish Equitable
International Equity** IMI $ (64,180) $ (110,543) N/A N/A
IDEX JCC Capital Appreciation IMI $ 167,150 $ 45,071 $ 7,502 $ 19,350
IDEX JCC Global IMI $ 3,907,062 $ 2,224,062 $ 126,856 $1,130,757
IDEX JCC Growth IMI $ 1,352,188 $11,676,637 $ 952,996 $5,459,981
IDEX C.A.S.E. Growth** IMI $ 36,124 $ (96,157) $ (11,137) $ (36,998)
IDEX NWQ Value Equity** IMI $ 46,140 $ (63,589) N/A N/A
IDEX LKCM Strategic Total Return** IMI $ 380,273 $ 127,630 $ 1,140 $ 5,591
IDEX Dean Asset Allocation** IMI $ 325,285 $ 120,873 $ 2,983 $ 53,542
IDEX JCC Balanced IMI $ 206,736 $ (4,940) $ (4,993) $ (21,773)
IDEX JCC Flexible Income IMI $ 151,489 $ 60,744 $ (3,566) $ 133,035
IDEX AEGON Income Plus** IMI $ 441,912 $ 416,928 $ 35,332 $ 414,023
IDEX AEGON Tax Exempt** IMI $ 136,481 $ (7,330) $ (6,243) $ 35,970
ADVISORY FEE REIMBURSEMENTS
----------------------------------------------
OCTOBER 31 SEPTEMBER 30
------------------------------ ------------
FUND 1998 1997 1996 1996
- ---- -------- -------- ------- --------
<S> <C> <C> <C> <C>
IDEX Alger Aggressive Growth** $173,443 $192,695 $17,394 $169,995
IDEX GE/Scottish Equitable
International Equity** $117,653 $128,291 N/A N/A
IDEX JCC Capital Appreciation $107,861 $193,491 $12,709 $122,710
IDEX JCC Global -- -- -- --
IDEX JCC Growth -- -- -- --
IDEX C.A.S.E. Growth** $ 51,462 $150,161 $13,949 $ 55,165
IDEX NWQ Value Equity** $ 93,563 $104,638 N/A N/A
IDEX LKCM Strategic Total Return** $ 30,860 $ 96,214 $11,492 $ 92,079
IDEX Dean Asset Allocation** $ 8,119 $ 99,277 $11,829 $ 28,453
IDEX JCC Balanced $ 50,820 $139,247 $13,490 $106,223
IDEX JCC Flexible Income $ 186 $ 95,242 $17,675 $ 41,410
IDEX AEGON Income Plus** -- -- -- --
IDEX AEGON Tax Exempt** $ 10,071 $155,172 $19,367 $123,530
</TABLE>
- --------------
* No information is included for the IDEX Goldman Sachs Growth, IDEX T. Rowe
Price Dividend Growth, IDEX Salomon All Cap, IDEX Pilgrim Baxter Mid Cap
Growth or IDEX T. Rowe Price Small Cap as they did not commence operations
until March 1, 1999.
** Prior to March 1, 1999, ISI served as investment adviser to these funds.
34
<PAGE>
IMI has entered into an Investment Counsel Agreement with Janus Capital
Corporation ("Janus"), 100 Fillmore Street, Denver, CO 80206, to serve as
sub-adviser to the IDEX JCC Capital Appreciation, IDEX JCC Global, IDEX JCC
Growth, IDEX JCC Balanced and IDEX JCC Flexible Income. The Investment Counsel
Agreement for these funds became effective June 25, 1998.
Fred Alger Management, Inc. ("Alger"), 1 World Trade Center, Suite 9333, New
York, NY 10048, serves as the investment sub-adviser to IDEX Alger Aggressive
Growth pursuant to an Investment Counsel Agreement dated September 30, 1994 with
IMI. Following are the sub-advisers of the respective Funds: Luther King Capital
Management Corporation ("LKCM"), 301 Commerce Street, Suite 1600, Fort Worth, TX
76102, serves as the investment sub-adviser to IDEX LKCM Strategic Total Return
pursuant to an Investment Counsel Agreement dated as of September 30, 1994. Dean
Investment Associates ("Dean"), a Division of C.H. Dean and Associates, Inc.,
2480 Kettering Tower, Dayton, Ohio 45423-2480 serves as the investment
sub-adviser to IDEX Dean Asset Allocation pursuant to an Investment Counsel
Agreement dated as of June 30, 1995. C.A.S.E. Management, Inc. ("C.A.S.E."),
5355 Town Center Road, Suite 701, Boca Raton, FL 33486, serves as the investment
sub-adviser to IDEX C.A.S.E. Growth pursuant to an Investment Counsel Agreement
dated November 15, 1995. NWQ Investment Management Company, Inc. ("NWQ"), 2049
Century Park East, 4th Floor, Los Angeles, CA 90067, serves as the investment
sub-adviser to IDEX NWQ Value Equity pursuant to an Investment Counsel Agreement
dated October 30, 1996. Scottish Equitable Investment Management Limited
("SEIM"), Edinburgh Park, Edinburgh EH12 9SE, Scotland, and GE Investment
Management Inc. ("GEIM"), 3003 Summer Street, Stamford, CT 06905, serve as the
investment sub-advisers to the IDEX GE/Scottish Equitable International Equity
pursuant to respective Investment Counsel Agreements dated February 1, 1997. T.
Rowe Price Associates, Inc. ("T. Rowe Price"), 100 E. Pratt Street, Baltimore,
MD 21202 serves as investment sub-adviser to the IDEX T. Rowe Price Dividend
Growth and IDEX T. Rowe Price Small Cap pursuant to an Investment Counsel
Agreement dated March 1, 1999. Salomon Brothers Asset Management, Inc. ("SBAM"),
7 World Trade Center, New York, NY 10048 serves as investment sub-adviser to
IDEX Salomon All Cap pursuant to an Investment Counsel Agreement dated March 1,
1999; Pilgrim Baxter & Associates, Ltd. ("Pilgrim Baxter"), 825 Duportail Road,
Wayne, PA 19087 serves as investment sub-adviser to IDEX Pilgrim Baxter Mid Cap
Growth pursuant to an Investment Counsel Agreement dated March 1, 1999. Goldman
Sachs Asset Management ("GSAM") One New York Plaza, New York, NY 10004 serves as
investment sub-adviser to the IDEX Goldman Sachs Growth pursuant to an
Investment Counsel Agreement dated March 1, 1999.
AEGON USA Investment Management, Inc. ("AIMI"), 4333 Edgewood Road, N.E., Cedar
Rapids, Iowa 52499, serves as the investment sub-adviser to IDEX AEGON Tax
Exempt and IDEX AEGON Income Plus pursuant to an Investment Counsel Agreement
relating to each.
The sub-advisers also serve as sub-advisers to certain portfolios of the WRL
Series Fund, Inc., a registered investment company. They may be referred to
herein collectively as the "sub-advisers" and individually as a "sub-adviser."
<TABLE>
<CAPTION>
FUND SUB-ADVISER SUB-ADVISORY FEE
- ------------------------------ -------------------------------- -------------------------------------------------
<S> <C> <C>
IDEX GE/Scottish Equitable GE Investment Management 0.50% of the fees received by IMI under the
International Equity Incorporated and Scottish Advisory Agreement, less 0.50% of any amount
Equitable Investment reimbursed pursuant to its expense limitation.
Management Limited
IDEX JCC Global Janus Capital Corporation 0.50% of first $750 million of average daily net
assets; 0.45% of next $250 million in assets; and
0.4250% of assets in excess of $1 billion.
IDEX T. Rowe Price Small Cap T. Rowe Price Associates, Inc. 0.35% of fund's average daily net assets.
IDEX Pilgrim Baxter Mid Cap Pilgrim Baxter & Associates, 0.50% of the first $100 million of fund's average
daily net assets; 0.40% of assets in excess of
$100 million (from first dollar).
</TABLE>
35
<PAGE>
<TABLE>
<CAPTION>
FUND SUB-ADVISER SUB-ADVISORY FEE
- --------------------------------- -------------------------------- -------------------------------------------------
<S> <C> <C>
IDEX JCC Capital Appreciation Janus Capital Corporation 0.50% of first $750 million of average daily net
assets; 0.45% of next $250 million in assets; and
0.4250% of assets in excess of $1 billion, less
50% of any amount reimbursed pursuant to the
fund's expense limitation.*
IDEX C.A.S.E. Growth C.A.S.E. Management, Inc. 0.50% of the fees received by IMI under the
Advisory Agreement, less 0.50% of any amount
reimbursed pursuant to its expense limitation.
IDEX NWQ Value Equity NWQ Investment Management 0.50% of the fees received by IMI under the
Company, Inc. Advisory Agreement, less 0.50% of any amount
reimbursed pursuant to its expense limitation.
IDEX Salomon All Cap Salomon Brothers Asset 0.30% of the first $20 million of fund's daily
Management Inc. net assets; 0.50% of the next $20-100 million of
average daily net assets; and 0.40% of average daily
net assets over $100 million.
IDEX Alger Aggressive Growth Fred Alger Management, Inc. 0.50% of the fees received by IMI under the
Advisory Agreement, less 0.40% of any amount
reimbursed pursuant to its expense limitation.
IDEX JCC Growth Janus Capital Corporation 0.50% of the first $750 million of average daily
net assets; 0.45% of the next $250 million; and
0.4250% of assets in excess of $1 billion, less
50% of any amount reimbursed pursuant to the
fund's expense limitation.*
IDEX Goldman Sachs Growth Goldman Sachs Asset Manage- 0.50% of the first $50 million of fund's average
ment daily net assets; 0.45% of the next $50-100 million in
assets; and 0.40% of assets in excess of $100 million.
IDEX T. Rowe Price Dividend T. Rowe Price Associates, Inc. 0.50% of first $100 million of average daily net
Growth assets and 0.40% of assets over $100 million
(from first dollar)
IDEX Dean Asset Allocation Dean Investment Associates 0.50% of the fees received by IMI under the
Advisory Agreement, less 0.50% of any amount
reimbursed pursuant to its expense limitation.
IDEX LKCM Strategic Total Luther King Capital Manage- 0.50% of the fees received by IMI under the
Return ment Corporation Advisory Agreement, less 0.50% of any amount
reimbursed pursuant to its expense limitation.
IDEX JCC Balanced Janus Capital Corporation 0.50% of first $750 million of average daily net
assets; 0.45 of next $250 million in assets; and
0.4250% of assets in excess of $1 billion, less
50% of any amount reimbursed pursuant to the
fund's expense limitation.*
IDEX JCC Flexible Income Janus Capital Corporation 0.45% of first $100 million of average daily net
assets; 0.40% of the next $150 million in assets;
and 0.35% of assets in excess of $250 million,
less 50% of any amount reimbursed pursuant to
the fund's expense limitation.*
IDEX AEGON Income Plus AEGON USA Investment 0.50% of the fees received by IMI under the
Management, Inc. Advisory Agreement, less 0.50% of any amount
reimbursed pursuant to its expense limitation.
</TABLE>
36
<PAGE>
<TABLE>
<CAPTION>
FUND SUB-ADVISER SUB-ADVISORY FEE
- ----------------------- ---------------------- -----------------------------------------------
<S> <C> <C>
IDEX AEGON Tax Exempt AEGON USA Investment 0.50% of the fees received by IMI under the
Management, Inc. Advisory Agreement, less 0.50% of any amount
reimbursed pursuant to its expense limitation.
</TABLE>
- ------------------------------
* Janus Capital has voluntarily agreed to reduce each sub-advisory fee as
follows:
IDEX JCC Growth, IDEX JCC Balanced and IDEX JCC Capital Appreciation:
First $100 million - none, next $400 million ($100 - $500 million)-0.0125%,
next $250 million ($500 - $750 million)-0.0625%, next $240 million
($750 million - $1 billion)-0.0125%, above $1 billion-0.0125%
IDEX JCC Flexible Income: -0.0125% of sub-advisory fee based on average daily
net assets.
SUB-ADVISORY FEES PAID*
(NET OF FEES REIMBURSED)
<TABLE>
<CAPTION>
OCTOBER 31 SEPTEMBER 30
-------------------------- ----------------------------------------------------
FUND 1998 1997 1996 1995
- ---- ---------- ------------- ---------------------------- ---------------------
<S> <C> <C> <C> <C>
IDEX Alger Aggressive Growth $ 137,607 $ 52,325 $ 22,704 $ 12,252
IDEX GE/Scottish Equitable International Equity $ -- -- N/A N/A
IDEX JCC Capital Appreciation $ 83,575 $ 22,536 $ 9,675 --
IDEX JCC Global $1,953,531 $1,112,031 $ 565,378 $ 436,960
IDEX JCC Growth $6,769,684 $5,838,319 $2,729,990 $2,146,215
IDEX C.A.S.E. Growth $ 14,450 -- -- N/A
IDEX NWQ Value Equity $ 18,456 -- N/A N/A
IDEX LKCM Strategic Total Return $ 152,109 $ 50,944 $ 2,236 --
IDEX Dean Asset Allocation $ 130,114 $ 48,349 $ 21,417 N/A
IDEX JCC Balanced $ 103,368 -- -- --
IDEX JCC Flexible Income $ 75,745 $ 30,372 $ 66,517 $ 84,848
IDEX AEGON Income Plus $ 220,956 $ 208,464 $ 207,011 $ 201,015
IDEX AEGON Tax Exempt $ 68,241 -- $ 17,985 $ 39,027
</TABLE>
- ------------------------------
* No information is included for the IDEX Goldman Sachs Growth, IDEX T. Rowe
Price Dividend Growth, IDEX Salomon All Cap, IDEX Pilgrim Baxter Mid Cap
Growth and IDEX T. Rowe Price Small Cap as they did not commence operations
until March 1, 1999.
AUSA Holding Company ("AUSA") owns 100% of the outstanding stock of IMI. AUSA
also owns 100% of the outstanding shares of the Fund's distributor and transfer
agent. AUSA is wholly-owned by AEGON USA, Inc., a financial services holding
company located at 4333 Edgewood Road, N.E., Cedar Rapids, Iowa 52499. AEGON
USA, Inc. is a wholly-owned indirect subsidiary of AEGON nv, a Netherlands
corporation and publicly traded international insurance group.
Janus Capital has agreed that it will, until June 25, 2000, and provided that it
continues to serve as sub-adviser to the funds, compensate ISI for its services
in connection with promotion, marketing, and distribution in an amount equal to
0.0375% of the average daily net assets of each of IDEX JCC Capital
Appreciation, IDEX JCC Growth, IDEX JCC Balanced and IDEX JCC Flexible Income at
certain levels.
Each of the sub-advisers also serves as investment adviser or sub-adviser to
other funds and/or private accounts which may have investment objectives
identical or similar to that of the funds. Securities frequently meet the
investment objectives of one or all of these funds, the other funds and the
private accounts. In such cases, a sub-adviser's decision to recommend a
purchase to one fund or account rather than another is based on a number of
factors. The determining factors in most cases are the amounts available for
investment by each fund or account, the amount of securities of the issuer then
outstanding, the value of those securities and the market for them. Another
factor considered in the investment recommendations is other investments which
each fund or account presently has in a particular industry.
It is possible that at times identical securities will be held by more than one
fund or account. However, positions in the same issue may vary and the length
of time that any fund or account may choose to hold its investment in the same
issue may likewise vary. To the extent that more than one of the funds or
private accounts served by a sub-adviser seeks to acquire or sell the same
security at about the same time, either the price obtained by the funds or the
amount of securities that may be purchased or sold by a fund at one time may be
adversely affected. On the other hand, if the same securities are bought or
sold at the same time by more than one fund or account, the resulting
participation in volume transactions could produce better executions for the
funds. In the event more than one fund or account purchases or sells the same
security on a given date, the purchase and sale transactions are allocated
among the fund(s), the other funds and the private accounts in a manner
believed by the sub-advisers to be equitable to each.
37
<PAGE>
DISTRIBUTOR
IDEX Mutual Funds has entered into an Underwriting Agreement with
InterSecurities, Inc., located at 570 Carillon Parkway, St. Petersburg, Florida
33716 ("ISI") to act as the principal underwriter of the shares of the funds.
