SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
Registration No. 33-2659
Pre-Effective Amendment No.
Post-Effective Amendment No. 33
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
1940 Act File No. 811-4556
Amendment No. 35
(Check appropriate box or boxes.)
IDEX MUTUAL FUNDS
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(Exact Name of Registrant as Specified in Charter)
570 CARILLON PARKWAY, ST. PETERSBURG, FLORIDA 33716
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(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, including Area Code: (727) 299-1800
JOHN K. CARTER, ESQ. P.O. BOX 5068, CLEARWATER, FLORIDA 33758-5068
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(Name and Address of Agent for Service)
Approximate date of proposed public offering:
It is proposed that this filing will become effective:
[ ] 60 days after filing pursuant to paragraph (a) (1) of Rule 485.
[X] 75 days after filing pursuant to paragraph (a) (2) of Rule 485.
[ ] On (date) pursuant to paragraph (a) (1) of Rule 485.
[ ] On (date) pursuant to paragraph (a) (2) of Rule 485.
[ ] Immediately upon filing pursuant to paragraph (b) of Rule 485.
[ ] On (date) pursuant to paragraph (b) of Rule 485.
If appropriate, check the following box:
[ ] This post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
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<PAGE>
IDEX MUTUAL FUNDS
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TABLE OF CONTENTS
All About the IDEX Funds
o Janus Capital Corporation
(Sub-Adviser)
IDEX JCC Growth ...................................................... 2
IDEX JCC Global ...................................................... 4
IDEX JCC Balanced .................................................... 6
IDEX JCC Capital Appreciation ........................................ 8
IDEX JCC Flexible Income ............................................. 10
o T. Rowe Price Associates, Inc.
(Sub-Adviser)
IDEX T. Rowe Price Dividend Growth ................................... 12
IDEX T. Rowe Price Small Cap ......................................... 14
o Goldman Sachs Asset Management
(Sub-Adviser)
IDEX Goldman Sachs Growth ............................................ 16
o Salomon Brothers Asset Management Inc.
(Sub-Adviser)
IDEX Salomon All Cap ................................................. 18
o Fred Alger Management, Inc.
(Sub-Adviser)
IDEX Alger Aggressive Growth ......................................... 20
o Pilgrim Baxter & Associates, Ltd.
(Sub-Adviser)
IDEX Pilgrim Baxter Mid Cap Growth ................................... 22
IDEX Pilgrim Baxter Technology .......................................
o AEGON USA Investment Management, Inc.
(Sub-Adviser)
IDEX AEGON Income Plus ...............................................
IDEX AEGON Tax Exempt ................................................
o GE Investment Management Incorporated
(Sub-Adviser)
IDEX GE International Equity .........................................
IDEX GE U.S. Equity ..................................................
o Dean Investment Associates
(Sub-Adviser)
IDEX Dean Asset Allocation ...........................................
o Luther King Capital Management Corporation
(Sub-Adviser)
IDEX LKCM Strategic Total Return .....................................
o NWQ Investment Management Company, Inc.
(Sub-Adviser)
IDEX NWQ Value Equity ................................................
o C.A.S.E. Management, Inc.
(Sub-Adviser)
IDEX C.A.S.E. Growth .................................................
o Transamerica Investment Services, Inc.
(Sub-Adviser)
IDEX Transamerica Equity .............................................
IDEX Transamerica Small Company ......................................
EXPLANATION OF STRATEGIES
AND RISKS ...............................................................
HOW THE IDEX FUNDS ARE
MANAGED AND ORGANIZED ...................................................
SHAREHOLDER INFORMATION .................................................
o How to Buy Shares .....................................................
o How to Sell Shares ....................................................
o How to Exchange Shares ................................................
o Other Account Information .............................................
DISTRIBUTION ARRANGEMENTS ...............................................
FINANCIAL HIGHLIGHTS ....................................................
APPENDIX A .............................................................. A-1
IDEX Mutual Funds (Fund) consists of 22 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. If you would like
additional information, please request a copy of the Statement of Additional
Information (SAI) (see back cover).
In addition, we suggest you contact your financial professional or an IDEX
customer service representative, who will assist you.
TO HELP YOU UNDERSTAND...
In this prospectus, you'll see symbols like the ones below. 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/ The target directs you to a portfolio's goal or objective.
/chess piece/ The chess piece indicates discussion about a portfolio's
strategies.
/warning sign/ The warning sign indicates the risks of investing in a
portfolio.
/graph/ The graph indicates investment performance.
/question mark/ The question mark provides additional information about the
Fund or may direct 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.
<PAGE>
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IDEX JCC GROWTH
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SUMMARY OR RISKS AND RETURNS
/target/ 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/ PRINCIPAL STRATEGIES AND POLICIES
The fund's sub-adviser, Janus Capital Corporation (JCC), seeks to achieve this
objective by investing principally in:
o common stocks listed on national exchanges or on NASDAQ which JCC 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 JCC believes the market environment favors such investing.
JCC builds the fund one company at a time, emphasizing growth of capital by
investing in companies JCC believes to have the greatest earnings growth
potential.
While investments are focused on earnings growth, JCC also searches for
companies that it believes are trading at reasonable prices relative to their
future earnings growth. To locate these opportunities, JCC subjects each
company to a rigorous "bottom up" fundamental analysis, carefully researching
each potential investment before and after it is incorporated into the fund.
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.
JCC may sell stocks when its expectations regarding earnings growth change,
there is an earnings surprise, or the earnings change.
While the fund invests principally in common stocks, JCC may also invest in
futures and foreign securities, or other securities and investment strategies in
pursuit of its investment objective, which are explained beginning on page and
in the SAI.
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WHAT IS A "BOTTOM UP" ANALYSIS?
When a sub-adviser uses a "bottom up" approach, it looks primarily at
individual companies against the context of broad market factors. It seeks
to identify individual companies with earnings growth potential that may
not be recognized by the market at large.
/warning sign/ PRINCIPAL RISKS
The fund is subject to the following principal investment risks:
o 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 markets 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.
o FOREIGN STOCKS
Investments in foreign securities (including ADRs, GDRs and EDRs) 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. These risks include:
o changes in currency values
o currency speculation
o currency trading costs
o different accounting and reporting practices
o less information available to the public
o less (or different) regulation of securities markets
o more complex business negotiations
o less liquidity
o more fluctuations in prices
o delays in settling foreign securities transactions
o higher costs for holding shares (custodial fees)
o higher transaction costs
o vulnerability to seizure and taxes
o political instability and small markets
o different market trading days
o forward foreign currency contracts for hedging
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 .
2
<PAGE>
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/graph/ 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 bar chart and table assume reinvestment of dividends and
capital gains distributions. As with all mutual funds, past performance is not
a prediction of future results.
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YEAR-BY-YEAR TOTAL RETURN as of 12/31 each year (%)
CLASS A SHARES
--------------
[GRAPH OMITTED]
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999
---- ---- ---- ---- ---- ---- ---- ---- ---- ----
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QUARTER ENDED RETURN
CLASS A SHARES: ------------- ----------
Best Quarter: 12/31/98 27.95%
Worst Quarter: 12/31/97 (22.05)%
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AVERAGE ANNUAL TOTAL RETURNS AS OF 12/31/99
SINCE
ONE YEAR 5 YEARS 10 YEARS INCEPTION
- --------------------------------------------------------------------------------
A Shares
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B Shares
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M Shares*
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T Shares
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S&P 500**
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*ALL SHARES DESIGNATED AS CLASS C SHARES PRIOR TO MARCH 1, 1999 WERE RENAMED AS
CLASS M SHARES ON THAT DATE. EFFECTIVE NOVEMBER 1, 1999 THE FUND BEGAN OFFERING
A NEW CLASS C SHARE THAT HAS DIFFERENT FEES AND EXPENSES THAN THE PREVIOUS
CLASS C SHARE.
**SINCE INCEPTION OF CLASS A SHARES (5/08/86). SINCE INCEPTION OF CLASS B
SHARES (10/01/95) IS %; CLASS M SHARES (10/01/93) IS %; AND CLASS T SHARES
(6/04/85) IS %.
/dollar sign/ FEES AND EXPENSES
This table describes the fees and expenses that you may pay if you buy and hold
shares of the fund.
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SHAREHOLDER FEES (fees paid directly from your investment)
CLASS OF SHARES
A B C M T*
--------- ------- ------ ------------- ---------
Maximum sales
charge (load)
imposed on
purchases
(AS A % OF OFFERING
PRICE) 5.50% None None 1.00% 8.50%
Maximum deferred
sales charge (load) None(a) 5.00% None 1.00%(b) None(a)
(AS A PERCENTAGE OF PURCHASE PRICE OR
REDEMPTION PROCEEDS, WHICHEVER IS LOWER)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
ANNUAL FUND OPERATING EXPENSES (expenses that are deducted from fund assets) (c)
% OF AVERAGE DAILY NET ASSETS
CLASS OF SHARES
A B C M T*
------- ------- ------- ------- ------
Management fees 0.93% 0.93% 0.93% 0.93% 0.93%
Distribution and service
(12b-1) fees 0.35% 1.00% 1.00% 0.90% 0.00%
Other expenses
TOTAL ANNUAL FUND
OPERATING EXPENSES
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(a) Certain purchases of Class A or Class T 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) Annual fund operating expenses are estimated based on the fund's expenses
for the fiscal year ended 10/31/99.
A $10 semi-annual fee is imposed on accounts open for over 2 years that are
below a minimum balance due to redemptions. See page .
*Not available to new investors.
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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 remaining 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 $ $ $ $
B* $ $ $ $
C $ $ $ $
M $ $ $ $
T $ $ $ $
- ------------- -------- --------- --------- ---------
If the shares are not redeemed:
SHARE CLASS 1 YEAR 3 YEARS 5 YEARS 10 YEARS
- ------------- -------- --------- --------- ---------
A $ $ $ $
B* $ $ $ $
C $ $ $ $
M $ $ $ $
T $ $ $ $
- ------------- -------- --------- --------- ---------
* EXAMPLES FOR CLASS B SHARES ASSUME THEY WILL CONVERT TO CLASS A SHARES EIGHT
YEARS AFTER YOU PURCHASE THEM.
3
<PAGE>
IDEX JCC GLOBAL
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SUMMARY OF RISKS AND RETURNS
/target 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.
/rook/ PRINCIPAL STRATEGIES AND POLICIES
The sub-adviser, Janus Capital Corporation (JCC), seeks to achieve this
objective by investing principally in:
o common stocks of foreign and domestic issuers
o depository receipts including ADRs, GDRs and EDRs
The fund may invest on a worldwide basis in companies and securities issued by
foreign or domestic governments, government agencies or other government
entities of any size, regardless of country of organization or place of
principal business activity.
JCC's main strategy is to use a "bottom up" approach to build the fund's
portfolio. 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, JCC (in addition to looking at individual
companies) considers such factors as:
o expected levels of inflation in various countries
o government policies that might affect business conditions
o the outlook for currency relationships
o prospects for economic growth among countries, regions or geographic areas
JCC sells the fund's securities when its expectations regarding growth
potential change.
While the fund invests principally in common stocks of foreign and domestic
issuers and depositary receipts, JCC may also invest in forward foreign
currency contracts and futures for hedging, or other securities and investment
strategies in pursuit of the fund's investment objective, which are explained
beginning on page and in the SAI.
- --------------------------------------------------------------------------------
WHAT IS A "BOTTOM UP" ANALYSIS?
When a sub-adviser uses a "bottom up" approach, it looks primarily at
individual companies against the context of broad market factors. It seeks
to identify individual companies with earnings growth potential that may
not be recognized by the market at large.
- --------------------------------------------------------------------------------
/warning sign/ PRINCIPAL RISKS
The fund is subject to the following principal investment risks:
o 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.
o FOREIGN STOCKS
Investments in foreign securities (including ADRs, GDRs and EDRs) 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. These risks include:
o changes in currency values
o currency speculation
o currency trading costs
o different accounting and reporting practices
o less information available to the public
o less (or different) regulation of securities markets
o more complex business negotiations
o less liquidity
o more fluctuations in prices
o delays in settling foreign securities transactions
o higher costs for holding shares (custodial fees)
o higher transaction costs
o vulnerability to seizure and taxes
o political instability and small markets
o different market trading days
o forward foreign currency contracts for hedging
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 .
4
<PAGE>
/graph/ 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 World Index (MSCIW), a widely recognized unmanaged index of
market performance. The bar chart and table assume reinvestment of dividends
and capital gains 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
--------------
[GRAPH OMITTED]
1993 1994 1995 1996 1997 1998 1999
---- ---- ---- ---- ---- ---- ----
- --------------------------------------------------------------------------------
QUARTER ENDED RETURN
CLASS A SHARES: ------------- ----------
Best Quarter: 12/31/98 18.50%
Worst Quarter: 9/30/98 (16.02)%
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS AS OF 12/31/99
SINCE
ONE YEAR 5 YEARS INCEPTION
- --------------------------------------------------------------------------------
A Shares
- --------------------------------------------------------------------------------
B Shares
- --------------------------------------------------------------------------------
M Shares*
- --------------------------------------------------------------------------------
MSCIW**
- --------------------------------------------------------------------------------
*ALL SHARES DESIGNATED AS CLASS C SHARES PRIOR TO MARCH 1, 1999 WERE RENAMED AS
CLASS M SHARES ON THAT DATE. EFFECTIVE NOVEMBER 1. 1999 THE FUND BEGAN OFFERING
A NEW CLASS C SHARE THAT HAS DIFFERENT FEES AND EXPENSES THAN THE PREVIOUS
CLASS C SHARE.
**SINCE INCEPTION OF CLASS A SHARES (10/01/92). SINCE INCEPTION OF CLASS B
SHARES (10/01/95) IS % AND CLASS M SHARES (10/01/93) IS %.
/dollar sign/ FEES AND EXPENSES
The following table describes the fees and expenses that you may pay if you buy
and hold shares of the fund.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SHAREHOLDER FEES (fees paid directly from your investment)
CLASS OF SHARES
A B C M
------- ------- ------- -------
Maximum sales charge
(load) imposed on
purchases
(AS A % OF OFFERING PRICE) 5.50% None None 1.00%
Maximum deferred sales
charge (load) None(a) 5.00% None 1.00%(b)
(AS A PERCENTAGE OF PURCHASE PRICE OR
REDEMPTION PROCEEDS, WHICHEVER IS LOWER)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
ANNUAL FUND OPERATING EXPENSES (expenses that are deducted from fund assets)(c)
% OF AVERAGE DAILY NET ASSETS
CLASS OF SHARES
A B C M
------- ------- ------- -------
Management fees 1.00% 1.00% 1.00% 1.00%
Distribution and service
(12b-1) fees 0.35% 1.00% 1.00% 0.90%
Other expenses
TOTAL ANNUAL FUND
OPERATING EXPENSES
- --------------------------------------------------------------------------------
(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) Annual fund operating expenses are estimated based on the fund's expenses
for the fiscal year ended 10/31/99.
A $10 semi-annual fee is imposed on accounts open for over 2 years that are
below a minimum balance due to redemptions. See page .
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
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 remaining 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 $ $ $ $
B* $ $ $ $
C $ $ $ $
M $ $ $ $
- --------------------------------------------------------------------------------
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
C $250 $ 770 $1,316 $2,806
M $338 $ 832 $1,353 $2,779
- --------------------------------------------------------------------------------
* EXAMPLES FOR CLASS B SHARES ASSUME THEY WILL CONVERT TO CLASS A SHARES EIGHT
YEARS AFTER YOU PURCHASE THEM.
5
<PAGE>
IDEX JCC BALANCED
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SUMMARY OF RISKS AND RETURNS
/target/ 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.
/rook/ PRINCIPAL STRATEGIES AND POLICIES
The fund's sub-adviser, Janus Capital Corporation (JCC), seeks to achieve the
fund's objective by investing principally in:
o 40% to 60% in securities selected primarily for growth potential - such as
common stocks
o 40% to 60% in securities selected primarily for income potential - both
equity and debt.
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 JCC believes are experiencing favorable demand
for their products and services, and that are operating in a favorable
competitive and regulatory climate. In its analysis, JCC looks for companies
with earnings growth potential that may not be recognized by the market.
The income component will consist of securities that JCC 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 sub-adviser uses a "bottom up" approach to select stocks. In other words,
JCC looks mostly for income producing securities that meet its investment
criteria one at a time. If JCC 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 JCC's analysis of the market and conditions in the economy.
If JCC 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.
JCC may sell the fund's securities when its expectations regarding earnings
growth potential change.
The fund may also invest in futures and foreign securities, or other securities
and investment strategies in pursuit of the fund's investment objectives, which
are explained beginning on page and in the SAI.
- --------------------------------------------------------------------------------
WHAT IS A "BOTTOM UP" ANALYSIS?
When a sub-adviser uses a "bottom up" approach, it looks primarily at
individual companies against the context of broad market factors. It seeks
to identify individual companies with earnings growth potential that may
not be recognized by the market at large.
- --------------------------------------------------------------------------------
/warning sign/ PRINCIPAL RISKS
The fund is subject to the following principal investment risks:
o 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.
o 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:
o changes in interest rates
o length of time to maturity
o issuers defaulting on their obligations to pay interest or return principal
o HIGH-YIELD/HIGH-RISK SECURITIES
o Credit risk
o Greater sensitivity to interest rate movements
o Greater vulnerability to economic changes
o Decline in market value in event of default
o 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 .
6
<PAGE>
/graph/ 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 S&P 500 Composite Stock Price Index (S&P 500) and the Lehman
Brothers Government/Corporate Bond Index (LBGCB), widely recognized unmanaged
indexes of market performance. The bar chart and table assume reinvestment of
dividends and capital gains 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
--------------
[GRAPHIC OMITTED]
1995 1996 1997 1998 1999
---- ---- ---- ---- ----
- --------------------------------------------------------------------------------
QUARTER ENDED RETURN
CLASS A SHARES: ------------- ----------
Best Quarter: 12/31/98 8.31%
Worst Quarter: 9/30/98 (3.63)%
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS AS OF 12/31/99
SINCE
ONE YEAR 5 YEARS INCEPTION
- --------------------------------------------------------------------------------
A Shares % % %
- --------------------------------------------------------------------------------
B Shares % N/A %
- --------------------------------------------------------------------------------
M Shares* % % %
- --------------------------------------------------------------------------------
S&P 500** % % %
- --------------------------------------------------------------------------------
LBGCB** % % %
- --------------------------------------------------------------------------------
*ALL SHARES DESIGNATED AS CLASS C SHARES PRIOR TO MARCH 1, 1999 WERE RENAMED AS
CLASS M SHARES ON THAT DATE, EFFECTIVE NOVEMBER 1, 1999 THE FUND BEGAN OFFERING
A NEW CLASS C SHARE THAT HAS DIFFERENT FEES AND EXPENSES THAN THE PREVIOUS
CLASS C SHARE.
**SINCE INCEPTION OF CLASS A SHARES AND CLASS M SHARES (12/02/94). SINCE
INCEPTION OF CLASS B SHARES (10/01/95) IS % (LBGCB) AND % (S&P 500).
/dollar sign/ FEES AND EXPENSES
The following table describes the fees and expenses that you may pay if you buy
and hold shares of the fund.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SHAREHOLDER FEES (fees paid directly from your investment)
CLASS OF SHARES
A B C M
------- ------- ------- -------
Maximum sales charge
(load) imposed on
purchases
(AS A % OF OFFERING
PRICE) 5.50% None None 1.00%
Maximum deferred
sales charge (load) None(a) 5.00% None 1.00%(b)
(AS A PERCENTAGE OF PURCHASE PRICE OR
REDEMPTION PROCEEDS, WHICHEVER IS LOWER)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
ANNUAL FUND OPERATING EXPENSES (expenses that are deducted from fund assets)(d)
% OF AVERAGE DAILY NET ASSETS
CLASS OF SHARES
A B C M
------- ------- ------- -------
Management fees 1.00% 1.00% 1.00% 1.00%
Distribution and service
(12b-1) fees 0.35% 1.00% 1.00% 0.90%
Other expenses
TOTAL ANNUAL FUND
OPERATING EXPENSES
EXPENSE REDUCTION (c)
NET OPERATING EXPENSES
- --------------------------------------------------------------------------------
(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 4/30/2001.
(d) Annual fund operating expenses are estimated based on the fund's expenses
for the fiscal year ended 10/31/99.
A $10 semi-annual fee is imposed on accounts open for over 2 years that are
below a minimum balance due to redemptions. See page .
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
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 remaining 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 $ $ $ $
B* $ $ $ $
C $ $ $ $
M $ $ $ $
- --------------------------------------------------------------------------------
If the shares are not redeemed:
SHARE CLASS 1 YEAR 3 YEARS 5 YEARS 10 YEARS
- --------------------------------------------------------------------------------
A $ $ $ $
B* $ $ $ $
C $ $ $ $
M $ $ $ $
- --------------------------------------------------------------------------------
*EXAMPLE FOR CLASS B SHARES ASSUME THEY WILL CONVERT TO CLASS A SHARES EIGHT
YEARS AFTER YOU PURCHASE THEM.
7
<PAGE>
IDEX JCC CAPITAL APPRECIATION
- --------------------------------------------------------------------------------
SUMMARY OF RISKS AND RETURNS
/target/ 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.
/rook/ PRINCIPAL STRATEGIES AND POLICIES
The fund's sub-adviser, Janus Capital Corporation (JCC), seeks to achieve the
fund's objective by investing principally in:
o 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 400 Index. As of ___________,
this range was $___ million to $___ billion.
This fund invests in industries and stocks of companies that JCC believes are
experiencing favorable demand for their products and services, and are
operating in favorable competitive and regulatory environments.
JCC uses a "bottom up" approach when choosing securities for the fund's
portfolio. JCC 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.
JCC may sell the fund's securities when its expectations regarding growth
potential change.
