SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[X] Preliminary Proxy Statement [ ] Confidential, for Use of
Commission Only (as permitted
by Rule 14a-6(e) (2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
IDEX MUTUAL FUNDS
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(Name of Registrant as Specified in Its Charter)
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(Name of Person(s) filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[ ] No fee required
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11
(1) Title of each class of securities to which transaction applies:
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed pursuant
to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee
is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[ ] Fee paid previously with preliminary materials.
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[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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<PAGE>
IDEX MUTUAL FUNDS
570 CARILLON PARKWAY
ST. PETERSBURG, FLORIDA 33716
(TOLL-FREE) 1-888-233-4339
NOTICE OF A SPECIAL MEETING OF SHAREHOLDERS
FEBRUARY 8, 2000
To the shareholders of IDEX GE/Scottish Equitable International Equity fund of
IDEX Mutual Funds:
Notice is hereby given that a special meeting of the shareholders of the IDEX
GE/Scottish Equitable International Equity fund (the "Fund") of IDEX Mutual
Funds ("IDEX") will be held at 570 Carillon Parkway, St. Petersburg, Florida
33716, on the 8th day of February 2000 at 11:00 a.m., local time, or any
adjournment(s) thereof, for the following purposes:
1. To approve a new Investment Advisory Agreement between IDEX and Idex
Management, Inc. ("IMI") with respect to the Fund;
2. To approve a new Sub-Advisory Agreement between IMI and GE Investment
Management Incorporated ("GEIM") with respect to the Fund; and
3. To transact such other business as may properly come before the
meeting or any adjournment thereof.
The Board of Trustees of IDEX (the "Board") has fixed the close of business on
November 30, 1999 as the record date for the determination of shareholders of
the Fund that are entitled to notice of, and to vote at, the meeting. You are
entitled to vote at the meeting and any adjournment(s) thereof if you owned
shares of the Fund at the close of business on November 30, 1999. If you attend
the meeting, you may vote your shares in person. If you do not expect to attend
the meeting, please complete, date, sign and return the enclosed proxy card in
the enclosed postage paid envelope. If your shares are held in the name of your
brokerage firm (a street name account), please complete your proxy card and
return it to your broker. Your vote is still important. If you mail your vote by
proxy ballot and then decide to attend the meeting, you may change your vote in
person at the meeting.
Each proposal set forth above has been unanimously approved by the
Board with respect to the Fund. The Board recommends that you vote shares that
you are entitled to vote "FOR" each proposal. Subject to shareholder approval of
Proposals Nos. 1 and 2 above, effective March 1, 2000 the Fund will be named
IDEX GE International Equity.
We look forward to your participation, and we thank you for your continued
confidence in IDEX.
By Order of the Board of Trustees,
Thomas E. Pierpan, Secretary
IDEX Mutual Funds
St. Petersburg, Florida
December 8, 1999
<PAGE>
YOUR VOTE IS IMPORTANT
NO MATTER HOW MANY SHARES YOU OWN
Please indicate your voting instructions on the enclosed proxy card, date and
sign the card, and return it in the envelope provided. If you sign, date and
return the proxy card but give no voting instructions, your shares will be voted
"FOR" each proposal presented above.
IDEX WILL FURNISH, WITHOUT CHARGE, A COPY OF ITS MOST RECENT ANNUAL REPORT TO
SHAREHOLDERS UPON REQUEST. ANY SUCH REQUEST SHOULD BE DIRECTED TO IDEX BY
CALLING (888) 233-4339 OR BY WRITING TO IDEX AT P.O. BOX 9015, CLEARWATER, FL
33758-9015.
SHAREHOLDERS OF THE FUND ARE INVITED TO ATTEND THE MEETING IN PERSON. IF YOU DO
NOT EXPECT TO ATTEND THE MEETING, PLEASE INDICATE YOUR VOTING INSTRUCTIONS ON
THE ENCLOSED PROXY CARD, DATE AND SIGN THE PROXY CARD, AND RETURN IT IN THE
ENVELOPE PROVIDED, WHICH IS ADDRESSED FOR YOUR CONVENIENCE AND NEEDS NO POSTAGE
IF MAILED IN THE UNITED STATES.
IN ORDER TO AVOID THE ADDITIONAL EXPENSE AND DELAY OF FURTHER SOLICITATION, WE
ASK THAT YOU MAIL YOUR PROXY PROMPTLY.
<PAGE>
PROXY STATEMENT DATED DECEMBER 8, 1999
IDEX MUTUAL FUNDS
570 CARILLON PARKWAY
ST. PETERSBURG, FLORIDA 33716
(TOLL FREE) 1-888-233-4339
This is a proxy statement for the IDEX GE/Scottish Equitable International
Equity fund (the "Fund") of IDEX Mutual Funds ("IDEX"), a series mutual fund
consisting of several separate investment funds. This proxy statement is being
furnished in connection with the solicitation of proxies by the Board of
Trustees of IDEX (the "Board") to be used at the IDEX special meeting of
shareholders of the Fund or any adjournment(s) thereof (the "Meeting"). The
Meeting will be held on February 8, 2000 at 11:00 a.m., local time, at 570
Carillon Parkway, St. Petersburg, Florida 33716.
The primary purposes of the Meeting are: (1) to permit the shareholders of the
Fund to consider a proposed Investment Advisory Agreement between Idex
Management, Inc. ("IMI") and IDEX with respect to the Fund ("Proposed Advisory
Agreement") to take effect upon the later to occur of March 1, 2000 or obtaining
shareholder approval; and (2) to permit shareholders of the Fund to consider a
proposed Sub-Advisory Agreement between IMI and GE Investment Management
Incorporated with respect to the Fund (the "Proposed Sub-Advisory Agreement"),
to take effect upon the later to occur of, March 1, 2000 or obtaining
shareholder approval.
INTRODUCTION
Currently, IMI acts as investment adviser to the Fund pursuant to an investment
advisory agreement dated February 1, 1997 (the "Current Advisory Agreement").
Under the Current Advisory Agreement, IMI is responsible for providing
investment management and supervision services to the Fund. With respect to the
Fund, IMI has in turn entered into an Investment Counsel Agreement with GE
Investment Management Incorporated ("GEIM") dated February 1, 1997 (the "Current
GEIM Sub-Advisory Agreement"), and an Investment Counsel Agreement with Scottish
Equitable Investment Management Limited ("SEIM") dated February 1, 1997 (the
"Current SEIM Sub-Advisory Agreement") (the Current GEIM Sub-Advisory Agreement
and the Current SEIM Sub-Advisory Agreement are referred to collectively as the
"Current Sub-Advisory Agreements"). Under the Current Sub-Advisory Agreements
the assets of the Fund are divided between GEIM and SEIM, and each entity
manages that portion of the assets of the Fund that is allocated to it.
SEIM, located in Edinburgh, Scotland, is a wholly-owned subsidiary of Scottish
Equitable plc, the successor of Scottish Equitable Life Assurance Society. SEIM
is also an indirect wholly-owned subsidiary of AEGON N.V. and, thus, is an
affiliate of IMI and IDEX.
1
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SEIM has notified IDEX that it is terminating operations in the United States
early next year. This will result in termination of the Current SEIM
Sub-Advisory Agreement effective March 1, 2000. Thereafter, SEIM will no longer
provide investment management services to the Fund and will not earn any
additional compensation from the Fund. Consequently, beginning March 1, 2000,
GEIM has agreed to serve as the sole sub-adviser for the Fund, with no change in
the Fund's overall investment management fee schedule, pending shareholder
consideration and approval of the Proposed Sub-Advisory Agreement (see Proposal
No. 2 below). IMI will continue to serve as investment adviser to the Fund under
the Proposed Advisory Agreement, which is substantially identical to the Current
Advisory Agreement (see Proposal 1 below).
Section 15(a) of the Investment Company Act of 1940, as amended (the "1940 Act")
generally provides that no person may serve as an investment adviser to a
registered investment company, such as the Fund, except pursuant to a written
contract that, among other requirements, has been approved by the vote of a
majority of the investment company's outstanding voting securities. Any material
change to an existing advisory contract creates a new advisory agreement that
must be approved in accordance with Section 15(a) of the 1940 Act.
The termination of the Current SEIM Sub-Advisory Agreement and the resulting
reallocation of the investment management responsibilities for certain assets of
the Fund from SEIM to GEIM may be deemed to result in a material change to the
Current GEIM Sub-Advisory Agreement under the 1940 Act. As a result, the
Proposed Sub-Advisory Agreement may be deemed to be a new advisory agreement
under the 1940 Act that requires shareholder approval. The Board recommends that
shareholders of the Fund VOTE FOR the Proposed Advisory Agreement and VOTE FOR
the Proposed Sub-Advisory Agreement.
VOTING INFORMATION
Shareholders of record of the Fund who own shares of beneficial interest at the
close of business on November 30, 1999 (the "Record Date") will be entitled to
vote at the Meeting with respect to the Proposed Advisory Agreement and Proposed
Sub-Advisory Agreement. With respect to each proposal presented herein,
shareholders are entitled to one vote for each share held and fractional votes
for fractional shares held with no share having cumulative voting rights. With
respect to the Fund, a majority of the shares of beneficial interest outstanding
on the Record Date, represented in person or by proxy, will constitute a quorum
for the Meeting, and therefore must be present for the transaction of business
at the Meeting. In the event that a quorum is not present at the Meeting, or a
quorum is present but sufficient votes to approve one or both of the proposals
are not received, the persons named as proxies may propose one or more
adjournments of the Meeting to permit further solicitation of proxies. Any such
adjournment will require the affirmative vote of a majority of the Fund shares
represented at the Meeting in person or by proxy.