The Underwriting Agreement will continue from year to year so long as its
continuance is approved at least annually in the same manner as the Investment
Advisory Agreements discussed above. A discussion of ISI's responsibilities and
charges as principal underwriter of Fund shares is set forth in the Prospectus.
UNDERWRITING COMMISSIONS*
<TABLE>
<CAPTION>
COMMISSIONS RECEIVED COMMISSIONS RETAINED
----------------------------------------------------------------------------------------------
OCTOBER 31 SEPTEMBER 30 OCTOBER 31 SEPTEMBER 30
FUND ----------------------------------------------------------------------------------------------
- ---- 1998 1997 1996 1996 1998 1997 1996 1996
<S> <C> <C> <C> <C> <C> <C> <C> <C>
IDEX Alger Aggressive Growth $ 449,078 $ 330,689 $ 25,967 $ 479,802 $ 64,099 $ 47,828 $ 3,677 $ 65,924
IDEX GE/Scottish Equitable
International Equity $ 64,324 $ 48,603 N/A N/A $ 9,250 $ 7,335 N/A N/A
IDEX JCC Capital Appreciation $ 164,358 $ 271,016 $ 47,565 $ 395,205 $ 26,358 $ 42,668 $ 8,052 $ 60,768
IDEX JCC Global $2,784,651 $2,336,372 $150,015 $ 938,340 $401,257 $353,015 $20,964 $139,197
IDEX JCC Growth $2,848,238 $2,541,907 $191,780 $2,033,743 $424,803 $396,160 $28,146 $296,565
IDEX C.A.S.E. Growth $ 70,063 $ 69,637 $ 4,356 $ 36,903 $ 9,325 $ 10,625 $ 642 $ 5,443
IDEX NWQ Value Equity $ 172,567 $ 105,441 N/A N/A $ 25,433 $ 15,512 $ N/A N/A
IDEX LKCM Strategic Total Return $ 419,778 $ 260,944 $ 19,972 $ 234,546 $ 67,470 $ 41,330 $ 3,617 $ 35,552
IDEX Dean Asset Allocation $ 186,182 $ 208,715 $ 22,282 $ 200,817 $ 28,499 $ 34,415 $ 2,742 $ 30,970
IDEX JCC Balanced $ 344,872 $ 174,256 $ 13,157 $ 128,544 $ 34,919 $ 27,931 $ 2,118 $ 20,474
IDEX JCC Flexible Income $ 40,463 $ 28,133 $ 2,509 $ 36,139 $ 1,530 $ 4,862 $ 444 $ 5,837
IDEX AEGON Income Plus $ 165,033 $ 99,411 $ 7,845 $ 167,267 $ 21,369 $ 17,322 $ 1,393 $ 29,744
IDEX AEGON Tax Exempt $ 30,201 $ 25,760 $ 2,189 $ 50,307 $ 5,356 $ 4,591 $ 410 $ 8,771
</TABLE>
<TABLE>
<CAPTION>
NET UNDERWRITING COMPENSATION ON
NAME OF DISCOUNTS AND REDEMPTIONS AND BROKERAGE OTHER
FUND PRINCIPAL UNDERWRITER COMMISSIONS REPURCHASES COMMISSIONS COMPENSATION
- ------------------------------------ ----------------------- ------------------ ----------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
IDEX Alger Aggressive Growth ISI 64,099 12,460 -0- 173,265
IDEX GE/Scottish Equitable
International Equity ISI 9,250 2,520 -0- 22,215
IDEX JCC Capital Appreciation ISI 26,358 6,522 -0- 99,498
IDEX JCC Global ISI 401,257 35,608 -0- 1,343,341
IDEX JCC Growth ISI 424,803 29,057 -0- 1,766,004
IDEX C.A.S.E. Growth ISI 9,325 7,348 -0- 38,334
IDEX NWQ Value Equity ISI 25,433 5,644 -0- 71,951
IDEX LKCM Strategic Total Return ISI 67,470 12,563 -0- 180,953
IDEX Dean Asset Allocation ISI 28,499 22,720 -0- 197,410
IDEX JCC Balanced ISI 34,919 5,585 -0- 104,253
IDEX JCC Flexible Income ISI 1,530 4,657 -0- 52,529
IDEX AEGON Income Plus ISI 21,369 4,122 -0- 214,585
IDEX AEGON Tax Exempt ISI 5,356 1,679 -0- 61,155
</TABLE>
- ------------------------------
* No information is included for the IDEX Goldman Sachs Growth, IDEX T. Rowe
Price Dividend Growth, IDEX Salomon All Cap, IDEX Pilgrim Baxter Mid Cap
Growth and IDEX T. Rowe Price Small Cap as they did not commence operations
until March 1, 1999.
ADMINISTRATIVE SERVICES
IMI is responsible for the supervision all of the administrative functions,
providing office space, and paying its allocable portion of the salaries, fees
and expenses of all Fund officers and of those trustees who are affiliated with
IMI. The costs and expenses, including legal and accounting fees, filing fees
and printing costs in connection with the formation of a fund and the
preparation and filing of a fund's initial registration statements under the
1933 Act and 1940 Act are also paid by the adviser. IMI has entered into an
Administrative Services Agreement ("Administrative Agreement") with ISI
applicable to each fund. Under each Administrative Agreement, ISI carries out
and supervises all of the administrative functions of the funds and incurs IMI's
expenses related to such functions.
The administrative duties of ISI with respect to each fund include: providing
the fund with office space, telephones, office equipment and supplies; paying
the compensation of the fund's officers for services rendered as such;
supervising and assisting in preparation of annual and semi-annual reports to
shareholders, notices of dividends, capital gain distributions and tax
information; supervising compliance by the fund with the recordkeeping
requirements under the 1940 Act and regulations thereunder and with the state
regulatory requirements; maintaining books and records of the fund (other than
those maintained by the fund's custodian and transfer agent); preparing and
filing tax returns and reports; monitoring and supervising relationships with
the fund's custodian and transfer agent; monitoring the qualifications of tax
deferred retirement plans providing for investment in shares of the fund;
authorizing expenditures and approving bills for payment on behalf of the fund;
and providing executive, clerical and secretarial help needed to carry out its
duties.
ADMINISTRATIVE FEES*
<TABLE>
<CAPTION>
ADMINISTRATIVE FEES FOR PERIOD ENDED
FUND OCTOBER 31, 1998
- ---- -------------------------------------
<S> <C>
IDEX Alger Aggressive Growth $ 310,477
IDEX GE/Scottish Equitable
International Equity -0-
IDEX JCC Capital Appreciation $ 137,506
IDEX JCC Global $1,953,531
IDEX JCC Growth $6,812,504
IDEX C.A.S.E. Growth $ 52,552
IDEX NWQ Value Equity $ 83,822
IDEX LKCM Strategic Total Return $ 246,680
IDEX Dean Asset Allocation $ 200,042
IDEX JCC Balanced $ 128,778
IDEX JCC Flexible Income $ 75,838
IDEX AEGON Income Plus $ 220,956
IDEX AEGON Tax Exempt $ 73,276
</TABLE>
- --------------
* No information is included for IDEX Goldman Sachs Growth, IDEX T. Rowe Price
Dividend Growth, IDEX Salomon All Cap, IDEX Pilgrim Baxter Mid Cap Growth or
IDEX T. Rowe Price Small Cap as these funds commenced operations on March 1,
1999.
38
<PAGE>
CUSTODIAN, TRANSFER AGENT AND OTHER AFFILIATES
Investors Fiduciary Trust Company ("IFTC"), 801 Pennsylvania, Kansas City,
Missouri 64105-1307, is Custodian for the fund. The Custodian is not
responsible for any of the investment policies or decisions of a fund, but
holds its assets in safekeeping, and collects and remits the income thereon
subject to the instructions of the funds.
Idex Investor Services, Inc., P. O. Box 9015, Clearwater, Florida 33758-9015, is
the fund's transfer agent, withholding agent and dividend disbursing agent. Idex
Investor Services, Inc. is a wholly-owned subsidiary of AUSA Holding Company and
thus is an affiliate of IMI and AIMI. Each fund pays the transfer agent an
annual per-account charge of $15.55 for each of its shareholder accounts in
existence, $2.71 for each new account opened and $1.62 for each closed account.
DST Systems Inc. ("DST"), provider of data processing and recordkeeping
services for the Fund's transfer agent, is a partially-owned subsidiary of
Kansas City Southern Industries ("KCSI") and, thus, is an affiliate of Janus
Capital. Each fund may use another affiliate of DST as introducing broker for
certain portfolio transactions as a means to reduce expenses through a credit
against transfer agency fees with regard to commissions earned by such
affiliate. (See "Fund Transactions and Brokerage.")
TRANSFER AGENCY FEES*
<TABLE>
<CAPTION>
FEES AND EXPENSES NET OF
BROKERAGE CREDITS BROKERAGE CREDITS RECEIVED
------------------------------------ ----------------------------------
OCTOBER 31 SEPTEMBER 30 OCTOBER 31 SEPTEMBER 30
------------------------------------ -------------- -------------------- -------------
FUND 1998 1997 1996 1996 1998 1997 1996 1996
- ---- ---------- ---------- -------- ---------- ------- ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
IDEX Alger Aggressive Growth $ 311,310 $ 217,941 $ 15,460 $ 141,668 -- -- -- --
IDEX GE/Scottish Equitable
International Equity $ 25,385 $ 11,583 $ N/A N/A -- -- N/A N/A
IDEX JCC Capital Appreciation $ 128,201 $ 133,515 $ 9,740 $ 61,086 -- -- -- --
IDEX JCC Global $1,032,225 $ 628,833 $ 46,880 $ 379,409 -- -- -- --
IDEX JCC Growth $2,628,305 $2,811,027 $273,000 $1,537,321 -- -- -- --
IDEX C.A.S.E. Growth $ 46,730 $ 32,500 $ 2,660 $ 8,930 -- -- -- --
IDEX NWQ Value Equity $ 71,985 $ 20,957 N/A N/A -- -- N/A N/A
IDEX LKCM Strategic Total Return $ 145,685 $ 89,918 $ 5,772 $ 40,189 -- -- -- --
IDEX Dean Asset Allocation $ 107,100 $ 71,335 $ 6,084 $ 25,499 -- -- -- --
IDEX JCC Balanced $ 81,805 $ 48,876 $ 3,500 $ 26,374 -- -- -- --
IDEX JCC Flexible Income $ 32,859 $ 48,615 $ 8,624 $ 51,078 -- -- -- --
IDEX AEGON Income Plus $ 119,036 $ 86,126 $ 10,000 $ 113,654 -- -- -- --
IDEX AEGON Tax Exempt $ 21,690 $ 34,786 $ 4,250 $ 40,367 -- -- -- --
</TABLE>
- --------------
* No information is included for the IDEX Goldman Sachs Growth, IDEX T. Rowe
Price Dividend Growth, IDEX Salomon All Cap, IDEX Pilgrim Baxter Mid Cap
Growth and IDEX T. Rowe Price Small Cap as they did not commence operations
until March 1, 1999.
39
<PAGE>
FUND TRANSACTIONS AND BROKERAGE
Decisions as to the assignment of fund business for each of the funds and
negotiation of commission rates are made by a fund's sub-adviser, whose policy
is to obtain the "best execution" (prompt and reliable execution at the most
favorable security price) of all fund transactions. The Advisory Agreement and
Investment Counsel Agreement for each fund specifically provide that in placing
portfolio transactions for a fund, the fund's sub-adviser may agree to pay
brokerage commissions for effecting a securities transaction in an amount
higher than another broker or dealer would have charged for effecting that
transaction as authorized, under certain circumstances, by the Securities
Exchange Act of 1934.
In selecting brokers and dealers and in negotiating commissions, a fund's
sub-adviser considers a number of factors, including but not limited to:
The sub-adviser's knowledge of currently available negotiated commission
rates or prices of securities and other current transaction costs;
The nature of the security being traded;
The size and type of the transaction;
The nature and character of the markets for the security to be purchased
or sold;
The desired timing of the trade;
The activity existing and expected in the market for the particular
security;
The quality of the execution, clearance and settlement services;
Financial stability;
The existence of actual or apparent operational problems of any broker or
dealer; and
Research products and services provided.
In recognition of the value of the foregoing factors, the sub-adviser may place
portfolio transactions with a broker with whom it has negotiated a commission
that is in excess of the commission another broker would have charged for
effecting that transaction. This is done if the sub-adviser determines in good
faith that such amount of commission was reasonable in relation to the value of
the brokerage and research provided by such broker viewed in terms of either
that particular transaction or of the overall responsibilities of the
sub-adviser. Research provided may include:
Furnishing advice, either directly or through publications or writings,
as to the value of securities, the advisability of purchasing or selling
specific securities and the availability of securities or purchasers or
sellers of securities;
Furnishing seminars, information, analyses and reports concerning
issuers, industries, securities, trading markets and methods, legislative
developments, changes in accounting practices, economic factors and
trends and portfolio strategy;
Access to research analysts, corporate management personnel, industry
experts, economists and government officials; and
Comparative performance evaluation and technical measurement services and
quotation services, and other services (such as third party publications,
reports and analyses, and computer and electronic access, equipment,
software, information and accessories that deliver process or otherwise
utilize information, including the research described above) that assist
the sub-adviser in carrying out its responsibilities.
Most of the brokers and dealers used by the fund's sub-advisers provide
research and other services described above.
A sub-adviser may use research products and services in servicing other
accounts in addition to the funds. If a sub-adviser determines that any
research product or service has a mixed use, such that it also serves functions
that do not assist in the investment decision-making process, a sub-adviser may
allocate the costs of such service or product accordingly. The portion of the
product or service that a sub-adviser determines will assist it in the
investment decision-making process may be paid for in brokerage commission
dollars. Such allocation may be a conflict of interest for a sub-adviser.
When a fund purchases or sells a security in the over-the-counter market, the
transaction takes place directly with a principal market-maker without the use
of a broker, except in those circumstances where better prices and executions
will be achieved through the use of a broker.
A sub-adviser may also consider the sale or recommendation of a fund's shares
by a broker or dealer to its customers as a factor in the selection of brokers
or dealers to execute portfolio transactions. In placing portfolio business
with brokers or dealers, a sub-adviser will seek the best execution of each
transaction, and all such brokerage placement must be consistent with the Rules
of Fair Practice of the National Association of Securities Dealers, Inc.
A sub-adviser may place transactions for the purchase or sale of portfolio
securities with affiliates of IMI, ISI or the sub-adviser, including DST
Securities, Inc., or Fred Alger & Company, Incorporated. It is anticipated that
Fred Alger & Company, Incorporated, an affiliate of Alger, will serve as IDEX
Alger Aggressive Growth's broker in effecting substantially all of IDEX Alger
Aggressive Growth's transactions on securities
40
<PAGE>
exchanges and will retain commissions in accordance with certain regulations of
the Securities and Exchange Commission ("SEC"). A sub-adviser may place
transactions if it reasonably believes that the quality of the transaction and
the associated commission are fair and reasonable, and if overall the
associated transaction costs, net of any credits described above under
"Custodian, Transfer Agent and Other Affiliates," are lower than those that
would otherwise be incurred. Under rules adopted by the SEC, the Fund's Board
of Trustees will conduct periodic compliance reviews of such brokerage
allocations and review certain procedures adopted by the Board of Trustees to
ensure compliance with these rules and to determine their continued
appropriateness.
For the fiscal year ended October 31, 1998, IDEX Alger Aggressive Growth paid
the following commissions to Fred Alger & Company, Incorporated:
<TABLE>
<CAPTION>
Commissions Paid:
- -------------------------------------
<S> <C>
Fiscal 1998 $154,866
Fiscal 1998 Percentages:
Commissions with affiliates to
total commissions 99%
Value of brokerage transactions
with affiliates to value of total
brokerage transactions 98%
</TABLE>
As of October 31, 1998, IDEX JCC Balanced owned $1,001,510 of the common
stock of Charles Schwab Corp. Charles Schwab Corp. is one of the ten brokers or
dealers that received the greatest dollar amount of brokerage commissions from
IDEX JCC Balanced during the fiscal year ended October 31, 1998.