While the fund invests principally in common stocks of medium-sized companies,
JCC may also invest in stocks of smaller to larger companies, including some
foreign companies, or other securities and investment strategies in pursuit of
the fund's investment objective, which are explained beginning on page and
in the SAI.
- --------------------------------------------------------------------------------
WHAT IS A "BOTTOM UP" ANALYSIS?
When a sub-adviser uses a "bottom up" approach, it looks primarily at
individual companies against the context of broad market factors. It seeks
to identify individual companies with earnings growth potential that may
not be recognized by the market at large.
- --------------------------------------------------------------------------------
/warning sign/ PRINCIPAL RISKS
The fund is subject to the following principal investment risks:
o 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.
o MEDUIUM-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.
THIS FUND IS NON-DIVERSIFIED.
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 .
- --------------------------------------------------------------------------------
WHAT IS A NON-DIVERSIFIED FUND?
A "non-diversified" 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 issuers, it may be
more susceptible to any single economic, political or regulatory
occurrence than a 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.
- --------------------------------------------------------------------------------
8
<PAGE>
/graph/ 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 bar
chart and table assume reinvestment of dividends and capital gains
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
--------------
[GRAPHIC OMITTED]
1995 1996 1997 1998 1999
---- ---- ---- ---- ----
- --------------------------------------------------------------------------------
QUARTER ENDED RETURN
CLASS A SHARES: ------------- ----------
Best Quarter: 12/31/98 34.17%
Worst Quarter: 9/30/98 (15.64)%
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS AS OF 12/31/99
SINCE
ONE YEAR 5 YEARS INCEPTION
- --------------------------------------------------------------------------------
A Shares % % %
- --------------------------------------------------------------------------------
B Shares % N/A %
- --------------------------------------------------------------------------------
M Shares* % % %
- --------------------------------------------------------------------------------
S&P 400** % % %
- --------------------------------------------------------------------------------
*ALL SHARES DESIGNATED AS CLASS C SHARES PRIOR TO MARCH 1, 1999 WERE RENAMED AS
CLASS M SHARES ON THAT DATE. EFFECTIVE NOVEMBER 1, 1999 THE FUND BEGAN OFFERING
A NEW CLASS C SHARE THAT HAS DIFFERENT FEES AND EXPENSES THAN THE PREVIOUS
CLASS C SHARE.
**SINCE INCEPTION OF CLASS A SHARES AND CLASS M SHARES (12/02/94). SINCE
INCEPTION OF CLASS B SHARES (10/01/95) IS %.
/dollar sign/ FEES AND EXPENSES
The following table describes the fees and expenses that you may pay if you buy
and hold shares of the fund.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SHAREHOLDER FEES (fees paid directly from your investment)
CLASS OF SHARES
A B C M
------- ------- ------- -------
Maximum sales charge
(load) imposed on
purchases
(AS A % OF OFFERING
PRICE) 5.50% None None 1.00%
Maximum deferred
sales charge (load) None(a) 5.00% None 1.00%(b)
(AS A PERCENTAGE OF PURCHASE PRICE OR
REDEMPTION PROCEEDS, WHICHEVER IS LOWER)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
ANNUAL FUND OPERATING EXPENSES (expenses that are deducted from fund assets)(d)
% OF AVERAGE DAILY NET ASSETS
CLASS OF SHARES
A B C M
------- ------- ------- -------
Management fees 1.00% 1.00% 1.00% 1.00%
Distribution and service
(12b-1) fees 0.35% 1.00% 1.00% 0.90%
Other expenses
--------------------------------------------------
TOTAL ANNUAL FUND
OPERATING EXPENSES
EXPENSE REDUCTION (c)
--------------------------------------------------
NET OPERATING EXPENSES
- --------------------------------------------------------------------------------
(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 4/30/2001.
(d) Annual fund operating expenses are estimated based on the fund's expenses
for the fiscal year ended 10/31/99.
A $10 semi-annual fee is imposed on accounts open for over 2 years that are
below a minimum balance due to redemptions. See page .
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
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 remaining the same. This return is
for illustration purposes and is not guaranteed. Actual costs may be higher or
lower.
If shares are redeemed at the end of each period.
SHARE CLASS 1 YEAR 3 YEARS 5 YEARS 10 YEARS
- --------------------------------------------------------------------------------
A $ $ $ $
B* $ $ $ $
C $ $ $ $
M $ $ $ $
- --------------------------------------------------------------------------------
If the shares are not redeemed:
SHARE CLASS 1 YEAR 3 YEARS 5 YEARS 10 YEARS
- --------------------------------------------------------------------------------
A $ $ $ $
B* $ $ $ $
C $ $ $ $
M $ $ $ $
- --------------------------------------------------------------------------------
*EXAMPLES FOR CLASS B SHARES ASSUMES THEY WILL CONVERT TO CLASS A SHARES EIGHT
YEARS AFTER YOUR PURCHASE THEM.
9
<PAGE>
IDEX JCC FLEXIBLE INCOME
- --------------------------------------------------------------------------------
SUMMARY OF RISKS AND RETURNS
/target/ 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.
/rook/ PRINCIPAL 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 (JCC), seeks to achieve the fund's objective by
investing principally in:
o corporate debt securities
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 JCC's 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.
Please see Appendix A for a description of ratings.
In addition to considering economic factors such as the affect of interest
rates on the fund's investments, JCC applies a "bottom up" approach in choosing
investments. If JCC 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, JCC uses, but doesn't rely
solely on, credit ratings
- --------------------------------------------------------------------------------
"WHAT IS A BOTTOM UP" ANALYSIS?
When a sub-adviser uses a "bottom up" approach, it looks primarily at
individual companies against the context of broader market factors. It
seeks to identify individual companies with earnings growth potential that
may not be recognized by the market at large.
- --------------------------------------------------------------------------------
JCC seeks to diversify the fund's investments across many securities, sectors
and countries. Currency risk is generally avoided through hedging and other
means.
JCC may sell the fund's securities when its expectations regarding market
interest rates change or the quality or return changes on investment.
While the fund invests principally in corporate debt securities, JCC may also
invest in lower-rated securities, including bonds considered less than
investment grade of both foreign and domestic issuers, mortgage- and other
asset-backed securities, convertible securities, preferred stock,
income-producing common stock, futures for hedging, or other securities and
investment strategies in pursuit of its investment objective, which are
explained beginning on page and in the SAI.
/warning sign/ PRINCIPAL RISKS
The fund is subject to the following principal investment risks:
o 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:
o changes in interest rates
o length of time to maturity
o issuers defaulting on their obligations to pay interest or return principal
o 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.
o HIGH-YIELD/HIGH RISK SECURITIES
o Credit Risk
o Greater sensitivity to interest rate movements
o Greater vulnerability to economic changes
o Decline in market value in event of default
o 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 .
10
<PAGE>
- --------------------------------------------------------------------------------
/graph/ 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 bar chart and table assume reinvestment of
dividends and capital gains 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
--------------
[GRAPH OMITTED]
1989 1990 1991 1992 1993 1994 1995 1996 1997 1998
---- ---- ---- ---- ---- ---- ---- ---- ---- ----
- --------------------------------------------------------------------------------
QUARTER ENDED RETURN
CLASS A SHARES: ------------- ----------
Best Quarter: 3/31/91 7.92%
Worst Quarter: 3/31/90 (8.59)%
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS AS OF 12/31/99
SINCE
ONE YEAR 5 YEARS 10 YEARS INCEPTION
- --------------------------------------------------------------------------------
A Shares
- --------------------------------------------------------------------------------
B Shares
- --------------------------------------------------------------------------------
M Shares*
- --------------------------------------------------------------------------------
LBGCB**
- --------------------------------------------------------------------------------
*ALL SHARES DESIGNATED AS CLASS C SHARES PRIOR TO MARCH 1, 1999 WERE RENAMED AS
CLASS M SHARES ON THAT DATE. EFFECTIVE NOVEMBER 1, 1999 THE FUND BEGAN OFFERING
A NEW CLASS C SHARE THAT HAS DIFFERENT FEES AND EXPENSES THAN THE PREVIOUS
CLASS C SHARE.
**SINCE INCEPTION OF CLASS A SHARES (6/29/87). SINCE INCEPTION OF CLASS B
SHARES (10/01/95) IS % AND CLASS M SHARES (10/01/93) IS %.
/dollar sign/ FEES AND EXPENSES
The following table describes the fees and expenses that you may pay if you buy
and hold shares of the fund.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SHAREHLDER FEES (fees paid directly from your investment)
CLASS OF SHARES
A B C M
------- ------- ------- -------
Maximum sales charge
(load) imposed on
purchases
(AS A % OF OFFERING
PRICE) 4.75% None None 1.00%
Maximum deferred
sales charge (load) None(a) 5.00% None 1.00%(b)
(AS A PERCENTAGE OF PURCHASE PRICE OR
REDEMPTION PROCEEDS, WHICHEVER IS LOWER)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
ANNUAL FUND OPERATING EXPENSES (expenses that are deducted from fund assets)(d)
% OF AVERAGE DAILY NET ASSETS
CLASS OF SHARES
A B C M
------- ------- ------- -------
Management fees 0.90% 0.90% 0.90% 0.90%
Distribution and service
(12b-1) fees 0.35% 1.00% 1.00% 0.90%
Other expenses
------------------------------------------------
TOTAL ANNUAL FUND
OPERATING EXPENSES
EXPENSE REDUCTION (c)
------------------------------------------------
NET OPERATING EXPENSES
- --------------------------------------------------------------------------------
(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 4/30/2001.
(d) Annual fund operating expenses are estimated based on the fund's expenses
for the fiscal year ended 10/31/99.
$10 semi-annual fee is imposed on accounts open for over 2 years that are below
a minimum balance due to redemptions. See page .
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
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 remaining 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 $ $ $ $
B* $ $ $ $
C $ $ $ $
M $ $ $ $
- --------------------------------------------------------------------------------
If the shares are not redeemed:
SHARE CLASS 1 YEAR 3 YEARS 5 YEARS 10 YEARS
- --------------------------------------------------------------------------------
A $ $ $ $
B* $ $ $ $
C $ $ $ $
M $ $ $ $
- --------------------------------------------------------------------------------
*EXAMPLES FOR CLASS B SHARES ASSUME THEY WILL CONVERT TO CLASS A SHARES EIGHT
YEARS AFTER YOU PURCHASE THEM.
11
<PAGE>
IDEX T. ROWE PRICE DIVIDEND GROWTH
- --------------------------------------------------------------------------------
SUMMARY OF RISKS AND RETURNS
/target/ 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 a reasonable level of
current income from equity investments that have the potential to rise faster
than inflation, and who can tolerate significant fluctuations in the value of
their investments.
/rook/ PRINCIPAL 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:
o dividend-paying common stocks with favorable prospects for increasing
dividends and long-term appreciation
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:
o either a track record of, or the potential for, above-average earnings and
dividend growth
o a competitive current dividend yield
o a sound balance sheet and solid cash flow to support future dividend increases
o a sustainable competitive advantage and leading market position
o attractive valuations such as a relatively high dividend yield
The fund may sell securities for a variety of reasons such as to secure gains,
limit losses or redeploy assets into more promising opportunities.
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 in pursuit of the
fund's objective. Futures and options may be used for any number of reasons,
including: to manage 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. These are explained beginning on page and
in the SAI.
/warning sign/ PRINCIPAL RISKS
The fund is subject to the following principal investment risks:
o 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.
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 .
12
<PAGE>
- --------------------------------------------------------------------------------
/graph/ PAST PERFORMANCE
Because the fund commenced operations in March 1999, no historical performance
information is presented here. Performance information will be presented for
the fund after it has been in operation for one complete calendar year.
/dollar sign/ FEES AND EXPENSES
This table describes the fees and expenses that you may pay if you buy and hold
shares of the fund.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SHAREHOLDER FEES (fees paid directly from your investment)
CLASS OF SHARES
A B C M
------- ------- ------- -------
Maximum sales charge
(load) imposed on
purchases
(AS A % OF OFFERING PRICE) 5.50% None None 1.00%
Maximum deferred sales
charge (load) None(a) 5.00% None 1.00%(b)
(AS A PERCENTAGE OF PURCHASE PRICE OR
REDEMPTION PROCEEDS, WHICHEVER IS LOWER)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
ANNUAL FUND OPERATING EXPENSES (expenses that are deducted from fund assets)(d)
% OF AVERAGE DAILY NET ASSETS
CLASS OF SHARES
A B C M
------- ------- ------- -------
Management fees 0.80% 0.80% 0.80% 0.80%
Distribution and service
(12b-1) fees 0.35% 1.00% 1.00% 0.90%
Other expenses
------------------------------------------------
TOTAL ANNUAL FUND
OPERATING EXPENSES
EXPENSE REDUCTION (c)
------------------------------------------------
NET OPERATING EXPENSES
- --------------------------------------------------------------------------------
(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 4/30/2001.
(d) Annual fund operating expenses are estimated based on the fund's expenses
for the fiscal year ended 10/31/99.
A $10 semi-annual fee is imposed on accounts open for over 2 years that are
below a minimum balance due to redemptions. See page .
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
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 remaining 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 $ $
B* $ $
C $ $
M $ $
- --------------------------------------------------------------------------------
If the shares are not redeemed: Share Class
SHARE CLASS 1 YEAR 3 YEARS
- --------------------------------------------------------------------------------
A $ $
B* $ $
C $ $
M $ $
- --------------------------------------------------------------------------------
13
<PAGE>
IDEX T. ROWE PRICE SMALL CAP
- --------------------------------------------------------------------------------
SUMMARY OF RISKS AND RETURNS
/target/ 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.
/rook/ PRINCIPAL 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:
o common stocks of small-cap growth companies
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 $ billion as of December 31, 1999, 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 fund'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 minimize the
effects of individual security selection on fund performance.
T. Rowe Price uses a number of quantitative models that are designed to
identify key characteristics of small-cap growth stocks. 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.
- --------------------------------------------------------------------------------
WHAT IS A QUANTITATIVE MODEL?
A quantitative model is fashioned by a fund's sub-adviser to assist the
sub-adviser in evaluating a potential security. The sub-adviser creates a
model that is designed using characteristics that the sub-adviser deems
advantageous in a security. The sub-adviser then compares a potential
security's characteristics against those of the model, and makes a
determination of whether or not to purchase the security based on the
results of that comparison.
- --------------------------------------------------------------------------------
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.
WHAT IS A TOP-DOWN APPROACH?
When using a "top-down" approach, the fund manager looks first at broad
market factors, and on the basis of those market factors, chooses certain
sectors, or industries within the overall market. The manager then looks
at individual companies within those sectors or industries.
While the fund invests principally in small-cap common stocks, T. Rowe Price
may also invest in stock index futures, or other securities and investment
strategies in pursuit of its investment objective, which are explained
beginning on page and in the SAI.
/warning sign/ PRINCIPAL RISKS
The fund is subject to the following principal investment risks:
o 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.
o 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.
o QUANTITATIVE MODELS
A quantitative model that is developed to select stocks may not be effective.
As a result, overall returns of the fund may be lower than if other methods
were used to select the stock held by the fund.
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 .
14
<PAGE>
- --------------------------------------------------------------------------------
/graph/ PAST PERFORMANCE
Because the fund commenced operations in March 1999, no historical performance
information is presented here. Performance information will be presented for
the fund after it has been in operation for one complete calendar year.
/dollar sign/ FEES AND EXPENSES
This table describes the fees and expenses that you may pay if you buy and hold
shares of the fund.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SHAREHOLDER FEES (fees paid directly from your investment)
CLASS OF SHARES
A B C M
------- ------- ------- -------
Maximum sales charge
(load) imposed on
purchases
(AS A % OF OFFERING PRICE) 5.50% None None 1.00%
Maximum deferred sales
charge (load) None(a) 5.00% None 1.00%(b)
(AS A PERCENTAGE OF PURCHASE PRICE OR
REDEMPTION PROCEEDS, WHICHEVER IS LOWER)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
ANNUAL FUND OPERATING EXPENSES (expenses that are deducted from fund assets)(d)
% OF AVERAGE DAILY NET ASSETS
CLASS OF SHARES
A B C M
------- ------- ------- -------
Management fees 0.80% 0.80% 0.80% 0.80%
Distribution and service
(12b-1) fees 0.35% 1.00% 1.00% 0.90%
Other expenses
------------------------------------------------
TOTAL ANNUAL FUND
OPERATING EXPENSES
EXPENSE REDUCTION (c)
------------------------------------------------
NET OPERATING EXPENSES
- --------------------------------------------------------------------------------
(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 4/30/2001.
(d) Annual fund operating expenses are estimated based on the fund's expenses
for the fiscal year ended 10/31/99.
A $10 semi-annual fee is imposed on accounts open for over 2 years that are
below a minimum balance due to redemptions. See page .
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
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 remaining 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 $ $
B* $ $
C $ $
M $ $
- --------------------------------------------------------------------------------
If the shares are not redeemed:
SHARE CLASS 1 YEAR 3 YEARS
- --------------------------------------------------------------------------------
A $ $
B* $ $
C $ $
M $ $
- --------------------------------------------------------------------------------
15
<PAGE>
- --------------------------------------------------------------------------------
IDEX GOLDMAN SACHS GROWTH
- --------------------------------------------------------------------------------
SUMMARY OF RISKS AND RETURNS
/target/ 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.
/rook/ PRINCIPAL STRATEGIES AND POLICIES
The fund's sub-adviser, Goldman Sachs Asset Management (GSAM), seeks to achieve
this objective by investing principally in:
o Stocks
This fund will invest at least 90% of total assets in a diversified portfolio
of common stocks that are considered by GSAM to have long-term capital
appreciation potential.
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:
o prospects for above-average sales and earnings growth per share
o high return on invested capital
o free cash flow generation
o sound balance sheet, financial and accounting policies, and overall financial
strength
o strong competitive advantages
o effective research, product development, and marketing
o pricing flexibility
o strength of management
o 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.
While the fund invests principally in stocks, GSAM may also invest up to 10% in
the aggregate in foreign equity securities (including securities of issuers in
emerging countries and securities quoted in foreign currencies), or other
securities and investment strategies in pursuit of its investment objective,
which are explained beginning on page and in the SAI.
/warning sign/ PRINCIPAL RISKS
The fund is subject to the following principal investment risks:
o 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 .
16
<PAGE>
- --------------------------------------------------------------------------------
/graph/ PAST PERFORMANCE
Because the fund commenced operations in March 1999, no historical performance
information is presented here. Performance information will be presented for
the fund after it has been in operation for one complete calendar year.
/dollar sign/ FEES AND EXPENSES
This table describes the fees and expenses that you may pay if you buy and hold
shares of the fund.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SHAREHOLDER FEES (fees paid directly from your investment)
CLASS OF SHARES
A B C M
------- ------- ------- -------
Maximum sales
charge (load)
imposed on
purchases
(AS A % OF OFFERING
PRICE) 5.50% None None 1.00%
Maximum deferred
sales charge (load) None(a) 5.00% None 1.00%(b)
(AS A PERCENTAGE OF PURCHASE PRICE OR
REDEMPTION PROCEEDS, WHICHEVER IS LOWER)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
ANNUAL FUND OPERATING EXPENSES (expenses that are deducted from fund assets)(d)
% OF AVERAGE DAILY NET ASSETS
CLASS OF SHARES
A B C M
------- ------- ------- -------
Management fees 0.80% 0.80% 0.80% 0.80%
Distribution and service
(12b-1) fees 0.35% 1.00% 1.00% 0.90%
Other expenses
------------------------------------------------
TOTAL ANNUAL FUND
OPERATING EXPENSES
EXPENSE REDUCTION (c)
------------------------------------------------
NET OPERATING EXPENSES
- --------------------------------------------------------------------------------
(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 4/30/2001.
(d) Annual fund operating expenses are estimated based on the fund's expenses
for the fiscal year ended 10/31/1999.
A $10 semi-annual fee is imposed on accounts open for over 2 years that are
below a minimum balance due to redemptions. See page .
- ------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
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 remaining 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 $ $
B* $ $
C $ $
M $ $
- --------------------------------------------------------------------------------
If the shares are not redeemed:
SHARE CLASS 1 YEAR 3 YEARS
- --------------------------------------------------------------------------------
A $ $
B* $ $
C $ $
M $ $
- --------------------------------------------------------------------------------
17
<PAGE>
- --------------------------------------------------------------------------------
IDEX SALOMON ALL CAP
- --------------------------------------------------------------------------------
SUMMARY OF RISKS AND RETURN
/target/ 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.
/rook/ PRINCIPAL 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:
o common stocks
In seeking capital appreciation, the fund may purchase securities of: seasoned
issuers; small companies; newer companies; and new issues.
SBAM anticipates that the fund's investments generally will be in securities of
companies which it considers to reflect the following characteristics:
o undervalued share prices
o 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
o 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.
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.
While the fund invests principally in common stocks, SBAM may also invest in
cash equivalents, convertible securities or other securities and investment
strategies in pursuit of its investment objective, which are explained
beginning on page and in the SAI.
- --------------------------------------------------------------------------------
WHAT IS A "BOTTOM UP" ANALYSIS?
When a sub-adviser uses a "bottom up" approach, it looks primarily at
individual companies against the context of broader market factors. It
seeks to identify individual companies with earnings growth potential that
may not be recognized by the market at large.
- --------------------------------------------------------------------------------
/warning sign/ PRINCIPAL RISKS
The fund is subject to the following principal investment risks:
o 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.
o SMALL SIZED OR NEW COMPANIES
These companies present additional risks because their earnings are less
predictable, their share price more volatile, and their securities less liquid
than larger or more established companies.
THIS FUND IS NON-DIVERSIFIED.
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 .
- --------------------------------------------------------------------------------
WHAT IS A NON-DIVERSIFIED FUND?
A "non-diversified" 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 issuers, it may be
more susceptible to any single economic, political or regulatory
occurrence than a 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.
- --------------------------------------------------------------------------------
18
<PAGE>
- --------------------------------------------------------------------------------
/graph/ PAST PERFORMANCE
Because the fund commenced operations in March 1999, no historical performance
information is presented here. Performance information will be presented for
the fund after it has been in operation for one complete calendar year.