The person named as proxies will vote those proxies that they are entitled to
vote FOR either of the proposals in favor of an adjournment of the Meeting, and
will vote those proxies required to be voted
2
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AGAINST either proposal for the Fund against such adjournment. A shareholder
vote may be taken on either proposal prior to any such adjournment if sufficient
votes have been received and it is otherwise appropriate.
The individuals named as proxies on the enclosed proxy card will vote in
accordance with your directions, if your proxy is received properly executed. If
we receive your proxy, and it is executed properly, but you give no voting
instructions with respect to either proposal, your shares will be voted FOR each
proposal. The duly appointed proxies may, in their discretion, vote upon such
other matters as may properly come before the Meeting.
Abstentions and "broker non-votes" (as defined below) are counted as shares
eligible to vote at the Meeting in determining whether a quorum is present, but
do not represent votes cast with respect to either of the proposals. "Broker
non-votes" are shares held by a broker or nominee as to which instructions have
not been received from the beneficial owners or persons entitled to vote and the
broker or nominee does not have discretionary voting power.
You may revoke your proxy: (a) at any time prior to its exercise by written
notice of its revocation to the Secretary of IDEX at the above address prior to
the Meeting; (b) by the subsequent execution and return of another proxy prior
to the Meeting; or (c) by being present and voting in person at the Meeting and
giving oral notice of revocation to the Chairman of the Meeting.
As of the Record Date, the Fund had __________ outstanding shares of beneficial
interest.
The principal solicitation of proxies will be by the mailing of this Proxy
Statement on or about December 8, 1999, but proxies may also be solicited by
telephone and/or in person by representatives of IDEX and regular employees of
Idex Investor Services, Inc., the transfer agent of IDEX, or its affiliate(s).
Arrangements will be made with brokerage houses and other custodians, nominees,
and fiduciaries to forward proxies and proxy materials to their principals. The
costs of the Meeting, including the preparation and mailing of the notice, Proxy
Statement and proxy, and the solicitation of proxies, including reimbursement to
broker-dealers and others who forward proxy materials to their clients, will be
borne by the shareholders of the Fund.
If a shareholder wishes to participate in the Meeting, such shareholder may
still submit the proxy card originally sent with the Proxy Statement or attend
the Meeting in person. Any proxy given by a shareholder, whether in writing or
by telephone, is revocable. A shareholder may revoke the accompanying proxy at
any time prior to its use by filing with IDEX a written revocation or a duly
executed proxy bearing a later date. In addition, any shareholder who attends
the Meeting in person may vote by ballot at the Meeting, thereby canceling any
proxy previously given.
3
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PROPOSAL 1:
TO APPROVE THE PROPOSED INVESTMENT ADVISORY AGREEMENT
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IDEX, on behalf of the Fund, entered into the Current Advisory Agreement with
IMI. Pursuant to the Current Advisory Agreement, IMI serves as the investment
adviser to the Fund. Pursuant to the terms of the Current Advisory Agreement,
IMI entered into the Current Sub-Advisory Agreements with SEIM and GEIM to
provide day to day investment management services with regard to certain assets
of the Fund. Under the Current Sub-Advisory Agreements, each day, the cash that
flows into the Fund for investment is divided equally by SEIM and GEIM, and they
manage their respective portions of the Fund's portfolio separately from then
on.
SEIM has advised IDEX that it will cease business operations in the United
States sometime during the first half of the year 2000. As a result, SEIM has
notified IDEX and IMI that it intends to terminate the Current SEIM Sub-Advisory
Agreement effective March 1, 2000. Under the Proposed Sub-Advisory Agreement,
GEIM would become the sole investment sub-adviser with respect to all of the
assets of the Fund, including those assets of the Fund formerly managed by SEIM.
For a more detailed description of the Proposed Sub-Advisory Agreement, please
refer to Proposal No. 2, on page 8.
In anticipation of the termination of the Current SEIM Sub-Advisory Agreement
and in order for IMI to continue to serve as the investment adviser to the Fund,
the Proposed Advisory Agreement must be (i) approved by a majority of the
Trustees of IDEX who are not parties to the Proposed Advisory Agreement or
interested persons of any such party or interested persons of IDEX as defined in
Section 2(a)(19) of the 1940 Act ("Disinterested Trustees"); and (ii) by the
holders of a majority of the outstanding voting securities (as defined in
Section 2(a)(42) of the 1940 Act ("voting securities")) of the Fund.
Prior to and at a meeting held on September 13, 1999, the Board, including a
majority of Disinterested Trustees reviewed and, at that Board meeting,
unanimously approved, the terms of the Proposed Advisory Agreement on the basis
that its execution would be in the best interest of the Fund and its
shareholders, and authorized its submission to the shareholders of the Fund for
their approval. If approved by the shareholders of the Fund, the Proposed
Advisory Agreement, as it applies to the Fund, will take effect on March 1,
2000, or as soon thereafter as practicable, following its approval by vote of a
majority of the outstanding voting securities of the Fund.
IDEX MANAGEMENT, INC.
IMI, a Delaware corporation, located at 570 Carillon Parkway, St. Petersburg,
Florida 33716 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. The primary emphasis of the
subsidiary companies of AUSA is generally the sale and servicing of life and
health insurance, and annuity and investment products. AEGON USA is
4
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a wholly-owned indirect subsidiary of AEGON N.V., a Netherlands corporation and
publicly traded international insurance group.
IMI does not currently act as an investment adviser with respect to any
registered investment company other than IDEX.
IMI's directors and principal officers, together with their principal
occupations, are listed below. The address of each is 570 Carillon Parkway, St.
Petersburg, Florida 33716.
<TABLE>
<CAPTION>
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NAME AND POSITION WITH IMI PRINCIPAL OCCUPATION
- ------------------------------------------------------------ -----------------------------------------------------------------
<S> <C>
John R. Kenney Trustee and Chairman of IDEX Mutual Funds; Chairman of
Director the Board of WRL Series Fund, Inc.; Director of ISI
Insurance Agency, Inc.; Chairman, President and Chief
Executive Officer of Western Reserve Life Assurance Co.
of Ohio; Senior Vice President of AEGON USA, Inc.
- ------------------------------------------------------------ -----------------------------------------------------------------
Jerome C. Vahl Executive Vice President, Western Reserve Life Assurance
Director Co. of Ohio; Director of Idex Investor Services, Inc.;
Vice President, AEGON USA, Cedar Rapids, Iowa.
- ------------------------------------------------------------ -----------------------------------------------------------------
Thomas R. Moriarty Senior Vice President, Treasurer and Principal Financial
Director, President and CEO Officer of IDEX Mutual Funds; President, Chief Executive
Officer and Director of ISI; Senior Vice President of ISI
Insurance Agency, Inc.; President and CEO of Idex Investor
Services, Inc.; Vice President of Western Reserve Life
Assurance Co. of Ohio; and President and CEO of AEGON Asset
Management Services, Inc.
- ------------------------------------------------------------ -----------------------------------------------------------------
Thomas E. Pierpan, Esq. Vice President, Associate General Counsel and Secretary
Assistant Vice President, Compliance Officer and of IDEX Mutual Funds; Vice President, Associate General
Assistant Secretary Counsel and Secretary of WRL Series Fund, Inc.; Vice
President, Associate General Counsel and Assistant
Secretary of Western Reserve Life Assurance Co. of Ohio.
- ------------------------------------------------------------ -----------------------------------------------------------------
Christopher G. Roetzer Vice President, Assistant Treasurer and Principal Assistant
Vice President Accounting Officer of IDEX Mutual Funds;
Assistant Vice President of Idex Investor Services,
Inc.; Assistant Vice President of ISI Insurance Agency, Inc.;
Assistant Vice President of ISI; and Vice President
and Treasurer of ISI Insurance Agency.
- ------------------------------------------------------------ -----------------------------------------------------------------
William G. Cummings Vice President and Treasurer of ISI; Assistant Vice
Treasurer President and Treasurer of Idex Investor Services, Inc.
- ------------------------------------------------------------ -----------------------------------------------------------------
William H. Geiger Secretary of InterSecurities, Inc., AEGON Asset Management Services,
Secretary Inc., Idex Investor Services, Inc., WRL Investment Management, Inc.
and WRL Investment Services, Inc.; Senior Vice President, Secretary,
Corporate Counsel, Group Vice President Compliance of AEGON USA; and
Assistant Secretary of IDEX Mutual Funds and WRL Series Fund, Inc.
- ------------------------------------------------------------ -----------------------------------------------------------------
</TABLE>
5
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All officers as set forth above, except Messrs. Vahl and Cummings serve as an
officer or trustee of IDEX. No officer or trustee of IDEX (who is not a director
of IMI) owns securities or has any other material direct or indirect interest in
IMI or is a person controlling, controlled by or under common control with IMI.