As of October 31, 1998, IDEX JCC Capital Appreciation owned $380,959 of the
common stock of Charles Schwab Corp. Charles Schwab Corp. is one of the ten
brokers or dealers that received the greatest dollar amount of brokerage
commissions from IDEX JCC Capital Appreciation during the fiscal year
ended October 31, 1998.
As of October 31, 1998, IDEX LKCM Strategic Total Return owned a total of
$291,500 of the common stock of Merrill Lynch and Company, Inc., which is one of
the ten brokers or dealers that received the greatest dollar amount of brokerage
commissions from IDEX LKCM Strategic Total Return during fiscal year ended
October 31, 1998.
BROKERAGE COMMISSIONS
<TABLE>
<CAPTION>
IDEX ALGER IDEX GE/SCOTTISH IDEX JCC
BROKERAGE COMMISSIONS PAID AGGRESSIVE INTERNATIONAL CAPITAL
(INCLUDING AFFILIATED BROKERAGE) GROWTH EQUITY APPRECIATION
- -------------------------------- ------ ------ ------------
<S> <C> <C> <C>
October 31, 1998 $155,668 $17,998 $ 89,687
October 31, 1997 $ 79,346 $ 6,337 $108,748
October 31, 1996 $ 5,156 N/A $ 14,114
September, 1996 $ 43,591 N/A $109,526
AFFILIATED BROKERAGE PAID
- -------------------------
October 31, 1998 $154,866 $ -- $ --
October 31, 1997 $ 78,761 -- --
October 31, 1996 $ 4,711 N/A --
September, 1996 $ 42,819 N/A --
<CAPTION>
IDEX NWQ
BROKERAGE COMMISSIONS PAID IDEX JCC IDEX JCC IDEX C.A.S.E. VALUE
(INCLUDING AFFILIATED BROKERAGE) GLOBAL GROWTH GROWTH EQUITY
- -------------------------------- ------ ------ ------ ------
<S> <C> <C> <C> <C>
October 31, 1998 $954,707 $ 843,937 $38,910 $15,539
October 31, 1997 $119,665 $1,301,654 $34,840 $10,553
October 31, 1996 $ 9,638 $ 34,732 $ 3,469 N/A
September, 1996 $109,328 $ 314,230 $50,714 N/A
AFFILIATED BROKERAGE PAID
- -------------------------
October 31, 1998 $ -- $ -- $ -- $ --
October 31, 1997 -- -- -- --
October 31, 1996 -- -- -- N/A
September, 1996 -- -- -- N/A
</TABLE>
<TABLE>
<CAPTION>
IDEX LKCM IDEX DEAN IDEX JCC IDEX AEGON
BROKERAGE COMMISSIONS PAID STRATEGIC ASSET IDEX JCC FLEXIBLE INCOME IDEX AEGON
(INCLUDING AFFILIATED BROKERAGE) TOTAL RETURN ALLOCATION BALANCED INCOME PLUS TAX EXEMPT
- -------------------------------- ------------ ---------- -------- ------ ---- ----------
<S> <C> <C> <C> <C> <C> <C>
October 31, 1998 $39,334 $43,487 $46,796 $ 23,653 $ -- $ --
October 31, 1997 $26,187 $48,786 $42,482 $101,213 -- --
October 31, 1996 $ 2,089 $ 2,800 $ 1,291 -- -- --
September, 1996 $16,340 $34,335 $37,881 $ 27,515 -- --
AFFILIATED BROKERAGE PAID
- -------------------------
October 31, 1998 -- -- -- -- -- --
October 31, 1997 -- -- -- -- -- --
October 31, 1996 -- -- -- -- -- --
September, 1996 -- -- -- -- -- --
</TABLE>
During the fiscal year ended October 31, 1998, IDEX JCC Growth, IDEX JCC Global,
IDEX JCC Balanced, IDEX JCC Capital Appreciation, IDEX LKCM Strategic Total
Return, IDEX Dean Asset Allocation, IDEX C.A.S.E. Growth, IDEX NWQ Value Equity
and IDEX GE/Scottish Equitable International Equity had transactions in the
amounts of $38,886,874, $21,547,796, $1,115,105, $898,856, $8,557,008,
$5,241,623.28, $26,946,774, $2,177,187.65 and $70,607.25, respectively, which
resulted in brokerage
41
<PAGE>
commission of $44,804, $36,315, $1,449, $760, $10,851, $9,327, $14,537, $2,871
and $157, respectively, that were directed to brokers for brokerage and
research services provided.
TRUSTEES AND OFFICERS
The Fund is run by a Board of Trustees. Subject to the supervision of the Board
of Trustees, the assets of each fund are managed by an investment adviser and
sub-advisers, and by fund managers. The Board of Trustees is responsible for
managing the business and affairs of the Fund. It oversees the operation of the
Fund by its officers. It also reviews the management of the funds' assets by
the investment adviser and sub-advisers. Information about the Trustees and
officers of the Fund is follows:
PETER R. BROWN (DOB 05/10/28), 1475 Belcher Road, South Largo, FL 33771.
Trustee of IDEX Mutual Funds; Director of WRL Series Fund, Inc. (investment
company); Chairman of the Board of Peter Brown Construction Co., Largo, FL
(construction, contractors and engineers); Rear Admiral (Retired), U.S.
Navy Reserve, Civil Engineer Corps.
DANIEL CALABRIA (DOB 03/05/36), 7068 S. Shore Drive S.,South Pasadena, FL
33707-4605.Trustee of IDEX Mutual Funds; Trustee (1993 - present) and
President (1993 - 1995) of The Florida Tax Free Funds (mutual funds);
Director (1996 - present) of ASM Fund (mutual fund); currently retired;
formerly President and Director (1995) of Sun Chiropractic Clinics, Inc.
(medical services); Executive Vice President (1993 - 1995) of William R.
Hough & Co. (investment adviser, municipal bond and underwriting firm);
President/CEO (1986 - 1992) of Templeton Funds Management, Inc. (investment
advisers); and Vice President (1986 - 1992) of all U.S. Templeton Funds
(mutual funds).
JAMES L. CHURCHILL (DOB 05/07/30), 15 Hawthorne Road, Bluffington, SC
29910-4901. Trustee of IDEX Mutual Funds; currently retired 1990 to present.
THOMAS E. PIERPAN(2)(DOB 10/18/43), Vice President, Associate General Counsel
and Secretary (December 1997 - present), of IDEX Mutual Funds; Vice
President, Associate General Counsel and Secretary (December 1997 -
present), Assistant Secretary (March 1995 - December 1997) of WRL Series
Fund, Inc. (investment company); Assistant Vice President, Counsel and
Assistant Secretary of InterSecurities, Inc. (November 1997 - present)
(broker-dealer); Vice President (November 1993 - present), Associate
General Counsel (February 1995 - present) and Assistant Secretary (February
1995 - present), Assistant Vice President (November 1992 - November 1993)
Western Reserve Life Assurance Co. of Ohio (life insurance).
CHARLES C. HARRIS (DOB) 07/15/30), 35 Winston Drive, Clearwater, FL 33756.
Trustee of IDEX Mutual Funds; Director (March 1994 - present) of WRL Series
Fund, Inc. (investment company); currently retired (1988 - present).
G. JOHN HURLEY(2) (DOB 09/12/48), President and Chief Executive Officer
(September 1990 to present) and Trustee (June 1990 to present) of IDEX
Mutual Funds; Executive Vice President (June 1993 to present) and Director
(March 1994 to present) of WRL Series Fund, Inc. (investment company);
President, Chief Executive Officer and Director (May 1988 to present) of
InterSecurities, Inc. (broker-dealer); President (September 1992 to
present) of ISI Insurance Agency, Inc.; Executive Vice President (April
1993 to present) of Western Reserve Life Assurance Co. of Ohio (life
insurance); President, Chief Executive Officer and Director (September 1990
to present) and Executive Vice President and Director (May 1988 to
September 1990) of Idex Management, Inc. (investment adviser); President
and Director (May 1988 to present) of Idex Investor Services, Inc.
(transfer agent).
JOHN R. KENNEY(2) (DOB 02/08/38), Trustee (1987 to present) and Chairman
(December 1989 to present), of IDEX Mutual Funds; Chairman of the Board
(1986 to present) of WRL Series Fund, Inc. (investment company); Director
(December 1990 to present) of Idex Management, Inc. (investment adviser);
Chairman (1988 to present) and Director (1985 to present) of
InterSecurities, Inc. (broker-dealer); Director (October 1992 to present)
of ISI Insurance Agency, Inc.; Chairman, President and Chief Executive
Officer (1992 to present) of Western Reserve Life Assurance Co. of Ohio
(life insurance); Senior Vice President (May 1992 to present) of AEGON USA,
Inc. (financial services holding company). Mr. Kenney is also the
brother-in-law of Jack Zimmerman, a trustee of the Fund.
JULIAN A. LERNER (DOB 11/12/24), One Spurling Plaza, Suite 208, 12850 Spurling
Road, Dallas, TX 75230.Trustee of IDEX Mutual Funds; currently retired;
Trustee of American Skandia Trust; Director of American Skandia Advisory
Funds; Trustee of American Skandia Master Trust; Director of Atlas Assets,
Inc. (mutual fund); Trustee of Atlas Insurance Trust (variable annuity);
formerly Investment Consultant (1995 - 1996) and Sr. Vice President (1987 -
1995) of Aim Capital Management (investment adviser).
THOMAS R. MORIARTY(2) (DOB 05/03/51), Senior Vice President (March 1995 to
present), Treasurer and Principal Financial Officer (December 1996 to
present) and Vice President and Principal Accounting Officer (November 1990
to March 1995) of IDEX Mutual
42
<PAGE>
Funds; Senior Vice President (June 1991 to present) of InterSecurities,
Inc. (broker-dealer); Senior Vice President (September 1992 to present) of
ISI Insurance Agency, Inc.; President (November 1990 to present) of PW
Securities, Inc. (broker-dealer); Senior Vice President (June 1991 to
present) of Idex Investor Services, Inc. (transfer agent); Vice President
(November 1990 to present) of Idex Management, Inc. (investment adviser);
Vice President (June 1993 to present) of Western Reserve Life Assurance Co.
of Ohio (life insurance).
CHRISTOPHER G. ROETZER(2) (DOB 01/11/63), Vice President, Assistant Treasurer
and Principal Accounting Officer (March 1997 to Present); Principal
Accounting Officer (March 1995 to March 1997) and Assistant Vice President
(November 1990 to March 1997) of IDEX Mutual Funds; Assistant Vice
President and Controller (May 1988 to present) of InterSecurities, Inc.
(broker-dealer); Assistant Vice President (September 1992 to present) of
ISI Insurance Agency, Inc.; Assistant Vice President and Controller (May
1988 to present) of Idex Investor Services, Inc. (transfer agent);
Assistant Vice President (November 1990 to present) of Idex Management,
Inc. (investment adviser).
WILLIAM W. SHORT, JR. (DOB 02/25/36), 12420 73rd Court, Largo, FL 33773.
Trustee of IDEX Mutual Funds; President and sole shareholder of Shorts,
Inc. (men's retail apparel); Chairman of Southern Apparel Corporation and
S.A.C. Apparel Corporation and S.A.C. Distributors (nationwide wholesale
apparel distributors), Largo, Florida; Member of Advisory Board of Barnett
Banks of Pinellas County; Trustee of Morton Plant Hospital Foundation;
former Chairman of Advisory Board of First Florida Bank, Pinellas County,
Florida.
JACK E. ZIMMERMAN (DOB 02/03/28), 507 Saint Michel Circle, Kettering, OH 45429.
Trustee of IDEX Mutual Funds; Director (1987 to present), Western Reserve
Life Assurance Co. of Ohio (life insurance); currently retired; formerly,
Director, Regional Marketing (September 1986 to January 1993) Martin
Marietta Corporation, Dayton (aerospace industry).
------------------------------
(1) The principal business address of each person listed, unless otherwise
indicated, is P.O. Box 9015, Clearwater, FL 33758-9015.
(2) Interested Person (as defined in the 1940 Act) of the Fund.
The Fund pays no salaries or compensation to any of its officers, all of whom
are officers or employees of either ISI, IMI or their affiliates. Disinterested
Trustees (i.e., Trustees who are not affiliated with ISI, IMI or any of the
sub-advisers) receive for each regular Board meeting: (a) a total annual
retainer fee of $13,000 from the funds, of which the funds pay a pro rata share
allocable to each fund based on the relative assets of the fund; plus (b)
$2,250 and incidental expenses per meeting attended. Three of the Disinterested
Trustees have been elected to serve on the Fund's Audit Committee, which meets
twice annually. Each Audit Committee member receives a total of $250 per Audit
Committee meeting attended in addition to the regular meetings attended. In the
case of a Special Board Meeting, each of the Disinterested Trustees receives a
fee of $500 per special meeting attended, in addition to the regular meetings
attended. Any fees and expenses paid to Trustees who are affiliates of IMI or
ISI are paid by IMI and/or ISI and not by the funds.
Commencing on January 1, 1996, a non-qualified deferred compensation plan (the
"Plan") became available to Trustees who are not interested persons of the
Fund. Under the Plan, compensation may be deferred that would otherwise be
payable by the Fund and/or WRL Series Fund, Inc., to a Disinterested Trustee or
Director on a current basis for services rendered as Trustee or Director.
Deferred compensation amounts will accumulate based on the value of Class A
shares of a fund (without imposition of sales charge), as elected by the
Trustee. It is not anticipated that the Plan will have any impact on the funds.
The following table provides compensation amounts paid to Disinterested
Trustees of the Fund for the fiscal year ended October 31, 1998.
43
<PAGE>
COMPENSATION TABLE
<TABLE>
<CAPTION>
AGGREGATE PENSION OR RETIREMENT TOTAL COMPENSATION PAID TO
COMPENSATION FROM BENEFITS ACCRUED AS PART OF TRUSTEES FROM FUND
NAME OF PERSON, POSITION IDEX MUTUAL FUNDS * FUND EXPENSES COMPLEX**
- -------------------------------- -------------------------- ----------------------------- ---------------------------
FOR YEAR ENDING 10/31/98 AS OF 10/31/98 10/31/98
<S> <C> <C> <C>
Peter R. Brown, Trustee $ 23,000 $23,000 $ 32,500
Daniel Calabria, Trustee $ 22,500 $ 5,625 $ 22,500
James L. Churchill, Trustee $ 22,500 $18,000 $ 22,500
Charles C. Harris, Trustee $ 23,000 $ -0- $ 32,500
Julian A. Lerner, Trustee $ 22,500 $ -0- $ 22,500
William W. Short, Jr., Trustee $ 23,000 $ -0- $ 23,000
Jack E. Zimmerman, Trustee $ 22,500 $22,500 $ 22,500
Total $159,000 $69,125 $178,000
</TABLE>
- ------------------------------
* Of this aggregate compensation, the total amounts deferred (including
earnings) and accrued for the benefit of the participating Trustees for the
year ending October 31, 1998 were as follows: Peter R. Brown, $29,368; Daniel
Calabria, $6,682; James L. Churchill, $20,581; and Jack E. Zimmerman,
$27,112.
** The Fund Complex consists of IDEX Mutual Funds (including IDEX Fund and IDEX
Fund 3 prior to their reorganization into IDEX Mutual Funds on September
20, 1996) and WRL Series Fund, Inc.
The Board of Trustees has adopted a policy whereby any Disinterested Trustee of
the Fund in office on September 1, 1990 who has served at least three years as
a trustee may, subject to certain limitations, elect upon his resignation to
serve as a trustee emeritus for a period of two years. A trustee emeritus has
no authority, power or responsibility with respect to any matter of the Fund.
While serving as such, a trustee emeritus is entitled to receive from the Fund
an annual fee equal to one-half the fee then payable per annum to Disinterested
Trustees of the Fund, plus reimbursement of expenses incurred for attendance at
Board meetings.
The Fund has an Executive Committee whose members currently are John R. Kenney,
G. John Hurley and Peter R. Brown. The executive committee may perform all of
the functions which may be performed by the Board of Trustees, except as set
forth in the Declaration of Trust and By-Laws of the Fund or as prohibited by
applicable law.