/dollar sign/ FEES AND EXPENSES
This table describes the fees and expenses that you may pay if you buy and hold
shares of the fund.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SHAREHOLDER FEES (fees paid directly from your investment)
CLASS OF SHARES
A B C M
------- ------- ------- -------
Maximum sales charge
(load) imposed on
purchases
(AS A % OF OFFERING PRICE) 5.50% None None 1.00%
Maximum deferred sales
charge (load) None(a) 5.00% None 1.00%(b)
(AS A PERCENTAGE OF PURCHASE PRICE OR
REDEMPTION PROCEEDS, WHICHEVER IS LOWER)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
ANNUAL FUND OPERATING EXPENSES (expenses that are deducted from fund assets)(d)
% OF AVERAGE DAILY NET ASSETS
CLASS OF SHARES
A B C M
------- ------- ------- -------
Management fees 0.80% 0.80% 0.80% 0.80%
Distribution and service
(12b-1) fees 0.35% 1.00% 1.00% 0.90%
Other expenses
------------------------------------------------
TOTAL ANNUAL FUND
OPERATING EXPENSE
EXPENSE REDUCTION (c)
------------------------------------------------
NET OPERATING EXPENSES
- --------------------------------------------------------------------------------
(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 4/30/2001.
(d) Annual fund operating expenses are estimated based on the fund's expenses
for the fiscal year ended 10/31/1999.
A $10 semi-annual fee is imposed on accounts open for over 2 years that are
below a minimum balance due to redemptions. See page .
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
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 remaining 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 $ $
B* $ $
C $ $
M $ $
- --------------------------------------------------------------------------------
If the shares are not redeemed:
SHARE CLASS 1 YEAR 3 YEARS
- --------------------------------------------------------------------------------
A $ $
B* $ $
C $ $
M $ $
- --------------------------------------------------------------------------------
19
<PAGE>
- --------------------------------------------------------------------------------
IDEX ALGER AGGRESSIVE GROWTH
- --------------------------------------------------------------------------------
SUMMARY OF RISKS AND RETURNS
/target/ 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.
[GRAPHIC OMITTED]
/rook/ PRINCIPAL 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:
o equity securities such as common or preferred stocks
o convertible securities (convertible securities can be exchanged for or
converted into common stock of such companies)
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:
o insiders' activity
o market style leadership
o institutional activity
o relative strength price change
o price-to-declining U.S. dollar
o earnings to projected change
o 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 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.
While the fund invests principally in equity and convertible securities, Alger
may also invest in American Depositary Receipts (ADRs), money market
instruments, repurchase agreements, or other securities and investment
strategies in pursuit of its investment objective, which are explained
beginning on page and in the SAI.
/warning sign/ PRINCIPAL RISKS
The fund is subject to the following principal investment risks:
o 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.
o INVESTING AGGRESSIVELY
o The value of developing-company stocks may be very volatile, and can drop
significantly in a short period of time.
o Rights, options and futures contracts may not be exercised and may expire
worthless.
o Warrants and rights may be less liquid than stocks.
o Leveraging practices may make the fund more volatile:
o leveraging may exaggerate the effect on net asset value of any increase or
decrease in the market value of the fund's securities
o money borrowed for leveraging is subject to interest costs
o 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
o CONVERTIBLE SECURITIES
Convertible securities may include corporate notes or preferred stock, but
ordinarily are a long-term debt obligation of the issuer convertible at a
stated exchange rate into common stock of the issuer. 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.
Convertible securities generally offer lower interest or dividend yields than
non-convertible securities of similar quality.
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 .
20
<PAGE>
- --------------------------------------------------------------------------------
/graph/ 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 bar chart and table assume reinvestment of dividends and
capital gains 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
--------------
[GRAPH OMITTED]
1995 1996 1997 1998 1999
---- ---- ---- ---- ----
- --------------------------------------------------------------------------------
QUARTER ENDED RETURN
CLASS A SHARES: ------------- ----------
Best Quarter: 12/31/98 28.99%
Worst Quarter: 9/30/98 (9.47)%
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS AS OF 12/31/99
SINCE
ONE YEAR 5 YEARS INCEPTION
- --------------------------------------------------------------------------------
A Shares % % %
- --------------------------------------------------------------------------------
B Shares % N/A %
- --------------------------------------------------------------------------------
M Shares* % % %
- --------------------------------------------------------------------------------
S&P 500** % % %
- --------------------------------------------------------------------------------
*All shares designated as Class C shares prior to March 1, 1999 were renamed as
Class M shares on that date. Effective November 1, 1999, the fund began
offering a new Class C share that has different fees and expenses than the
previous Class C share.
**Since inception of Class A shares and Class M shares (12/02/94). Since
inception of Class B shares (10/01/95) is %.
/dollar sign/ FEES AND EXPENSES
The following table describes the fees and expenses that you may pay if you buy
and hold shares of the fund.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SHAREHOLDER FEES (fees paid directly from your investment)
CLASS OF SHARES
A B C M
------- ------- ------- -------
Maximum sales charge (load)
imposed on purchases
(AS A % OF OFFERING PRICE) 5.50% None None 1.00%
Maximum deferred sales charge
(load) None(a) 5.00% None 1.00%(b)
(AS A PERCENTAGE OF PURCHASE PRICE OR
REDEMPTION PROCEEDS, WHICHEVER IS LOWER)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
ANNUAL FUND OPERATING EXPENSES (expenses that are deducted from fund assets) (d)
% OF AVERAGE DAILY NET ASSETS
CLASS OF SHARES
A B C M
------- ------- ------- -------
Management fees (e) 0.80% 0.80% 0.80% 0.80%
Distribution and service
(12b-1) fees 0.35% 1.00% 1.00% 0.90%
Other expenses
------------------------------------------------
TOTAL ANNUAL FUND
OPERATING EXPENSES
EXPENSE REDUCTION (c)
------------------------------------------------
NET OPERATING EXPENSES
- --------------------------------------------------------------------------------
(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 4/30/2001
(d) Annual fund operating expenses are estimated based on the fund's expenses
for the fiscal year ended 10/31/99.
(e) Effective March 1, 1999, management fees were reduced from 1.00% to 0.80%.
A $10 semi-annual fee is imposed on accounts open for over 2 years that are
below a minimum balance due to redemptions. See page .
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
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 remaining 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 $ $ $ $
B* $ $ $ $
C $ $ $ $
M $ $ $ $
- --------------------------------------------------------------------------------
If the shares are not redeemed
SHARE CLASS 1 YEAR 3 YEARS 5 YEARS 10 YEARS
- --------------------------------------------------------------------------------
A $ $ $ $
B* $ $ $ $
C $ $ $ $
M $ $ $ $
- --------------------------------------------------------------------------------
*EXAMPLES FOR CLASS B SHARES ASSUME THEY WILL CONVERT TO CLASS A SHARES EIGHT
YEARS AFTER YOU PURCHASE THEM.
21
<PAGE>
- --------------------------------------------------------------------------------
IDEX PILGRIM BAXTER MID CAP GROWTH
- --------------------------------------------------------------------------------
SUMMARY OF RISKS AND RETURNS
/target/ 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.
/rook/ PRINCIPAL 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:
o 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.
Purchase ideas may be suggested by Pilgrim Baxter's quantitative models or
analysts, but the fund's 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
maintain 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.
While the fund invests principally in common stocks of medium-sized companies,
Pilgrim Baxter may elect to invest in foreign securities, warrants and rights,
or other securities and investment strategies in pursuit of its investment
objective, which are explained beginning on page and in the SAI.
- --------------------------------------------------------------------------------
WHAT IS A QUANTITATIVE MODEL?
A quantitative model is fashioned by a fund's sub-adviser in evaluating a
potential security. The sub-adviser creates a model that is designed using
characteristics that the sub-adviser deems advantageous in a security. The
sub-adviser then compares a potential security's characteristics against
those of the model and makes a determination of whether or not to purchase
the security based on the results of that comparison.
- --------------------------------------------------------------------------------
/warning sign/ PRINCIPAL RISKS
The fund is subject to the following principal investment risks:
o 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.
o 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.
o QUANTITATIVE MODEL
A quantitative model that is developed to select stocks may not be effective.
As a result, overall returns of the fund may be lower than if other methods
were used to select the stock held by the fund.
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 .
22
<PAGE>
- --------------------------------------------------------------------------------
/graph/ PAST PERFORMANCE
Because the fund commenced operations in March 1999, no historical performance
information is presented here. Performance information will be presented for
the fund after it has been in operation for one complete calendar year.
/dollar sign/ FEES AND EXPENSES
This table describes the fees and expenses that you may pay if you buy and hold
shares of the fund.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SHAREHOLDER FEES (fees paid directly from your investment)
CLASS OF SHARES
A B C M
------- ------- ------- -------
Maximum sales charge
(load) imposed on
purchases
(AS A % OF OFFERING PRICE) 5.50% None None 1.00%
Maximum deferred sales
charge (load) None(a) 5.00% None 1.00%(b)
(AS A PERCENTAGE OF PURCHASE PRICE OR
REDEMPTION PROCEEDS, WHICHEVER IS LOWER)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
ANNUAL FUND OPERATING EXPENSES (expenses that are deducted from fund assets)(d)
% OF AVERAGE DAILY NET ASSETS
CLASS OF SHARES
A B C M
------- ------- ------- -------
Management fees 0.80% 0.80% 0.80% 0.80%
Distribution and service
(12b-1) fees 0.35% 1.00% 1.00% 0.90%
Other expenses
------------------------------------------------
TOTAL ANNUAL FUND
OPERATING EXPENSE
EXPENSE REDUCTION (c)
------------------------------------------------
NET OPERATING EXPENSES
- --------------------------------------------------------------------------------
(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 4/30/2001.
(d) Annual fund operating expenses are estimated based on the fund's expenses
for the fiscal year ended 10/31/1999.
A $10 semi-annual fee is imposed on accounts open for over 2 years that are
below a minimum balance due to redemptions. See page .
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
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 remaining 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 $ $
B* $ $
C $ $
M $ $
- --------------------------------------------------------------------------------
If the shares are not redeemed:
SHARE CLASS 1 YEAR 3 YEARS
- --------------------------------------------------------------------------------
A $ $
B* $ $
C $ $
M $ $
- --------------------------------------------------------------------------------
23
<PAGE>
- --------------------------------------------------------------------------------
IDEX PILGRIM BAXTER TECHNOLOGY
- --------------------------------------------------------------------------------
SUMMARY OF RISKS AND RETURNS
/target/ OBJECTIVE
THE OBJECTIVE OF IDEX PILGRIM BAXTER TECHNOLOGY IS GROWTH OF CAPITAL.
This fund may be appropriate for investors who are willing to accept the higher
risk of loss inherent in a fund that invests in technology company securities
which may be strongly affected by worldwide scientific and technological
developments and governmental policies, in exchange for the potential of
greater capital appreciation.
/rook/ PRINCIPAL STRATEGIES AND POLICIES
The fund's sub-adviser, Pilgrim Baxter & Associates, Ltd. (Pilgrim Baxter),
seeks to achieve this objective by investing principally in:
o common stocks of companies that offer technology or communications related
products and services
Under normal market conditions, the fund will invest at least 65% of its assets
in common stocks of small, medium or large capitalization companies that rely
extensively on technology or communications in their product development or
operations, are expected to benefit from technological advances and
improvements, or may be experiencing exceptional growth in sales and earnings
driven by technology or communications related products and services.
These companies may be in different industries, such as computer software and
hardware, network and cable broadcasting, defense and data storage retrieval,
and biotechnology, Pilgrim Baxter feels that there is significant growth
potential because the fund invests in companies that may be responsible for
breakthrough products or technologies or positioned to take advantage of
cutting-edge developments. The fund's holdings may range from smaller companies
developing new technologies or pursuing scientific breakthroughs to large, blue
chip firms with established track records in developing and marketing
scientific advances.
While the fund invests principally in common stocks, Pilgrim Baxter may also
invest in options and futures contracts for hedging and risks management or in
other securities and investment strategies in pursuit of its investment
objective, which are explained beginning on page and in the SAI.
/warning sign/ PRINCIPAL RISKS
The fund is subject to the following principal investment risks:
o 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 markets 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.
o TECHNOLOGY STOCKS
Securities of technology companies are strongly affected by worldwide
scientific and technological developments and governmental policies, and,
therefore, are generally more volatile than securities of companies not
dependent upon or associated with technological issues.
YOU MAY LOSE MONEY IF YOU INVEST IN THE FUND.
These and other risks are fully described in the section entitled "Explanation
of Strategies and Risks," beginning on page .
24
<PAGE>
- --------------------------------------------------------------------------------
/graph/ PAST PERFORMANCE
Because the fund commenced operations in March 2000, no historical performance
information is presented here. Performance information will be presented for
the fund after it has been in operation for one complete calendar year.
/dollar sign/ FEES AND EXPENSES
This table describes the fees and expenses that you may pay if you buy and hold
shares of the fund.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SHAREHOLDER FEES (fees paid directly from your investment)
CLASS OF SHARES
A B C M
------- ------- ------- -------
Maximum sales charge
(load) imposed on
purchases
(AS A % OF OFFERING PRICE) 5.50% None None 1.00%
Maximum deferred sales
charge (load) None(a) 5.00% None 1.00%(b)
(AS A PERCENTAGE OF PURCHASE PRICE OR
REDEMPTION PROCEEDS, WHICHEVER IS LOWER)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
ANNUAL FUND OPERATING EXPENSES (expenses that are deducted from fund assets)(d)
% OF AVERAGE DAILY NET ASSETS
CLASS OF SHARES
A B C M
------- ------- ------- -------
Management fees 0.80% 0.80% 0.80% 0.80%
Distribution and service
(12b-1) fees 0.35% 1.00% 1.00% 0.90%
Other expenses (c) % % % %
------------------------------------------------
TOTAL ANNUAL FUND OPERATING
EXPENSES % % % %
EXPENSE REDUCTION (d) % % % %
------------------------------------------------
NET OPERATING EXPENSES % % % %
- --------------------------------------------------------------------------------
(a) Certain purchases of Class A shares in amounts greater than $1 million are
subject to a 1% contingent deferred sales charge for 18 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 March 2000 the "Other expenses"
are estimates.
(d) Contractual arrangement with Idex Management, Inc. through 4/30/2001.
A $10 semi-annual fee is imposed on accounts open for over 2 years that are
below a minimum balance due to redemptions. See page .
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
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 remaining 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 $ $
B* $ $
C $ $
M $ $
- --------------------------------------------------------------------------------
If the shares are not redeemed:
SHARE CLASS 1 YEAR 3 YEARS
- --------------------------------------------------------------------------------
A $ $
B* $ $
C $ $
M $ $
- --------------------------------------------------------------------------------
25
<PAGE>
- --------------------------------------------------------------------------------
IDEX AEGON INCOME PLUS
- --------------------------------------------------------------------------------
SUMMARY OF RISKS AND RETURNS
/target/ 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.
/rook/ PRINCIPAL 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:
o 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).
Please see Appendix A for a description of ratings.
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 U.S. government, obligations (Treasury bills). Under these
circumstances, the fund will be unable to achieve its investment objective.
AIMI may sell fund securities when it determines there are changes in economic
indicators, technical indicators or valuation.
- --------------------------------------------------------------------------------
WHAT IS A "BOTTOM UP" ANALYSIS?
When a sub-adviser uses a "bottom up" approach, it looks primarily at
individual companies against the context of broader market factors. It
seeks to identify individual companies with earnings growth potential that
may not be recognized by the market at large.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
WHAT IS A TOP-DOWN APPROACH?
When using a "top-down" approach, the fund manager looks first at broad
market factors, and on the basis of those market factors, chooses certain
sectors, or industries within the overall market. The manager then looks
at individual companies within those sectors or industries.
- --------------------------------------------------------------------------------
/warning sign/ PRINCIPAL RISKS
The fund is subject to the following principal investment risks:
o 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:
o changes in interest rates
o length of time to maturity
o issuers defaulting on their obligations to pay interest or return principal
o HIGH-YIELD/HIGH-RISK SECURITIES
o Credit risk
o Greater sensitivity to interest rate movements
o Greater vulnerability to economic changes
o Decline in market value in event of default
o Less liquidity
o 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 "Full
Explanation of Strategies and Risks," beginning on page .
26
<PAGE>
- --------------------------------------------------------------------------------
/graph/ 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 bar chart and table assume reinvestment of dividends and
capital gains 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
--------------
[GRAPH OMITTED]
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999
---- ---- ---- ---- ---- ---- ---- ---- ---- ----
- --------------------------------------------------------------------------------
QUARTER ENDED RETURN
CLASS A SHARES: ------------- ----------
Best Quarter: 6/30/95 6.74%
Worst Quarter: 3/31/94 (2.82)%
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS AS OF 12/31/99
SINCE
ONE YEAR 5 YEARS 10 YEARS INCEPTION
- --------------------------------------------------------------------------------
A Shares
- --------------------------------------------------------------------------------
B Shares
- --------------------------------------------------------------------------------
M Shares*
- --------------------------------------------------------------------------------
MLHYM**
- --------------------------------------------------------------------------------
*All shares designated as Class C shares prior to March 1, 1999 were renamed as
Class M shares on that date. Effective November 1, 1999 the fund began offering
a new Class C share that has different fees and expenses than the previous
Class C share.
**Since inception of Class A shares (6/14/85). Since inception of Class B
shares (10/01/95) is % and Class M shares (10/01/93) is %.
/dollar sign/ FEES AND EXPENSES
The following table describes the fees and expenses that you may pay if you buy
and hold shares of the fund.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SHAREHOLDER FEES (fees paid directly from your investment)
CLASS OF SHARES
A B C M
------- ------- ------- -------
Maximum sales charge
(load) imposed on purchases
(AS A % OF OFFERING PRICE) 4.75% None None 1.00%
Maximum deferred sales
charge (load) None(a) 5.00% None 1.00%(b)
(AS A PERCENTAGE OF PURCHASE PRICE OR
REDEMPTION PROCEEDS, WHICHEVER IS LOWER)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
ANNUAL FUND OPERATING EXPENSES (expenses that are deducted from fund assets) (c)
% OF AVERAGE DAILY NET ASSETS
CLASS OF SHARES
A B C M
------- ------- ------- -------
Management fees 0.60% 0.60% 0.60% 0.60%
Distribution and service
(12b-1) fees 0.35% 1.00% 1.00% 0.90%
Other expenses % % % %
------------------------------------------------
TOTAL ANNUAL FUND
OPERATING EXPENSES % % % %
- --------------------------------------------------------------------------------
(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) Annual fund operating expenses are estimated based on the fund's expenses
for the fiscal year ended 10/31/99.
A $10 semi-annual fee is imposed on accounts open for over 2 years that are
below a minimum balance due to redemptions. See page .
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
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 remaining 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 $ $ $ $
B* $ $ $ $
C $ $ $ $
M $ $ $ $
- --------------------------------------------------------------------------------
If the shares are not redeemed:
SHARE CLASS 1 YEAR 3 YEARS 5 YEARS 10 YEARS
- --------------------------------------------------------------------------------
A $ $ $ $
B* $ $ $ $
C $ $ $ $
M $ $ $ $
- --------------------------------------------------------------------------------
*EXAMPLES FOR CLASS B SHARES ASSUME THEY WILL CONVERT TO CLASS A SHARES EIGHT
YEARS AFTER YOU PURCHASE THEM.
27
<PAGE>
- --------------------------------------------------------------------------------
IDEX AEGON TAX EXEMPT
- --------------------------------------------------------------------------------
SUMMARY OF RISKS AND RETURNS
/target/ 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 because they would receive
no benefit from the tax-exempt nature of most of the fund's income.
/rook/ PRINCIPAL STRATEGIES AND POLICIES
Its sub-adviser, AEGON USA Investment Management, Inc. (AIMI), seeks to achieve
this objective by investing at least 80% of the fund's net assets in:
o municipal obligations rated in the three highest grades of Moody's or S&P
These securities must be tax-exempt and not subject to alternative minimum tax.
Please see Appendix A for a description of ratings.
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 AIMI'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:
o type or classification of the issuer
o maturity
o size and structure of the deal
o 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 diversified 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/ PRINCIPAL RISKS
The fund is subject to the following principal investment risks:
o MUNICIPAL OBLIGATIONS
o Their yields are usually lower than on similar, but taxable securities
o The income may be subject to state and local taxes
o The income may be a preference item for determining the federal alternative
minimum tax
o Unrated municipal securities may be less liquid than rated securities
o Congress occasionally considers restricting or eliminating the federal tax
exemption
o Obligations could ultimately be federally taxable
o 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:
o fluctuations in market value
o changes in interest rates
o length of time to maturity
o 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 .
28
<PAGE>
- --------------------------------------------------------------------------------
/graph/ 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
General Municipal Bond Index (LBGMB), a widely recognized unmanaged index of
market performance. The bar chart and table assume reinvestment of dividends
and capital gains 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
--------------
[GRAPH OMITTED]
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999
---- ---- ---- ---- ---- ---- ---- ---- ---- ----
- --------------------------------------------------------------------------------
QUARTER ENDED RETURN
CLASS A SHARES: ------------- ----------
Best Quarter:
Worst Quarter: 3/31/94 (3.02)%
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS AS OF 12/31/99
SINCE
ONE YEAR 5 YEARS 10 YEARS INCEPTION
- --------------------------------------------------------------------------------
A Shares % % % %
- --------------------------------------------------------------------------------
B Shares % N/A N/A %
- --------------------------------------------------------------------------------
M Shares* % % N/A %
- --------------------------------------------------------------------------------
LBGMB** % % % %
- --------------------------------------------------------------------------------
*ALL SHARES DESIGNATED AS CLASS C SHARES PRIOR TO MARCH 1, 1999 WERE RENAMED AS
CLASS M SHARES ON THAT DATE. EFFECTIVE NOVEMBER 1, 1999 THE FUND BEGAN OFFERING
A NEW CLASS C SHARE THAT HAS DIFFERENT FEES AND EXPENSES THAN THE PREVIOUS
CLASS C SHARE.