THE CURRENT ADVISORY AGREEMENT
IMI has served as the investment adviser of IDEX with respect to the Fund, under
the Current Advisory Agreements since March 1, 1999. Subject to the supervision
and direction of the Board, IMI is generally responsible for managing the Fund
in accordance with its stated investment objective and policies. As compensation
for its services to the Fund, IMI currently is entitled to receive monthly
compensation from IDEX at an annual rate of 0.80% of the first $500 million of
the Fund's average daily net assets and 0.70% of assets over $500 million.
In addition to the investment advisory fee under the Current Advisory Agreement,
the Fund also pays most of its operating costs, including administrative,
bookkeeping, and clerical expenses, legal fees, auditing and accounting fees,
shareholder services and transfer agent fees, custodian fees, costs of complying
with state and federal regulations, preparing, printing and distributing reports
to shareholders, Disinterested Trustees' fees and expenses, interest, insurance,
dues for trade associations and taxes.
IMI voluntarily has agreed to reimburse the Fund, or waive fees, or both, when
the Fund's normal operating expenses, including advisory fees but excluding
interest, taxes, brokerage commissions and 12b-1 fees, exceed, on an annual
basis, 1.45% of the Fund's average daily net assets ("fee cap"). Effective March
1, 2000, the fee cap will be reduced to 1.20% per annum of the Fund's average
daily net assets.
The terms of the Current Advisory Agreement were first approved by the Board,
including by vote of a majority of its Disinterested Trustees cast in person, at
a meeting held on October 30, 1996. On December 7, 1998 the Board approved
having IMI succeed ISI as investment adviser effective March 1, 1999. The
Current Advisory Agreement was most recently approved by the Board on March 29,
1999, and under its terms, will continue in effect from year to year, so long as
such continuance is specifically approved at least annually by the vote of a
majority of the Disinterested Trustees of IDEX, cast in person at a meeting
called for the purposes of voting on the approval of the terms of such renewal,
and by either the Trustees of IDEX or the affirmative vote of a majority of the
outstanding voting securities of the Fund. The Current Advisory Agreement may be
terminated with respect to the Fund at any time by the Board of IDEX, or by vote
of a majority of the outstanding voting securities of the Fund, in each case
without penalty on 60 days' written notice to IMI, or by IMI on 60 days' written
notice to IDEX, and will automatically terminate in the event of its assignment.
The Current Advisory Agreement may be amended with respect to the Fund only with
the approval of the affirmative vote of a majority of the outstanding voting
securities of the Fund and the approval by the vote of a majority of the
Disinterested Trustees of IDEX, cast in person at a meeting called for the
purposes of voting on the approval of such amendment.
6
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During the fiscal year ended October 31, 1999, IDEX paid IMI an aggregate
investment advisory fee of $______________ for investment management and
supervision services and for certain administrative services, on behalf of the
Fund. The Fund did not pay IMI for any other services than those stipulated in
the Current Advisory Agreement.
THE PROPOSED ADVISORY AGREEMENT
The Proposed Advisory Agreement is substantially identical to the Current
Advisory Agreement, except that: (i) SEIM will no longer serve as a
co-sub-adviser of the Fund (GEIM will serve as sole sub-adviser of the Fund);
(ii) the date of effectiveness will be the later to occur of (a) obtaining
shareholder approval or (b) March 1, 2000; and (iii) certain non-material,
clarifying and stylistic changes. The Proposed Advisory Agreement does not
contemplate any changes in the nature of services provided by the Adviser or in
the fees payable to IMI under the terms of the Agreement. Shareholders are being
asked to approve the Proposed Advisory Agreement solely because the Current
Advisory Agreement states that IMI will hire both GEIM and SEIM as sub-advisers
for the Fund. The description herein of the terms of the Proposed Advisory
Agreement is qualified by reference to the full text of the Form of Proposed
Advisory Agreement itself, which appears as Exhibit A to this Proxy Statement.
BOARD EVALUATION
In evaluating the Proposed Advisory Agreement, the Board considered that, except
as described above and as set forth in the Proposed Advisory Agreement which is
attached hereto as Exhibit A, the terms of the Proposed Advisory Agreement are
substantially identical to the terms of the Current Advisory Agreement. The
Board also considered the nature, quality and extent of services provided under
the Current Advisory Agreement and the skills and the capabilities of IMI
regarding its continued ability to provide such services. As part of its
analysis and evaluation of the Proposed Advisory Agreement and the fees paid to
IMI thereunder, the Board reviewed information regarding the costs and
profitability of IMI's operations, comparative information with respect to
advisory fees and total expenses paid by other comparable investment companies
over a range of asset sizes, and information with respect to recent developments
and trends with respect to mutual funds with similar investment objectives and
policies. Accordingly, the Board expects the Fund and its shareholders to
receive the same level and quality of investment management and supervision
services under the Proposed Advisory Agreement as it receives under the Current
Advisory Agreement.
Based upon the Board's review and evaluation of the information presented, and
in consideration of all factors the Board deemed relevant to their
deliberations, the Board determined that the Proposed Advisory Agreement is
fair, reasonable, and in the best interest of the Fund and its shareholders.
Accordingly, the Board, including the Disinterested Trustees, unanimously
approved the terms of the Proposed Advisory Agreement and determined to submit
the Proposed Advisory Agreement for consideration by the shareholders of the
Fund. If the Proposed Advisory Agreement is not approved by the shareholders of
the Fund, the Board will consider such alternative measures as the Board deems
prudent and in the best interest of the Fund and its shareholders.
7
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THE BOARD OF TRUSTEES RECOMMENDS THAT YOU VOTE
"FOR" PROPOSAL NO. 1
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PROPOSAL NO. 2:
TO APPROVE THE PROPOSED SUB-ADVISORY AGREEMENT
BETWEEN IMI AND GEIM
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IMI, on behalf of the Fund, has entered into the Current Sub-Advisory Agreements
with GEIM and SEIM pursuant to which SEIM and GEIM each provide investment
management services with respect to assets of the Fund. The shareholders of the
Fund are being asked to approve the Proposed Sub-Advisory Agreement between IMI
and GEIM with respect to the Fund that will take effect upon the later to occur
of (a) obtaining shareholder approval or (b) March 1, 2000. Under the Proposed
Sub-Advisory Agreement, GEIM would become the investment sub-adviser with
respect to 100% of the assets of the Fund. Other than expanding the role of GEIM
with regard to providing investment management services to the Fund, and
providing that GEIM's fee will be calculated based on 100 percent of the assets
of the Fund, the terms and conditions of the Proposed Sub-Advisory Agreement are
substantially identical to the terms and conditions of the Current GEIM
Sub-Advisory Agreement. The Proposed Sub-Advisory Agreement appears as Exhibit B
to this Proxy Statement.
GE INVESTMENT MANAGEMENT INCORPORATED
GEIM, located at 3003 Summer Street, Stamford, CT 06904, currently serves as a
co-sub-adviser of the Fund. GEIM is a wholly-owned subsidiary of General
Electric Company ("GE") and is a registered investment adviser. GEIM's principal
officers, directors and portfolio managers hold similar positions with General
Electric Investment Corporation ("GEIC"), a wholly-owned subsidiary of GE and a
registered investment adviser. As of September 30, 1999, GE's investment
advisers managed approximately $81.9 billion in individual and institutional
assets, with over $16.8 billion in mutual funds.
GE's investment advisers provide investment management and related services to
other mutual fund portfolios and individual, corporate, charitable and
retirement accounts. For each registered investment company portfolio advised or
sub-advised by GEIM or GEIC with an investment objective similar to that of the
IDEX GE/Scottish Equitable International Equity fund, the following table
identifies and sets forth the size of each such portfolio as of September 30,
1999, along with the management fee expressed as a percentage of average net
assets for that portfolio. GEIM or GEIC receives the fees in exchange for
providing investment services, which are comprised of investment advisory
services or administrative services or both.
8
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<TABLE>
<CAPTION>
- ---------------------------------------- -------------------------------------- --------------------------------------
NAME OF ITS PORTFOLIO/FUND WITH NET ASSETS AS OF ANNUAL MANAGEMENT FEE RATE
SIMILAR INVESTMENT OBJECTIVE SEPTEMBER 30, 1999
- ---------------------------------------- -------------------------------------- --------------------------------------
<S> <C> <C>
GE International Equity Fund $56,605,094 0.80%
- ---------------------------------------- -------------------------------------- --------------------------------------
GE Institutional International Equity $197,175,841 First $25 million 0.75%
Fund Next $50 million 0.65%
Over $75 million 0.55%
- ---------------------------------------- -------------------------------------- --------------------------------------
GE Investments International Equity $41,184,047 First $100 million 1.00%
Fund Next $100 million 0.95%
Over $200 million 0.90%
- ---------------------------------------- -------------------------------------- --------------------------------------
$233,632,023 0.10%
Elfun International Equity Fund*
- ---------------------------------------- -------------------------------------- --------------------------------------
WRL GE/Scottish Equitable $29,348,000 50% of the investment management
International Equity fund fees received by the investment
adviser (GEIM acts as sub-adviser);
investment adviser compensation: 1.00%
- ---------------------------------------- -------------------------------------- --------------------------------------
</TABLE>
* The Elfun International Equity Fund is an "employees' securities company"
within the meaning of the 1940 Act and thus is offered exclusively to certain
employees of GE and its subsidiaries and other persons satisfying eligibility
requirements. As such, it receives investment management services at a
significantly reduced rate.