During the fiscal year ended October 31, 1998, the Fund paid $167,404 in
trustees fees and expenses, and no trustee emeritus fees or expenses. As of
January 30, 1999, the trustees and officers held in the aggregate less than 1%
of the outstanding shares of each of the funds.
PURCHASE OF SHARES
As stated in the prospectus, each fund offers investors a choice of three
classes of shares. (IDEX JCC Growth also includes a fourth class, Class T
shares, which are not available for new investors.) Class A, Class B or Class M
shares of a fund can be purchased through ISI or through broker-dealers or
other financial institutions that have sales agreements with ISI. Shares of
each fund are sold at the net asset value per share as determined at the close
of the regular session of business on the New York Stock Exchange next
occurring after a purchase order is received and accepted by the fund. (The
applicable sales charge is added in the case of Class A and Class T shares.)
The prospectus contains detailed information about the purchase of fund shares.
DISTRIBUTION PLANS
As stated in the prospectus under "Investment Advisory and Other Services," each
fund has adopted a separate Distribution Plan pursuant to Rule 12b-1 under the
1940 Act (individually, a "Plan" and collectively, the "Plans"), applicable to
Class A, Class B and Class M shares of the fund. CLASS T SHARES OF IDEX JCC
GROWTH ARE NOT SUBJECT TO ANNUAL DISTRIBUTION AND SERVICE FEES.
In determining whether to approve the Distribution Plan and the Distribution
Agreement, the Trustees considered the possible advantages afforded
shareholders from adopting the Distribution Plan and Distribution Agreement.
The Trustees were informed by representatives of ISI that reimbursements of
distribution-related expenses by the Fund under the Distribution Plan would
provide incentives to ISI to establish and maintain an enhanced distribution
system whereby new investors will be attracted to the funds. The Trustees
believe that improvements in distribution services should result in
44
<PAGE>
increased sales of shares in the funds. In turn, increased sales are expected
to lead to an increase in a fund's net asset levels, which would enable the
funds to achieve economies of scale and lower their per-share operating
expenses. In addition, higher net asset levels could enhance the investment
management of the funds, for net inflows of cash from new sales may enable a
fund's investment adviser and sub-adviser to take advantage of attractive
investment opportunities. Finally, reduced redemptions could eliminate the
potential need to liquidate attractive securities positions in order to raise
the capital necessary to meet redemption requests.
Under the Plans for Class A shares (the "Class A Plans"), a fund may pay ISI an
annual distribution fee of up to 0.35% and an annual service fee of up to 0.25%
of the average daily net assets of a fund's Class A shares; however, to the
extent that a fund pays service fees, the amount which a fund may pay as a
distribution fee is reduced accordingly so that the total fees payable under
the Class A Plan may not exceed on an annualized basis 0.35% of the average
daily net assets of a fund's Class A shares.
Under the Plans for Class B shares (the "Class B Plans"), a fund may pay ISI an
annual distribution fee of up to 0.75% and an annual service fee of up to 0.25%
of the average daily net assets of the fund's Class B shares.
Under the Plans for Class M shares (the "Class M Plans"), a fund may pay ISI an
annual distribution fee of up to 0.75% and an annual service fee of up to 0.25%
of the average daily net assets of the fund's Class M shares; however, the
total fee payable pursuant to the Class M Plan may not on an annualized basis,
exceed 0.90% of the average daily net assets of the fund's Class M shares.
ISI may use the fees payable under the Class A, Class B and Class M Plans as it
deems appropriate to pay for activities or expenses primarily intended to
result in the sale of the Class A, Class B or Class M shares,
respectively, or in personal service to and/or maintenance of these
shareholder accounts. For each class, these activities and expenses may
include, but are not limited to:
Compensation to employees of ISI;
Compensation to and expenses of ISI and other selected dealers who engage
in or otherwise support the distribution of shares or who service
shareholder accounts;
The costs of printing and distributing prospectuses, statements of
additional information and reports for other than existing shareholders;
and
The cost of preparing, printing and distributing sales literature and
advertising materials.
Under the Plans, as required by Rule 12b-1, the Board of Trustees will review,
at least quarterly, a written report provided by ISI of the amounts expended by
ISI in distributing and servicing Class A, Class B or Class M shares of the
funds and the purpose for which such expenditures were made. For so long as the
Plans are in effect, selection and nomination of the Trustees who are not
interested persons of the Fund shall be committed to the discretion of the
Trustees who are not interested persons of the Fund.
A Plan may be terminated as to a class of shares of a fund at any time by vote
of a majority of the non-interested Trustees, or by vote of a majority of the
outstanding voting securities of the applicable class. A Plan may be amended by
vote of the Trustees, including a majority of the non-interested Trustees who
are not interested persons of the Fund and have no direct or indirect
financial interest in the operation of the Plan or any agreement relating
thereto ("non-interested Trustees"), cast in person at a meeting called for
that purpose. Any amendment of a Plan that would materially increase the costs
to a particular class of shares of a fund requires approval by the shareholders
of that class. A Plan will remain in effect for successive one year periods, so
long as such continuance is approved annually by vote of the Fund's Trustees,
including a majority of the non-interested Trustees, cast in person at a
meeting called for the purpose of voting on such continuance.
45
<PAGE>
DISTRIBUTION FEES
Distribution related expenses incurred by ISI for the fiscal year ended October
31, 1998 are listed in the table below. These expenses have been partially
reimbursed to ISI by a 12b-1 arrangement with the funds.
IDEX MUTUAL FUNDS:
<TABLE>
<CAPTION>
IDEX ALGER IDEX GE/SCOTTISH EQUITABLE
AGGRESSIVE GROWTH INTERNATIONAL EQUITY
----------------------------- ------------------------
A B C A B C
SHARES SHARES SHARES SHARES SHARES SHARE
-------- ------- ------- ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
Advertising $ 7,897 $ 2,634 $ 1,469 $1,075 $ 410 $ 139
Printing/mailing
Prospectuses to other than
current Shareholders $ 29,161 $ 9,372 $ 6,281 $4,134 $1,466 $ 702
Compensation to underwriters $ 48,327 $ 4,225 $ 5,769 $7,401 $ 233 $ 646
Compensation to dealers $ 49,265 $ 4,188 $ 5,466 $2,368 $ 165 $ 496
Compensation to sales personnel $ 17,469 $ 5,923 $ 2,966 $2,366 $ 952 $ 296
Interest or other finance charges $ -- $ -- $ -- $ -- $ -- $ --
Travel $ 3,473 $ 1,155 $ 613 $ 474 $ 193 $ 73
Office Expenses $ 14,557 $ 4,708 $ 2,954 $2,011 $ 755 $ 330
Administrative Processing Costs $ 5,884 $ 2,510 $ 2,010 $1,685 $1,534 $1,480
TOTAL $909,355 $34,715 $27,528 $21,514 $5,708 $4,162
<CAPTION>
IDEX JCC
CAPITAL APPRECIATION IDEX JCC GLOBAL
----------------------------- --------------------------------
A B C A B C
SHARES SHARES SHARES SHARES SHARES SHARE
-------- ------- ------- ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
Advertising $ 3,204 $ 746 $ 220 $ 54,953 $ 40,053 $ 19,737
Printing/mailing
Prospectuses to other than
current Shareholders $13,343 $ 2,664 $ 863 $ 197,285 $129,515 $ 76,772
Compensation to underwriters $38,127 $ 2,359 $2,486 $ 295,263 $ 13,642 $ 32,628
Compensation to dealers $18,640 $ 2,723 $1,542 $ 369,223 $ 31,236 $ 79,303
Compensation to sales personnel $ 6,792 $ 1,680 $ 478 $ 121,003 $ 91,326 $ 40,644
Interest or other finance charges $ -- $ -- $ -- $ -- $ -- $ --
Travel $ 1,440 $ 330 $ 100 $ 22,844 $ 16,513 $ 7,587
Office Expenses $ 6,469 $ 1,344 $ 432 $ 96,227 $ 65,071 $ 35,639
Administrative Processing Costs $ 3,304 $ 1,905 $1,667 $ 15,335 $ 5,884 $ 4,198
TOTAL $91,319 $13,751 $7,788 $1,172,133 $393,240 $296,508
</TABLE>
<TABLE>
<CAPTION>
IDEX JCC GROWTH IDEX C.A.S.E. GROWTH
---------------------------------- ----------------------------
A B C A B C
SHARES SHARES SHARES SHARES SHARES SHARE
---------- -------- -------- ------- ------- ------
<S> <C> <C> <C> <C> <C> <C>
Advertising $ 77,405 $ 11,673 $ 19,518 $ 1,400 $ 658 $ 320
Printing/mailing
Prospectuses to other than
current Shareholders $ 280,860 $ 32,758 $ 41,586 $ 5,787 $ 2,940 $1,859
Compensation to underwriters $ 757,228 $ 11,998 $ 26,389 $ 5,961 $ 765 $1,149
Compensation to dealers $1,042,306 $ 10,067 $ 21,834 $ 5,260 $ 2,597 $3,309
Compensation to sales personnel $ 169,895 $ 27,606 $ 48,270 $ 3,202 $ 1,442 $ 605
Interest or other finance charges $ -- $ -- $ -- $ -- $ -- $ --
Travel $ 32,301 $ 4,779 $ 7,581 $ 753 $ 337 $ 157
Office Expenses $ 136,860 $ 17,364 $ 24,079 $ 3,058 $ 1,457 $ 821
Administrative Processing Costs $ 36,001 $ 3,720 $ 3,307 $ 1,943 $ 1,691 $1,576
TOTAL $2,532,856 $119,965 $192,564 $27,364 $11,887 $9,796
<CAPTION>
IDEX LKCM STRATEGIC
IDEX NWQ VALUE EQUITY TOTAL RETURN
----------------------------- ------------------------------
A B C A B C
SHARES SHARES SHARE SHARES SHARES SHARE
------- ------- ------- -------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Advertising $ 2,032 $ 1,487 $ 611 $ 6,160 $ 2,587 $ 1,783
Printing/mailing
Prospectuses to other than
current Shareholders $ 9,573 $ 6,341 $ 3,314 $ 25,647 $10,979 $ 9,069
Compensation to underwriters $12,245 $ 1,414 $ 3,864 $ 48,644 $ 4,375 $ 8,564
Compensation to dealers $ 6,590 $ 1,103 $ 1,501 $ 18,621 $ 2,134 $ 3,600
Compensation to sales personnel $ 3,986 $ 3,131 $ 1,221 $ 12,640 $ 5,389 $ 3,350
Interest or other finance charges $ -- $ -- $ -- $ -- $ -- $ --
Travel $ 899 $ 655 $ 320 $ 2,556 $ 1,132 $ 759
Office Expenses $ 4,483 $ 2,983 $ 1,553 $ 12,047 $ 5,223 $ 4,027
Administrative Processing Costs $ 2,125 $ 1,826 $ 1,645 $ 3,166 $ 2,082 $ 1,913
TOTAL $41,933 $18,940 $14,029 $128,481 $33,901 $33,065
</TABLE>
<TABLE>
<CAPTION>
IDEX DEAN ASSET ALLOCATION IDEX JCC BALANCED
----------------------------- -----------------------------
A B C A B C
SHARES SHARES SHARES SHARES SHARES SHARE
------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Advertising $ 3,036 $ 3,274 $ 2,067 $ 4,556 $ 4,219 $ 1,509
Printing/mailing
Prospectuses to other than
current Shareholders $12,382 $13,879 $ 9,786 $17,283 $11,366 $ 5,778
Compensation to underwriters $26,061 $10,044 $11,881 $32,505 $ 2,083 $ 2,917
Compensation to dealers $ 8,878 $ 6,582 $ 4,314 $10,388 $ 1,745 $ 3,232
Compensation to sales personnel $ 6,414 $ 6,755 $ 4,281 $ 9,677 $ 9,935 $ 3,100
Interest or other finance charges $ -- $ -- $ -- $ -- $ -- $ --
Travel $ 1,319 $ 1,370 $ 1,030 $ 1,806 $ 1,643 $ 525
Office Expenses $ 5,951 $ 6,430 $ 4,775 $ 8,090 $ 5,952 $ 2,508
Administrative Processing Costs $ 2,357 $ 2,088 $ 1,847 $ 2,395 $ 1,772 $ 1,648
TOTAL $66,398 $50,422 $39,981 $86,700 $38,715 $21,217
<CAPTION>
IDEX JCC
FLEXIBLE INCOME IDEX AEGON INCOME PLUS
---------------------------- ------------------------------
A B C A B C
SHARES SHARES SHARE SHARES SHARES SHARE
------- ------ ------- -------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Advertising $ 1,438 $ 864 $ 920 $ 6,829 $ 1,731 $ 1,324
Printing/mailing
Prospectuses to other than
current Shareholders $ 5,415 $2,168 $ 2,758 $ 25,783 $ 5,070 $ 6,169
Compensation to underwriters $24,302 $ 545 $ 916 $104,696 $ 1,435 $ 4,879
Compensation to dealers $12,267 $ 697 $ 1,862 $ 60,733 $ 1,076 $ 6,383
Compensation to sales personnel $ 3,184 $2,041 $ 2,281 $ 15,071 $ 3,956 $ 2,576
Interest or other finance charges $ -- $ -- $ -- $ -- $ -- $ --
Travel $ 649 $ 321 $ 456 $ 3,051 $ 681 $ 564
Office Expenses $ 2,721 $1,139 $ 1,583 $ 12,859 $ 2,631 $ 2,853
Administrative Processing Costs $ 2,108 $1,490 $ 1,518 $ 3,438 $ 1,584 $ 1,649
TOTAL $52,084 $9,265 $12,294 $232,460 $18,164 $26,397
</TABLE>
46
<PAGE>
<TABLE>
<CAPTION>
IDEX AEGON TAX EXEMPT
-----------------------------
A B C
SHARES SHARES SHARES
-------- -------- -------
<S> <C> <C> <C>
Advertising $ 2,211 $ 204 $ 513
Printing/mailing
Prospectuses to other than
current Shareholders $ 9,432 $ 491 $1,777
Compensation to underwriters $31,751 $ 260 $1,184
Compensation to dealers $25,800 $ 318 $1,331
Compensation to sales personnel $ 5,034 $ 500 $1,110
Interest or other finance charges $ -- $ -- $ --
Travel $ 1,192 $ 86 $ 199
Office Expenses $ 4,887 $ 288 $ 857
Administrative Processing Costs $ 1,962 $1,440 $1,481
TOTAL $82,269 $3,587 $8,452
</TABLE>
- ------------------------------
* Class T shares of IDEX JCC Growth are not subject to annual distribution and
service fees.
No expenses are listed for IDEX Goldman Sachs Growth, IDEX T. Rowe Price
Dividend Growth, IDEX Salomon All Cap, IDEX Pilgrim Baxter Mid Cap Growth, or
IDEX T. Rowe Price Small Cap as these funds commenced operations March 1, 1999.
NET ASSET VALUE DETERMINATION
Net asset value is determined separately for each class of shares of a fund on
each day as of the close of the regular session of business on the New York
Stock Exchange (the "Exchange"), currently 4:00 p.m. Eastern Time, Monday
through Friday, except on: (i) days on which changes in the value of portfolio
securities will not materially affect the net asset value of a particular class
of shares of the funds; (ii) days during which no shares of a fund are tendered
for redemption and no orders to purchase shares of that fund are received; or
(iii) customary national holidays on which the Exchange is closed. The per share
net asset value of each class of shares of a fund is determined by dividing the
total value of the fund's securities, receivables and other assets allocable to
that class by the total number of shares outstanding of that class. The public
offering price of a Class A, Class B, Class M or Class T share of a fund is the
net asset value per share plus, the applicable sales charge in the case of Class
A or Class T shares. Investment securities are valued at the closing price for
securities traded on a principal securities exchange (U.S. or foreign), or on
the NASDAQ National Market. Investment securities traded on the over-the-counter
market and listed securities for which no sales are reported for the trading
period immediately preceding the time of determination are valued at the last
bid price. Foreign currency denominated assets and liabilities are converted
into U.S. dollars at the closing exchange rate each day. Other securities for
which quotations are not readily available are valued at fair values determined
in such manner as a fund's sub-adviser, under the supervision of the Board of
Trustees, decides in good faith. (No information is included in the chart below
for IDEX Goldman Sachs Growth, IDEX T. Rowe Price Dividend Growth, IDEX Salomon
All Cap, IDEX Pilgrim Baxter Mid Cap Growth or IDEX T. Rowe Price Small Cap as
these funds commenced operations March 1, 1999.)