**SINCE INCEPTION OF CLASS A SHARES (4/01/85). SINCE INCEPTION OF CLASS B
SHARES (10/01/95) IS % AND CLASS M (10/01/93) IS %.
/dollar sign/ FEES AND EXPENSES
The following table describes the fees and expenses that you may pay if you buy
and hold shares of the fund.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SHAREHOLDER FEES (fees paid directly from your investment)
CLASS OF SHARES
A B C M
------- ------- ------- -------
Maximum sales charge (load)
imposed on purchases
(AS A % OF OFFERING PRICE) 4.75% None None 1.00%
Maximum deferred sales
charge (load) None(a) 5.00% None 1.00%(b)
(AS A PERCENTAGE OF PURCHASE PRICE OR
REDEMPTION PROCEEDS, WHICHEVER IS LOWER)
- --------------------------------------------------------------------------------
ANNUAL FUND OPERATING EXPENSES (expenses that are deducted from fund assets) (d)
% OF AVERAGE DAILY NET ASSETS
CLASS OF SHARES
A B C M
------- ------- ------- -------
Management fees 0.60% 0.60% 0.60% 0.60%
Distribution and service
(12b-1) fees 0.35% 1.00% 1.00% 0.60%
Other expenses
------------------------------------------------
TOTAL ANNUAL FUND
OPERATING EXPENSES
EXPENSE REDUCTION (c)
------------------------------------------------
NET OPERATING EXPENSES
- --------------------------------------------------------------------------------
(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 4/30/2001.
(d) Annual fund operating expenses are estimated based on the fund's expenses
for the fiscal year ended 10/31/99.
A $10 semi-annual fee is imposed on accounts open for over 2 years that are
below a minimum balance due to redemptions. See page .
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
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 remaining 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 $ $ $ $
B* $ $ $ $
C $ $ $ $
M $ $ $ $
- --------------------------------------------------------------------------------
If the shares are not redeemed:
SHARE CLASS 1 YEAR 3 YEARS 5 YEARS 10 YEARS
- --------------------------------------------------------------------------------
A $ $ $ $
B* $ $ $ $
C $ $ $ $
M $ $ $ $
- --------------------------------------------------------------------------------
*EXAMPLES FOR CLASS B SHARES ASSUME THEY WILL CONVERT TO CLASS A SHARES EIGHT
YEARS AFTER YOU PURCHASE THEM.
29
<PAGE>
- --------------------------------------------------------------------------------
IDEX GE INTERNATIONAL EQUITY (FORMERLY IDEX GE/SCOTTISH EQUITABLE INTERNATIONAL
EQUITY)
- --------------------------------------------------------------------------------
SUMMARY OF RISKS AND RETURNS
/target/ OBJECTIVE
The objective of IDEX GE 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.
/rook/ PRINCIPAL STRATEGIES AND POLICIES
The fund's sub-adviser, GE Investment Management Incorporated (GEIM), seeks to
achieve this objective by investing principally in:
o common stocks and other equity securities of companies located in developed
and developing countries other than the U.S. Equity securities are defined to
include common stocks, preferred stocks, convertible preferred stocks and
convertible bonds, depository receipts, and warrants and rights.
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
The fund invests not only in the larger markets of Europe and Japan, but may
also invest in the smaller markets of Asia, emerging Europe, Latin America, and
other emerging markets.
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 also invest in debt securities or other securities and investment
strategies in pursuit of its investment objective which are explained beginning
on page and in the SAI.
Please note! Prior to March 1, 2000, Scottish Equitable Investment Management
Limited served as co-manager of this fund.
/warning sign/ PRINCIPAL RISKS
The fund is subject to the following principal investment risks:
o 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.
o FOREIGN SECURITIES
Investments in foreign securities involve risks relating to political, social
and economic developments abroad, as well as risks resulting from differences
between the regulations to which U.S. and foreign issuers and markets are
subject. These risks include: changes in currency values; currency speculation;
currency trading costs; different accounting and reporting practices; less
information available to the public; less (or different) regulation of
securities' markets; more complex business negotiations; less liquidity; more
fluctuations in market prices; delays in settling foreign securities
transactions; higher transaction costs; higher costs for holding foreign
securities (custodial fees); vulnerability to seizure and taxes; political
instability and small markets; and different market trading days.
o CONVERTIBLE SECURITIES
Convertible securities may include corporate notes or preferred stock, but
ordinarily are a long-term debt obligation of the issuer convertible at a
stated exchange rate into common stock of the issuer. 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.
Convertible securities generally offer lower interest or dividend yields than
non-convertible securities of similar quality.
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 .
30
<PAGE>
- --------------------------------------------------------------------------------
/graph/ 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 performance compares
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 bar chart and table assume reinvestment of dividends and
capital gains 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
--------------
[GRAPH OMITTED]
1998 1999
---- ----
- --------------------------------------------------------------------------------
QUARTER ENDED RETURN
CLASS A SHARES: ------------- ----------
Best Quarter: 12/31/98 15.39%
Worst Quarter: 9/30/98 (16.94)%
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS AS OF 12/31/99
SINCE
ONE YEAR INCEPTION
- --------------------------------------------------------------------------------
A Shares % %
- --------------------------------------------------------------------------------
B Shares % %
- --------------------------------------------------------------------------------
M Shares* % %
- --------------------------------------------------------------------------------
MSCI-EAFE** % %
- --------------------------------------------------------------------------------
*ALL SHARES DESIGNATED AS CLASS C SHARES PRIOR TO MARCH 1, 1999 WERE RENAMED AS
CLASS M SHARES ON THAT DATE. EFFECTIVE NOVEMBER 1, 1999 THE FUND BEGAN OFFERING
A NEW CLASS C SHARE THAT HAS DIFFERENT FEES AND EXPENSES THAN THE PREVIOUS
CLASS C SHARE.
**SINCE INCEPTION (2/01/97).
/dollar sign/ FEES AND EXPENSES
The following table describes the fees and expenses that you may pay if you buy
and hold shares of the fund.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SHAREHOLDER FEES (fees paid directy from your investment)
CLASS OF SHARES
A B C M
- --------------------------------------------------------------------------------
Maximum sales charge
(load) imposed on
purchases
(AS A % OF OFFERING PRICE) 5.50% None None 1.00%
Maximum deferred sales
charge (load) None(a) 5.00% None 1.00%(b)
(AS A PERCENTAGE OF PURCHASE PRICE OR
REDEMPTION PROCEEDS, WHICHEVER IS LOWER)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
ANNUAL FUND OPERATING EXPENSES (expenses that are deducted from fund assets) (d)
% OF AVERAGE DAILY NET ASSETS
CLASS OF SHARES
A B C M
- --------------------------------------------------------------------------------
Management fees (e) 0.80% 0.80% 0.80% 0.80%
Distribution and service
(12b-1) fees 0.35% 1.00% 1.00% 0.90%
Other expenses
------------------------------------------------
TOTAL ANNUAL FUND
OPERATING EXPENSES
EXPENSE REDUCTION (c)
------------------------------------------------
NET OPERATING EXPENSES
- --------------------------------------------------------------------------------
(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 4/30/2001.
(d) Annual fund operating expenses are estimated based on the fund's expenses
for the fiscal year ended 10/31/99.
(e) Effective March 1, 1999, management fees were reduced from 1.00% to 0.80%.
A $10 semi-annual fee is imposed on accounts open for over 2 years that are
below a minimum balance due to redemptions. See page .
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
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 remaining 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 $ $ $ $
B* $ $ $ $
C $ $ $ $
M $ $ $ $
- --------------------------------------------------------------------------------
If the shares are not redeemed:
SHARE CLASS 1 YEAR 3 YEARS 5 YEARS 10 YEARS
- --------------------------------------------------------------------------------
A $ $ $ $
B* $ $ $ $
C $ $ $ $
M $ $ $ $
- --------------------------------------------------------------------------------
*EXAMPLES FOR CLASS B SHARES ASSUME THEY WILL CONVERT TO CLASS A SHARES EIGHT
YEARS AFTER YOU PURCHASE THEM.
31
<PAGE>
- --------------------------------------------------------------------------------
IDEX GE U.S. EQUITY
- --------------------------------------------------------------------------------
SUMMARY OF RISKS AND RETURNS
/target/ OBJECTIVE
The objective of IDEX GE U.S. Equity is to seek long-term growth of capital.
This fund may be appropriate for investors who seek long-term growth from a
diversified fund that combines "value" and "growth" investment management
styles. The investor should be comfortable with the price fluctuations of a
stock fund and be willing to accept higher short-term risk for potential
long-term returns.
/rook/ PRINCIPAL STRATEGIES AND POLICIES
The fund's sub-adviser, GE Investment Management Incorporated (GEIM), seeks to
meet the fund's investment objective by investing principally in:
o common and preferred stock
o convertible securities (convertible preferred stock, convertible bonds,
convertible debentures, convertible notes)
o depositary receipts (ADRs, EDRs, and GDRs)
o warrants and rights
GEIM, under normal conditions, will invest at least 65% of the assets of the
fund its assets in equity securities of U.S. companies. GEIM combines "values"
and "growth" investment management styles.
Through fundamental company research, the fund managers seek to identify
securities of large companies (companies with a market capitalization of $
- - $ ) with characteristics such as: attractive valuations, financial
strength and high quality management focused on generating shareholder value.
The fund may also invest in foreign securities and debt securities or other
securities and investment strategies in pursuit of its investment objective
which are explained beginning on page and in the SAI.
/warning sign/ PRINCIPAL RISKS
The fund is subject to the following principal investment risks:
o 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.
o CONVERTIBLE SECURITIES
Convertible securities may include corporate notes or preferred stock, but
ordinarily are a long-term debt obligation of the issuer that is convertible at
a stated exchange rate into common stock of the issuer. 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.
Convertible securities generally offer lower interest or dividend yields than
non-convertible securities of similar quality.
o DEPOSITARY RECEIPTS
Investments in ADRs, GDRs and EDRs and other 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. Please see page for a description of
these risks.
o WARRANTS AND RIGHTS
Warrants and rights may be considered more speculative than certain other types
of investments because they do not entitle a holder to the dividends or voting
rights for the securities that may be purchased. They do not represent any
rights in the assets of the issuing company.
Also, the value of a warrant or right does not necessarily change with the
value of the underlying securities. A warrant or right ceases to have value if
it is not exercised prior to the expiration date.
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 .
32
<PAGE>
- --------------------------------------------------------------------------------
/graph/ PAST PERFORMANCE
Because the fund commenced operations in March 2000, no historical performance
information is presented here. Performance information will be presented for
the fund after it has been in operation for one complete calendar year.
/dollar sign/ FEES AND EXPENSES
This table describes the fees and expenses that you may pay if you buy and hold
shares of the fund.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SHAREHOLDER FEES (fees paid directly from your investment)
CLASS OF SHARES
A B C M
------- ------- ------- -------
Maximum sales charge
(load) imposed on
purchases
(AS A % OF OFFERING PRICE) 5.50% None None 1.00%
Maximum deferred sales
charge (load) None(a) 5.00% None 1.00%(b)
(AS A PERCENTAGE OF PURCHASE PRICE OR
REDEMPTION PROCEEDS, WHICHEVER IS LOWER)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
ANNUAL FUND OPERATING EXPENSES (expenses that are deducted from fund assets)
% OF AVERAGE DAILY NET ASSETS
CLASS OF SHARES
A B C M
------- ------- ------- -------
Management fees 0.80% 0.80% 0.80% 0.80%
Distribution and service
(12b-1) fees 0.35% 1.00% 1.00% 0.90%
Other expenses (c) % % % %
------------------------------------------------
TOTAL ANNUAL FUND OPERATING
EXPENSES % % % %
EXPENSE REDUCTION % % % %
------------------------------------------------
NET OPERATING EXPENSES % % % %
- --------------------------------------------------------------------------------
(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 March 2000 the "Other expenses" are
estimates.
(d) Contractial arrangements with IDEX Management, Inc. through 4/30/2001.
A $10 semi-annual fee is imposed on accounts open for over 2 years that
are below a minimum balance due to redemptions. See page .
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
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 remaining 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 $ $
B* $ $
C $ $
M $ $
- --------------------------------------------------------------------------------
If the shares are not redeemed:
SHARE CLASS 1 YEAR 3 YEARS
- --------------------------------------------------------------------------------
A $ $
B* $ $
C $ $
M $ $
- --------------------------------------------------------------------------------
33
<PAGE>
IDEX DEAN ASSET ALLOCATION
SUMMARY OF RISKS AND RETURNS
/target/ OBJECTIVE
The objective of IDEX Dean Asset 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.
/rook/ PRINCIPAL 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:
o income-producing common and preferred stocks
o debt obligations of U.S. issuers, some of which will be convertible into
common stocks
o U.S. Treasury bonds, notes and bills
o money market funds
In selecting stocks, Dean focuses on 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.
- --------------------------------------------------------------------------------
WHAT IS A "BOTTOM UP" ANALYSIS?
When a sub-adviser uses a "bottom up" approach, it looks primarily at
individual companies against the context of broader market factors. It
seeks to identify individual companies with earnings growth potential that
may not be recognized by the market at large.
- --------------------------------------------------------------------------------
/warning sign/ PRINCIPAL RISKS
The fund is subject to the following principal investment risks:
o 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.
o CONVERTIBLE SECURITIES
Convertible securities may include corporate notes or preferred stock, but
ordinarily are a long-term debt obiligation of the issuer convertible at a
stated exchange rate into common stock of the issuer. 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.
Convertible securities generally offer lower interest or dividend yields than
non-convertible securities of similar quality.
o 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:
o changes in interest rates
o length of time to maturity
o issuers defaulting on their obligations to pay interest or return principal
o 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 .
34
<PAGE>
/graph/ 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 Russell 1000 Index (Russell 1000), widely recognized unmanaged indexes of
market performance. The bar chart and table assume reinvestment of dividends
and capital gains 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
--------------
[GRAPH OMITTED]
1996 1997 1998 1999
---- ---- ---- ----
- --------------------------------------------------------------------------------
QUARTER ENDED RETURN
CLASS A SHARES: ------------- ----------
Best Quarter: 6/30/97 8.95%
Worst Quarter: 9/30/98 (6.21)%
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS AS OF 12/31/99
SINCE
ONE YEAR INCEPTION
- --------------------------------------------------------------------------------
A Shares
- --------------------------------------------------------------------------------
B Shares
- --------------------------------------------------------------------------------
M Shares*
- --------------------------------------------------------------------------------
LBIGCB**
- --------------------------------------------------------------------------------
Russel 1000**
- --------------------------------------------------------------------------------
*ALL SHARES DESIGNATED AS CLASS C SHARES PRIOR TO MARCH 1, 1999 WERE RENAMED AS
CLASS M SHARES ON THAT DATE. EFFECTIVE NOVEMBER 1, 1999 THE FUND BEGAN OFFERING
A NEW CLASS C SHARE THAT HAS DIFFERENT FEES AND EXPENSES THAN THE PREVIOUS
CLASS C SHARE.
**SINCE INCEPTION (10/01/95).
/dollar sign/ FEES AND EXPENSES
The following table describes the fees and expenses that you may pay if you buy
and hold shares of the fund.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SHAREHOLDER FEES (fees paid directly from your investment)
CLASS OF SHARES
A B C M
- --------------------------------------------------------------------------------
Maximum sales
charge (load)
imposed on
purchases
(AS A % OF OFFERING
PRICE) 5.50% None None 1.00%
Maximum deferred
sales charge (load) None(a) 5.00% None 1.00%(b)
(AS A PERCENTAGE OF PURCHASE PRICE OR
REDEMPTION PROCEEDS, WHICHEVER IS LOWER)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
ANNUAL FUND OPERATING EXPENSES (expenses that are deducted from fund assets) (d)
% OF AVERAGE DAILY NET ASSETS
CLASS OF SHARES
A B C M
- --------------------------------------------------------------------------------
Management fees (e) 0.80% 0.80% 0.80% 0.80%
Distribution and service
(12b-1) fees 0.35% 1.00% 1.00% 0.90%
Other expenses
--------------------------------------------------
TOTAL ANNUAL FUND
OPERATING EXPENSES
EXPENSE REDUCTION (d)
--------------------------------------------------
NET OPERATING EXPENSES
- --------------------------------------------------------------------------------
(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 4/30/2001.
(d) Annual fund operating expenses are estimated based on the fund's expenses
for the fiscal year ended 10/31/99.
(e) Effective March 1, 1999, management fees were reduced from 1.00% to 0.80%.
A $10 semi-annual fee is imposed on accounts open for over 2 years that are
below a minimum balance due to redemptions. See page .
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
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 remaining 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 $ $ $ $
B* $ $ $ $
C $ $ $ $
M $ $ $ $
- --------------------------------------------------------------------------------
If the shares are not redeemed:
SHARE CLASS 1 YEAR 3 YEARS 5 YEARS 10 YEARS
- --------------------------------------------------------------------------------
A $ $ $ $
B* $ $ $ $
C $ $ $ $
M $ $ $ $
- --------------------------------------------------------------------------------
*EXAMPLES FOR CLASS B SHARES ASSUME THEY WILL CONVERT TO CLASS A SHARES EIGHT
YEARS AFTER YOU PURCHASE THEM.
35
<PAGE>
- --------------------------------------------------------------------------------
IDEX LKCM STRATEGIC TOTAL RETURN
- --------------------------------------------------------------------------------
SUMMARY OF RISKS AND RETURNS
/target/ 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.
/rook/ PRINCIPAL 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 which include:
o common stocks
o corporate bonds
o government 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 to a lesser extent. In choosing such securities, Luther King looks
for companies with strong fundamental characteristics. It considers factors
such as:
o balance sheet quality
o cash flow generation
o earnings and dividend growth record and outlook
o 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.
Luther King closely analyzes a company's financial status and a security's
valuation in a 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. Corporate debt securities in which the fund invests
will generally have a rating within the four highest grades as determined by
Moody's or S&P. (See Appendix A for a description of the ratings.)
Luther King may sell fund securities when its stocks become overvalued or when
the stocks lose their strong fundamentals.
While the fund invests principally in common stocks and corporate and
government bonds, Luther King may also invest in convertible preferred stocks,
corporate convertible bonds, or other securities and investment strategies in
pursuit of its investment objective, which are explained beginning on page
and in the SAI.
/warning sign/ PRINCIPAL RISKS
The fund is subject to the following principal investment risks:
o 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.
o 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:
o changes in interest rates
o length of time to maturity
o 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 .
36
<PAGE>
- --------------------------------------------------------------------------------
/graph/ 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 returns. 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
(LBIGCB) Index, widely recognized unmanaged indexes of stock performance. The
bar chart and table assume reinvestment of dividends and capital gains
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
--------------
[GRAPH OMITTED]
1995 1996 1997 1998 1999
---- ---- ---- ---- ----
- --------------------------------------------------------------------------------
QUARTER ENDED RETURN
CLASS A SHARES: ------------- ----------
Best Quarter: 6/30/97 12.74%
Worst Quarter: 9/30/98 (7.39)%
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS AS OF 12/31/98
SINCE
ONE YEAR 5 YEARS INCEPTION
- --------------------------------------------------------------------------------
A Shares % % %
- --------------------------------------------------------------------------------
B Shares % N/A %
- --------------------------------------------------------------------------------
M Shares* % % %
- --------------------------------------------------------------------------------
S&P 500** % % %
- --------------------------------------------------------------------------------
LBIGCB % % %
- --------------------------------------------------------------------------------
*ALL SHARES DESIGNATED AS CLASS C SHARES PRIOR TO MARCH 1, 1999 WERE RENAMED AS
CLASS M SHARES ON THAT DATE. EFFECTIVE NOVEMBER 1, 1999 THE FUND BEGAN OFFERING
A NEW CLASS C SHARE THAT HAS DIFFERENT FEES AND EXPENSES THAN THE PREVIOUS
CLASS C SHARE.
**SINCE INCEPTION OF CLASS A SHARES AND CLASS M SHARES (12/02/94). SINCE
INCEPTION OF CLASS B SHARES (10/01/95) IS % FOR THE S&P 500, AND % FOR
LBIGC.
/dollar sign/ FEES AND EXPENSES
The following table describes the fees and expenses that you may pay if you buy
and hold shares of the fund.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SHAREHOLDER FEES (fees paid directly from your investment)
CLASS OF SHARES
A B C M
- --------------------------------------------------------------------------------
Maximum sales charge (load)
imposed on purchases
(AS A % OF OFFERING PRICE) 5.50% None None 1.00%
Maximum deferred sales
charge (load) None(a) 5.00% None 1.00%(b)
(AS A PERCENTAGE OF PURCHASE PRICE
OR REDEMPTION PROCEEDS, WHICHEVER IS LOWER)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
ANNUAL FUND OPERATING EXPENSES (expenses that are deducted from fund assets) (d)
% OF AVERAGE DAILY NET ASSETS
CLASS OF SHARES
A B C M
- --------------------------------------------------------------------------------
Management fees (e) 0.80% 0.80% 0.80% 0.80%
Distribution and service
(12b-1) fees 0.35% 1.00% 1.00% 0.90%
Other expenses
--------------------------------------------------
TOTAL ANNUAL FUND
OPERATING EXPENSES
EXPENSE REDUCTION (c)
--------------------------------------------------
NET OPERATING EXPENSES
- --------------------------------------------------------------------------------
(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 4/30/2001.
(d) Annual fund operating expenses are estimated based on the fund's expenses
for the fiscal year ended 10/31/99.
(e) Effective March 1, 1999, management fees were reduced from 1.00% to 0.80%.
A $10 semi-annual fee is imposed on accounts open for over 2 years that are
below a minimum balance due to redemptions. See page .