DIRECTORS AND OFFICERS OF GEIM. The following table sets forth certain
information concerning the principal executive officers and directors of GEIM.
The address of each of the following persons is 3003 Summer Street, Stamford,
Connecticut 06904.
NAME PRINCIPAL OCCUPATION/POSITION WITH GEIM
- ---- ---------------------------------------
John H. Myers Chairman of the Board and President
Eugene K. Bolton Executive Vice President and Director
Michael J. Cosgrove Executive Vice President and Director
Ralph R. Layman Executive Vice President and Director
Alan M. Lewis Executive Vice President, General Counsel
Secretary and Director
Robert A. MacDougall Executive Vice President and Director
Geoffrey R. Norman Executive Vice President and Director
Donald W. Torey Executive Vice President and Director
John J. Walker Executive Vice President and Director
No officer or director of IDEX is an officer, employee, director or shareholder
of GEIM. No officer or director of IDEX owns securities or has any other
material direct or indirect interest in GEIM or is a person controlling,
controlled by or under common control with GEIM.
9
<PAGE>
CURRENT SUB-ADVISORY AGREEMENTS
GEIM and SEIM have served as co-sub-advisers of the Fund since February 1, 1997.
Pursuant to the Current Sub-Advisory Agreements, IMI contracts with GEIM and
SEIM for investment sub-advisory services for the Fund.
Under the terms of the Current Sub-Advisory Agreements, GEIM and SEIM provides
investment advisory assistance and portfolio management advice to IMI. Subject
to the review and supervision of IMI and the Board, GEIM and SEIM are
responsible for the actual management of the Fund and for making decisions to
buy, sell or hold any particular security, and GEIM and SEIM each places orders
to buy or sell securities on behalf of the portion of the Fund that each
manages. GEIM and SEIM each bears all of their expenses in connection with the
performance of its services, such as compensating and furnishing office space
for its officers and employees connected with investment and economic research,
trading and investment management of the Fund.
For their services, GEIM and SEIM, together, receive monthly compensation from
IMI in the amount of 50% of the investment management fees received by IMI with
respect to the Fund. The compensation paid to GEIM and SEIM individually is
based on the portion of Fund assets that each entity manages.
During the most recent fiscal year of the Fund, GEIM and SEIM received the
following amount of sub-advisory fees for their services under the Current
Sub-Advisory Agreements:
GEIM: _________
SEIM: _________
The Current Sub-Advisory Agreements for the Fund were last approved by the Board
on March 29, 1999. Under the terms of the Current Sub-Advisory Agreements, each
will continue in effect from year to year so long as such continuance is
specifically approved annually by the vote of a majority of the Disinterested
Trustees of IDEX, cast in person at a meeting called for the purpose of voting
on the approval of the terms of such renewal, and by either the Board or the
affirmative vote of a majority of the outstanding voting securities of the Fund
(as that phrase is defined in the 1940 Act). Each Current Sub-Advisory Agreement
may be terminated with respect to the Fund at any time, without penalty, by
either GEIM or SEIM as applicable, the Board or by shareholders of the Fund
acting by vote of at least a majority of its outstanding voting securities on 60
days' written notice to the sub-adviser or by the sub-adviser on 60 days'
written notice to IMI and IDEX. In addition, each Current Sub-Advisory Agreement
terminates automatically upon its assignment. Each Current Sub-Advisory
Agreement may be amended with respect to the Fund only with the approval of the
affirmative vote of a majority of the outstanding voting securities of the Fund
and the approval by the vote of a majority of the Disinterested Trustees of
IDEX, cast in person at a meeting called for the purpose of voting on the
approval of such amendment.
10
<PAGE>
GEIM INVESTMENT STRATEGY
As sole sub-adviser of the Fund, GEIM will invest primarily in equity securities
of companies in developed or developing countries other than the United States.
GEIM focuses on companies that it expects will grow faster than relevant markets
and whose security price does not fully reflect their potential growth. Under
normal circumstances, the Fund's assets are invested in no fewer than three
different countries.
GEIM considers the following factors in determining where an issuer is located:
country of organization, primary securities trading market, location of assets,
or country where the issuer derives at least half of its revenue and profits.
Stock selection is key to performance of the Fund.
GEIM seeks to identify securities of growth companies with characteristics such
as:
o low prices relative to their long-term cash earnings potential
o potential for significant improvement in the company's business
o financial strength
o sufficient liquidity
GEIM may also invest in debt securities and other securities and investment
strategies in pursuit of the Fund's investment objective.
PROPOSED SUB-ADVISORY AGREEMENT AND RECOMMENDATION OF THE
BOARD OF TRUSTEES
The following description of the Proposed Sub-Advisory Agreement is qualified by
reference to Exhibit B, which consists of the Proposed Sub-Advisory Agreement.
THE PROPOSED SUB-ADVISORY AGREEMENT IS SUBSTANTIALLY IDENTICAL TO THE CURRENT
GEIM SUB-ADVISORY AGREEMENT EXCEPT THAT: (I) THE EFFECTIVE DATE WILL BE THE
LATER TO OCCUR OF (A) OBTAINING SHAREHOLDER APPROVAL OR (B) MARCH 1, 2000; (II)
THE INITIAL TERM WILL END TWO YEARS FROM THE EFFECTIVE DATE; (III) GEIM WILL
SERVE AS THE SOLE SUB-ADVISER FOR THE FUND; (IV) THE AMOUNT OF ADVISORY FEES
RECEIVED BY GEIM, BUT NOT THE RATE AT WHICH THOSE FEES ARE PAID BY IMI, WILL
INCREASE; AND (V) THE AGREEMENT REFLECTS NON-MATERIAL STYLISTIC AND CLARIFYING
CHANGES. THE PROPOSED SUB-ADVISORY AGREEMENT DOES NOT CONTEMPLATE ANY CHANGES IN
THE NATURE OF SERVICES PROVIDED BY GEIM OR COMPENSATION PAID TO GEIM, EXCEPT
THAT IT WILL SERVE AS THE SOLE SUB-ADVISER OF THE FUND AND GEIM'S FEES WILL BE
CALCULATED BASED UPON ALL OF THE FUND'S ASSETS. ASSUMING THAT THE PROPOSED
SUB-ADVISORY AGREEMENT IS APPROVED BY SHAREHOLDERS, GEIM WILL CONTINUE TO SERVE
AS THE INVESTMENT SUB-ADVISER TO THE FUND PURSUANT TO THE TERMS OF THE PROPOSED
SUB-ADVISORY AGREEMENT UNTIL SUCH TIME AS THE AGREEMENT IS AMENDED OR TERMINATED
IN ACCORDANCE WITH ITS TERMS.
11
<PAGE>
PER THE TERMS OF THE PROPOSED SUB-ADVISORY AGREEMENT, GEIM WILL RECEIVE 50% OF
THE MANAGEMENT FEES RECEIVED BY THE INVESTMENT ADVISER.
EVALUATION BY THE BOARD
Prior to and at a meeting of the Board on September 13, 1999, the Board,
including the Disinterested Trustees, reviewed information regarding the
Proposed Sub-Advisory Agreement.
In evaluating the Proposed Sub-Advisory Agreement, the Board took into account
that the Current GEIM Sub-Advisory Agreement, including the terms relating to
the services to be provided thereunder by GEIM and the expenses payable by the
Fund, is substantially identical to the Proposed Sub-Advisory Agreement, except
for the dates of execution, effectiveness and termination, and that GEIM will
serve as the sole sub-adviser for the Fund. Although the advisory fee schedule
under the Proposed Sub-Advisory Agreement is the same as it is under the Current
Sub-Advisory Agreements, the actual amount of sub-advisory fees received by GEIM
will increase as a result of it being the sole sub-adviser to the Fund. The
Board also considered the reputation, expertise and resources of GEIM and its
affiliates in both domestic and international financial markets. Furthermore,
the Board considered the desirability of retaining, subject to ordinary
turnover, the same personnel primarily responsible for providing current
investment advisory and other services for 50% of the assets of the Fund.
After consideration of the factors discussed in Proposal No. 1, above, and such
other factors and information that the Board deemed relevant, the Board,
including the Disinterested Trustees, unanimously approved the Proposed
Sub-Advisory Agreement and voted to recommend approval of the agreement to the
shareholders of the Fund.
In the event that the Proposed Sub-Advisory Agreement is not approved by the
shareholders of the Fund, the Board will consider such alternative measures as
the Board deems prudent and in the best interest of the Fund and its
shareholders.
THE BOARD OF TRUSTEES RECOMMENDS THAT YOU VOTE "FOR"
PROPOSAL NO. 2
- --------------------------------------------------------------------------------
SHAREHOLDER PROPOSALS
As a general matter, IDEX does not hold annual meetings of shareholders.
Shareholders wishing to submit proposals for inclusion in a proxy statement for
a subsequent shareholders' meeting should send their written proposals to the
Secretary of IDEX Mutual Funds, 570 Carillon Parkway, St. Petersburg, Florida
33716.