47
<PAGE>
OFFERING PRICE PER SHARE CALCULATED AS FOLLOWS:
<TABLE>
<CAPTION>
NET ASSET VALUE PER SHARE ADD MAXIMUM AMOUNT OF SALES OFFERING PRICE
AS OF OCTOBER 31, 1998 (NET ASSETS SHARES OUTSTANDING) SELLING COMMISSIONS CHARGE PER SHARE
- ---------------------------- --------------------------------- --------------------- ----------------- ---------------
<S> <C> <C> <C> <C>
IDEX Alger Aggressive Growth
Class A $22.24 5.50% $1.29 $23.53
Class B $21.93 0.00% $0.00 $21.93
Class M* $21.98 1.00% $0.22 $22.20
IDEX GE/Scottish Equitable
International Equity
Class A $10.77 5.50% $0.63 $11.40
Class B $10.71 0.00% $0.00 $10.71
Class M* $10.72 1.00% $0.11 $10.83
IDEX JCC Capital Appreciation
Class A $16.97 5.50% $0.99 $17.96
Class B $16.72 0.00% $0.00 $16.72
Class M* $16.76 1.00% $0.17 $16.93
IDEX JCC Global
Class A $24.09 5.50% $1.40 $25.49
Class B $23.62 0.00% $0.00 $23.62
Class M* $23.56 1.00% $0.24 $23.80
IDEX JCC Growth
Class A $29.35 5.50% $1.71 $31.06
Class B $28.63 0.00% $0.00 $28.63
Class M* $28.74 1.00% $0.29 $29.03
Class T $29.74 8.50% $2.76 $32.50
IDEX C.A.S.E. Growth
Class A $10.14 5.50% $0.59 $10.73
Class B $10.02 0.00% $0.00 $10.02
Class M* $10.04 1.00% $0.10 $10.14
IDEX NWQ Value Equity
Class A $11.09 5.50% $0.65 $11.74
Class B $10.98 0.00% $0.00 $10.98
Class M* $11.00 1.00% $0.11 $11.11
IDEX LKCM Strategic Total Return
Class A $16.18 5.50% $0.94 $17.12
Class B $16.17 0.00% $0.00 $16.17
Class M* $16.17 1.00% $0.16 $16.33
IDEX Dean Asset Allocation
Class A $13.14 5.50% $0.76 $13.90
Class B $13.13 0.00% $0.00 $13.13
Class M* $13.13 1.00% $0.13 $13.26
IDEX JCC Balanced
Class A $14.75 5.50% $0.86 $15.61
Class B $14.74 0.00% $0.00 $14.74
Class M* $14.74 1.00% $0.15 $14.89
IDEX JCC Flexible Income
Class A $ 9.84 4.75% $0.49 $10.33
Class B $ 9.83 0.00% $0.00 $ 9.83
Class M* $ 9.84 1.00% $0.10 $ 9.94
IDEX AEGON Income Plus
Class A $10.43 4.75% $0.52 $10.95
Class B $10.42 0.00% $0.00 $10.42
Class M* $10.42 1.00% $0.11 $10.53
IDEX AEGON Tax Exempt
Class A $11.94 4.75% $0.60 $12.54
Class B $11.94 0.00% $0.00 $11.94
Class M* $11.94 1.00% $0.12 $12.06
</TABLE>
* Effective March 1, 1999, Class C shares became Class M shares.
48
<PAGE>
DIVIDENDS AND OTHER DISTRIBUTIONS
An investor may choose among several options with respect to dividends and
capital gain distributions payable to the investor. Dividends or other
distributions will be paid in full and fractional shares at the net asset value
determined as of the ex-dividend date unless the shareholder has elected another
distribution option as described in the prospectus. Transaction confirmations
and checks for payments designated to be made in cash generally will be mailed
on the payable date. The per share income dividends on Class B and Class M
shares of a fund are anticipated to be lower than the per share income dividends
on Class A shares of that fund, (and Class T shares of IDEX JCC Growth) as a
result of higher distribution and service fees applicable to the Class B and
Class M shares.
SHAREHOLDER ACCOUNTS
Detailed information about general procedures for Shareholder Accounts and
specific types of accounts is set forth in the prospectus.
RETIREMENT PLANS
The Fund offers several types of retirement plans that an investor may establish
to invest in shares of a fund with tax deductible dollars. Prototype retirement
plans for both corporations and self-employed individuals, and for Individual
Retirement Accounts, Code Section 401(k) Plans and Simplified Employee Pension
Plans are available by calling or writing IDEX Customer Service. These plans
require the completion of separate applications which are also available from
IDEX Customer Service. Investors Fiduciary Trust Company ("IFTC"), Kansas City,
Missouri, acts as the custodian or trustee under these plans for which it
charges an annual fee of up to $15.00 on each such account with a maximum of
$30.00 per tax identification number. However, if your retirement plan is under
custody of IFTC and your combined retirement account balances per taxpayer ID
number are more than $50,000, there is generally no fee. Shares of a fund are
also available for investment by Code Section 403(b)(7) retirement plans for
employees of charities, schools, and other qualifying employers. IDEX AEGON Tax
Exempt is not well-suited as an investment vehicle for tax-deferred retirement
plans which cannot benefit from tax-exempt income and whose distributed earnings
are taxable to individual recipients as ordinary income. To receive additional
information or forms on these plans, please call IDEX Customer Service at (888)
233-4339 (toll free) or write the Idex Investor Services, Inc. at P. O. Box
9015, Clearwater, Florida 33758-9015. No contribution to a retirement plan can
be made until the appropriate forms to establish the plan have been completed.
It is advisable for an investor considering the funding of any retirement plan
to consult with an attorney, retirement plan consultant or financial or tax
advisor with respect to the requirements of such plans and the tax aspects
thereof.
REDEMPTION OF SHARES
Shareholders may redeem their shares at any time at any price equal to the net
asset value per share next determined following receipt of a valid redemption
order by the transfer agent, in proper form. Payment will ordinarily be made
within three days of the receipt of a valid redemption order. The value of
shares on redemption may be more or less than the shareholder's cost, depending
upon the market value of the fund's net assets at the time of redemption.CLASS B
SHARES, CLASS M SHARES AND CERTAIN CLASS A SHARE PURCHASES ARE ALSO SUBJECT TO A
CONTINGENT DEFERRED SALES CHARGE UPON CERTAIN REDEMPTIONS. THE PROSPECTUS
DESCRIBES THE REQUIREMENTS AND PROCEDURES FOR THE REDEMPTION OF SHARES.
Shares will normally be redeemed for cash, although each fund retains the right
to redeem its shares in-kind under unusual circumstances in order to protect
the interests of the remaining shareholders by the delivery of securities
selected from its assets at its discretion. The Fund has, however, elected to
be governed by Rule 18f-1 under the 1940 Act pursuant to which a fund is
obligated to redeem shares solely in cash up to the lesser of $250,000 or 1% of
the net asset value of a fund during any 90-day period for any one shareholder.
Should redemptions by any shareholder exceed such limitation, the fund will
have the option of redeeming the excess in cash or in kind. If shares are
redeemed in kind, the redeeming shareholder might incur brokerage
49
<PAGE>
costs in converting the assets to cash. The method of valuing securities used
to make redemptions in kind will be the same as the method of valuing portfolio
securities described under "Net Asset Value Determination," and such valuation
will be made as of the same time the redemption price is determined. Upon any
distributions in-kind, shareholders may appeal the valuation of such securities
by writing to the Fund.
Redemption of shares may be suspended, or the date of payment may be postponed,
whenever: (1) trading on the Exchange is restricted, as determined by the SEC,
or the Exchange is closed except for holidays and weekends; (2) the SEC permits
such suspension and so orders; or (3) an emergency exists as determined by the
SEC so that disposal of securities and determination of net asset value is not
reasonably practicable.
The Contingent Deferred Sales Charge ("CDSC") is waived on redemptions of Class
B and Class M shares in the circumstances described below:
(a) Redemption upon Total Disability or Death
A fund will waive the CDSC on redemptions following the death or total
disability (as evidenced by a determination of the Federal Social Security
Administration) of a Class B or M shareholder, but in the case of total
disability only as to shares owned at the time of the initial determination of
disability. The Transfer Agent or Distributor will require satisfactory proof of
death or disability before it determines to waive the CDSC.
(b) Redemption Pursuant to a Fund's Systematic
Withdrawal Plan
A shareholder may elect to participate in a systematic withdrawal plan ("Plan")
with respect to the shareholder's investment in a fund. Under the Plan, a
dollar amount of a participating shareholder investment in the fund will be
redeemed systematically by the fund on a periodic basis, and the proceeds paid
in accordance with shareholder's instructions. The amount to be redeemed and
frequency of the systematic withdrawals will be specified by the shareholder
upon his or her election to participate in the Plan. The CDSC will be waived on
redemptions made under the Plan subject to the limitations described below.
The amount of a shareholder's investment in a fund at the time election to
participate in the Plan is made with respect to the fund is hereinafter
referred to as the "Initial Account Balance." The amount to be systematically
redeemed from a fund without the imposition of a CDSC may not exceed a maximum
of 12% annually of the shareholder's Initial Account Balance. The funds reserves
the right to change the terms and conditions of the Plan and the ability to
offer the Plan.
(c) Reinvestment Privilege
The CDSC is also waived on redemption of Class B or M shares as it relates to
the reinvestment of redemption proceeds in the same class of shares of another
IDEX fund within 90 days after redemption.
(d) Certain Retirement Plan Withdrawals
A fund will waive the CDSC on withdrawals from IRS qualified and nonqualified
retirement plans, individual retirement accounts, tax- sheltered accounts, and
deferred compensation plans, where such withdrawals are permitted under the
terms of the plan or account (e.g., attainment of age 591/2%, separation from
service, death, disability, loans, hardships, withdrawals of excess
contributions pursuant to applicable IRS rules or withdrawals based on life
expectancy under applicable IRS rules). This waiver does not include transfer
of asset redemptions, broker directed accounts or omnibus accounts.
TAXES
Each fund has either qualified (except IDEX Goldman Sachs Growth, IDEX T. Rowe
Price Dividend Growth, IDEX Salomon All Cap, IDEX Pilgrim Baxter Mid Cap Growth
and IDEX T. Rowe Price Small Cap which all intend to qualify), and expects to
continue to qualify, for treatment as a regulated investment company ("RIC")
under the Internal Revenue Code of 1986, as amended (the "Code"). In order to
qualify for that treatment, a fund must distribute to its shareholders for each
taxable year at least 90% of its investment company taxable income
("Distribution Requirement") and must meet several additional requirements. With
respect to each fund, these requirements include the following: (1) the fund
must derive at least 90% of its gross income each taxable year from dividends,
interest, payments with respect to securities loans, and gains from the sale or
other disposition of securities or foreign currencies, or other income
(including gains from options, futures or forward contracts) derived with
respect to its business of investing in securities or those currencies ("Income
Requirement"); (2) at the close of each quarter of the fund's taxable year, at
least 50% of the value of its total assets must be represented by cash and cash
items, U.S. Government securities, securities of other RICs and other securities
that, with respect to any one issuer, do not exceed 5% of the value of the
fund's total assets and that do not represent more than 10% of
50
<PAGE>
the outstanding voting securities of the issuer; and (3) at the close of each
quarter of the fund's taxable year, not more than 25% of the value of its total
assets may be invested in securities (other than U.S. Government securities or
the securities of other RICs) of any one issuer. If each fund qualifies as a
regulated investment company and distributes to its shareholders substantially
all of its net income and net capital gains, then each fund should have little
or no income taxable to it under the Code.
A fund will be subject to a nondeductible 4% excise tax to the extent it fails
to distribute by the end of any calendar year substantially all of its ordinary
income for that year and capital gain net income for the one-year period ending
on October 31 of that year, plus certain other amounts. Each fund intends to
distribute annually a sufficient amount of any taxable income and capital gains
so as to avoid liability for this excise tax.
If IDEX AEGON Tax Exempt invests in any instruments that generate taxable
income, distributions of the interest earned thereon will be taxable to that
fund's shareholders as ordinary income to the extent of its earnings and
profits. Moreover, if that fund realizes capital gains as a result of market
transactions, any distributions of that gain also will be taxable to its
shareholders.
Proposals may be introduced before Congress for the purpose of restricting or
eliminating the Federal income tax exemption for interest on municipal
securities. If such a proposal were enacted, the availability of municipal
securities for investment by IDEX AEGON Tax Exempt and the value of its
portfolio securities would be affected. In that event, IDEX AEGON Tax Exempt
will re-evaluate its investment objective and policies.
Dividends and interest received by a fund may be subject to income, withholding
or other taxes imposed by foreign countries and U.S. possessions that would
reduce the yield on its securities. Tax conventions between certain countries
and the United States may reduce or eliminate these foreign taxes, however, and
foreign countries generally do not impose taxes on capital gains in respect of
investments by foreign investors. If more than 50% of the value of IDEX JCC
Global's total assets at the close of its taxable year consists of securities of
foreign corporations, it will be eligible to, and may, file an election with the
Internal Revenue Service that will enable its shareholders, in effect, to
receive the benefit of the foreign tax credit with respect to any foreign and
U.S. possessions income taxes paid by it.
Pursuant to the election, a fund will treat those taxes as dividends paid to
its shareholders and each shareholder will be required to: (1) include in gross
income, and treat as paid by him, his proportionate share of those taxes; (2)
treat his share of those taxes and of any dividend paid by the fund that
represents income from foreign or U.S. possessions sources as his own income
from those sources; and (3) either deduct the taxes deemed paid by him in
computing his taxable income or, alternatively, use the foregoing information
in calculating the foreign tax credit against his federal income tax. IDEX JCC
Global will report to its shareholders shortly after each taxable year their
respective shares of the income from sources within, and taxes paid to, foreign
countries and U.S. possessions if it makes this election.
Each fund, except IDEX AEGON Tax Exempt, may invest in the stock of "passive
foreign investment companies" ("PFICs"). A PFIC is a foreign corporation that,
in general, meets either of the following tests: (1) at least 75% of its gross
income is passive; or (2) an average of at least 50% of its assets produce, or
are held for the production of, passive income. Under certain circumstances, a
fund will be subject to Federal income tax on a portion of any "excess
distribution" received on the stock of a PFIC or of any gain on disposition of
that stock (collectively "PFIC income"), plus interest thereon, even if the fund
distributes the PFIC income as a taxable dividend to its shareholders. The
balance of the PFIC income will be included in the fund's investment company
taxable income and, accordingly, will not be taxable to it to the extent that
income is distributed to its shareholders. If a fund invests in a PFIC and
elects to treat the PFIC as a "qualified electing fund," then in lieu of the
foregoing tax and interest obligation, the fund will be required to include in
income each year its pro rata share of the qualified electing fund's annual
ordinary earnings and net capital gain (the excess of net long-term capital gain
over net short-term capital loss). This will occur even if they are not
distributed to the fund and those amounts would be subject to the distribution
requirements described above. In most instances it will be very difficult, if
not impossible, to make this election because of certain requirements thereof.
A fund, however, may qualify for, and may make, an election permitted under
Section 853 of the Code so that shareholders may be eligible to claim a credit
or deduction on their Federal income tax returns for, and will be required to
treat as part of the amounts distributed to them, their pro rata portion of
qualified taxes paid or incurred by the fund to foreign countries (which taxes
relate primarily to investment income). The portfolio may make an election under
Section 853 of the Code, provided that more than 50% of the value of the fund's
total assets at the close of the taxable year consists of securities in foreign
corporations, and the fund satisfies applicable distribution provisions of the
Code. The foreign tax credit available to shareholders is subject to certain
limitations imposed by the Code. In addition, another election is available that
would involve marking to market a fund's PFIC stock at the end of each taxable
year (and on certain other dates prescribed in the Code), with the result that
unrealized gains are treated as though they were realized although any such
gains recognized will be ordinary income rather than capital gain. If this
election were made, tax at the fund level under the PFIC rules would be
eliminated, but a fund could, in limited circumstances, incur nondeductible
interest charges. A fund's intention to qualify annually as a regulated
investment company may limit a fund's election with respect to PFIC stock.