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
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 remaining 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 $ $ $ $
B* $ $ $ $
C $ $ $ $
M $ $ $ $
- --------------------------------------------------------------------------------
If the shares are not redeemed:
SHARE CLASS 1 YEAR 3 YEARS 5 YEARS 10 YEARS
- --------------------------------------------------------------------------------
A $ $ $ $
B* $ $ $ $
C $ $ $ $
M $ $ $ $
- --------------------------------------------------------------------------------
*EXAMPLES FOR CLASS B SHARES ASSUME THEY WILL CONVERT TO CLASS A SHARES EIGHT
YEARS AFTER YOU PURCHASE THEM.
37
<PAGE>
- --------------------------------------------------------------------------------
IDEX NWQ VALUE EQUITY
- --------------------------------------------------------------------------------
SUMMARY OF RISKS AND RETURNS
/target/ 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.
/rook/ PRINCIPAL 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:
o common stocks
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:
o uses earnings averaged over both strong and weak periods in evaluating
cyclical companies
o focuses on quality of earnings
o invests in relative value
o 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.
While the fund invests principally in common stocks, NWQ may also invest in
money market and short term instruments (Treasury bills), or other securities
and investment strategies in pursuit of its investment objective, which are
explained beginning on page and in the SAI.
/warning sign/ PRINCIPAL RISKS
The fund is subject to the following principal investment risks:
o 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.
o 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 .
38
<PAGE>
- --------------------------------------------------------------------------------
/graph/ 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 performance compares to the
returns of the S&P 500, a widely recognized unmanaged index of stock
performance. Both the bar chart and table assume reinvestment of dividends and
capital gains 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
--------------
[GRAPH OMITTED]
1998 1999
---- ----
- --------------------------------------------------------------------------------
QUARTER ENDED RETURN
CLASS A SHARES: ------------- ----------
Best Quarter: 3/31/98 9.96%
Worst Quarter: 9/30/98 (18.47)%
- --------------------------------------------------------------------------------
Average annual total returns as of 12/31/99
SINCE
ONE YEAR INCEPTION
- --------------------------------------------------------------------------------
A Shares
- --------------------------------------------------------------------------------
B Shares
- --------------------------------------------------------------------------------
M Shares*
- --------------------------------------------------------------------------------
S&P 500**
- --------------------------------------------------------------------------------
*ALL SHARES DESIGNATED AS CLASS C SHARES PRIOR TO MARCH 1, 1999 WERE RENAMED AS
CLASS M SHARES ON THAT DATE. EFFECTIVE NOVEMBER 1, 1999 THE FUND BEGAN OFFERING
A NEW CLASS C SHARE THAT HAS DIFFERENT FEES AND EXPENSES THAN THE PREVIOUS
CLASS C SHARE.
**SINCE INCEPTION (2/01/97).
/dollar sign/ FEES AND EXPENSES
The following table describes the fees and expenses that you may pay if you buy
and hold shares of the fund.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SHAREHOLDER FEES (fees paid directly from your investment)
CLASS OF SHARES
A B C M
- --------------------------------------------------------------------------------
Maximum sales charge
(load) imposed on
purchases
(AS A % OF OFFERING PRICE) 5.50% None None 1.00%
Maximum deferred sales
charge (load) None(a) 5.00% None 1.00%(b)
(AS A PERCENTAGE OF PURCHASE PRICE OR
REDEMPTION PROCEEDS, WHICHEVER IS LOWER)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
ANNUAL FUND OPERATING EXPENSES (expenses that are deducted from fund assets) (d)
% OF AVERAGE DAILY NET ASSETS
CLASS OF SHARES
A B C M
- --------------------------------------------------------------------------------
Management fees (e) 0.80% 0.80% 0.80% 0.80%
Distribution and service
(12b-1) fees 0.35% 1.00% 1.00% 0.90%
Other expenses
--------------------------------------------------
TOTAL ANNUAL FUND
OPERATING EXPENSES
EXPENSE REDUCTION (c)
--------------------------------------------------
NET OPERATING EXPENSES % % % %
- --------------------------------------------------------------------------------
(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 4/30/2001.
(d) Annual fund operating expenses are estimated based on the fund's expenses
for the fiscal year ended 10/31/99.
(e) Effective March 1, 1999, management fees were reduced from 1.00% to 0.80%.
A $10 semi-annual fee is imposed on accounts open for over 2 years that are
below a minimum balance due to redemptions. See page .
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
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 remaining 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 $ $ $ $
B* $ $ $ $
C $ $ $ $
M $ $ $ $
- --------------------------------------------------------------------------------
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
C $223 $ 844 $1,491 $3,226
M $311 $ 906 $1,527 $3,200
- --------------------------------------------------------------------------------
*EXAMPLES FOR CLASS B SHARES ASSUME THEY WILL CONVERT TO CLASS A SHARES EIGHT
YEARS AFTER YOU PURCHASE THEM.
39
<PAGE>
- --------------------------------------------------------------------------------
IDEX C.A.S.E. GROWTH
- --------------------------------------------------------------------------------
SUMMARY OF RISKS AND RETURNS
/target/ 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.
This fund may be appropriate for investors who seek long-term growth 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.
/rook/ PRINCIPAL 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:
o common stocks
o preferred stocks
o 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:
o insiders' activity
o market style leadership
o earnings surprise
o analysts' change in earnings projections
o return on equity
o 5-year earnings-per-share growth rate
o price-earnings ratio
o price-to-book ratio
o price-to-cash flow
o institutional activity and holdings
o relative strength price change
o price-to-200-day moving average
o price-to-historical rising inflation
o price-to-declining U.S. dollar
o earnings projected change
o 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 fund's 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/ PRINCIPAL RISKS
The fund is subject to the following principal investment risks:
o 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.
o 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.
o CONVERTIBLE SECURITIES
Convertible securities may include corporate notes or preferred stock, but
ordinarily are a long-term debt obligation of the issuer convertible at a
stated exchange rate into common stock of the issuer. 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.
Convertible securities generally offer lower interest or dividend yields than
non-convertible securities of similar quality.
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 .
40
<PAGE>
- --------------------------------------------------------------------------------
/graph/ 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 bar chart and table assume
reinvestment of dividends and capital gains 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
--------------
[GRAPH OMITTED]
1997 1998 1999
- --------------------------------------------------------------------------------
QUARTER ENDED RETURN
CLASS A SHARES: ------------- ----------
Best Quarter: 12/31/98 24.98%
Worst Quarter: 9/30/98 (24.42)%
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS AS OF 12/31/99
SINCE
ONE YEAR INCEPTION
- --------------------------------------------------------------------------------
A Shares % %
- --------------------------------------------------------------------------------
B Shares % %
- --------------------------------------------------------------------------------
M Shares* % %
- --------------------------------------------------------------------------------
S&P 500** % %
- --------------------------------------------------------------------------------
* ALL SHARES DESIGNATED AS CLASS C SHARES PRIOR TO MARCH 1, 1999 WERE RENAMED
AS CLASS M SHARES ON THAT DATE. EFFECTIVE NOVEMBER 1, 1999 THE FUND BEGAN
OFFERING A NEW CLASS C SHARE THAT HAS DIFFERENT FEES AND EXPENSES THAN THE
PREVIOUS CLASS C SHARE.
** SINCE INCEPTION (2/01/96).
/dollar sign/ FEES AND EXPENSES
The following table describes the fees and expenses that you may pay if you buy
and hold shares of the fund.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SHAREHOLDER FEES (fees paid directly from your investment)
CLASS OF SHARES
A B C M
- --------------------------------------------------------------------------------
Maximum sales charge (load)
imposed on purchases
(AS A % OF OFFERING PRICE) 5.50% None None 1.00%
Maximum deferred sales
charge (load) None(a) 5.00% None 1.00%(b)
(AS A PERCENTAGE OF PURCHASE PRICE OR
REDEMPTION PROCEEDS, WHICHEVER IS LOWER)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
ANNUAL FUND OPERATING EXPENSES (expenses that are deducted from fund assets) (d)
% OF AVERAGE DAILY NET ASSETS
CLASS OF SHARES
A B C M
- --------------------------------------------------------------------------------
Management fees (e) 0.80% 0.80% 0.80% 0.80%
Distribution and service
(12b-1) fees 0.35% 1.00% 1.00% 0.90%
Other expenses
--------------------------------------------------
TOTAL ANNUAL FUND
OPERATING EXPENSES
EXPENSE REDUCTION (c)
--------------------------------------------------
NET OPERATING EXPENSES
- --------------------------------------------------------------------------------
(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 04/30/2001.
(d) Annual fund operating expenses are estimated based on the fund's expenses
for the fiscal year ended 10/31/99.
(e) Effective March 1, 1999, management fees were reduced from 1.00% to 0.80%.
A $10 semi-annual fee is imposed on accounts open for over 2 years that are
below a minimum balance due to redemptions. See page .
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
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 operating expenses remaining 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 $ $ $ $
B* $ $ $ $
C $ $ $ $
M $ $ $ $
- --------------------------------------------------------------------------------
If the shares are not redeemed:
SHARE CLASS 1 YEAR 3 YEARS 5 YEARS 10 YEARS
- --------------------------------------------------------------------------------
A $ $ $ $
B* $ $ $ $
C $ $ $ $
M $ $ $ $
- --------------------------------------------------------------------------------
*EXAMPLES FOR CLASS B SHARES ASSUME THEY WILL CONVERT TO CLASS A SHARES EIGHT
YEARS AFTER YOU PURCHASE THEM.
41
<PAGE>
- --------------------------------------------------------------------------------
IDEX TRANSAMERICA EQUITY
- --------------------------------------------------------------------------------
SUMMARY OF RISKS AND RETURNS
/target/ OBJECTIVE
The objective of IDEX Transamerica Equity is to maximize long-term growth.
This fund may be appropriate for long-term investors who have the perspective,
patience and financial ability to take on above-average price volatility in
pursuit of long-term capital growth.
/rook/ PRINCIPAL STRATEGIES AND POLICIES
The fund's sub-adviser, Transamerica Investment Services, Inc. (TIS), uses a
"bottom up" approach to investing and builds the fund's portfolio one company
at a time by investing fund assets principally in:
o common stocks
TIS generally invests at least 65% of the fund's assets in a diversified
portfolio of domestic common stocks.
TIS buys securities of companies it feels are under-valued in the stock market.
The companies that they invest in have many or all of the following features:
o outstanding management
o superior track record
o well-defined plans for the future
o unique low cost products
o dominance in market share or products in specialized markets
o strong earnings and cash flows to foster future growth
o focus on shareholders through increasing dividends, stock repurchases and
strategic acquisitions
TIS also selects companies for their growth potential in relation to major U.S.
trends. These trends include:
o the aging of baby boomers
o rapid growth in communication and information technologies
o shift toward financial assets versus real estate or other tangible assets
o continuing increase in U.S. productivity
While TIS invests principally in domestic common stocks, the fund may also
invest in other securities or investment strategies in pursuit of its
investment objective, which are explained beginning on page and in the SAI.
TIS may also invest in cash or cash equivalents for temporary defensive
purposes when market conditions warrant. To the extent it is invested in these
securities, the fund may not be able to achieve its investment objective.
/warning sign/ PRINCIPAL RISKS
The fund is subject to the following principal investment risks:
o 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 .
- --------------------------------------------------------------------------------
WHAT IS A "BOTTOM UP" ANALYSIS?
When a sub-adviser uses a "bottom up" approach, it looks primarily at
individual companies against the context of broad market factors. It seeks
to identify individual companies with earnings growth potential that may
not be recognized by the market at large.
- --------------------------------------------------------------------------------
42
<PAGE>
- --------------------------------------------------------------------------------
/graph/ PAST PERFORMANCE
Because the fund commenced operations in March 2000, no historical performance
information is presented here. Performance information will be presented for
the fund after it has been in operation for one complete calendar year.
/dollar sign/ FEES AND EXPENSES
This table describes the fees and expenses that you may pay if you buy and hold
shares of the fund.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SHAREHOLDER FEES (fees paid directly from your investment)
CLASS OF SHARES
A B C M
- --------------------------------------------------------------------------------
Maximum sales charge (load)
imposed on purchases
(AS A % OF OFFERING PRICE) 5.50% None None 1.00%
Maximum deferred sales
charge (load) None(a) 5.00% None 1.00%(b)
(AS A PERCENTAGE OF PURCHASE PRICE OR
REDEMPTION PROCEEDS, WHICHEVER IS LOWER)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
ANNUAL FUND OPERATING EXPENSES (expenses that are deducted from fund assets)
% OF AVERAGE DAILY NET ASSETS
CLASS OF SHARES
A B C M
- --------------------------------------------------------------------------------
Management fees 0.80% 0.80% 0.80% 0.80%
Distribution and service
(12b-1) fees 0.35% 1.00% 1.00% 0.90%
Other expenses (c) % % % %
--------------------------------------------------
TOTAL ANNUAL FUND
OPERATING EXPENSES % % % %
EXPENSE REDUCTION (d) % % % %
--------------------------------------------------
NET OPERATING EXPENSES % % % %
- --------------------------------------------------------------------------------
(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 purchases.
(c) Because the fund commenced operations in March 2000, the "Other expenses"
are estimates.
(d) Contractual arrangement with Idex Management, Inc. through 04/30/2001.
A $10 semi-annual fee is imposed on accounts open for over 2 years that are
below a minimum balance due to redemption. See page .
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
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 remaining 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 $ $
B* $ $
C $ $
M $ $
- --------------------------------------------------------------------------------
If the shares are not redeemed:
SHARE CLASS 1 YEAR 3 YEARS
- --------------------------------------------------------------------------------
A $ $
B* $ $
C $ $
M $ $
- --------------------------------------------------------------------------------
43
<PAGE>
- --------------------------------------------------------------------------------
IDEX TRANSAMERICA SMALL COMPANY
- --------------------------------------------------------------------------------
SUMMARY OF RISKS AND RETURNS
/target/ OBJECTIVE
The objective of IDEX Transamerica Small Company is to maximize long-term
growth.
This fund may be appropriate for long-term investors who are willing and
financially able to take on above-average stock market volatility in order to
pursue long-term capital growth.
/rook/ PRINCIPAL STRATEGIES AND POLICIES
The fund's sub-adviser, Transamerica Investment Services, Inc. (TIS), uses a
"bottom-up" approach to investing and builds the fund's portfolio one company
at a time by investing fund assets principally in:
o equity securities such as common stocks, preferred stocks, rights, warrants
and securities convertible into or exchangeable for common stocks of small
companies
TIS generally invests at least 65% of the fund's assets in a diversified
portfolio of equity securities. The companies issuing these securities are
companies with small market capitalization. Small companies are those whose
market capitalization falls within the range represented in the S&P 600
SmallCap Index. (The market range for this index was $ to $
as of ).
TIS selects stocks that are issued by small U.S. companies which, in its
opinion, show:
o strong potential for steady growth
o high barriers to competition
It is the opinion of TIS that companies with smaller capitalization levels are
less actively followed by security analysts and therefore they may be
undervalued, providing strong opportunities for a rise in value.
While the fund invests principally in equity securities of small companies, TIS
may also invest in debt securities or other securities and investment
strategies in pursuit of its investment objective, which are explained
beginning on page __ and in the SAI.
TIS may also invest in cash or cash equivalents for temporary defensive
purposes when market conditions warrant. To the extent it is invested in these
securities, the fund may not be able to achieve its investment objective.
/warning sign/ PRINCIPAL RISKS
The fund is subject to the following principal investment risks:
o 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.
o CONVERTIBLE SECURITIES
Convertible securities may include corporate notes or preferred stock, but
ordinarily are a long-term debt obligation of the issuer convertible at a
stated exchange rate into common stock of the issuer. 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.
Convertible securities generally offer lower interest or dividend yields than
non-convertible securities of similar quality.
o 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, market, 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.
o WARRANTS AND RIGHTS
Warrants and rights may be considered more speculative than certain other types
of investments because they do not entitle a holder to the dividends or voting
rights for the securities that may be purchased. They do not represent any
rights in the assets of the issuing company.
Also, the value of a warrant or right does not necessarily change with the
value of the underlying securities. A warrant or right ceases to have value if
it is not exercised prior to the expiration date.
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 .
- --------------------------------------------------------------------------------
WHAT IS A "BOTTOM UP" ANALYSIS?
When a sub-adviser uses a "bottom up" approach, it looks primarily at
individual companies against the context of broad market factors. It seeks
to identify individual companies with earnings growth potential that may
not be recognized by the market at large.
- --------------------------------------------------------------------------------
44
<PAGE>
- --------------------------------------------------------------------------------
/graph/ PAST PERFORMANCE
Because the fund commenced operations in March 2000, no historical performance
information is presented here. Performance information will be presented for
the fund after it has been in operation for one complete calendar year.
/dollar sign/ FEES AND EXPENSES
This table describes the fees and expenses that you may pay if you buy and hold
shares of the fund.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SHAREHOLDER FEES (fees paid directly from your investment)
CLASS OF SHARES
A B C M
- --------------------------------------------------------------------------------
Maximum sales charge
(load) imposed on
purchases
(AS A % OF OFFERING PRICE) 5.50% None None 1.00%
Maximum deferred sales
charge (load) None(a) 5.00% None 1.00%(b)
(AS A PERCENTAGE OF PURCHASE PRICE OR
REDEMPTION PROCEEDS, WHICHEVER IS LOWER)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
ANNUAL FUND OPERATING EXPENSES (expenses that are deducted from fund assets)
% OF AVERAGE DAILY NET ASSETS
CLASS OF SHARES
A B C M
- --------------------------------------------------------------------------------
Management fees 0.80% 0.80% 0.80% 0.80%
Distribution and service
(12b-1) fees 0.35% 1.00% 1.00% 0.90%
Other expenses (c) % % % %
---------------------------------------------------
TOTAL ANNUAL FUND
OPERATING EXPENSES % % % %
EXPENSE REDUCTION (d) % % % %
---------------------------------------------------
NET OPERATING EXPENSES % % % %
- --------------------------------------------------------------------------------
(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 purchases.
(c) Because the fund commenced operations in March 2000, the "Other expenses"
are estimates.
(d) Contractual arrangement with Idex Management, Inc. through 04/30/2001.
A $10 semi-annual fee is imposed on accounts open for over 2 years that
are below a minimum balance due to redemptions. See page .
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
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 remaining 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 $ $
B* $ $
C $ $
M $ $
- --------------------------------------------------------------------------------
If the shares are not redeemed:
SHARE CLASS 1 YEAR 3 YEARS
- --------------------------------------------------------------------------------
A $ $
B* $ $
C $ $
M $ $
- --------------------------------------------------------------------------------
45
<PAGE>
- --------------------------------------------------------------------------------
EXPLANATION OF STRATEGIES AND RISKS
- --------------------------------------------------------------------------------
HOW TO USE THIS SECTION
In the discussions of the individual funds on pages 2 through , you found
descriptions of the principal strategies and risks associated with each. In
those pages, you were referred to this section for a more complete description
of the risks of both principal and non-principal investments. 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 SAI, which is
available upon request. See the back cover of this prospectus for information
on how to order the SAI.
/rook/ DIVERSIFICATION. 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
issuers 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 fund, its share price can be expected to fluctuate more than a
diversified fund.
All of the funds (except IDEX Salomon All Cap and IDEX JCC Capital
Appreciation) qualify as diversified funds under the 1940 Act. The diversified
funds are subject to the following diversification requirements (which are set
forth in full in the SAI):
o 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.
o 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.
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).
/rook/ CONCENTRATION. As a fundamental policy governing concentration, no fund
will invest more than 25% of its total assets in any one particular industry,
other than U.S. government securities. As an operating policy, no fund will
invest 25% of its total assets in any one particular industry, other than U.S.
government securities.
/warning sign/ 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/ 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/ INVESTING IN "CONVERTIBLES," PREFERRED STOCKS, AND BONDS. Since
preferred stocks and corporate bonds pay a stated return, their prices usually
do not 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/ VOLATILITY. The more an investment goes up and down in price, the
more volatile it is 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/ INVESTING IN BONDS. Like common stocks, bonds fluctuate in value,
though the factors causing this are different, including:
o 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.
o 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 usually become smaller and the price
gets closer to face value.
o 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.
o 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.
46
<PAGE>
o 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.
o 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.
o 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).
Please see Appendix A for a description of ratings.
/warning sign/ INVESTING IN FOREIGN SECURITIES. Foreign securities are
investments offered by non-U.S. companies, governments and government agencies.
They involve risks not usually associated with U.S. securities, including:
o 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.
o CURRENCY SPECULATION. The foreign currency market is largely unregulated and
subject to speculation.
o CURRENCY TRADING COSTS. Some funds also invest in American Depositary
Receipts (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.
o 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 ability to manage monetary policies among the participating
countries.
o DIFFERING ACCOUNTING AND REPORTING PRACTICES. Foreign tax laws are different,
as are laws, practices and standards for accounting, auditing and reporting
data to investors.
o LESS INFORMATION AVAILABLE TO THE PUBLIC. Foreign companies usually make far
less information available to the public.
o LESS REGULATION. Securities regulations in many foreign countries are more
lax than in the U.S.
o MORE COMPLEX NEGOTIATIONS. Because of differing business and legal
procedures, a fund might find it hard to enforce obligations or negotiate
favorable brokerage commission rates.
o LESS LIQUIDITY/MORE VOLATILITY. Some foreign securities are harder to convert
to cash than U.S. securities, and their prices may fluctuate more
dramatically.
o SETTLEMENT DELAYS. "Settlement" is the process of completing payment and
delivery of a securities transaction. In many countries, this process takes
longer than it does in the U.S.
o HIGHER CUSTODIAL CHARGES. Fees charged by the fund's custodian for holding
shares are higher for foreign securities than those of domestic securities.
o VULNERABILITY TO SEIZURE AND TAXES. Some governments can seize assets. They
may also limit movement of assets from the country. Fund interest, dividends
and capital gains may be subject to foreign withholding taxes.
o 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.
o DIFFERENT MARKET TRADING DAYS. Foreign markets may not be open for trading
the same days as U.S. markets are open and asset values can change before
your transaction occurs.
o 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.
o EMERGING MARKET 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 market countries are less
diverse and mature than those in developed countries, and their political
systems are less stable. Investments in emerging market countries may be
affected by national policies that restrict foreign investments. Emerging
market countries may
47
<PAGE>
- --------------------------------------------------------------------------------
EXPLANATION OF STRATEGIES AND RISKS
- --------------------------------------------------------------------------------
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/ 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:
o 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.
o 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.
o Illiquid markets. If there is no market for the contracts, the fund may not
be able to control losses.
o 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/ INVESTING IN 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:
o inaccurate market predictions
o imperfect correlation
o illiquidity
o tax considerations
/warning sign/ INVESTING IN FORWARD FOREIGN CURRENCY CONTRACTS. 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.