12
<PAGE>
OTHER BUSINESS
Management knows of no business to be presented to the Meeting other than the
matters set forth in this Proxy Statement, but should any other matter requiring
a vote of shareholders arise, the proxies will vote thereon according to their
best judgment in the interests of IDEX and its shareholders.
By Order of the Board of Trustees,
Thomas E. Pierpan, Esq., Secretary
IDEX Mutual Funds
St. Petersburg, Florida
Exhibit A - Proposed Investment Advisory Agreement
Exhibit B - Proposed Sub-Advisory Agreement
13
<PAGE>
EXHIBIT A
PROPOSED INVESTMENT ADVISORY AGREEMENT
IDEX MUTUAL FUNDS
This Agreement, entered into between IDEX Mutual Funds, a Massachusetts
business trust (referred to herein as the "Fund") and Idex Management, Inc., a
Delaware corporation (referred to herein as "Idex Management"), to provide
certain advisory services with respect to the series of shares of beneficial
interest in the Fund as listed on the attached Schedule A to this Agreement
(each a "fund," collectively the "funds").
The Fund is registered as an open-end investment company under the
Investment Company Act of 1940, as amended (the "1940 Act"), and consists of
more than one series of shares, including the funds. In managing the funds, as
well as in the conduct of certain of its affairs, the Fund wishes to have the
benefit of the investment advisory services of Idex Management and its
assistance in performing certain management, administrative and promotional
functions. Idex Management desires to furnish such services to the Fund and to
perform the functions assigned to it under this Agreement for the considerations
provided. Schedule A, which may be amended from time to time, lists the
effective date and the termination date of this Agreement for each fund of the
Fund. Accordingly, the parties have agreed as follows:
1. APPOINTMENT. The Fund hereby appoints Idex Management as the funds'
investment adviser and administrator for the period and on the terms set forth
in this Agreement. Idex Management accepts such appointment and agrees to render
or cause to be rendered the services set forth for the compensation herein
specified. In all matters relating to the performance of this Agreement, Idex
Management will act in conformity with the Fund's Declaration of Trust, Bylaws
and registration statement applicable to the funds and with the instructions and
direction of the Board of Trustees of the Fund, and will conform to and comply
with the 1940 Act and all other applicable federal or state laws and
regulations.
2. INVESTMENT ADVISORY SERVICES. In its capacity as investment adviser
to the funds, Idex Management shall have the following responsibilities:
(a) to provide a continuous investment program for each fund including
advice as to the acquisition, holding or disposition of any or all of
the securities or other assets which the funds may own or contemplate
acquiring from time to time, consistent with the Fund's Declaration of
Trust and each fund's investment objective and policies adopted and
declared by the Board of Trustees and stated in the Fund's current
Prospectus;
(b) to cause its officers to attend meetings and furnish oral or
written reports, as the Fund may reasonably require, in order to keep
the Trustees and appropriate officers of the Fund fully informed as to
the conditions of each investment portfolio of the funds, the
investment recommendations of Idex Management, and the investment
considerations which have given rise to those recommendations;
(c) to supervise the purchase and sale of securities as directed by the
appropriate officers of the Fund, including the selection of brokers
and dealers to execute such transactions, consistent with paragraph 8
hereof; and
(d) to maintain all books and records required to be maintained by the
Investment Adviser pursuant to the 1940 Act and the rules and
regulations promulgated thereunder with respect to transactions on
behalf of the Fund. In compliance with the requirements of
<PAGE>
Rule 31a-3 under the 1940 Act, Idex Management hereby agrees: (i) that
all records that it maintains for the Fund are the property of the
Fund, (ii) to preserve for the periods prescribed by Rule 31a-2 under
the 1940 Act any records that it maintains for the Fund and that are
required to be maintained by Rule 31a-1 under the 1940 Act and
(iii) agrees to surrender promptly to the Fund any records that it
maintains for the Fund upon request by the Fund; provided, however,
Idex Management may retain copies of such records.
It is understood and agreed that Idex Management may, and intends to,
enter into Sub-Advisory Agreements with duly registered investment advisers (the
"Sub-Advisers") for each fund, under which each Sub-Adviser will, under the
supervision of Idex Management, furnish investment information and advice with
respect to one or more funds to assist Idex Management in carrying out its
responsibilities under this Section 2. The compensation to be paid to each
Sub-Adviser for such services and the other terms and conditions under which the
services shall be rendered by the Sub-Adviser shall be set forth in the
Sub-Advisory Agreement between Idex Management and each Sub-Adviser; provided,
however, that such Agreement shall be approved by the Board of Trustees and by
the holders of the outstanding voting securities of each fund in accordance with
the requirements of Section 15 of the 1940 Act, and shall otherwise be subject
to, and contain such provisions as shall be required by, the 1940 Act.
3. MANAGEMENT AND ADMINISTRATIVE SERVICES. Idex Management shall
furnish or make available to the funds the services of executive and management
personnel to supervise the performance of all administrative, recordkeeping,
shareholder relations, regulatory reporting and compliance, and all other
functions of the funds, including supervising and coordinating the services of
the funds' custodian and transfer agent. Idex Management shall also assist in
the preparation of reports to shareholders of the funds and prepare sales
literature promoting sale of the funds' shares as requested by the Fund.
4. ALLOCATION OF EXPENSES. During the term of this Agreement, each fund
will bear all expenses not expressly assumed by Idex Management incurred in the
operation of each fund and the offering of its shares.
Without limiting the generality of the foregoing:
(a) Each fund shall pay (i) fees payable to Idex Management pursuant to
this Agreement; (ii) the cost (including brokerage commissions, if any)
incurred in connection with purchases and sales of each fund's
portfolio securities; (iii) expenses of organizing the fund; (iv)
filing fees and expenses relating to registering and qualifying and
maintaining the registration and qualification of a fund's shares for
sale under federal and state securities laws; (v) its allocable share
of the compensation, fees and reimbursements paid to the Fund's
non-interested Trustees; (vi) custodian and transfer agent fees; (vii)
legal and accounting expenses allocable to each fund, including costs
for local representation in Massachusetts and fees of special counsel,
if any, for the independent Trustees; (viii) all federal, state and
local tax (including stamp, excise, income and franchise taxes and the
preparation and filing of all returns and reports in connection
therewith; (ix) cost of certificates and delivery to purchasers; (x)
expenses of preparing and filing reports with federal and state
regulatory authorities; (xi) expenses of shareholders' meetings and of
preparing, printing and distributing proxy statements (unless otherwise
agreed to by the Fund and Idex Management); (xii) costs of any
liability, uncollectible items of deposit and other insurance or
fidelity bonds; (xiii) any costs, expenses or losses arising out of any
liability of or claim for damage or other relief asserted against the
Fund for violation of any law; (xiv) expenses of preparing, typesetting
and printing prospectuses and supplements thereto for existing
shareholders and of reports and statements to shareholders; (xv) fees
and expenses in connection with membership in investment company
organizations; and (xvi) any extraordinary expenses incurred by the
Fund on behalf of the funds.
2
<PAGE>
(b) Idex Management shall pay (i) all expenses incurred by it in the
performance of its duties under this Agreement; and (ii) compensation,
fees and expenses of officers and Trustees of the Fund, except for such
Trustees who are not interested persons (as defined in the 1940 Act) of
Idex Management; and
(c) If, for any fiscal year, the total expenses of a fund, including
but not limited to: the fees to Idex Management, compensation to its
custodian, transfer agent, registrar, auditors and legal counsel,
printing expense, and fees, compensation and expenses to Trustees who
are not interested persons, exceed any expense limitation imposed by
applicable state law, Idex Management shall reimburse a fund for such
excess in the manner and to the extent required by applicable state
law; provided, however, that Idex Management shall reimburse each fund
for the amount of expenses that exceed the percentage of the fund's
average daily net assets as specified on Schedule A. For purposes of
this sub-paragraph, "total expenses" shall not include interest, taxes,
litigation expenses, brokerage commissions or other costs incurred in
acquiring or disposing of any of a fund's portfolio securities,
expenses incurred pursuant to a fund's Plan of Distribution under Rule
12b-1 of the 1940 Act, or any costs arising other than in the ordinary
and necessary course of a fund's business.
5. OBLIGATIONS OF FUND. The Fund shall have the following obligations
under the Agreement:
(a) to keep Idex Management continuously and fully informed as to the
composition of its investment portfolio of each fund and the nature of
all of its assets and liabilities from time to time;
(b) to furnish Idex Management with a certified copy of any financial
statement or report prepared for a fund by certified or independent
public accountants, and with copies of any financial statements or
reports made to its shareholders or to any governmental body or
securities exchange;
(c) to furnish Idex Management with any further materials or
information which Idex Management may reasonably request to enable it
to perform its functions under this Agreement; and
(d) to compensate Idex Management for its services in accordance with
the provisions of Section 6 hereof.
6. COMPENSATION. Each fund shall pay to Idex Management for its
services a fee, computed daily and paid monthly, payable on the last day of each
month during which or part of which this Agreement is in effect, as set forth on
Schedule A attached to this Agreement, as it may be amended from time to time in
accordance with Section 15 below. For the month during which this Agreement
becomes effective and the month during which it terminates, however, there shall
be an appropriate pro-ration of the fee payable for such month based on the
number of calendar days of such month during which this Agreement is effective.