The use of hedging strategies, such as writing (selling) and purchasing options
and futures contracts and entering into forward contracts, involves complex
rules that will determine for income tax purposes the character and timing of
recognition of the income received in connection therewith by a fund. Income
from foreign currencies (except certain gains therefrom that may be excluded by
future regulations), and income from transactions in options, futures and
forward contracts derived by a fund with respect to its business of investing
in securities or foreign currencies, will qualify as permissible income under
the Income Requirement.
If a fund satisfies certain requirements, any increase in value on a position
that is part of a "designated hedge" will be offset by any decrease in value
(whether realized or not) of the offsetting hedging position during the
51
<PAGE>
period of the hedge for purposes of determining whether the fund satisfies the
Short-Short Limitation. Thus, only the net gain (if any) from the designated
hedge will be included in gross income for purposes of that limitation. Each
fund intends that, when it engages in hedging transactions, they will qualify
for this treatment, but at the present time it is not clear whether this
treatment will be available for all of the fund's hedging transactions. To the
extent this treatment is not available, a fund may be forced to defer the
closing out of certain options and futures contracts beyond the time when it
otherwise would be advantageous to do so, in order for the fund to continue to
qualify as an RIC.
The treatment of income dividends and capital gain distributions by a fund to
shareholders under the various state income tax laws may not parallel that
under the federal law. Qualification as a regulated investment company does not
involve supervision of a fund's management or of its investment policies and
practices by any governmental authority.
Shareholders are urged to consult their own tax advisors with specific
reference to their own tax situations, including their state and local tax
liabilities.
PRINCIPAL SHAREHOLDERS
To the knowledge of the Fund, as of January 30, 1999, no shareholders owned
beneficially or of record 5% or more of the outstanding shares of beneficial
interest of IDEX Alger Aggressive Growth, IDEX JCC Capital Appreciation, IDEX
JCC Global, IDEX C.A.S.E. Growth, IDEX NWQ Value Equity, IDEX LKCM Strategic
Total Return, IDEX Dean Asset Allocation, IDEX JCC Balanced, IDEX JCC Flexible
Income or IDEX AEGON Tax Exempt with the following exceptions: National Heritage
Foundation for the benefit of VORA, Falls Church, Virginia, owns approximately
6% of the outstanding shares of beneficial interest of the IDEX GE/Scottish
Equitable International Equity; Donaldson, Lufkin & Jenrette Securities
Corporation, Jersey City, New Jersey, owns approximately 6% of the outstanding
shares of beneficial interest of the IDEX GE/Scottish Equitable International
Equity, and ISI owned beneficially or of record approximately 15% of the IDEX
GE/Scottish Equitable International Equity and 7% of IDEX C.A.S.E. Growth. As of
January 30, 1999 certain affiliates of AIMI were the record owners of shares of
beneficial interest of IDEX AEGON Income Plus, AUSA Life Insurance Company owned
beneficially or of record 7% of the outstanding shares. As of January 30, 1999,
State Street Bank and Trust Company as Trustee for the ConAgra Retirement Income
Savings Plan, Boston, Massachusetts, owned approximately 10% of the outstanding
shares of beneficial interest of IDEX JCC Growth.
MISCELLANEOUS
ORGANIZATION
Each fund is a series of the IDEX Mutual Funds, a Massachusetts business trust
that was formed by a Declaration of Trust dated January 7, 1986. The Trust
currently is governed by a Restatement of Declaration of Trust ("Declaration of
Trust") dated as of August 30, 1991.
On October 1, 1993, in a tax-free reorganization, IDEX JCC Flexible Income
acquired all of the assets and assumed all of the liabilities of IDEX Total
Income Trust ("IDEX Total") in exchange for shares of IDEX JCC Flexible Income
which were then distributed to IDEX Total shareholders. All historical financial
and performance information set forth in this SAI relates to IDEX Total prior to
the date it was reorganized into the IDEX JCC Flexible Income.
On September 20, 1996 in a tax-free reorganization, IDEX JCC Growth (formerly
IDEX II Growth Fund) acquired all of the assets and assumed all of the
liabilities of IDEX Fund and IDEX Fund 3 in exchange for Class T shares of IDEX
JCC Growth which were then distributed on a pro rata basis to the respective
shareholders of IDEX Fund and IDEX Fund 3. Upon closing of the reorganization,
IDEX II Series Fund changed its name to IDEX Series Fund. IDEX Series Fund
became IDEX Mutual Funds effective March 1, 1999.
SHARES OF BENEFICIAL INTEREST
The Declaration of Trust permits the Fund to issue an unlimited number of
shares of beneficial interest. Shares of the Fund are fully paid and
nonassessable when issued. Shares of the Fund have no preemptive, cumulative
voting, conversion or subscription rights. Shares of the Fund are fully
transferable but the Fund is not bound to recognize any transfer until it is
recorded on the books.
The shares of beneficial interest of each fund are divided into three classes,
Class A, Class B and Class M shares; IDEX JCC Growth includes a fourth class,
Class T shares. Each class represents interests in the same assets of the fund
and differ as follows: each class of shares has exclusive voting rights on
matters pertaining to its plan of distribution or any other matter
appropriately limited to that class; Class A shares are subject to an initial
sales charge; Class B shares are subject to a contingent deferred sales charge,
or back-end load, at a declining rate; Class M shares are subject to an initial
sales
52
<PAGE>
charge and are subject to a contingent deferred sales charge if redeemed within
18 months of purchase; Class B and Class M shares are subject to higher ongoing
distribution and service fees; each class may bear differing amounts of certain
class-specific expenses; and each class has a separate exchange privilege. Class
T shares of the IDEX JCC Growth are subject to an initial sales charge, but no
annual distribution and service fees. Class T shares are NOT available to new
investors; only existing Class T shareholders (who were shareholders of IDEX
Fund or IDEX Fund 3 on September 20, 1996) may purchase additional Class T
shares. The Fund does not anticipate that there will be any conflicts between
the interests of holders of the different classes of shares of the same fund by
virtue of these classes. On an ongoing basis, the Board of Trustees will
consider whether any such conflict exists and, if so, take appropriate action.
On any matter submitted to a vote of shareholders of a series or class, each
full issued and outstanding share of that series or class has one vote.
The Declaration of Trust provides that each of the Trustees will continue in
office until the termination of the Trust or his earlier death, resignation,
bankruptcy or removal. A meeting will be called for the election of trustees
upon the written request of holders of 10% or more of the outstanding shares of
the Fund. Vacancies may be filled by majority of the remaining trustees,
subject to certain limitations imposed by the 1940 Act. Therefore, it is not
anticipated that annual or regular meetings of shareholders normally will be
held, unless otherwise required by the Declaration of Trust or the 1940 Act.
Subject to the foregoing, shareholders have the power to vote for the election
and removal of trustees, to terminate or reorganize the Fund, to amend the
Declaration of Trust, on whether to bring certain derivative actions and on any
other matters on which a shareholder vote is required by the 1940 Act, the
Declaration of Trust, the Fund's bylaws or the Trustees.
LEGAL COUNSEL AND AUDITORS
Sutherland Asbill & Brennan LLP, 1275 Pennsylvania Avenue, N.W., Washington,
D.C. 20004, serves as counsel to the Fund and certain of its affiliates.
PricewaterhouseCoopers LLP, 160 Federal Street, Boston, MA 02110 serves as
independent accountants for the Fund.
REGISTRATION STATEMENT
This SAI and the prospectus for the Fund does not contain all the information
set forth in the registration statement and exhibits relating thereto, which the
Fund has filed with the SEC, Washington, D.C. under the 1933 Act and the 1940
Act, to which reference is hereby made.
PERFORMANCE INFORMATION
Quotations of average annual total return for a particular class of shares of a
fund will be expressed in terms of the average annual compounded rate of return
of a hypothetical investment in the fund over periods of 1, 5, and 10 years.
These are the average annual compounded rates of return that would equate the
initial amount invested to the ending redeemable value. These rates of return
are calculated pursuant to the following formula:
P(1 + T)n = ERV
(where P = a hypothetical initial investment of $1,000; T = the average annual
total return; N = the number of years; and ERV = the ending redeemable value of
a hypothetical $1,000 investment made at the beginning of the period). All
average annual total return figures reflect the deduction of a proportionate
share of each Fund's expenses on an annual basis, and assume that the maximum
sales load (Class A and Class T shares) is deducted from the initial $1,000
investment and all dividends and distributions are paid in additional shares.
53
<PAGE>
AVERAGE ANNUAL TOTAL RETURN
<TABLE>
<CAPTION>
IDEX GE/SCOTTISH EQUITABLE
IDEX MUTUAL FUNDS IDEX ALGER AGGRESSIVE GROWTH INTERNATIONAL EQUITY
AS OF OCTOBER 31, 1998 CLASS CLASS
- ---------------------- -------------------------------------- --------------------------------------
A B M*** A B M***
------------ ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Inception Date 12/02/94 10/01/95 12/02/94 02/01/97 02/01/97 02/01/97
Sales Charge 5.50% * 1.00% 5.50% * 1.00%
12b-1 Fee 0.35% 1.00% 0.90% 0.35% 1.00% 0.90%
Average Annual Total Return Including
Sales Charges:
1 year 15.74% 17.04% 20.89% (3.07)% (3.11)% 0.97%
5 years N/A N/A N/A N/A N/A N/A
10 years N/A N/A N/A N/A N/A N/A
Inception 25.31% 11.87% 26.45% 1.50 % 1.92 % 3.68%
Average Annual Total Return Without
Deduction of Sales Charge:
1 year 22.48% 22.04% 22.11% 2.58 % 1.89 % 1.99%
5 years N/A N/A N/A N/A% N/A% N/A
10 years N/A N/A N/A N/A% N/A% N/A
Inception 27.13% 12.37% 26.78% 4.85 % 4.17 % 4.28%
Cumulative Total Return Without
Deduction of Sales Charge:
1 year 22.48% 22.04% 22.11% 2.58 % 1.89 % 1.99%
5 years N/A N/A N/A N/A N/A N/A
10 years N/A N/A N/A N/A N/A N/A
Inception 156.14% 43.32% 153.33% 8.59 % 7.36 % 7.55%
<CAPTION>
IDEX MUTUAL FUNDS IDEX JCC CAPITAL APPRECIATION
AS OF OCTOBER 31, 1998 CLASS
- -------------------------------------- --------------------------------------
A B M***
------------ ------------ ------------
<S> <C> <C> <C>
Inception Date 12/02/94 10/01/95 12/02/94
Sales Charge 5.50% * 1.00%
12b-1 Fee 0.35% 1.00% 0.90%
Average Annual Total Return Including
Sales Charges:
1 year 3.83% 4.35% 8.34%
5 years N/A N/A N/A
10 years N/A N/A N/A
Inception 16.00% 10.37% 16.89%
Average Annual Total Return Without
Deduction of Sales Charge:
1 year 9.87% 9.35% 9.43%
5 years N/A N/A N/A
10 years N/A N/A N/A
Inception 17.69% 10.90% 17.19%
Cumulative Total Return Without
Deduction of Sales Charge:
1 year 9.87% 9.35% 9.43%
5 years N/A N/A N/A
10 years N/A N/A N/A
Inception 89.29% 37.59% 86.17%
</TABLE>
<TABLE>
<CAPTION>
IDEX MUTUAL FUNDS IDEX JCC GLOBAL IDEX JCC GROWTH
AS OF OCTOBER 31, 1998 CLASS CLASS
- ---------------------- -------------------------------------- --------------------------------------------------
A B M*** A B M*** T
------------ ------------ ------------ ------------ ------------ ------------ -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Inception Date 10/01/92 10/01/95 10/01/93 05/08/86 10/01/95 10/01/93 6/04/85
Sales Charge 5.50% * 1.00% 5.50% * 1.00% 8.50%
12b-1 Fee 0.35% 1.00% 0.90% 0.35% 1.00% 0.90% 0%
Average Annual Total Return Including
Sales Charges:
1 year 5.17% 5.93% 9.97% 27.77% 29.96% 32.65% 24.01%
5 years 15.66% N/A 16.33% 18.08% N/A 18.84% 17.81%
10 years --% N/A N/A 18.81% N/A N/A 18.77%
Inception 19.59% 18.18% 17.69% 17.35% 22.46% 18.50% 17.65%
Average Annual Total Return Without
Deduction of Sales Charge:
1 year 11.30% 10.93% 11.08% 35.21% 34.96% 35.00% 35.53%
5 years 16.98% N/A 16.33% 19.43% N/A 19.07% 19.92%
10 years --% N/A N/A 19.48% N/A N/A 19.83%
Inception 20.71% 18.64% 17.92% 17.89% 22.88% 18.74% 18.44%
Cumulative Total Return Without
Deduction of Sales Charge:
1 year 11.30% 10.93% 11.08% 35.21% 34.96% 35.00% 35.53%
5 years 119.02% N/A 115.20% 142.96% N/A 139.38% 147.99%
10 years N/A N/A N/A 493.06% N/A N/A 510.64%
Inception 213.98% 69.41% 131.08% 679.92% 88.79% 139.35% 866.59%
</TABLE>
54
<PAGE>
<TABLE>
<CAPTION>
IDEX MUTUAL FUNDS IDEX C.A.S.E. GROWTH IDEX NWQ VALUE EQUITY
AS OF OCTOBER 31, 1998 CLASS CLASS
- ---------------------- -------------------------------------- --------------------------------------
A B M*** A B M***
------------ ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Inception Date 02/01/96 02/01/96 02/01/96 02/01/97 02/01/97 02/01/97
Sales Charge 5.50% * 1.00% 5.50% * 1.00%
12b-1 Fee 0.35% 1.00% 0.90% 0.35% 1.00% 0.90%
Average Annual Total Return
Including Sales Charges:
1 year (19.51)% (19.63)% (17.00)% (10.18)% (10.27)% (7.34)%
5 years N/A N/A N/A N/A N/A N/A
10 years N/A N/A N/A N/A N/A N/A
Inception 3.18 % 3.67 % 4.40 % 2.96 % 3.51 % 5.22 %
Average Annual Total Return Without
Deduction of Sales Charge:
1 year (14.83)% (15.40)% (15.31)% (4.96)% (5.55)% (5.46)%
5 years N/A N/A N/A N/A N/A N/A
10 years N/A N/A N/A N/A N/A N/A
Inception 5.33 % 4.69 % 4.79 % 6.37 % 5.74 % 5.83 %
Cumulative Total Return Without
Deduction of Sales Charge:
1 year (14.83)% (15.40)% (15.31)% (4.96)% (5.55)% (5.46)%
5 years N/A N/A N/A N/A N/A N/A
10 years N/A N/A N/A N/A N/A N/A
Inception 15.32 % 13.41 % 13.70 % 11.33 % 10.18 % 10.36 %
<CAPTION>
IDEX MUTUAL FUNDS IDEX LKCM STRATEGIC TOTAL RETURN
AS OF OCTOBER 31, 1998 CLASS
- ---------------------- --------------------------------------
A B M***
------------ ------------ ------------
<S> <C> <C> <C>
Inception Date 12/02/94 10/01/95 12/02/94
Sales Charge 5.50% * 1.00%
12b-1 Fee 0.35% 1.00% 0.90%
Average Annual Total Return
Including Sales Charges:
1 year 1.52% 1.74% 4.78%
5 years N/A N/A N/A
10 years N/A N/A N/A
Inception 15.07% 14.03% 15.83%