Hedging against a decline in the value of a currency does not eliminate
fluctuations in the prices of securities, or prevent losses if the prices of
the fund's 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.
/question mark/ 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 on municipal obligations. If that
happened, it could substantially reduce the value of your fund's assets.
/question mark/ 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 undervalued, then
increase considerably in price, due to:
o a new product or process
o a management change
o a technological breakthrough
o an extraordinary corporate event
o 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/ 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 _____________________________________________________________
had turnover rates greater than 100% for the fiscal year ended October 31, 1999.
/question mark/ INVESTMENT STRATEGIES. A fund is permitted to use other
securities and investment strategies in pursuit of its investment objective,
subject to limits established by the Fund's Board of Trustees. No fund is under
any obligation to use any of the techniques or strategies at any given time or
under any particular economic condition. Certain instruments and investment
strategies may expose the funds to other risks and considerations, which are
discussed in the Fund's SAI.
/warning sign/ GEI SHORT-TERM INVESTMENT FUND. The IDEX GE International Equity
and IDEX GE U.S. Equity funds may invest in money market instruments directly or
indirectly through investment in the GEI Short-Term Investment Fund (Investment
Fund). The Investment Fund is advised by GEIM; GEIM charges no advisory fee to
the Investment Fund.
48
<PAGE>
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 sub-advisory agreements with each sub-
adviser. The investment adviser also monitors 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 N.V., 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
- ----------- ---------
JCC IDEX JCC Growth
IDEX JCC Global
IDEX JCC Balanced
IDEX JCC Capital Appreciation
IDEX JCC Flexible Income
T. Rowe Price IDEX T. Rowe Price Dividend
Growth
IDEX T. Rowe Price Small Cap
GSAM IDEX Goldman Sachs Growth
SBAM IDEX Salomon All Cap
Alger IDEX Alger Aggressive Growth
Pilgrim Baxter IDEX Pilgrim Baxter Mid Cap
Growth
IDEX Pilgrim Baxter Technology
AIMI IDEX AEGON Income Plus
IDEX AEGON Tax Exempt
GEIM IDEX GE International Equity
IDEX GE U.S. Equity
Dean IDEX Dean Asset Allocation
Luther King IDEX LKCM Strategic Total Return
NWQ IDEX NWQ Value Equity
C.A.S.E. IDEX C.A.S.E. Growth
TIS IDEX Transamerica Equity
IDEX Transamerica Small
Company
49
<PAGE>
- --------------------------------------------------------------------------------
HOW THE IDEX FUNDS ARE MANAGED AND ORGANIZED
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
ADVISORY FEE SCHEDULE--ANNUAL RATES
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
IDEX IDEX IDEX IDEX
JCC* IDEX IDEX IDEX 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> <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 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 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>
IDEX IDEX
T. ROWE PRICE IDEX IDEX GOLDMAN
AVERAGE DAILY DIVIDEND T. ROWE PRICE SALOMON SACHS
NET ASSETS GROWTH SMALL CAP ALL CAP GROWTH
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
First $500 million 0.80% 0.80% 0.80% 0.80%
- --------------------------------------------------------------------------------
over $500 million 0.70% 0.70% 0.70% 0.70%
- --------------------------------------------------------------------------------
<CAPTION>
IDEX IDEX IDEX
PILGRIM BAXTER IDEX ALGER IDEX TRANSAMERICA
AVERAGE DAILY MID CAP PILGRIM BAXTER AGGRESSIVE TRANSAMERICA SMALL
NET ASSETS GROWTH TECHNOLOGY GROWTH EQUITY COMPANY
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
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>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
IDEX IDEX IDEX IDEX
GE IDEX NWQ LKCM DEAN IDEX
AVERAGE DAILY INTERNATIONAL C.A.S.E. VALUE STRATEGIC ASSET GE U.S.
NET ASSETS EQUITY GROWTH EQUITY TOTAL RETURN ALLOCATION EQUITY
- -----------------------------------------------------------------------------------------------------
<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%
- -----------------------------------------------------------------------------------------------------
</TABLE>
50
<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 JCC in 1988.
IDEX PILGRIM BAXTER MID CAP GROWTH
IDEX PILGRIM BAXTER TECHNOLOGY
JEFFREY A. WRONA, CFA, has managed these funds since inception. Prior to
joining Pilgrim Baxter 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 INTERNATIONAL EQUITY
RALPH R. LAYMAN is a director and executive vice president and leads a team of
fund managers. Mr. Layman has served in this 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 and LAURENCE CHANG serve as co-managers of this fund. Ms.
Hayes has served as manager of this fund since inception, and as co-manager
since January 2000. She has been employed by JCC since 1987. Laurence Chang has
served as co-manager of this fund since January 2000. Before joining JCC in
1993, Mr. Chang was a project director at the National Security Archive.
IDEX SALOMON ALL CAP
ROSS S. MARGOLIES, has managed this fund since inception. Mr. Margolies joined
SBAM in 1992.
ROBERT M. DONAHUE, JR. assists in the day-to-day management of the fund. Prior
to joining SBAM in 1997, Mr. Donahue worked as an equity analyst at Gabelli &
Company.
IDEX JCC GROWTH
EDWARD KEELY serves as manager of this fund.
Mr. Keely has been sole manager of this fund since January, 2000. He served as
co-manager of the fund since January, 1999. Prior to joining JCC, in 1998, 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 this 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, has been senior manager of this fund since inception. He
joined Dean in 1989.
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
KAREN L. REIDY, CFA, has served as manager of this fund since January 2000.
Prior to joining JCC in 1995, she was a manager in both the Mergers and
Accquisitions and Audit business units at PricewaterhouseCoopers LLP.
IDEX JCC FLEXIBLE INCOME
RONALD V. SPEAKER has managed this fund since October 1993. He has been with
JCC 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.
51
<PAGE>
- --------------------------------------------------------------------------------
HOW THE IDEX FUNDS ARE MANAGED AND ORGANIZED
- --------------------------------------------------------------------------------
IDEX TRANSAMERICA SMALL COMPANY
CHRISTOPHER J. BONAVICO has served as manager of this fund since inception. He
joined TIS in 1993.
IDEX TRANSAMERICA EQUITY
JEFFREY S. VANHARTE has served as manager of this fund since inception. He has
been employed by TIS since 1980 and currently is vice president and senior fund
manager.
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 J. 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 M. 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.
52
<PAGE>
- --------------------------------------------------------------------------------
/question mark/ OPENING AN ACCOUNT
If you are opening a fund through a registered 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.
The Fund or its agents may reject a request for purchase of shares at any time,
including any purchase under the exchange privilege.
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 1-888-233-IDEX (4339) or writing IDEX Customer Service.
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. The minimum initial
purchase is $500 for Class A, B and T shares, and $1,000 for Class C and Class
M shares and shares purchased through authorized dealers. There is a $50
minimum on additional purchases. 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.
/question mark/ SHARE TRANSACTIONS
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.
/question mark/ HOW TO SELL SHARES
Your request to sell your shares and receive payment may be affected by:
o the privileges or features established on your account
o the type of account you have, and if there is more than one owner
o the dollar amount you are requesting
o if there have been recent changes made to your account (such as an address
change) or other circumstances that may require a written request or
signature guarantees
There are several ways to request redemption of your shares:
o in writing (by mail or fax)
o by internet access to your account(s) at www.idexfunds.com
o 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 may be paid by check, or by direct deposit to
your bank account subject to any restrictions that may be applicable. Purchases
must be held at IDEX for 15 calendar days before they are eligible for
redemption. Certain exceptions may apply.
/question mark/ HOW TO EXCHANGE SHARES
You can exchange $500 or more of one fund for shares in the same class of
another fund. As explained below, you may be able to exchange your shares into
any one of the three portfolios of the Cash Equivalent Fund (CEF) 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. The
minimum exchange to a new account is $500 unless an automatic investment plan
is established on the new account.
Prior to making exchanges into a fund that you do not own, read this prospectus
carefully. You can request share exchanges 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.
MONEY MARKET EXCHANGE PRIVILEGE
You can exchange Class A, C and T shares for any of the three CEF portfolios.
You may exchange Class B and M shares only into the CEF's 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
Portfolio, 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.
The Fund may restrict the number of times that you may exchange your shares.
Please see the section below titled "Excessive Trading."
SPECIAL SITUATIONS FOR EXCHANGING SHARES
o 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.
53
<PAGE>
SHAREHOLDER INFORMATION
- --------------------------------------------------------------------------------
o You may not exchange other classes of shares of the IDEX funds for Class T
shares.
o The Fund reserves the right to modify or terminate the exchange privilege at
any time.
EXCESSIVE TRADING
The exchange privilege is not intended as a vehicle for short-term or excessive
trading.The Fund does not permit excessive trading/market-timing. Excessive
purchases, redemptions or exchanges of fund shares disrupt portfolio management
and drive fund expenses higher. The Fund may limit or terminate your exchange
privileges or may not accept future investments from you. In determining
excessive trading, the Fund considers frequent purchases and redemptions having
similar effects as exchanges to be excessive trading. Four or more exchanges in
a quarter (3 months) is considered excessive trading, though the Fund reserves
the right to impose restriction if there are less frequent transactions.
A 2% short-term fee will apply to Class A or C shares redeemed within 90 days of
purchase. The fee also applies to Cash Equivalent Fund shares redeemed that were
acquired by exchange from Class A or C within the preceding 90 days. If you have
purchased shares over different days, the "first-in, first-out" (FIFO) method is
used to determine the holding period. Thus, shares you purchased first are
considered redeemed first.
No such redemption fee is assessed on:
o shares redeemed that were acquired by reinvested income or capital gain
distributions, or
o systematic withdrawal plan (SWP) redemptions (unless the SWP depletes the
account within 90 days of opening)
/question mark/ OTHER ACCOUNT INFORMATION
MINIMUM PURCHASES
o $500 for Class A, B and T shares; $1,000 for Class C and M shares; additional
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
Each fund's price (NAV) is calculated on each day the New York Stock Exchange
(NYSE) is open for business. The NAV of each class is calculated by dividing
its assets less liabilities by the number of its shares outstanding.
If the Fund receives your order by closing time of the NYSE (usually 4 p.m. New
York time), you will pay or receive that day's NAV plus any applicable sales
charges. If later, it will be priced based on the next day's NAV. Share 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, each fund's 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.
MINIMUM ACCOUNT BALANCE
Due to the proportionately higher cost of maintaining customer accounts with
balances below the stated minimums for each class of shares, the Fund reserves
the right to close such accounts. However, the Fund will provide a 60-day
notification to you prior to assessing a minimum account fee, or closing, any
account. The following describes the fees assessed to accounts with low
balances:
No fees will be charged on:
o accounts opened within the preceding 24 months
o accounts with an active monthly Automatic Investment Plan ($50 minimum per
account)
o accounts owned by individuals which, combined, have a balance of $10,000 or
more
ACCOUNT BALANCE FEE ASSESSMENT
--------------- --------------
If your balance is $10 fee assessed every
below $500 due to 6 months, until
redemptions (Class A, balance reaches $500
B & T shares) ($1,000 for Class A, B & T
for Class C & M and $1,000 for Class
shares) C & M shares
If your balance is Your account will be
below $250, due to charged a fee and be
redemptions liquidated; any
applicable CDSC will
be deducted, and a
check will be mailed
TELEPHONE TRANSACTIONS
The Fund, InterSecurities, Inc. (ISI) and Idex Investor Services, Inc. (IIS)
are not liable for complying with telephone instructions which are deemed by
them to be genuine. The Fund, ISI and IIS will employ reasonable procedures to
make sure telephone instructions are genuine. In situations where the Fund, ISI
or IIS 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 at any time.
Telephone redemption with payment by check is not allowed within 10 days of a
change of registration/address. Call IDEX Customer Service (1-888-233-IDEX
(4339)) 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 to a pre-authorized bank account.
No fee is charged.
WIRE TRANSACTIONS
In most cases, the Fund can send your redemption money via a federal funds bank
wire. The Fund charges a $10 fee for this service, in addition to any fee your
bank may charge. For more details, call IDEX Customer Service (1-888-233-IDEX
(4339)) or see the SAI.
REINVESTMENT PRIVILEGE
Within a 90 day period after you sell your shares, you have the right to
"reinvest" your money in any fund of the same class. You will not incur a new
sales charge if you use this privilege within the allotted time frame. Any CDSC
you paid on your shares will be credited to
54
<PAGE>
your account. You may reinvest the proceeds of a Class B share sale (less the
CDSC) in Class A shares without paying the up-front sales charge. Send your
written request to the Fund 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. Please review the confirmation
statement carefully and promptly notify IDEX in writing of any error or you will
be deemed to have ratified the transaction as reported to you. 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
Customer Service (1-888-233-IDEX (4339)) to request them. You may return share
certificates to the Fund for re-deposit at any time. If your share certificates
are lost or stolen, notify IDEX Customer Service 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 the Fund in order to redeem or exchange your shares. Share
certificates can be issued with the following limitations:
o no certificates issued for fractional shares
o no certificates issued for less than 30 shares
o no certificates issued for retirement plan accounts with Investors Fiduciary
Trust Company as custodian
o 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/ DISTRIBUTIONS AND TAXES
Each of our funds intends 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 ordinary 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:
o qualified retirement accounts
o tax-exempt investors; or
o exempt-interest distributions from IDEX AEGON Tax Exempt
Fund distributions are taxable to you as ordinary income to the extent they are
attributable to a 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 distributions or receive cash. Certain distributions paid by
a fund in January 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 or tax forms 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 reinvested or received in cash. 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 statement 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
advisor regarding the implications of holding shares in IDEX AEGON Tax Exempt.
If you receive Social Security or railroad retirement benefits, please
55
<PAGE>
- --------------------------------------------------------------------------------
SHAREHOLDER INFORMATION
- --------------------------------------------------------------------------------
consult your tax advisor 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.
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 a 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 cost (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 gains
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 gains
distributions, and share redemption proceeds) if the shareholder has not
provided an accurate taxpayer identification number to the Fund in the manner
required by IRS regulations.
NON-RESIDENT ALIEN WITHHOLDING
If you are a non-U.S. investor, your financial professional should determine
whether Fund shares may be sold in your jurisdiction. Shareholders that are not
U.S. persons under the Internal Revenue Code are subject to different tax
rules. Dividends and capital gains distributions may be subject to non-resident
alien withholding.
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 Fund. More information is provided in the SAI. You should
also consult your own tax advisor for information regarding all tax
consequences applicable to your investments in the Fund.
56
<PAGE>
<TABLE>
<S> <C>
HOW TO BUY SHARES TO OPEN A NEW ACCOUNT (FIRST-TIME IDEX INVESTORS)
- --------------------------------------------------------------------------------------------------------------------------
BY MAIL Send your completed application and check payable 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 account and providing IDEX with your
Taxpayer ID Number. The minimum order from an authorized dealer is $1,000.
- --------------------------------------------------------------------------------------------------------------------------
BY AUTOMATIC INVESTMENT PLAN Send your completed application, along with a check for your initial investment,
payable to Idex Investor Services, Inc., P.O. Box 9015, Clearwater, Florida 33758-9015.
- --------------------------------------------------------------------------------------------------------------------------
TO ADD TO YOUR EXISTING ACCOUNT
- --------------------------------------------------------------------------------------------------------------------------
BY CHECK Make your check payable to Idex Investor Services Inc. and mail it to:
P.O. Box 9015, Clearwater, FL 33758-9015; or, for overnight delivery: 570 Carillon
Parkway, St. Petersburg, FL 33716. Third party checks, or checks endorsed to IDEX,
will not be accepted. All checks must be made payable to Idex Investor Services, Inc.
- --------------------------------------------------------------------------------------------------------------------------
BY AUTOMATIC INVESTMENT PLAN With an Automatic Investment Plan (AIP), a level dollar amount is invested monthly
and payment is deducted electronically from your bank account. Call or write IDEX
Customer Service to establish an AIP.
- --------------------------------------------------------------------------------------------------------------------------
BY TELEPHONE The electronic funds transfer privilege must be established in advance, when you open
your account, or by adding this feature to your existing account. Select "Electronic
Bank Link" on the Application or write to the Fund. Funds can then be transferred
electronically from your bank to the Fund. Call IDEX Customer Service to invest by
phone, either through our automated IDEX InTouchSM system (1-888-233-IDEX
(4339)), or by speaking directly with your representative. Shares will be purchased via
electronic funds when the money is received by IDEX, usually 2-4 business days after
the request.
- --------------------------------------------------------------------------------------------------------------------------
THROUGH AUTHORIZED DEALERS If your dealer has already established your 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. (The Fund 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 request a transfer of funds from your bank account to the Fund. Visit our
website at www.idexfunds.com. Payment will be transferred from your bank account
electronically. Shares will be purchased via electronic funds when the money is received
by IDEX, usually 2-4 business days after the request.
- --------------------------------------------------------------------------------------------------------------------------
BY PAYROLL DEDUCTION You may have money transferred regularly from your payroll to your IDEX account.
Please instruct your employer's payroll department to do so. Call IDEX Customer
Service (1-888-233-IDEX (4339)) to establish this deduction.
- --------------------------------------------------------------------------------------------------------------------------
BY WIRE TRANSFER Request that your bank wire funds to the Fund. You must have an existing account to
make a payment by wire transfer. Ask your bank to send your payment to:
NationsBank, NA, Tampa, FL, ABA# 063100277,
Credit: Idex Investor Services Acct #: 3601194554,
Ref: Shareholder name, IDEX fund and account numbers.
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
57
<PAGE>
- --------------------------------------------------------------------------------
SHAREHOLDER INFORMATION
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
TO RECEIVE PAYMENT BY HOW TO REQUEST YOUR REDEMPTION
- --------------------------------------------------------------------------------------------------------------------------
DIRECT DEPOSIT - ACH Call IDEX Customer Service (1-888-233-IDEX (4339)) to verify that this feature is
(ONLY FOR ACCOUNTS THAT ARE NOT in place on your account. Maximum amount per day is the lesser of your balance or
QUALIFIED RETIREMENT PLANS) $50,000. Request an "ACH redemption" in writing, by phone (automated IDEX
InTouch(SM)system (1-888-233-IDEX (4339)) or person-to-person), or by internet
access to your account. Payment should usually be received by your bank account
3-5 banking days after your request. The Fund does not charge for this payment
option. Certain IRAs and Qualified Plans may not be eligible for ACH redemptions.
- --------------------------------------------------------------------------------------------------------------------------
DIRECT DEPOSIT Call IDEX Customer Service (1-888-233-IDEX (4339)) to be sure this feature is in
(ELECTRONIC FUNDS TRANSFER-FEDERAL place on your account. Maximum amount per day is the lesser of your available
FUNDS BANK WIRE) balance or $50,000 (with a minimum of $1,000). Request an "Expedited Wire
Redemption" in writing, or by phone (person-to-person request). Payment should be
received by your bank account the next banking day after your request. The Fund
charges $10 for this service. Your bank may charge a fee as well.
- --------------------------------------------------------------------------------------------------------------------------
CHECK TO THE ADDRESS OF RECORD WRITTEN REQUEST:
Send a letter requesting a withdrawal to the Fund 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, P.O. Box 9015, Clearwater,
FL 33758-9015. 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 Customer Service (1-888-233-IDEX (4339)) and make your request using
the automated IDEX InTouchSM system (1-888-233-IDEX (4339)), 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.
If an address change was made in the last 10 days, the check will not be mailed until
after the 10 day period following the address change. To avoid this, IDEX requires a
redemption request in writing signed and signature guaranteed by all shareholders.
- --------------------------------------------------------------------------------------------------------------------------
CHECK TO ANOTHER PARTY/ADDRESS This request must be in writing, regardless of amount, with all account owners'
signatures guaranteed. Mail to: Idex Investor Services, P.O. Box 9015, Clearwater, FL
33758-9015. Attention: Redemptions.
- --------------------------------------------------------------------------------------------------------------------------
PERIODIC AUTOMATIC PAYMENT You can establish a Systematic Withdrawal Plan (SWP) either at the time you open
(BY DIRECT DEPOSIT-ACH OR CHECK) your account or at a later date. Call IDEX Customer Service (1-888-233-IDEX
(4339)) for assistance. You must have a minimum balance of $10,000 in your
account.
- --------------------------------------------------------------------------------------------------------------------------
BY EXCHANGE You may request an exchange in writing, by phone (automated IDEX InTouch(SM)
system (1-888-233-IDEX (4339)) or person-to-person), or by accessing your account
through the internet.
- --------------------------------------------------------------------------------------------------------------------------
THROUGH AN AUTHORIZED DEALER
You may redeem your shares through an authorized dealer. (They may impose a
service charge.) Contact your Registered Representative or call IDEX Customer
Service (1-888-233-IDEX (4339)) for assistance.
- --------------------------------------------------------------------------------------------------------------------------
NOTE: Purchases must be held at IDEX for 15 calendar days before they are elegible for redemption. Certain exceptions
may apply.
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
58
<PAGE>
CHOSING A SHARE CLASS
The Fund offers four 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, shares that were designated as Class C shares became Class M shares.