7. TREATMENT OF INVESTMENT ADVICE. With respect to a fund, the Fund
shall retain full control over its own investment policies. However, the
Trustees of the Fund may delegate to the appropriate officers of the Fund, or to
a committee of Trustees, the power to authorize purchases, sales or other
actions affecting each fund in the interim between meetings of the Trustees,
provided such action is consistent with the established investment policy of the
Trustees and is reported to the Trustees at their next meeting.
3
<PAGE>
8. BROKERAGE COMMISSIONS. For purposes of this Agreement, brokerage
commissions paid by a fund upon the purchase or sale of its portfolio securities
shall be considered a cost of securities of the fund and shall be paid by the
fund. Idex Management is authorized and directed to place a fund's securities
transactions, or to delegate to the Sub-Advisers the authority and direction to
place a fund's securities transactions, only with brokers and dealers who render
satisfactory service in the execution of orders at the most favorable prices and
at reasonable commission rates; provided, however, that Idex Management or the
Sub-Advisers, may pay a broker or dealer an amount of commission for effecting a
securities transaction in excess of the amount of commission another broker or
dealer would have charged for effecting that transaction if Idex Management or
the Sub-Advisers determines in good faith that such amount of commission was
reasonable in relation to the value of the brokerage and research services
provided by such broker or dealer viewed in terms of either that particular
transaction or the overall responsibilities of Idex Management or the
Sub-Advisers. Idex Management and the Sub-Advisers are also authorized to
consider sales of fund shares (which shall be deemed to include also shares of
other registered investment companies with the same investment adviser) by a
broker-dealer or the recommendation of a broker-dealer to its customers that
they purchase fund shares as a factor in selecting broker-dealers to execute the
fund's securities transactions, provided that in placing portfolio business with
such broker-dealers, Idex Management and the Sub-Advisers shall seek the best
execution of each transaction and all such brokerage placement shall be
consistent with the Conduct Rules of the National Association of Securities
Dealers, Inc. Notwithstanding the foregoing, the Fund shall retain the right to
direct the placement of all securities transactions of each fund, and the
Trustees may establish policies or guidelines to be followed by Idex Management
and the Sub-Advisers in placing portfolio transactions for each fund pursuant to
the foregoing provisions. Idex Management shall report on the placement of
portfolio transactions each quarter to the Trustees of the Fund.
9. PURCHASES BY AFFILIATES. Neither Idex Management nor any officer or
Director thereof shall take a long or short position in the securities issued by
the funds. This prohibition, however, shall not prevent the purchase from a fund
of shares issued by the Fund on behalf of the fund, by the officers or Directors
of Idex Management (or by deferred benefit plans established for their benefit)
at the current price available to the public, or at such price with reductions
in sales charge as may be permitted by the Fund's current prospectus, in
accordance with Section 22(d) of the 1940 Act.
10. TERM. This Agreement shall continue in effect, unless sooner
terminated in accordance with its terms, for an initial term of two years ending
March 1, 2002, and shall continue in effect from year to year thereafter,
provided such continuance is specifically approved at least annually by the vote
of a majority of the Trustees of the Fund who are not parties hereto or
interested persons (as that term is defined in Section 2(a)(19) of the 1940 Act,
as amended) of any such party, cast in person at a meeting called for the
purpose of voting on the approval of the terms of such renewal, and by either
the Trustees of the Fund or the affirmative vote of a majority of the
outstanding voting securities of each fund (as that phrase is defined in Section
2(a)(42) of the 1940 Act.
11. TERMINATION. This Agreement may be terminated at any time, without
penalty, by the Trustees of the Fund, or with respect to a fund, by the
shareholders of such fund acting by vote of at least a majority of its
outstanding voting securities (as that phrase is defined in Section 2(a)(42) of
the 1940 Act), provided in either case that 60 days' written notice of
termination be given to Idex Management at its principal place of business. This
Agreement may be terminated by Idex Management at any time by giving 60 days'
written notice of termination to the Fund, addressed to its principal place of
business.
12. USE OF NAME. If this Agreement is terminated and Idex Management no
longer serves as investment adviser to the funds, Idex Management reserves the
right to withdraw from
4
<PAGE>
the Fund the use of the name "IDEX" with respect to the funds or any name
misleadingly implying a continuing relationship between the funds and Idex
Management or any of its affiliates.
13. LIABILITY OF IDEX MANAGEMENT. Idex Management may rely on
information reasonably believed by it to be accurate and reliable. Except as may
otherwise be provided by the 1940 Act, neither Idex Management nor its officers,
directors, employees or agents shall be subject to any liability to the Fund or
the funds or any shareholder of the funds for any error of judgment, mistake of
law or any loss arising out of any investment or other act or omission in the
course of, connected with or arising out of any service to be rendered
hereunder, except by reason of willful misfeasance, bad faith or gross
negligence in its performance of its duties or by reason of reckless disregard
of its obligations and duties under this Agreement.
14. ASSIGNMENT. This Agreement shall terminate automatically in the
event of any assignment (as that term is defined in Section 2(a)(4) of the 1940
Act) of this Agreement.
15. AMENDMENTS. This Agreement may be amended only with the approval by
the affirmative vote of a majority of the outstanding voting securities of each
affected fund (as that phrase is defined in Section 2(a)(42) of the 1940 Act)
and the approval by the vote of a majority of Trustees of the Fund who are not
parties hereto or interested persons (as that phrase is defined in Section
2(a)(19) of the 1940 Act) of any such party, cast in person at a meeting called
for the purpose of voting on the approval of such amendment.
16. PRIOR AGREEMENTS. This Agreement supersedes all prior agreements
between the parties relating to the subject matter hereof, and all such prior
agreements are deemed terminated upon the effectiveness of this Agreement.
17. LIMITATION OF LIABILITY. A copy of the Fund's Declaration of Trust
is on file with the Secretary of The Commonwealth of Massachusetts, and notice
is hereby given that this Agreement is executed on behalf of the Trustees as
Trustees of the Fund and not individually, and that the obligations under this
Agreement are not binding upon any of the Trustees, officers, shareholders,
agents or employees of the Fund individually, but binding only upon the assets
and property of the funds.
ATTEST: IDEX MANAGEMENT, INC.
______________________________ By:____________________________________
William H. Geiger, Secretary Thomas R. Moriarty
President and Chief
Executive Officer
ATTEST: IDEX MUTUAL FUNDS
______________________________ By:____________________________________
Thomas E. Pierpan, Secretary John R. Kenney
Chairman of the Board
5
<PAGE>
Effective Date: MARCH 1, 2000
----------------------------------
SCHEDULE A
<TABLE>
<CAPTION>
- ---------------------------- -------------------------- -------------------------- --------------------------
Fund PERCENTAGE OF MONTHLY EXPENSE LIMITATION TERMINATION DATE
AVERAGE DAILY NET ASSETS
- ---------------------------- -------------------------- -------------------------- --------------------------
<S> <C> <C> <C>
IDEX GE International 0.80% of the first $500
Equity million of the fund's
average daily net 1.20% March 1, 2002
assets; 0.70% of assets
in excess of $500 million
- ---------------------------- -------------------------- -------------------------- --------------------------
</TABLE>
<PAGE>
EXHIBIT B
PROPOSED
SUB-ADVISORY AGREEMENT
BETWEEN
IDEX MANAGEMENT, INC.
AND
GE INVESTMENT MANAGEMENT INCORPORATED
SUB-ADVISORY AGREEMENT made as of the 1st day of March, 2000, between
Idex Management, Inc. ("Investment Adviser"), a corporation organized and
existing under the laws of the State of Delaware and GE Investment Management
Incorporated ("Sub-Adviser"), a corporation organized and existing under the
laws of the State of Delaware.
WHEREAS, the Investment Adviser has entered into an Investment Advisory
Agreement dated as of the 1st day of March, 2000 ("Advisory Agreement") with the
IDEX Mutual Funds ("Fund"), a Massachusetts business trust which is engaged in
business as an open-end management investment company registered under the
Investment Company Act of 1940, as amended ("1940 Act"); and
WHEREAS, the Fund is authorized to issue shares of the IDEX GE
International Equity (a "fund"), a separate series of the Fund;
WHEREAS, the Sub-Adviser is engaged principally in the business of
rendering investment advisory services and is registered as an investment
adviser under the Investment Advisers Act of 1940, as amended ("Advisers Act");
and
WHEREAS, the Investment Adviser desires to retain the Sub-Adviser as
sub-adviser to furnish certain investment advisory services to the Investment
Adviser with respect to the fund and the Sub-Adviser is willing to furnish such
services.
NOW, THEREFORE, in consideration of the premises and mutual promises
herein set forth, the parties hereto agree as follows:
1. APPOINTMENT.
Investment Adviser hereby appoints the Sub-Adviser as its investment
sub-adviser with respect to the fund for the period and on the terms set forth
in this Agreement. The Sub-Adviser accepts such appointment and agrees to render
the services herein set forth, for the compensation herein provided.