Average Annual Total Return Without
Deduction of Sales Charge:
1 year 7.43% 6.74% 6.85%
5 years N/A N/A N/A
10 years N/A N/A N/A
Inception 16.74% 14.52% 16.12%
Cumulative Total Return Without
Deduction of Sales Charge:
1 year 7.43% 6.74% 6.85%
5 years N/A N/A N/A
10 years N/A N/A N/A
Inception 83.40% 51.95% 79.61%
</TABLE>
<TABLE>
<CAPTION>
IDEX MUTUAL FUNDS IDEX DEAN ASSET ALLOCATION IDEX JCC BALANCED
AS OF OCTOBER 31, 1998 CLASS CLASS
- ---------------------- -------------------------------------- -------------------------------------
A B M*** A B M***
------------ ------------ ------------ ------------ ----------- ------------
<S> <C> <C> <C> <C> <C> <C>
Inception Date 10/01/95 10/01/95 10/01/95 12/02/94 10/1/95 12/02/94
Sales Charge 5.50% * 1.00% 5.50% * 1.00%
12b-1 Fee 0.35% 1.00% 0.90% 0.35% 1.00% 0.90%
Average Annual Total Return Including
Sales Charge:
1 year 1.35% 1.56% 4.60% 8.38% 8.97% 11.94%
5 years N/A N/A N/A N/A N/A N/A
10 years N/A N/A N/A N/A N/A N/A
Inception 10.71% 11.52% 11.78% 17.68% 18.40% 18.45%
Average Annual Total Return Without
Deduction of Sales Charge:
1 year 7.25% 6.56% 6.67% 14.69% 13.97% 14.08%
5 years N/A N/A N/A N/A N/A N/A
10 years N/A N/A N/A N/A N/A N/A
Inception 12.75% 12.04% 12.15% 19.39% 18.85% 18.76%
Cumulative Total Return Without
Deduction of Sales Charge:
1 year 7.25% 6.56% 6.67% 14.69% 13.97% 14.08%
5 years N/A N/A N/A N/A N/A N/A
10 years N/A N/A N/A N/A N/A N/A
Inception 44.83% 42.01% 42.44% 100.23% 70.36% 96.12%
<CAPTION>
IDEX MUTUAL FUNDS IDEX JCC FLEXIBLE INCOME
AS OF OCTOBER 31, 1998 CLASS
- ---------------------- --------------------------------------
A B M***
------------ ------------ ------------
<S> <C> <C> <C>
Inception Date 06/29/87 10/01/95 10/01/93
Sales Charge 4.75% * 1.00%
12b-1 Fee 0.35% 1.00% 0.90%
Average Annual Total Return Including
Sales Charge:
1 year 2.32% 1.74% 4.77%
5 years 6.21% N/A 6.44%
10 years 7.74% N/A N/A
Inception 7.99% 7.75% 6.50%
Average Annual Total Return Without
Deduction of Sales Charge:
1 year 7.43% 6.74% 6.84%
5 years 7.25% N/A 6.65%
10 years 8.27% N/A N/A
Inception 8.45% 8.30% 6.71%
Cumulative Total Return Without
Deduction of Sales Charge:
1 year 7.43% 6.74% 6.84%
5 years 41.88% N/A 38.00%
10 years 121.34% N/A N/A
Inception 150.96% 27.89% 39.11%
</TABLE>
55
<PAGE>
<TABLE>
<CAPTION>
IDEX MUTUAL FUNDS IDEX AEGON INCOME PLUS IDEX AEGON TAX EXEMPT
AS OF OCTOBER 31, 1998 CLASS CLASS
- ---------------------- ----------------------------------------- ------------------------------------------
A B M*** A B M***
----------- ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Inception Date 6/14/85 10/01/95 10/01/93 04/01/85 10/01/95 10/01/93
Sales Charge 4.75% * 1.00% 4.75% * 1.00%
12B-1 Fee 0.35% 1.00% 0.90% 0.35% 1.00% 0.60%
Average Annual Total Return
Including Sales Charges:
1 year (1.38)% (2.13)% 0.94% 2.10% 1.50% 4.85%
5 years 6.16 % N/A 6.28% 4.84% N/A 5.39%
10 years 9.31 % N/A N/A 6.51% N/A N/A
Inception 9.79 % 7.05 % 6.42% 7.77% 6.06% 5.36%
Average Annual Total Return Without
Deduction of Sales Charge:
1 year 3.54 % 2.87 % 2.97% 7.19% 6.50% 6.92%
5 years 7.19 % N/A 6.49% 5.87% N/A 5.60%
10 years 9.84 % N/A N/A 7.03% N/A N/A
Inception 10.19 % 7.62 % 6.63% 8.15% 6.63% 5.57%
Cumulative Total Return Without
Deduction of Sales Charge:
1 year 3.54 % 2.87 % 2.97% 7.19% 6.50% 6.92%
5 years 41.53 % N/A 36.97% 33.00% N/A 31.32%
10 years 155.67 % N/A N/A 97.29% N/A N/A
Inception 266.15 % 25.39 % 38.59% 189.91% 21.89% 31.69%
</TABLE>
- ------------------------------
* The deferred sales charge on redemption of Class B shares is 5% during the
first year, 4% during the second year, 3% during the third year, 2% during
the fourth year, 1% during the fifth and sixth years and 0% during the
seventh year and later. The Class C shares are subject to a 1% contingent
deferred sales charge.
** Performance of Class T Shares of IDEX JCC Growth is based on the
historical performance of IDEX Fund from its inception on June 4, 1985
until the reorganization of IDEX Fund and IDEX Fund 3 into Class T Shares
of IDEX Series Fund Growth Portfolio on September 20, 1996; and the
historical performance of Class T Shares of IDEX JCC Growth thereafter.
*** Effective March 1, 1999, Class C shares became Class M shares.
No information is included for IDEX Goldman Sachs Growth, IDEX Pilgrim Baxter
Mid Cap Growth, IDEX T. Rowe Price Dividend Growth, IDEX T. Rowe Price Small Cap
and IDEX Salomon All Cap as they did not commence operations until March 1,
1999.
The current yield for a particular class of shares of each of IDEX JCC
Flexible Income, IDEX AEGON Tax Exempt, IDEX AEGON Income Plus, IDEX JCC
Balanced, IDEX AEGON Income Plus, IDEX Dean Asset Allocation or IDEX LKCM
Strategic Total Return is computed in accordance with a standardized method
prescribed by rules of the SEC. The yield is computed by dividing the fund's
investment income per share earned during a particular 30-day base period
(including dividends, if any and interest earned, minus expenses excluding
reductions for affiliated brokerage and custody earnings credits accrued during
the period) by the maximum offering price per share on the last day of the base
period and then annualizing the result.
CURRENT YIELD
<TABLE>
<CAPTION>
30 DAY PERIOD
ENDED 10/31/98
---------------
<S> <C>
IDEX LKCM STRATEGIC TOTAL RETURN
Class A 1.06%
Class B 0.52%
Class C 0.60%
IDEX JCC BALANCED
Class A 1.81%
Class B 1.31%
Class C 1.41%
IDEX JCC FLEXIBLE INCOME
Class A 4.95%
Class B 4.55%
Class C 4.66%
IDEX AEGON TAX EXEMPT
Class A 3.33%
Class B 2.85%
Class C 3.25%
IDEX AEGON INCOME PLUS
Class A 5.57%
Class B 5.20%
Class C 5.29%
IDEX DEAN ASSET ALLOCATION
Class A 1.31%
Class B 0.78%
Class C 0.87%
</TABLE>
The tax equivalent yield of IDEX AEGON Tax Exempt is computed by dividing that
portion of the yield (as computed above) which is tax-exempt by one minus an
assumed tax rate of 28% and adding the product to that portion, if any, of the
fund's yield that is not tax-exempt. The tax equivalent yield of IDEX AEGON Tax
Exempt is Class A, Class
56
<PAGE>
B and Class C shares based on a 30-day period ended October 31, 1998 was 4.63%,
3.96% and 4.51%, respectively.
From time to time in advertisements or sales material, a fund may present and
discuss its performance rankings and/or ratings or other information as
published by recognized mutual fund statistical services or by publications of
general interest such as WALL STREET JOURNAL, BOSTON GLOBE, NEW YORK TIMES, LOS
ANGELES TIMES, CHRISTIAN SCIENCE MONITOR, USA TODAY, TAMPA TRIBUNE, ST.
PETERSBURG TIMES, FINANCIAL TIMES, HARTFORD CURRENT, INTERNATIONAL HERALD
TRIBUNE, INVESTOR'S BUSINESS DAILY, BOSTON HERALD, WASHINGTON POST, KIPLINGER'S
WASHINGTON LETTER, KIPLINGER'S TAX REPORT, KIPLINGER'S PERSONAL FINANCE
MAGAZINE, BARRON'S, BUSINESS WEEK, FINANCIAL SERVICES WEEK, NATIONAL
UNDERWRITER, TIME, NEWSWEEK, PENSIONS & INVESTMENTS, U.S. NEWS AND WORLD
REPORT, MORNINGSTAR MUTUAL FUND VALUES, ECONOMIST, BANK LETTER, BOSTON BUSINESS
JOURNAL, RESEARCH RECOMMENDATIONS, FACS OF THE WEEK, MONEY, MODERN MATURITY,
FORBES, FORTUNE, FINANCIAL PLANNER, AMERICAN BANKER, U.S. BANKER, ABA BANKING
JOURNAL, INSTITUTIONAL INVESTOR (U.S./EUROPE), REGISTERED REPRESENTATIVE,
INDEPENDENT AGENT, AMERICAN DEMOGRAPHICS, TRUSTS & ESTATES, CREDIT UNION
MANAGEMENT, PERSONAL INVESTOR, NEW ENGLAND BUSINESS, BUSINESS MONTH,
GENTLEMEN'S QUARTERLY, EMPLOYEE RESEARCH REPORT, EMPLOYEE BENEFIT PLAN REVIEW,
ICI MUTUAL FUND NEWS, SUCCEED, JOHNSON CHARTS, WEISENBERGER INVESTMENT
COMPANIES SERVICE, MUTUAL FUND QUARTERLY, FINANCIAL WORLD MAGAZINE, CONSUMER
REPORTS, BABSON-UNITED MUTUAL FUND SELECTOR AND MUTUAL FUND ENCYCLOPEDIA
(DEARBORN FINANCIAL PUBLISHING). A fund may also advertise non-standardized
performance information which is for a period in addition to those required to
be presented, or which provides actual year-by-year return, or any combination
thereof, or both. For Class A, Class B and Class T shares, non-standardized
performance may also be that which does not reflect deduction of the maximum
sales charge applicable to Class A and Class T shares or the contingent
deferred sales charge applicable to Class B shares. In addition, a fund may, as
appropriate, compare its performance to that of other types of investments such
as certificates of deposit, savings accounts and U.S. Treasuries, or to certain
interest rate and inflation indices, such as the Consumer Price Index. A fund
may also advertise various methods of investing including, among others, dollar
cost averaging, and may use compounding illustrations to show the results of
such investment methods. The Fund or the Distributor may also from time to time
in advertisements or sales material present tables or other information
comparing tax-exempt yields to the equivalent taxable yields, whether with
specific reference to IDEX AEGON Tax Exempt or otherwise.
FINANCIAL STATEMENTS
Audited Financial Statements for IDEX Alger Aggressive Growth, IDEX GE/Scottish
Equitable International Equity, IDEX JCC Capital Appreciation, IDEX JCC
Global, IDEX JCC Growth, IDEX C.A.S.E. Growth, IDEX NWQ Value Equity, IDEX
LKCM Strategic Total Return, IDEX Dean Asset Allocation, IDEX JCC Balanced,
IDEX JCC Flexible Income, IDEX AEGON Income Plus and IDEX AEGON Tax Exempt for
the fiscal year ended October 31, 1998 are incorporated by reference from the
Fund's Annual Report dated October 31, 1998. No information is included for
IDEX Goldman Sachs Growth, IDEX T. Towe Price Dividend Growth, IDEX Salomon All
Cap, IDEX Pilgrim Baxter Mid Cap Growth or IDEX T. Towe Price Small Cap as they
did not commence operations until March 1, 1999.
57
<PAGE>
APPENDIX A
CERTAIN SECURITIES IN WHICH THE FUNDS MAY INVEST
I. MUNICIPAL OBLIGATIONS IN WHICH IDEX AEGON TAX EXEMPT MAY INVEST
A. MUNICIPAL BONDS
GENERAL INFORMATION. Municipal Bonds are debt obligations issued to obtain
funds for various public purposes, including the construction of a wide range
of public facilities such as airports, highways, bridges, schools, hospitals,
housing, mass transportation, streets and water and sewer works, and that pay
interest that is exempt from federal income tax in the opinion of issuer's
counsel. Other public purposes for which Municipal Bonds may be issued include
the refunding of outstanding obligations, obtaining funds for general expenses
and obtaining funds to lend to other public institutions and facilities.
The two principal classifications of Municipal Bonds are "general obligation"
bonds and "revenue" or "special tax" bonds. General obligation bonds are
secured by the issuer's pledge of its full faith, credit and taxing power for
the payment of principal and interest. Revenue or special tax bonds are payable
only from the revenues derived from a particular facility or class of
facilities or project or, in some cases, from the proceeds of a special excise
tax or other specific revenue source, but are not supported by the issuer's
power to levy general taxes. Most industrial development bonds are in this
category.
There are, of course, variations in the security of Municipal bonds, both
within a particular classification and between classifications, depending on
numerous factors. The yields of Municipal Bonds depend, among other things,
upon general money market conditions, general conditions of the Municipal Bond
market, size of a particular offering, the maturity of the obligations and
rating of the issue.
INDUSTRIAL DEVELOPMENT BONDS AND PRIVATE ACTIVITY BONDS. Industrial development
bonds ("IDBs") and private activity bonds ("PABs") are issued by or on behalf
of public authorities to finance various privately operated facilities, such as
airports or pollution control facilities. PABs generally are such bonds issued
after August 15, 1986. These obligations are included within the term
"municipal bonds" if the interest paid thereon is exempt from federal income
tax in the option of the bond counsel. IDBs and PABs are in most cases revenue
bonds and thus are not payable from the unrestricted revenues of the issuer.
The credit quality of IDBs and PABs is usually directly related to the credit
standing of the user of the facilities being financed.
PURCHASES ON "WHEN-ISSUED" OR "DELAYED DELIVERY" BASIS. Sometimes the IDEX AEGON
Tax Exempt may buy Municipal Bonds on a "when-issued" or "delayed delivery"
basis. This means that when it agrees to buy, the terms of the Bonds and the
price it will pay are fixed, but it does not purchase and take delivery of the
Bonds until a later date (the "settlement date"), which is usually within one
month. The IDEX AEGON Tax Exempt pays no money and receives no interest before
the settlement date. The commitment to purchase securities on a when-issued or
delayed delivery basis involves the risk that the market value of such
securities may fall below cost prior to the settlement date. While the IDEX
AEGON Tax Exempt may sell the Municipal Bonds before the settlement date, it
will ordinarily do so only for investment management reasons. Ordinarily, the
IDEX AEGON Tax Exempt purchases Municipal Bonds that it has agreed to buy on a
when-issued or delayed delivery basis. Gains or losses on sales prior to the
settlement date are not tax-exempt.
A Municipal Bond purchased on a when-issued or delayed delivery basis is
recorded as an asset on the commitment date. The IDEX AEGON Tax Exempt will
direct the Fund's custodian to segregate cash, U.S. Government securities or
other appropriate debt obligations owned by the Fund that are at least equal in
value to the amount the IDEX AEGON Tax Exempt will have to pay on the settlement
date. If necessary, additional assets will be placed in the account daily so
that the value of the account will at least equal the Fund's purchase
commitment.
B. MUNICIPAL NOTES
The IDEX AEGON Tax Exempt may invest in the following types of Municipal Notes,
subject to the quality requirements described in the Prospectus:
PROJECT NOTES. Project notes ("PNs") are issued on behalf of local authorities
at auctions conducted by the United States Department of Housing and Urban
Development to raise funds for federally sponsored urban renewal, neighborhood
development and housing programs. PNs are backed by the full faith and credit
of the Federal government through agreements with the local authority which
provide that, if required, the Federal government will lend the issuer an
amount
A-1
<PAGE>
equal to the principal of and interest on the PNs. Ordinarily, PNs are repaid
by rolling over the notes or from the proceeds of new bonds or other securities
which are issued to provide permanent financing.