They have an initial sales charge of 1.00% and a contingent deferred sales
charge (CDSC) of 1.00% if you sell within 18 months of purchase. The sales
charge and CDSC only apply to shares purchased after February 28, 1999.
The Fund began offering a new Class C share on November 1, 1999. This new Class
C share has no initial or deferred sales charges. All shares that were
designated as Class C shares prior to March 1, 1999, which then converted to
Class M shares on that date, will continue as Class M shares.
The amount of your investment and the amount of time that you plan to hold your
shares will determine which class of shares you should choose. You should make
this decision carefully because all of your future investments in your account
will be in the same share class that you designate when you open your account.
Your financial professional can help you choose the share class that makes the
best sense for you.
If you are investing a large amount and plan to hold your shares for a long
period, Class A or Class M 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 C shares (if you plan to
invest for a period of less than 5 years).
The Fund 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 1.00% CDSC, unless they were purchased through
a qualified retirement plan.
Also, the Fund will treat Class A share purchases in an amount of less than $1
million 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 million.
<TABLE>
<CAPTION>
CLASS T SHARES
CLASS A SHARES - CLASS B SHARES - CLASS C SHARES - CLASS M SHARES - (CLOSED TO NEW
FRONT LOAD BACK LOAD LEVEL LOAD LEVEL LOAD INVESTORS)
- ----------------------- --------------------- --------------------- ------------------------ -------------------
<S> <C> <C> <C> <C>
o Initial sales o No up-front sales o No up-front sales o Initial sales o Initial sales
charge of 5.50% charge charge charge of 1.00% charge of 8.50%
or less (see Class or less
A Share Quantity o Deferred sales o No deferred sales o 12b-1 distribution
Discounts Table) charge of 5.00% or charge and service o No 12b-1
less on shares you fees of 0.90% per distribution and
o Discounts of sales sell within 6 years o 12b-1 distribution year (except for service fees
charge for larger (see deferred sales and service fees the IDEX AEGON
investments charge table of 1.00% Tax Exempt, whose o Sales charge
below) 12b-1 distribution percentage can be
o 12b-1 distribution o No conversion to and service fee is reduced in the
and service fees o 12b-1 distribution Class A shares; 0.60%) same four ways as
of 0.35% and service fees expenses do not Class A shares
of 1.00% decrease o Deferred sales (see Class A Share
o Lower annual charge of 1.00% if Quantity
expenses o Automatic you sell within 18 Discounts Table)
than Class B, C conversion to months of purchase
or M shares due Class A shares
to lower 12b-1 after 8 years, o Automatic
distribution reducing future conversion to
and service fees annual expenses Class A shares
after 10 years,
reducing future
annual expenses
</TABLE>
59
<PAGE>
- --------------------------------------------------------------------------------
DISTRIBUTION ARRANGEMENTS
- --------------------------------------------------------------------------------
CLASS B SHARES -- BACK LOAD
Class B shares are sold in amounts up to $250,000. With Class B shares, you pay
no initial sales charge when you invest, but you are charged a CDSC when you
sell shares you have held for six years or less, as described in the table
below.
Class B shares automatically convert to Class A shares after 8 years, lowering
annual expenses from that time on.
- --------------------------------------------------------------------------------
CONTINGENT DEFERRED SALES CHARGE - CLASS B SHARES
AS A % OF DOLLAR AMOUNT
YEAR AFTER PURCHASING (SUBJECT TO CHANGE)
- --------------------------------------------------------------------------------
First 5%
Second 4%
Third 3%
Fourth 2%
Fifth and Sixth 1%
Seventh and Later 0%
- --------------------------------------------------------------------------------
CLASS C SHARES -- LEVEL LOAD
With Class C shares, you pay no initial sales charge or CDSC. There are 12b-1
distribution and service fees of up to 1.00% per year.
CLASS M SHARES -- LEVEL LOAD
Class M shares are sold in amounts up to $1 million. 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 12b-1 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%.
Class M shares purchased on or after November 1, 1999 automatically convert to
Class A shares after 10 years, lowering annual expenses from that time on.
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
12b-1 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 1.00% 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 sales charges are granted under certain conditions. Persons
eligible to buy Class T shares at NAV may not impose a sales charge when they
re-sell those shares.
CONTINGENT DEFERRED SALES CHARGE
Your shares may be subject to a CDSC. 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, the Fund 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.
CLASS A SALES CHARGE REDUCTIONS
You can lower the sales charge percentage in four ways:
o Substantial investments receive lower sales charge rates. Please see the SAI
for details on these reductions on page .
o 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.
o 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.
o By investing as part of a qualified group.
60
<PAGE>
Class A Share Quantity Discounts
(all funds except IDEX JCC Flexible Income, IDEX AEGON
Income Plus and IDEX AEGON Tax Exempt)
<TABLE>
<CAPTION>
SALES CHARGE SALES CHARGE
AS % OF AS % OF
OFFERING AMOUNT
AMOUNT OF PURCHASE PRICE INVESTED
- --------------------------------------------------------------------------------
<S> <C> <C>
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%
- --------------------------------------------------------------------------------
</TABLE>
Class A Share Quantity Discounts
(IDEX JCC Flexible Income, IDEX AEGON Income Plus
& IDEX AEGON Tax Exempt)
<TABLE>
<CAPTION>
SALES CHARGE SALES CHARGE
AS % OF AS % OF
OFFERING AMOUNT
AMOUNT OF PURCHASE PRICE INVESTED
- --------------------------------------------------------------------------------
<S> <C> <C>
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%
- --------------------------------------------------------------------------------
</TABLE>
Class T Share Quantity Discounts
(IDEX JCC Growth)
<TABLE>
<CAPTION>
SALES CHARGE SALES CHARGE
AS % OF AS % OF
OFFERING AMOUNT
AMOUNT OF PURCHASE PRICE INVESTED
- --------------------------------------------------------------------------------
<S> <C> <C>
Under $10,000 8.50% 9.29%
$10,000 to under $25,000 7.75% 8.40%
$25,000 to under $50,000 6.25% 6.67%
$50,000 to under $75,000 5.75% 6.10%
$75,000 to under $100,000 5.00% 5.26%
$100,000 to under $250,000 4.25% 4.44%
$250,000 to under $500,000 3.00% 3.09%
$500,000 to under $1,000,000 1.25% 1.27%
$1,000,000 and over 0.00% 0.00%
- --------------------------------------------------------------------------------
</TABLE>
WAIVERS OF SALES CHARGES
------------------------------------------------------------------------------
WAIVER OF CLASS A AND T SALES CHARGES
Class A and Class T shares may be purchased without a sales charge by:
o Current or former trustees, directors, officers, full-time employees or
sales representatives of the Fund, IMI, ISI, any of the sub-advisers or
any of their affiliates.
o directors, officers, full-time employees and sales representatives of
dealers having a sales agreement with ISI.
o any trust, pension, profit-sharing or other benefit plan for any of the
foregoing persons.
o "wrap" accounts for the benefit of clients of certain broker-dealers,
financial institutions or financial planners, who have entered into
arrangements with the Fund or ISI.
Persons eligible to buy Class A and Class T shares at NAV may not impose a
sales charge when they re-sell those shares.
------------------------------------------------------------------------------
WAIVER OF CLASS A, CLASS B, CLASS M, AND CLASS T REDEMPTION CHARGES
------------------------------------------------------------------------------
You will not be assessed a sales charge for Class B shares if you sell in
the following situations:
o Following the death of the shareholder.
o Following the total disability of the shareholder (as determined by the
Social Security Administration - applies only to shares held at the time
the disability is determined).
o On redemptions made under the Fund's systematic withdrawal plan (may not
exceed 12% of the account value on the day the systematic withdrawal plan
was established).
NOTE: The amount redeemed under this waiver does not need to be under a
systematic withdrawal plan. If it is not under a systematic withdrawal plan,
it is limited to one redemption per year up to 12% of your account balance at
the time of redemption.
o If you redeem your Class B or Class M shares and reinvest the proceeds in
the same class of any fund within 90 days of redeeming, the sales charge on
the first redemption is waived.
o 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.
(This waiver does not include transfer of asset redemptions, broker
directed accounts or omnibus accounts.)
61
<PAGE>
- --------------------------------------------------------------------------------
DISTRIBUTION ARRANGEMENTS
- --------------------------------------------------------------------------------
/question mark/ /dollar sign/ UNDERWRITING
AGREEMENT
The Fund has an Underwriting Agreement with ISI, a registered broker/dealer.
Under this agreement, ISI underwrites and distributes all 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 C or M shares, ISI reallows its entire fee to those sellers.
/dollar sign/ DISTRIBUTION PLANS
DISTRIBUTION OF CLASS A SHARES. ISI receives the sales fees or loads imposed on
these shares (up to 5.50% 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
which includes 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 1.00% which includes an annual service fee of
0.25%.
DISTRIBUTION OF CLASS C SHARES. For these shares, the funds may pay ISI an
annual distribution fee of up to 1.00% which includes 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 the Class B and C shares fees, but the total annual fee may not exceed
0.90% of the average daily net assets of the funds.
CLASS T SHARES (IDEX JCC GROWTH ONLY). 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 the funds have 12b-1 Plans, even though Class
B and C 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 owners of Class A and M shares. For a complete description of the
funds' 12b-1 Plans, see the SAI.
62
<PAGE>
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
THE FINANCIAL HIGHLIGHTS TABLE IS INTENDED TO HELP YOU TO UNDERSTAND EACH
FUND'S PERFORMANCE FOR AS LONG AS IT HAS BEEN OPERATING, OR FOR FIVE YEARS,
WHICHEVER IS SHORTER. 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 THROUGH OCTOBER 31, 1999 HAS BEEN AUDITED BY PRICEWATERHOUSECOOPERS
LLP, WHOSE REPORT, ALONG WITH THE FUND'S FINANCIAL STATEMENTS, IS INCLUDED IN
THE 1999 ANNUAL REPORT, WHICH IS AVAILABLE TO YOU UPON REQUEST. INFORMATION IS
NOT INCLUDED FOR THE IDEX GE U.S. EQUITY, IDEX PILGRIM BAXTER TECHNOLOGY, IDEX
TRANSAMERICA SMALL COMPANY AND IDEX TRANSAMERICA EQUITY AS THEY HAD NOT
COMMENCED OPERATIONS AS OF 10/31/99.
<TABLE>
<CAPTION>
INVESTMENT OPERATIONS DISTRIBUTIONS
------------------------------------------------------------------------
NET ASSET NET FROM NET
YEAR OR VALUE INVESTMENT NET REALIZED FROM NET REALIZED
PERIOD BEGINNING INCOME & UNREALIZED TOTAL INVESTMENT CAPITAL TOTAL
ENDED OF PERIOD (LOSS) GAIN (LOSS) OPERATIONS INCOME GAINS DISTRIBUTIONS
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
IDEX Alger Class A 10/31/99
Aggressive Growth 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(3) 15.75 (0.01) (0.04) (0.05) 0.00 0.00 0.00
09/30/96(4) 17.68 (0.15) (0.76) (0.91) 0.00 (1.02) (1.02)
09/30/95(5) 10.00 (0.14) 7.82 7.68 0.00 0.00 0.00
-------------------------------------------------------------------------------------------------------------
Class B 10/31/99
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(3) 15.63 (0.01) (0.04) (0.05) 0.00 0.00 0.00
09/30/96(4) 17.64 (0.23) (0.76) (0.99) 0.00 (1.02) (1.02)
-------------------------------------------------------------------------------------------------------------
Class M 10/31/99(2)
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(3) 15.65 (0.01) (0.04) (0.05) 0.00 0.00 0.00
09/30/96(4) 17.64 (0.21) (0.76) (0.97) 0.00 (1.02) (1.02)
09/30/95(5) 10.00 (0.18) 7.82 7.64 0.00 0.00 0.00
- ------------------------------------------------------------------------------------------------------------------------------------
IDEX GE Class A 10/31/99
International Equity 10/31/98(4) 10.57 0.07 0.20 0.27 (0.07) 0.00 (0.07)
(formerly IDEX 10/31/97(6) 10.00 0.07 0.50 0.57 0.00 0.00 0.00
GE/Scottich -------------------------------------------------------------------------------------------------------------
International Equity) Class B 10/31/99
10/31/98(4) 10.52 0.00 0.20 0.20 (0.01) 0.00 (0.01)
10/31/97(6) 10.00 0.02 0.50 0.52 0.00 0.00 0.00
-------------------------------------------------------------------------------------------------------------
Class M(11) 10/31/99(2)
10/31/98(4) 10.53 0.01 0.20 0.21 (0.02) 0.00 (0.02)
10/31/97(6) 10.00 0.03 0.50 0.53 0.00 0.00 0.00
- ------------------------------------------------------------------------------------------------------------------------------------
IDEX JCC Class A 10/31/99
Capital 10/31/98 15.90 0.01 1.51 1.52 0.00 (0.45) (0.45)
Appreciation 10/31/97 15.49 0.04 0.58 0.62 0.00 (0.21) (0.21)
10/31/96(3) 15.75 (0.02) (0.24) (0.26) 0.00 0.00 0.00
09/30/96(4) 13.54 (0.02) 3.12 3.10 (0.07) (0.82) (0.89)
09/30/95(5) 10.00 (0.03) 3.57 3.54 0.00 0.00 0.00
-------------------------------------------------------------------------------------------------------------
Class B 10/31/99
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(3) 15.69 (0.03) (0.24) (0.27) 0.00 0.00 0.00
09/30/96 13.49 (0.10) 3.12 3.02 0.00 (0.82) (0.82)
-------------------------------------------------------------------------------------------------------------
Class M 10/31/99(2)
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(3) 15.70 (0.03) (0.24) (0.27) 0.00 0.00 0.00
09/30/96(4) 13.49 (0.08) 3.12 3.04 (0.01) (0.82) (0.83)
09/30/95(5) 10.00 (0.08) 3.57 3.49 0.00 0.00 0.00
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
*Please see notes to financial highlights on page
64
<PAGE>
<TABLE>
<CAPTION>
RATIO OF EXPENSES TO AVERAGE NET
ASSETS(10)(11) NET INVESTMENT
NET ASSET NET ASSETS ----------------------------------- INCOME (LOSS) PORTFOLIO
VALUE AT END TOTAL AT END OF EXCLUDING INCLUDING TO AVERAGE TURNOVER
OF PERIOD RETURN(9) PERIOD (000'S) CREDITS GROSS CREDITS NET ASSETS(11) RATE(12)
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
22.24 22.48 46,413 1.85 2.18 1.85 (1.11) 142.08
18.77 24.71 31,260 1.85 2.44 1.85 (1.07) 120.96
15.70 (0.32) 21,938 1.85 2.62 1.85 (1.06) 9.40
15.75 (4.91) 22,078 1.85 2.60 1.85 (1.15) 127.49
17.68 76.80 16,747 2.85 3.35 2.85 (2.39) 88.28
- --------------------------------------------------------------------------------------------------------------------
21.93 22.04 10,564 2.50 2.83 2.50 (1.76) 142.08
18.58 24.47 4,880 2.50 3.09 2.50 (1.71) 120.96
15.58 (0.32) 1,992 2.50 3.27 2.50 (1.71) 9.40
15.63 (5.33) 1,800 2.50 3.25 2.50 (1.80) 127.49
- --------------------------------------------------------------------------------------------------------------------
21.98 22.11 5,573 2.40 2.73 2.40 (1.66) 142.08
18.61 24.50 3,468 2.40 2.99 2.40 (1.62) 120.96
15.60 (0.32) 2,129 2.40 3.17 2.40 (1.62) 9.40
15.65 (5.22) 2,250 2.40 3.15 2.40 (1.70) 127.49
17.64 76.40 1,736 3.40 3.91 3.40 (2.94) 88.28
- --------------------------------------------------------------------------------------------------------------------
10.77 2.58 4,981 2.03 4.22 2.03 (0.21) 50.01
10.57 5.70 3,076 1.70 8.93 1.70 0.19 21.85
- --------------------------------------------------------------------------------------------------------------------
10.71 1.89 1,198 2.68 4.87 2.68 (0.86) 50.01
10.52 5.20 589 2.35 9.58 2.35 (0.45) 21.85
- --------------------------------------------------------------------------------------------------------------------
10.72 1.99 397 2.58 4.77 2.58 (0.76) 50.01
10.53 5.30 399 2.25 9.48 2.25 (0.35) 21.85
- --------------------------------------------------------------------------------------------------------------------
16.97 9.87 23,798 1.85 2.24 1.85 (1.37) 136.59
15.90 4.09 20,605 1.85 2.66 1.85 (1.27) 130.48
15.49 (1.59) 19,350 1.85 2.48 1.85 (1.41) 10.11
15.75 24.35 18,713 1.85 2.72 1.85 (0.35) 160.72
13.54 35.40 6,241 2.90 4.17 2.85 0.75 262.97
- --------------------------------------------------------------------------------------------------------------------
16.72 9.35 3,734 2.50 2.89 2.50 (2.02) 136.59
15.74 3.56 2,866 2.50 3.31 2.50 (1.92) 130.48
15.42 (1.66) 2,132 2.50 3.13 2.50 (2.06) 10.11
15.69 23.63 2,022 2.50 3.37 2.50 (1.00) 160.72
- --------------------------------------------------------------------------------------------------------------------
16.76 9.43 1,382 2.40 2.79 2.40 (1.92) 136.59
15.77 3.64 1,751 2.40 3.21 2.40 (1.82) 130.48
15.43 (1.66) 2,243 2.40 3.03 2.40 (1.96) 10.11
15.70 23.81 2,369 2.40 3.27 2.40 (0.90) 160.72
13.49 34.90 2,565 3.45 4.72 3.40 0.20 262.97
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
65
<PAGE>
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
INVESTMENT OPERATIONS DISTRIBUTIONS
-----------------------------------------------------------------------------
NET ASSET NET FROM NET
YEAR OR VALUE INVESTMENT NET REALIZED FROM NET REALIZED
PERIOD BEGINNING INCOME & UNREALIZED TOTAL INVESTMENT CAPITAL TOTAL
ENDED OF PERIOD (LOSS) GAIN (LOSS) OPERATIONS INCOME GAINS DISTRIBUTIONS
- ----------------------------------------------------------------------------------------------------------- --------- --------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
IDEX JCC Global Class A 10/31/99
10/31/98(4) 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(3) 21.40 (0.02) 0.01 (0.01) 0.00 0.00 0.00
09/30/96 17.73 (0.09) 4.38 4.29 0.00 (0.62) (0.62)
09/30/95 15.93 (0.06) 2.42 2.36 0.00 (0.56) (0.56)
-----------------------------------------------------------------------------------------------------------------
Class B 10/31/99
10/31/98(4) 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(3) 21.14 (0.02) 0.01 (0.01) 0.00 0.00 0.00
09/30/96 17.57 (0.19) 4.38 4.19 0.00 (0.62) (0.62)
-----------------------------------------------------------------------------------------------------------------
Class M 10/31/99(2)
10/31/98(4) 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(3) 21.04 (0.02) 0.01 (0.01) 0.00 0.00 (0.62)
09/30/96 17.46 (0.18) 4.38 4.20 0.00 (0.62) 0.00
09/30/95 15.74 (0.14) 2.42 2.28 0.00 (0.56) (0.56)
- ------------------------------------------------------------------------------------------------------------------------------------
IDEX JCC Growth Class A 10/31/99
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(3) 22.21 0.00 (0.24) (0.24) 0.00 0.00 0.00
09/30/96 22.84 (0.11) 4.66 4.55 0.00 (5.18) (5.18)
09/30/95 16.78 (0.05) 6.18 6.13 0.00 (0.07) (0.07)
-----------------------------------------------------------------------------------------------------------------
Class B 10/31/99
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(3) 21.85 (0.01) (0.24) (0.25) 0.00 0.00 0.00
09/30/96 22.64 (0.27) 4.66 4.39 0.00 (5.18) (5.18)
-----------------------------------------------------------------------------------------------------------------
Class M 10/31/99
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(3) 21.91 (0.02) (0.24) (0.26) 0.00 0.00 0.00
09/30/96 22.64 (0.21) 4.66 4.45 0.00 (5.18) (5.18)
09/30/95 16.68 (0.15) 6.18 6.03 0.00 (0.07) (0.07)
-----------------------------------------------------------------------------------------------------------------
Class T 10/31/99
10/31/98(4) 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