2. DUTIES OF THE SUB-ADVISER.
A. INVESTMENT SUB-ADVISORY SERVICES. Subject to the
supervision of the Fund's Board of Trustees ("Board") and the Investment
Adviser, the Sub-Adviser shall act as the investment sub-adviser and shall
supervise and direct the investments of the fund in accordance with the fund's
investment objective, policies, and restrictions as provided in the Fund's
Prospectus and Statement of Additional Information, as currently in effect and
as amended or supplemented from time to time (hereinafter referred to as the
"Prospectus"), and such other limitations as directed by the appropriate
officers of the Investment Adviser or the Fund by notice in writing to the
Sub-Adviser. The Sub-Adviser shall obtain and evaluate such information relating
to the economy, industries, businesses, securities markets, and securities as it
may deem necessary or useful in the discharge of its obligations hereunder and
shall formulate and implement a continuing program for the management of the
assets and resources of the fund in a manner consistent with the fund's
investment objective, policies, and restrictions. In furtherance of this duty,
the Sub-Adviser, on behalf of the fund, is authorized, in its discretion and
without prior consultation with the fund or the Investment Adviser, to:
1
<PAGE>
(1) buy, sell, exchange, convert, lend, and otherwise trade in any
stocks, bonds and other securities or assets; and
(2) place orders and negotiate the commissions (if any) for the
execution of transactions in securities or other assets with or
through such brokers, dealers, underwriters or issuers as the
Sub-Adviser may select.
B. ADDITIONAL DUTIES OF SUB-ADVISER. In addition to the above,
Sub-Adviser shall:
(1) furnish continuous investment information, advice and
recommendations to the fund as to the acquisition, holding or
disposition of any or all of the securities or other assets which
the fund may own or contemplate acquiring from time to time;
(2) cause its officers to attend meetings of the Fund and furnish
oral or written reports, as the Fund may reasonably require, in
order to keep the Fund and its officers and Board fully informed
as to the condition of the investment securities of the fund, the
investment recommendations of the Sub-Adviser, and the investment
considerations which have given rise to those recommendations; and
(3) furnish such statistical and analytical information and
reports as may reasonably be required by the Fund from time to
time.
C. FURTHER DUTIES OF SUB-ADVISER. In all matters relating to
the performance of this Agreement, the Sub-Adviser shall act in conformity with
the Fund's Declaration of Trust and By-Laws, as each may be amended or
supplemented, and currently effective Registration Statement (as defined below)
and with the written instructions and directions of the Board and the Investment
Adviser, and shall comply with the requirements of the 1940 Act, the Advisers
Act, the rules thereunder, and all other applicable federal and state laws and
regulations.
3. COMPENSATION.
For the services provided and the expenses assumed by the Sub-Adviser
pursuant to this Agreement, the Sub-Adviser shall receive a monthly investment
management fee equal to 50% of the fees received by the Investment Adviser for
services rendered under the Advisory Agreement by the Investment Adviser with
respect to the fund. The management fee shall be payable by the Investment
Adviser monthly to the Sub-Adviser upon receipt by the Investment Adviser from
the fund of advisory fees payable to the Investment Adviser. If this Agreement
becomes effective or terminates before the end of any month, the investment
management fee for the period from the effective date to the end of such month
or from the beginning of such month to the date of termination, as the case may
be, shall be pro-rated according to the pro-ration which such period bears to
the full month in which such effectiveness or termination occurs.
4. DUTIES OF THE INVESTMENT ADVISER.
A. The Investment Adviser shall continue to have
responsibility for all services to be provided to the fund pursuant to the
Advisory Agreement and shall oversee and review the Sub-Adviser's performance of
its duties under this Agreement.
B. The Investment Adviser has furnished the Sub-Adviser with
copies of each of the following documents and will furnish to the Sub-Adviser at
its principal office all future amendments and supplements to such documents, if
any, as soon as practicable after such documents become available:
(1) The Declaration of Trust of the Fund, as filed with the
State of Massachusetts, as in effect on the date hereof and as
amended from time to time ("Declaration");
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(2) The By-Laws of the Fund as in effect on the date hereof
and as amended from time to time ("By-Laws");
(3) Certified resolutions of the Board of the Fund authorizing
the appointment of the Investment Adviser and the Sub-Adviser
and approving the form of the Advisory Agreement and this
Agreement;
(4) The Fund's Registration Statement under the 1940 Act and
the Securities Act of 1933, as amended, on Form N-1A, as filed
with the Securities and Exchange Commission ("SEC") relating
to the fund and its shares and all amendments thereto
("Registration Statement");
(5) The Notification of Registration of the Fund under the
1940 Act on Form N-8A as filed with the SEC and any amendments
thereto;
(6) The Fund's Prospectus (as defined above); and
(7) A certified copy of any publicly available financial
statement or report prepared for the Fund by certified or
independent public accountants, and copies of any financial
statements or reports made by the fund to its shareholders or
to any governmental body or securities exchange.
The Investment Adviser shall furnish the Sub-Adviser with any further
documents, materials or information that the Sub-Adviser may reasonably request
to enable it to perform its duties pursuant to this Agreement.
C. During the term of this Agreement, the Investment Adviser
shall furnish to the Sub-Adviser at its principal office all prospectuses, proxy
statements, reports to shareholders, sales literature, or other material
prepared for distribution to shareholders of the fund or the public, which refer
to the Sub-Adviser or investment companies or other advisory accounts advised or
sponsored by the Sub-Adviser or investment companies or other advisory accounts
advised or sponsored by the Sub-Adviser in any way, prior to the use thereof,
and the Investment Adviser shall not use any such materials if the Sub-Adviser
reasonably objects in writing fifteen business days (or such other time as may
be mutually agreed upon) after receipt thereof.
5. BROKERAGE.
A. The Sub-Adviser agrees that, in placing orders with
broker-dealers for the purchase or sale of portfolio securities, it shall
attempt to obtain quality execution at favorable security prices (best price and
execution); provided that, on behalf of the Fund, the Sub-Adviser may, in its
discretion, agree to pay a broker-dealer that furnishes brokerage or research
services as such services are defined under Section 28(e) of the Securities
Exchange Act of 1934, as amended ("1934 Act"), a higher commission than that
which might have been charged by another broker-dealer for effecting the same
transactions, if the Sub-Adviser determines in good faith that such commission
is reasonable in relation to the brokerage and research services provided by the
broker-dealer, viewed in terms of either that particular transaction or the
overall responsibilities of the Sub-Adviser with respect to the accounts as to
which it exercises investment discretion (as such term is defined under Section
3(a)(35) of the 1934 Act). In no instance will portfolio securities be purchased
from or sold to the Sub-Adviser, or any affiliated person thereof, except in
accordance with the federal securities laws and the rule and regulations
thereunder.
B. On occasions when the Sub-Adviser deems the purchase or
sale of a security to be in the best interest of the Fund as well as other
clients of the Sub-Adviser, the Sub-Adviser, to the extent permitted by
applicable laws and regulations, may, but shall be under no obligation to,
aggregate the securities to be purchased or sold to attempt to obtain a more
favorable price or lower brokerage commissions and efficient execution. In such
event, allocation of the securities so purchased or sold, as well as the
expenses incurred in the transaction, will be made by the Sub-Adviser in the
manner the Sub-
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Adviser considers to be the most equitable and consistent with its fiduciary
obligations to the Fund and to its other clients.
C. In addition to the foregoing, the Sub-Adviser agrees that
orders with broker-dealers for the purchase or sale of portfolio securities by
the fund shall be placed in accordance with the standards set forth in the
Advisory Agreement.
6. OWNERSHIP OF RECORDS.
The Sub-Adviser shall maintain all books and records required to be
maintained by the Sub-Adviser pursuant to the 1940 Act and the rules and
regulations promulgated thereunder with respect to transactions on behalf of the
Fund. In compliance with the requirements of Rule 31a-3 under the 1940 Act, the
Sub-Adviser hereby agrees: (i) that all records that it maintains for the Fund
are the property of the Fund, (ii) to preserve for the periods prescribed by
Rule 31a-2 under the 1940 Act any records that it maintains for the Fund and
that are required to be maintained by Rule 31a-1 under the 1940 Act and (iii)
agrees to surrender promptly to the Fund any records that it maintains for the
Fund upon request by the Fund; provided, however, the Sub-Adviser may retain
copies of such records.
7. REPORTS.
The Sub-Adviser shall furnish to the Board or the Investment Adviser,
or both, as appropriate, such information, reports, evaluations, analyses and
opinions as the Sub-Adviser and the Board or the Investment Adviser, as
appropriate, may mutually agree upon from time to time.
8. SERVICES TO OTHERS CLIENTS.
Nothing contained in this Agreement shall limit or restrict (i) the
freedom of the Sub-Adviser, or any affiliated person thereof, to render
investment management and corporate administrative services to other investment
companies, to act as investment manager or investment counselor to other
persons, firms, or corporations, or to engage in any other business activities,
or (ii) the right of any director, officer, or employee of the Sub-Adviser, who
may also be a director, officer, or employee of the Fund, to engage in any other
business or to devote his or her time and attention in part to the management or
other aspects of any other business, whether of a similar nature or a dissimilar
nature.