BOND ANTICIPATION NOTES. Bond anticipation notes ("BANs") are usually general
obligations of state and local governmental issuers which are sold to obtain
interim financing for projects that will eventually be funded through the sale
of long-term debt obligations or bonds. The ability of an issuer to meet its
obligations on its BANs is primarily dependent on the issuer's access to the
long-term municipal bond market and the likelihood that the proceeds of such
bond sales will be used to pay the principal and interest on the BANs.
TAX ANTICIPATION NOTES. Tax anticipation notes ("TANs") are issued by state and
local governments to finance their current operations. Repayment is generally
to be derived from specific future tax revenues. TANs are usually general
obligations of the issuer. A weakness in an issuer's capacity to raise taxes
due to, among other things, a decline in its tax base or a rise in
delinquencies, could adversely affect the issuer's ability to meet its
obligations on outstanding TANs.
REVENUE ANTICIPATION NOTES. Revenue anticipation notes ("RANs") are issued by
governments or governmental bodies with the expectation that future revenues
from a designated source will be used to repay the notes. In general, they also
constitute general obligations of the issuer. A decline in the receipt of
projected revenues, such as anticipated revenues from another level of
government, could adversely affect an issuer's ability to meet its obligations
on outstanding RANs. In addition, the possibility that the revenues would, when
received, be used to meet other obligations could affect the ability of the
issuer to pay the principal and interest on RANs.
CONSTRUCTION LOAN NOTES. Construction loan notes are issued to provide
construction financing for specific projects. Frequently, these notes are
redeemed with funds obtained from the Federal Housing Administration.
BANK NOTES. Bank notes are notes issued by local governmental bodies and
agencies as those described above to commercial banks as evidence of borrowings.
Banks on occasion sell such notes to purchasers such as the IDEX AEGON Tax
Exempt. The purposes for which the notes are issued vary, but bank notes are
frequently issued to meet short-term working-capital or capital-project needs.
These notes typically are redeemed with revenue from taxes or from long-term
financing proceeds, and may have risks similar to the risks associated with TANs
and RANs.
C. MUNICIPAL COMMERCIAL PAPER
Municipal Commercial Paper (also called "short-term discount notes") represents
short-term obligations of state and local governments and their agencies issued
typically to meet seasonal working capital or interim construction financing
requirements. Municipal Commercial Paper is often issued at a discount, with
shorter maturities than Municipal Notes. Such obligations are repayable from
general revenues of the issuer or refinanced with long-term debt. In most
cases, Municipal Commercial Paper is backed by letters of credit, lending or
note repurchase agreements, or other credit facility agreements offered by
banks or other institutions.
While the various types of Municipal Notes and Municipal Commercial Paper
described above as a group represent the major portion of the tax-exempt note
market, other types of notes are occasionally available in the marketplace and
the IDEX AEGON Tax Exempt may invest in such other types of notes to the extent
permitted under its investment objective and policies. Such short-term
obligations may be issued for different purposes and with different security
than those mentioned above.
D. FLOATING RATE AND VARIABLE RATE OBLIGATIONS
IDEX AEGON Tax Exempt may purchase floating rate and variable rate obligations,
including participation interests therein (see section E below). Investments in
floating or variable rate securities normally will include IDBs which provide
that the rate of interest is set as a specific percentage of a designated base
rate, such as the rate on Treasury Bonds or Bills or the prime rate at a major
commercial bank, and that the fund can demand payment of the obligation on short
notice at par value plus accrued interest. Variable rate securities provide for
a specified periodic adjustment in the interest rate, while floating rate
securities have flexible rates that change whenever there is a change in the
designated base interest rate. Frequently, such securities are secured by
letters of credit or other credit support arrangements provided by banks. The
quality of the underlying creditor (i.e., the corporation utilizing the IDBs
financing) or the bank, as the case may be, must be equivalent to the Municipal
Obligation ratings required for purchases for the IDEX AEGON Tax Exempt.
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E. PARTICIPATION INTERESTS
IDEX AEGON Tax Exempt may invest in participation interests purchased from banks
in variable rate tax-exempt securities (such as IDBs) owned by the banks. A
participation interest gives the purchaser an undivided interest in the
tax-exempt security in the proportion that the fund's participation interest
bears to the total principal amount of the tax-exempt security, and permits
demand repurchase as described in section D above. Participations are frequently
backed by an irrevocable letter of credit or guarantee of the bank offering the
participation which the sub-adviser, under the supervision of the Board of
Trustees, has determined meets the prescribed quality standards for the IDEX
AEGON Tax Exempt. The fund has the right to sell the instrument back to the bank
and draw on the letter of credit on 7 days' notice for all or any part of the
fund's participation interest in the tax-exempt security, plus accrued interest.
The fund intends to exercise its demand rights under the letter of credit only
(1) upon a default under the terms of the tax-exempt security, (2) as needed to
provide liquidity in order to meet redemptions, or (3) upon a drop in the rating
or the sub-adviser's evaluation of the underlying security. Banks charge a
service and letter of credit fee and a fee for issuing repurchase commitments in
an amount equal to the excess of the interest paid on the tax-exempt securities
over the yield negotiated between the fund and the bank at which the instruments
were purchased by the IDEX AEGON Tax Exempt. The sub-adviser will monitor the
pricing, quality and liquidity of the variable rate demand instruments held by
the IDEX AEGON Tax Exempt, including the IDBs supported by bank letters of
credit or guarantee, on the basis of published financial information, reports or
rating agencies and other bank analytical services. Participation interests will
be purchased only if, in the opinion of counsel, interest income on such
interest will be tax-exempt when distributed as dividends to shareholders.
Obligations of issuers of Municipal Bonds, Municipal Notes and Municipal
Commercial Paper are subject to the provisions of bankruptcy, insolvency and
other laws affecting the rights and remedies of creditors, such as the Federal
Bankruptcy Act, and laws, if any, which may be enacted by Congress or state
legislatures extending the time for payment of principal or interest, or
imposing other constraints upon enforcement of such obligations or upon
municipalities' power to levy taxes. There is also the possibility that
litigation or other conditions may materially affect the power or ability of an
issuer to pay, when due, the principal of and interest on its Municipal
Obligations. II.
II. OBLIGATIONS IN WHICH EACH FUND MAY INVEST
(UNLESS OTHERWISE NOTED)
The funds may invest in the following obligations for temporary defensive
purposes or as otherwise described in the prospectus.
A. U.S. GOVERNMENT OBLIGATIONS
As described in the prospectus, a fund may invest in some or all of the
following types of direct obligations of the Federal Government, issued by the
Department of the Treasury, and backed by the full faith and credit of the
Federal Government.
TREASURY BILLS. Treasury bills are issued with maturities of up to one year.
They are issued in bearer form, are sold on a discount basis and are payable at
par value at maturity.
TREASURY NOTES. Treasury Notes are longer-term interest bearing obligations
with original maturities of one to seven years.
TREASURY BONDS. Treasury bonds are longer-term interest bearing obligations
with original maturities from 5 to 30 years.
B. OBLIGATIONS OF FEDERAL AGENCIES, INSTRUMENTALITIES AND AUTHORITIES
Certain Federal agencies have been established as instrumentalities of the
United States Government to supervise and finance certain types of activities.
These agencies include, but are not limited to, the Banks for Cooperatives,
Federal Land Banks, Federal Intermediate Credit Banks, Federal Home Loan Banks
("FHLB"), Federal National Mortgage Association ("FNMA"), Government National
Mortgage Association ("GNMA"), Export-Import Bank of the United States, and
Tennessee Valley Authority ("TVA"). Issues of these agencies, while not direct
obligations of the United States Government, are either backed by the full
faith and credit of the United States (e.g., GNMA Certificates or certain TVA
Bonds) or are guaranteed by the Treasury (e.g., certain other TVA Bonds) or
supported by the issuing agencies' right to borrow from the Treasury (e.g.,
FHLB and FNMA Bonds). There can be no assurance that the United States
Government itself will pay interest and principal on securities as to which it
is not legally obligated to do so.
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C. CERTIFICATES OF DEPOSIT AND TIME DEPOSITS
A time deposit is a non-negotiable interest-bearing deposit with a bank which
generally cannot be withdrawn prior to a specified maturity date without
substantial interest penalties. A certificate of deposit ("CD") is a negotiable
instrument issued by a bank against a time deposit. CDs normally can be traded
in the secondary market prior to maturity, and are thus more liquid than other
forms of time deposits. The funds will only invest in U.S. dollar denominated
time deposits and CDs representing deposits in U.S. banks with assets of $1
billion or more, whose deposits are insured by the Federal Deposit Insurance
Corporation.
D. COMMERCIAL PAPER
Commercial paper refers to short-term unsecured promissory notes issued by
commercial and industrial corporations to finance their current operations.
Commercial paper may be issued at a discount and redeemed at par, or issued at
par with interest added at maturity. The interest or discount rate depends on
general interest rates, the credit standing of the issuer, and the maturity of
the note, and generally moves in tandem with rates on large CDs and Treasury
bills. An established secondary market exists for commercial paper,
particularly that of stronger issuers which are rated by Moody's Investors
Service, Inc. and Standard and Poor's Ratings Group. Investments in commercial
paper are subject to the risks that general interest rates will rise, that the
credit standing and outside rating of the issuer will fall, or that the
secondary market in the issuer's notes will become too limited to permit their
liquidation at a reasonable price.
E. BANKERS' ACCEPTANCES
A bankers' acceptance is a negotiable short-term draft, generally arising from
a bank customer's commercial transaction with another party, with payment due
for the transaction on the maturity date of the customer's draft. The draft
becomes a bankers' acceptance when the bank, upon fulfillment of the
obligations of the third party, accepts the draft for later payment at
maturity, thus adding the bank's guarantee of payment to its customer's own
obligation. In effect, a bankers' acceptance is a post-dated certified check
payable to its bearer at maturity. Such acceptances are highly liquid, but are
subject to the risk that both the customer and the accepting bank will be
unable to pay at maturity. A fund may invest in U.S. dollar denominated
bankers' acceptances issued by U.S. banks, their foreign branches, and by U.S.
branches of foreign banks.
F. REPURCHASE AGREEMENTS FOR U.S. GOVERNMENT SECURITIES
Subject to its investment restrictions, a fund may enter into repurchase
agreements with banks and dealers for securities of or guaranteed by the U.S.
Government, under which the fund purchases securities and agrees to resell the
securities at an agreed upon time and at an agreed upon price. The difference
between the amount a fund pays for the securities and the amount it receives
upon resale is accrued as interest and reflected in the fund's net investment
income. When a fund enters into repurchase agreements, it relies on the seller
to repurchase the securities. Failure to do so may result in a loss for the
fund if the market value of the securities is less than the repurchase price.
Under the Investment Company Act of 1940, repurchase agreements may be
considered collateralized loans by a fund.
At the time a fund enters into a repurchase agreement, the value of the
underlying security including accrued interest will be equal to or exceed the
value of the repurchase agreement and, for repurchase agreements that mature in
more than one day, the seller will agree that the value of the underlying
security including accrued interest will continue to be at least equal to the
value of the repurchase agreement.
Although repurchase agreements carry certain risks not associated with direct
investment in securities, a fund intends to enter into repurchase agreements
only with banks and dealers in transactions which the fund's sub-adviser
believes present minimal credit risks in accordance with guidelines adopted by
the Trustees. To the extent that proceeds from any sales of collateral upon a
default in the counterparty's obligation to repurchase were less than the
repurchase price, the fund would suffer a loss. If the counterpart's petitions
for bankruptcy or otherwise becomes subject to bankruptcy or liquidation
proceedings, there might be restrictions on a fund's ability to sell the
collateral and the fund could suffer a loss.
III. OTHER SECURITIES IN WHICH THE FUNDS MAY INVEST
A. CORPORATE DEBT SECURITIES
A fund may invest in corporate bonds, notes and debentures of long and short
maturities and of various grades, including unrated securities. Corporate debt
securities exist in great variety, differing from one another in quality,
maturity, and call
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or other provisions. Lower grade bonds, whether rated or unrated, usually offer
higher interest income, but also carry increased risk of default. Corporate
bonds may be secured or unsecured, senior to or subordinated to other debt of
the issuer, and, occasionally, may be guaranteed by another entity. In
addition, they may carry other features, such as those described under
"Convertible Securities" and "Variable or Floating Rate Securities," or have
special features such as the right of the holder to shorten or lengthen the
maturity of a given debt instrument, rights to purchase additional securities,
rights to elect from among two or more currencies in which to receive interest
or principal payments, or provisions permitting the holder to participate in
earnings of the issuer or to participate in the value of some specified
commodity, financial index, or other measure of value.
B. INTERNATIONAL AGENCY OBLIGATIONS
A fund may invest in bonds, notes or Eurobonds of international agencies.
Examples are securities issued by the Asian Development Bank, the European
Economic Community, and the European Investment Bank. The funds may also
purchase obligations of the International Bank for Reconstruction and
Development which, while technically not a U.S. Government agency or
instrumentality, has the right to borrow from the participating countries,
including the United States.
C. BANK OBLIGATIONS OR SAVINGS AND LOAN OBLIGATIONS
Subject to its investment restrictions, a fund may purchase certificates of
deposit, bankers' acceptances and other debt obligations of commercial banks
and certificates of deposit and other debt obligations of savings and loan
associations ("S&L's"). Certificates of deposit are receipts from a bank or an
S&L for funds deposited for a specified period of time at a specified rate of
return. Bankers' acceptances are time drafts drawn on commercial banks by
borrowers, usually in connection with international commercial transactions.
These instruments may be issued by institutions of any size, may be of any
maturity, and may be insured or uninsured. The quality of bank or savings and
loan obligations may be affected by such factors as (a) location -- the
strength of the local economy will often affect financial institutions in the
region, (b) asset mix -- institutions with substantial loans in a troubled
industry may be weakened by those loans, and (c) amount of equity capital --
under-capitalized financial institutions are more vulnerable when loan losses
are suffered. The sub-adviser will evaluate these and other factors affecting
the quality of bank and savings and loan obligations purchased by a fund, but
the fund is not restricted to obligations or institutions which satisfy
specified quality criteria.
D. VARIABLE OR FLOATING RATE SECURITIES
Subject to its investment restrictions, a fund may purchase variable rate
securities that provide for automatic establishment of a new interest rate at
fixed intervals (e.g., daily, monthly, semi-annually, etc.). Floating rate
securities provide for automatic adjustment of the interest rate whenever some
specified interest rate index changes. The interest rate on variable and
floating rate securities is ordinarily determined by reference to, or is a
percentage of, a bank's prime rate, the 90-day U.S. Treasury bill rate, the
rate of return on commercial paper or bank certificates of deposit, an index of
short-term interest rates, or some other objective measure.
E. PREFERRED STOCKS
Subject to a fund's investment restrictions, a fund may purchase preferred
stocks. Preferred stocks are securities which represent an ownership interest
in a corporation and which give the owner a prior claim over common stock on
the corporation's earnings and assets. Preferred stock generally pays quarterly
dividends. Preferred stocks may differ in many of their provisions. Among the
features that differentiate preferred stocks from one another are the dividend
rights, which may be cumulative or non-cumulative and participating or
non-participating, redemption provisions, and voting rights. Such features will
establish the income return and may affect the prospects for capital
appreciation or risks of capital loss.
F. CONVERTIBLE SECURITIES
Subject to its investment restrictions, a fund may invest in debt securities
convertible into or exchangeable for equity securities, or debt securities that
carry with them the right to acquire equity securities, as evidenced by
warrants attached to such securities or acquired as part of units of the
securities. Such securities normally pay less current income than securities
without conversion features, but add the potential opportunity for appreciation
from enhanced value for the equity securities into which they are convertible,
and the concomitant risk of loss from declines in those values.
G. COMMON STOCKS
Subject to its investment restrictions, a fund may invest in common stocks.
IDEX JCC Flexible Income will consider investment in income-producing common
stocks if the yields of common stocks generally become competitive with the
yields of
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other income securities. Common stocks are junior to the debt obligations and
preferred stocks of an issuer. Hence, dividend payments on common stocks should
be regarded as less secure than income payments on corporate debt securities.
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