9. SUB-ADVISER'S USE OF THE SERVICES OF OTHERS.
The Sub-Adviser may (at its cost except as contemplated by Paragraph 5 of this
Agreement) employ, retain, or otherwise avail itself of the services or
facilities of other persons or organizations for the purpose of obtaining such
statistical and other factual information, such advice regarding economic
factors and trends, such advice as to occasional transactions in specific
securities, or such other information, advice, or assistance as the Sub-Adviser
may deem necessary, appropriate, or convenient for the discharge of its
obligations hereunder or otherwise helpful to the Company, as appropriate, or in
the discharge of Sub-Adviser's overall responsibilities with respect to the
other accounts that it serves as investment manager or counselor, provided that
the Sub-Adviser shall at all times retain responsibility for making investment
recommendations with respect to the fund.
10. LIMITATION OF LIABILITY OF THE SUB-ADVISER.
Neither the Sub-Adviser nor any of its officers, directors, or employees, nor
any person performing executive, administrative, trading, or other functions for
the Company, the Fund (at the direction or request of the Sub-Adviser) or the
Sub-Adviser in connection with the Sub-Adviser's discharge of its obligations
undertaken or reasonably assumed with respect to this Agreement, shall be liable
for any error of judgment or mistake of law or for any loss suffered by the
Company or Fund or any error of fact or mistake of law contained in any report
or date provided by the Sub-Adviser, except for any error, mistake or loss
resulting from willful misfeasance, bad faith, or gross negligence in the
performance of its or his duties on
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behalf of the Company or Fund or from reckless disregard by the Sub-Adviser or
any such person of the duties of the Sub-Adviser pursuant to this Agreement.
11. REPRESENTATIONS OF SUB-ADVISER.
The Sub-Adviser represents, warrants, and agrees as follows:
A. The Sub-Adviser: (i) is registered as an investment adviser
under the Advisers Act and will continue to be so registered for so long as this
Agreement remains in effect; (ii) is not prohibited by the 1940 Act or the
Advisers Act from performing the services contemplated by this Agreement; (iii)
has met, and will continue to meet for so long as this Agreement remains in
effect, any applicable federal or state requirements, or the applicable
requirements of any regulatory or industry self-regulatory agency, necessary to
be met in order to perform the services contemplated by this Agreement; (iv) has
the authority to enter into and perform the services contemplated by this
Agreement; and (v) will immediately notify the Investment Adviser of the
occurrence of any event that would disqualify the Sub-Adviser from serving as an
investment adviser of an investment company pursuant to Section 9 (a) of the
1940 Act or otherwise.
B. The Sub-Adviser has adopted a written code of ethics
complying with the requirements of Rule 17j-1 under the 1940 Act and has
provided the Investment Adviser and the Fund with a copy of such code of ethics,
together with evidence of its adoption.
C. The Sub-Adviser has provided the Investment Adviser and the
Fund with a copy of its Form ADV as most recently filed with the SEC and will,
promptly after filing any amendment to its Form ADV with the SEC, furnish a copy
of such amendment to the Investment Adviser.
12. INDEMNIFICATION
A. The Investment Adviser agrees to indemnify the Sub-Adviser,
its officers and directors, and any person who controls the Sub-Adviser within
the meaning of Section 15 of the 1933 Act for any loss or expense (including
attorney's fees) arising out of any claim, demand, action or suit in the event
that the Sub-Adviser has been found to be without fault and the Investment
Adviser or any other investment sub-adviser to the fund, or any person who
controls the Investment Adviser or such other investment sub-adviser within the
meaning of Section 15 of the 1933 Act has been found at fault (i) by the final
judgment of a court of competent jurisdiction or (ii) in any order of settlement
of any claim, demand, action or suit that has been approved by the Board of
Trustees of the Investment Adviser, such other investment sub-adviser or such
other controlling person.
B. The Sub-Adviser agrees to indemnify the Investment Adviser,
its officers and directors, and any person who controls the Investment Adviser
within the meaning of Section 15 of the 1933 Act for any loss or expense
(including attorney's fees) arising out of any claim, demand, action or suit in
the event that the Investment Adviser has been found to be without fault and the
Sub-Adviser or any person who controls the Sub-Adviser within the meaning of
Section 15 of the 1933 Act has been found at fault (i) by the final judgment of
a court of competent jurisdiction or (ii) in any order of settlement of any
claim, demand, action or suit that has been approved by the Board of Trustees of
the Sub-Adviser or such other controlling person.
13. TERM OF AGREEMENT.
This Agreement shall become effective upon the date first above
written, provided that this Agreement shall not take effect unless it has first
been approved (i) by a vote of a majority of those Trustees of the Fund who are
not parties to this Agreement or interested persons of any such party, cast in
person at a meeting called for the purpose of voting on such approval, and (ii)
by vote of a majority of the fund's outstanding voting securities. Unless sooner
terminated as provided herein, this Agreement shall continue in effect for two
years from its effective date. Thereafter, this Agreement shall continue in
effect from year to year, with respect to the fund, subject to the termination
provisions and all other terms
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and conditions hereof, so long as such continuation shall be specifically
approved at least annually (a) by either the Board, or by vote of a majority of
the outstanding voting securities of the fund; and (b) in either event, by the
vote, cast in person at a meeting called for the purpose of voting on such
approval, of a majority of the Trustees of the Fund who are not parties to this
Agreement or interested persons of any such party. The Sub-Adviser shall furnish
to the Fund, promptly upon its request such information as may reasonably be
necessary to evaluate the terms of this Agreement or any extension, renewal, or
amendment hereof.
14. TERMINATION OF AGREEMENT.
Notwithstanding the foregoing, this Agreement may be terminated at any
time, without the payment of any penalty, by vote of the Board or by a vote of a
majority of the outstanding voting securities of the fund on at least 60 days'
prior written notice to the Sub-Adviser. This Agreement may also be terminated
by the Investment Adviser: (i) on at least 60 days' prior written notice to the
Sub-Adviser, without the payment of any penalty; or (ii) if the Sub-Adviser
becomes unable to discharge its duties and obligations under this Agreement. The
Sub-Adviser may terminate this Agreement at any time, or preclude its renewal
without the payment of any penalty, on at least 60 days' prior notice to the
Investment Adviser. This Agreement shall terminate automatically in the event of
its assignment or upon termination of the Advisory Agreement.
15. AMENDMENT OF AGREEMENT.
No provision of this Agreement may be changed, waived, discharged, or
terminated orally, but only by an instrument in writing signed by the party
against which enforcement of the change, waiver, discharge, or termination is
sought, and no amendment of this Agreement shall be effective until approved by
vote of a majority of the fund's outstanding voting securities and a vote of a
majority of those Trustees of the Fund who are not parties to this Agreement or
interested persons of any such party, cast in person at a meeting called for the
purpose of voting on such amendment, unless otherwise permitted in accordance
with the 1940 Act.
16. MISCELLANEOUS.
A. GOVERNING LAW. This Agreement shall be construed in
accordance with the laws of the State of Massachusetts without giving effect to
the conflicts of laws principles thereof, and the 1940 Act. To the extent that
the applicable laws of the State of Massachusetts conflict with the applicable
provisions of the 1940 Act, the latter shall control.
B. CAPTIONS. The captions contained in this Agreement are
included for convenience of reference only and in no way define or delimit any
of the provisions hereof or otherwise affect their construction or effect.
C. ENTIRE AGREEMENT. This Agreement represents the entire
agreement and understanding of the parties hereto and shall supersede any prior
agreements between the parties relating to the subject matter hereof, and all
such prior agreements shall be deemed terminated upon the effectiveness of this
Agreement.
D. INTERPRETATION. Nothing herein contained shall be deemed to
require the Fund to take any action contrary to its Declaration or By-Laws, or
any applicable statutory or regulatory requirement to which it is subject or by
which it is bound, or to relieve or deprive the Board of its responsibility for
and control of the conduct of the affairs of the Fund.
E. DEFINITIONS. Any question of interpretation of any term or
provision of this Agreement having a counterpart in or otherwise derived from a
term or provision of the 1940 Act shall be resolved by reference to such term or
provision of the 1940 Act and to interpretations thereof, if any, by the United
States courts or, in the absence of any controlling decision of any such court,
by rules, regulations, or orders of the SEC validly issued pursuant to the 1940
Act. As used in this Agreement, the terms "majority
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of the outstanding voting securities," "affiliated person," "interested person,"
"assignment," "broker," "investment adviser," "net assets," "sale," "sell," and
"security" shall have the same meaning as such terms have in the 1940 Act,
subject to such exemption as may be granted by the SEC by any rule, regulation,
or order. Where the effect of a requirement of the federal securities laws
reflected in any provision of this Agreement is made less restrictive by a rule,
regulation, or order of the SEC, whether of special or general application, such
provision shall be deemed to incorporate the effect of such rule, regulation, or
order, unless the Investment Adviser and the Sub-Adviser agree to the contrary.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to
be executed by their duly authorized signatories as of the date and year first
above written.
Attest: IDEX MANAGEMENT, INC.
________________________________ By: _________________________
William H. Geiger, Secretary Name: Thomas R. Moriarty
Title: President and Chief
Executive Officer
Attest: GE INVESTMENT MANAGEMENT INCORPORATED
__________________________________ By:_____________________________________
Name:
Title:
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