09/30/96(7) 22.23 0.00 0.18 0.18 0.00 0.00 0.00
- ------------------------------------------------------------------------------------------------------------------------------------
IDEX C.A.S.E. Class A 10/31/99
Growth 10/31/98 12.90 0.03 (1.84) (1.81) 0.00 (0.95) (0.95)
10/31/97(4) 10.56 (0.01) 2.86 2.85 (0.51) 0.00 (0.51)
10/31/96(3) 10.46 (0.07) 0.17 0.10 0.00 0.00 0.00
09/30/96(8) 10.00 0.61 (0.15) 0.46 0.00 0.00 0.00
-----------------------------------------------------------------------------------------------------------------
Class B 10/31/99
10/31/98 12.85 (0.04) (1.84) (1.88) 0.00 (0.95) (0.95)
10/31/97(4) 10.51 (0.07) 2.86 2.79 (0.45) 0.00 (0.45)
10/31/96(3) 10.41 (0.07) 0.17 0.10 0.00 0.00 0.00
09/30/96(8) 10.00 0.56 (0.15) 0.41 0.00 0.00 0.00
-----------------------------------------------------------------------------------------------------------------
Class M 10/31/99
10/31/98 12.86 (0.03) (1.84) (1.87) 0.00 (0.95) (0.95)
10/31/97(4) 10.52 (0.06) 2.86 2.80 (0.46) 0.00 (0.46)
10/31/96(3) 10.42 (0.07) 0.17 0.10 0.00 0.00 0.00
09/30/96(8) 10.00 0.57 (0.15) 0.42 0.00 0.00 0.00
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
66
<PAGE>
<TABLE>
<CAPTION>
RATIO OF EXPENSES TO AVERAGE NET
ASSETS(10)(11) NET INVESTMENT
NET ASSET NET ASSETS ----------------------------------- INCOME (LOSS) PORTFOLIO
VALUE AT END TOTAL AT END OF EXCLUDING INCLUDING TO AVERAGE TURNOVER
OF PERIOD RETURN(9) PERIOD (000'S) CREDITS GROSS CREDITS NET ASSETS(11) RATE(12)
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
24.09 11.30 296,450 1.82 0.00 1.82 (0.45) 87.68
23.74 22.72 218,681 1.91 0.00 1.91 (0.50) 91.02
21.39 (0.05) 135,837 2.08 0.00 2.07 (1.15) 2.59
21.40 25.04 131,347 2.09 0.00 2.06 (0.67) 97.94
17.73 15.47 89,397 2.10 0.00 1.97 (0.43) 161.48
- --------------------------------------------------------------------------------------------------------------------
23.62 10.93 110,630 2.47 0.00 2.47 (1.10) 87.68
23.38 22.53 43,951 2.56 0.00 2.56 (1.15) 91.02
21.13 (0.05) 5,966 2.73 0.00 2.72 (1.80) 2.59
21.14 24.70 5,000 2.74 0.00 2.71 (1.32) 97.94
- --------------------------------------------------------------------------------------------------------------------
23.56 11.08 63,552 2.37 0.00 2.37 (1.00) 87.68
23.30 22.72 27,210 2.46 0.00 2.46 (1.05) 91.02
21.03 (0.05) 8,624 2.63 0.00 2.62 (1.70) 2.59
21.04 24.91 8,081 2.64 0.00 2.61 (1.22) 97.94
17.46 15.14 3,567 2.65 0.00 2.52 (0.98) 161.48
- --------------------------------------------------------------------------------------------------------------------
29.35 35.21 817,749 1.51 0.00 1.51 (0.55) 27.19
25.04 16.40 614,544 1.61 0.00 1.61 (0.10) 91.52
21.97 (1.09) 565.032 1.68 0.00 1.68 (0.13) 9.40
22.21 22.41 567,564 1.83 0.00 1.82 (0.22) 57.80
27.84 36.70 485,935 1.86 0.00 1.84 (0.26) 123.26
- --------------------------------------------------------------------------------------------------------------------
28.63 34.96 40,809 2.16 0.00 2.16 (1.20) 27.19
24.55 16.11 13,046 2.26 0.00 2.26 (0.75) 91.52
21.60 (1.14) 5,242 2.32 0.00 2.32 (0.78) 9.40
21.85 21.87 4,536 2.46 0.00 2.45 (0.86) 57.80
- --------------------------------------------------------------------------------------------------------------------
28.74 35.00 58,265 2.06 0.00 2.06 (1.10) 27.19
24.62 16.19 14,295 2.16 0.00 2.16 (0.65) 91.52
21.65 (1.19) 11,016 2.23 0.00 2.23 (0.68) 9.40
21.91 22.15 11,167 2.34 0.00 2.33 (0.77) 57.80
22.64 36.32 5,593 2.41 0.00 2.38 (0.81) 123.26
- --------------------------------------------------------------------------------------------------------------------
29.74 35.53 755,770 1.16 0.00 1.16 (0.20) 27.19
25.31 16.54 603,129 1.26 0.00 1.26 0.25 91.52
22.17 (1.03) 573,884 1.33 0.00 1.33 (0.20) 9.40
22.41 0.81 585,505 1.18 0.00 1.17 0.36 57.80
- --------------------------------------------------------------------------------------------------------------------
10.14 (14.83) 4,284 1.85 2.44 1.85 (0.73) 147.01
12.90 28.31 3,920 1.85 4.62 1.85 (0.34) 183.06
10.56 0.96 1,675 1.85 6.79 1.84 0.27 20.69
10.46 4.60 1,455 2.85 5.89 2.85 10.00 654.49
- --------------------------------------------------------------------------------------------------------------------
10.02 (15.40) 2,460 2.50 3.09 2.50 (1.38) 147.01
12.85 27.62 2,436 2.50 5.27 2.50 (0.99) 183.06
10.51 0.96 1,159 2.50 7.44 2.49 0.38 20.69
10.41 4.10 1,100 3.50 6.54 3.50 9.35 654.49
- --------------------------------------------------------------------------------------------------------------------
10.04 (15.31) 879 2.40 2.99 2.40 (1.28) 147.01
12.86 27.73 2,028 2.40 5.17 2.40 (0.89) 183.06
10.52 0.96 687 2.40 7.34 2.39 0.28 20.69
10.42 4.20 613 3.40 6.44 3.40 9.45 654.49
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
67
<PAGE>
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
INVESTMENT OPERATIONS DISTRIBUTIONS
-----------------------------------------------------------------------------
NET ASSET NET FROM NET
YEAR OR VALUE INVESTMENT NET REALIZED FROM NET REALIZED
PERIOD BEGINNING INCOME & UNREALIZED TOTAL INVESTMENT CAPITAL TOTAL
ENDED OF PERIOD (LOSS) GAIN (LOSS) OPERATIONS INCOME GAINS DISTRIBUTIONS
- ----------------------------------------------------------------------------------------------------------- --------- --------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
IDEX NWQ Class A 10/31/99
Value Equity 10/31/98 11.71 0.03 (0.61) (0.58) 0.00 (0.04) (0.04)
10/31/97(6) 10.00 0.02 1.69 1.71 0.00 0.00 0.00
-------------------------------------------------------------------------------------------------------------------
Class B 10/31/99
10/31/98 11.67 (0.04) (0.61) (0.65) 0.00 (0.04) (0.04)
10/31/97(6) 10.00 (0.02) 1.69 1.67 0.00 0.00 0.00
-------------------------------------------------------------------------------------------------------------------
Class M 10/31/99(2)
10/31/98 11.67 (0.02) (0.61) (0.63) 0.00 (0.04) (0.04)
10/31/97(6) 10.00 (0.02) 1.69 1.67 0.00 0.00 0.00
- ------------------------------------------------------------------------------------------------------------------------------------
IDEX LKCM Class A 10/31/99
Strategic 10/31/98 15.91 0.21 0.94 1.15 (0.21) (0.67) (0.88)
Total Return 10/31/97 13.43 0.20 2.79 2.99 (0.19) (0.32) (0.51)
10/31/96(3) 13.27 0.01 0.15 0.16 0.00 0.00 0.00
09/30/96 11.74 0.20 1.65 1.85 (0.17) (0.15) (0.32)
09/30/95(5) 10.00 0.09 1.75 1.84 (0.10) 0.00 (0.10)
-------------------------------------------------------------------------------------------------------------------
Class B 10/31/99
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(3) 13.27 0.00 0.15 0.15 0.00 0.00 0.00
09/30/96 11.73 0.13 1.65 1.78 (0.09) (0.15) (0.24)
-------------------------------------------------------------------------------------------------------------------
Class M 10/31/99(2)
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(3) 13.27 0.00 0.15 0.15 0.00 0.00 0.00
09/30/96 11.73 0.15 1.65 1.80 (0.11) (0.15) (0.26)
09/30/95(5) 10.00 0.03 1.75 1.78 (0.05) 0.00 (0.05)
- ------------------------------------------------------------------------------------------------------------------------------------
IDEX Dean Class A 10/31/99
Asset Allocation 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(3) 11.03 0.02 0.14 0.16 0.00 0.00 0.00
09/30/96 10.00 0.08 1.03 1.11 (0.08) 0.00 (0.08)
-------------------------------------------------------------------------------------------------------------------
Class B 10/31/99
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(3) 11.02 0.02 0.14 0.16 0.00 0.00 0.00
-------------------------------------------------------------------------------------------------------------------
Class M 10/31/99(2)
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(3) 11.03 0.01 0.14 0.15 0.00 0.00 0.00
09/30/96 10.00 0.02 1.03 1.05 (0.02) 0.00 (0.02)
- ------------------------------------------------------------------------------------------------------------------------------------
IDEX JCC Class A 10/31/99
Balanced 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(3) 13.47 0.01 0.10 0.11 0.00 0.00 0.00
09/30/96 11.47 0.24 2.25 2.49 (0.21) (0.28) (0.49)
09/30/95(5) 10.00 0.05 1.47 1.52 (0.05) 0.00 (0.05)
-------------------------------------------------------------------------------------------------------------------
Class B 10/31/99
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
09/30/96 11.47 0.15 2.25 2.40 (0.13) (0.28) (0.41)
-------------------------------------------------------------------------------------------------------------------
Class M 10/31/99(2)
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(3) 13.46 0.01 0.10 0.11 0.00 0.00 0.00
09/30/96 11.47 0.16 2.25 2.41 (0.14) (0.28) (0.42)
09/30/95(5) 10.00 0.01 1.47 1.48 (0.01) 0.00 (0.01)
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
68
<PAGE>
<TABLE>
<CAPTION>
RATIO OF EXPENSES TO AVERAGE NET
ASSETS(10)(11) NET INVESTMENT
NET ASSET NET ASSETS ----------------------------------- INCOME (LOSS) PORTFOLIO
VALUE AT END TOTAL AT END OF EXCLUDING INCLUDING TO AVERAGE TURNOVER
OF PERIOD RETURN(9) PERIOD (000'S) CREDITS GROSS CREDITS NET ASSETS(11) RATE(12)
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
11.09 (4.96) 8,035 1.85 2.51 1.85 0.00 30.43
11.71 17.14 5,305 1.50 4.05 1.50 0.38 6.40
- --------------------------------------------------------------------------------------------------------------------
10.98 (5.55) 5,020 2.50 3.16 2.50 (0.65) 30.43
11.67 16.65 2,850 2.15 4.70 2.15 (0.28) 6.40
- --------------------------------------------------------------------------------------------------------------------
11.00 (5.46) 2,013 2.40 3.06 2.40 (0.55) 30.43
11.67 16.73 1,607 2.05 4.60 2.05 (0.18) 6.40
- --------------------------------------------------------------------------------------------------------------------
16.18 7.43 32,055 1.85 1.92 1.85 1.30 32.12
15.91 22.80 21,629 1.85 2.28 1.85 1.41 51.44
13.43 1.20 11,744 1.85 2.76 1.82 1.47 5.50
13.27 16.00 11,314 1.85 2.79 1.79 1.67 40.58
11.74 18.43 5,167 2.99 4.57 2.85 0.85 34.67
- --------------------------------------------------------------------------------------------------------------------
16.17 6.74 9,789 2.50 2.57 2.50 0.65 32.12
15.89 22.03 4,698 2.50 2.93 2.50 0.76 51.44
13.42 1.13 1,684 2.50 3.40 2.47 0.82 5.50
13.27 15.38 1,537 2.50 3.44 2.44 1.02 40.58
- --------------------------------------------------------------------------------------------------------------------
16.17 6.85 6,977 2.40 2.47 2.40 0.75 32.12
15.90 22.15 4,332 2.40 2.83 2.40 0.86 51.44
13.42 1.13 1,792 2.40 3.30 2.37 0.92 5.50
13.27 15.49 1,728 2.40 3.34 2.34 1.12 40.58
11.73 17.95 281 3.54 5.12 3.40 0.30 34.67
- --------------------------------------------------------------------------------------------------------------------
13.14 7.25 15,747 1.85 1.87 1.85 1.82 55.45
13.19 19.84 12,291 1.85 2.30 1.85 1.57 71.63
11.19 1.45 8,396 1.85 2.65 1.85 1.26 2.38
11.03 11.07 7,401 2.85 3.20 2.85 0.72 56.22
- --------------------------------------------------------------------------------------------------------------------
13.13 6.56 14,679 2.50 2.52 2.50 1.17 55.45
13.18 19.08 9,747 2.50 2.95 2.50 0.92 71.63
11.18 1.45 5,013 2.50 3.30 2.50 0.61 2.38
- --------------------------------------------------------------------------------------------------------------------
13.13 6.67 7,342 2.40 2.42 2.40 1.27 55.45
13.18 19.20 5,088 2.40 2.85 2.40 1.02 71.63
11.18 1.36 4,758 2.40 3.20 2.40 0.71 2.38
11.03 10.50 4,641 3.40 3.75 3.40 0.17 56.22
- --------------------------------------------------------------------------------------------------------------------
14.75 14.69 22,995 1.85 2.04 1.85 1.12 61.50
14.34 22.96 13,414 1.85 2.88 1.85 1.29 127.08
13.58 0.81 8,402 1.85 3.44 1.85 1.84 9.08
13.47 22.12 8,056 1.85 3.11 1.85 1.87 175.78
11.47 15.27 3,670 2.92 4.48 2.85 0.56 82.48
- --------------------------------------------------------------------------------------------------------------------
14.74 13.97 11,916 2.50 2.69 2.50 0.47 61.50
14.33 22.19 2,583 2.50 3.53 2.50 0.64 127.08
13.56 0.74 878 2.50 4.09 2.50 1.18 9.08
13.46 21.38 687 2.50 3.76 2.50 1.22 175.78
- --------------------------------------------------------------------------------------------------------------------
14.74 14.08 4,897 2.40 2.59 2.40 0.57 61.50
14.33 22.31 1,561 2.40 3.43 2.40 0.74 127.08
13.57 0.81 967 2.40 3.99 2.40 1.28 9.08
13.46 21.49 943 2.40 3.66 2.40 1.32 175.78
11.47 14.77 3,365 3.47 5.03 3.40 0.01 82.48
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
69
<PAGE>
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
INVESTMENT OPERATIONS DISTRIBUTIONS
----------------------------------------------------------------------------
NET ASSET NET FROM NET
YEAR OR VALUE INVESTMENT NET REALIZED FROM NET REALIZED
PERIOD BEGINNING INCOME & UNREALIZED TOTAL INVESTMENT CAPITAL TOTAL
ENDED OF PERIOD (LOSS) GAIN (LOSS) OPERATIONS INCOME GAINS DISTRIBUTIONS
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
IDEX JCC Class A 10/31/99
Flexible Income 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(3) 9.19 0.05 0.14 0.19 (0.05) 0.00 (0.05)
09/30/96 9.17 0.60 0.00 0.60 (0.58) 0.00 (0.58)
09/30/95 8.83 0.61 0.37 0.98 (0.64) 0.00 (0.64)
-------------------------------------------------------------------------------------------------------------------
Class B 10/31/99
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(3) 9.18 0.05 0.14 0.19 (0.05) 0.00 (0.05)
09/30/96 9.17 0.53 0.00 0.53 (0.52) 0.00 (0.52)
-------------------------------------------------------------------------------------------------------------------
Class M 10/31/99(2)
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(3) 9.18 0.05 0.14 0.19 (0.05) 0.00 (0.05)
09/30/96 9.17 0.54 0.00 0.54 (0.53) 0.00 (0.53)
09/30/95 8.83 0.56 0.37 0.93 (0.59) 0.00 (0.59)
- ------------------------------------------------------------------------------------------------------------------------------------
IDEX AEGON Class A 10/31/99
Income Plus 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(3) 10.41 0.04 0.22 0.26 (0.06) 0.00 (0.06)
09/30/96 10.36 0.72 0.04 0.76 (0.71) 0.00 (0.71)
09/30/95 9.75 0.75 0.71 1.46 (0.75) (0.10) (0.85)
-------------------------------------------------------------------------------------------------------------------
Class B 10/31/99
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(3) 10.40 0.05 0.22 0.27 (0.06) 0.00 (0.06)
09/30/96 10.35 0.65 0.04 0.69 (0.64) 0.00 (0.64)
-------------------------------------------------------------------------------------------------------------------
Class M(11) 10/31/99(2)
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(3) 10.40 0.05 0.22 0.27 (0.06) 0.00 (0.06)
09/30/96 10.35 0.66 0.04 0.70 (0.65) 0.00 (0.65)
09/30/95 9.74 0.69 0.71 1.40 (0.69) (0.10) (0.79)
- ------------------------------------------------------------------------------------------------------------------------------------
IDEX AEGON Class A 10/31/99
Tax Exempt 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(3) 11.36 0.05 0.04 0.09 (0.05) 0.00 (0.05)
09/30/96 11.34 0.55 0.10 0.65 (0.56) (0.07) (0.63)
09/30/95 11.10 0.55 0.29 0.84 (0.56) (0.04) (0.60)
-------------------------------------------------------------------------------------------------------------------
Class B 10/31/99
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(3) 11.36 0.04 0.04 0.08 (0.04) 0.00 (0.04)
09/30/96 11.34 0.48 0.10 0.58 (0.49) (0.07) (0.56)
-------------------------------------------------------------------------------------------------------------------
Class M 10/31/99(2)
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(3) 11.36 0.04 0.04 0.08 (0.04) 0.00 (0.04)
09/30/96 11.34 0.52 0.10 0.62 (0.53) (0.07) (0.60)
09/30/95 11.10 0.52 0.29 0.81 (0.53) (0.04) (0.57)
- ------------------------------------------------------------------------------------------------------------------------------------
IDEX Class A 10/31/99(1)
Goldman Sachs -------------------------------------------------------------------------------------------------------------------
Growth Class B 10/31/99(2)
-------------------------------------------------------------------------------------------------------------------
Class M 10/31/99(1)(2)
- ------------------------------------------------------------------------------------------------------------------------------------
IDEX Class A 10/31/99(1)
T. Rowe Price --------------------------------------------------------------------------------------------------------------------
Small Cap Class B 10/31/99(1)
-------------------------------------------------------------------------------------------------------------------
Class M 10/31/99(1)(2)
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
70
<PAGE>
<TABLE>
<CAPTION>
RATIO OF EXPENSES TO AVERAGE NET
ASSETS(10)(11) NET INVESTMENT
NET ASSET NET ASSETS ----------------------------------- INCOME (LOSS) PORTFOLIO
VALUE AT END TOTAL AT END OF EXCLUDING INCLUDING TO AVERAGE TURNOVER
OF PERIOD RETURN(9) PERIOD (000'S) CREDITS GROSS CREDITS NET ASSETS(11) RATE(12)
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
9.84 7.43 14,970 1.83 0.00 1.83 6.22 90.63
9.75 11.53 15,532 1.85 2.40 1.85 6.41 135.53
9.33 2.08 17,001 1.85 2.98 1.85 6.15 16.16
9.19 6.73 17,065 1.85 2.07 1.85 6.46 135.38
9.17 11.57 19,786 1.87 1.94 1.85 7.03 149.58
- --------------------------------------------------------------------------------------------------------------------
9.83 6.74 2,387 2.48 0.00 2.48 5.57 90.63
9.75 10.79 746 2.50 3.05 2.50 5.76 135.53
9.32 2.04 522 2.50 3.63 2.50 5.50 16.16
9.18 5.94 494 2.50 2.72 2.50 5.81 135.38
- --------------------------------------------------------------------------------------------------------------------
9.84 6.84 2,207 2.38 0.00 2.38 5.67 90.63
9.75 10.91 928 2.40 2.95 2.40 5.86 135.53
9.32 2.04 846 2.40 3.53 2.40 5.60 16.16
9.18 6.03 883 2.40 2.62 2.40 5.91 135.38
9.17 10.95 558 2.42 2.49 2.40 6.48 149.58
- --------------------------------------------------------------------------------------------------------------------
10.43 3.54 63,494 1.24 0.00 1.24 6.38 53.09
10.96 11.86 65,612 1.27 0.00 1.27 7.14 62.28
10.61 2.53 66,285 1.33 0.00 1.32 5.60 1.58
10.41 7.64 65,252 1.33 0.00 1.31 6.89 65.96
10.36 15.85 68,746 1.29 0.00 1.26 7.53 25.07
- --------------------------------------------------------------------------------------------------------------------
10.42 2.87 5,041 1.89 0.00 1.89 5.73 53.09
10.96 11.10 1,761 1.92 0.00 1.92 6.49 62.28
10.61 2.59 804 1.98 0.00 1.97 4.95 1.58
10.40 6.95 774 1.98 0.00 1.96 6.24 65.96
- --------------------------------------------------------------------------------------------------------------------
10.42 2.97 4,073 1.79 0.00 1.79 5.83 53.09
10.96 11.22 3,480 1.82 0.00 1.82 6.59 62.28
10.61 2.59 2,781 1.88 0.00 1.87 5.05 1.58
10.40 7.05 2,684 1.88 0.00 1.86 6.34 65.96
10.35 15.08 1,980 1.84 0.00 1.81 6.98 25.07
- --------------------------------------------------------------------------------------------------------------------
11.94 7.19 22,313 1.23 1.27 1.23 4.08 42.42
11.75 8.68 23,320 1.00 1.63 1.00 4.60 71.29
11.40 0.76 24,439 1.00 1.89 1.00 4.60 3.79
11.36 5.89 24,708 1.00 1.46 1.00 4.88 71.05
11.34 7.75 27,401 1.02 1.35 1.00 4.83 126.48
- --------------------------------------------------------------------------------------------------------------------
11.94 6.50 654 1.88 1.92 1.88 3.43 42.42
11.74 7.93 377 1.65 2.28 1.65 3.95 71.29
11.40 0.71 198 1.65 2.54 1.65 3.94 3.79
11.36 5.21 189 1.65 2.11 1.65 4.23 71.05
- --------------------------------------------------------------------------------------------------------------------
11.94 6.92 1,607 1.48 1.52 1.48 3.83 42.42
11.75 8.39 921 1.25 1.88 1.25 4.35 71.29
11.40 0.74 939 1.25 2.14 1.25 4.34 3.79
11.36 5.63 907 1.25 1.71 1.25 4.63 71.05
11.34 7.48 454 1.27 1.60 1.25 4.58 126.48
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
71
<PAGE>
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
INVESTMENT OPERATIONS DISTRIBUTIONS
---------------------------------------------------------------------------
NET ASSET NET FROM NET
YEAR OR VALUE INVESTMENT NET REALIZED FROM NET REALIZED
PERIOD BEGINNING INCOME & UNREALIZED TOTAL INVESTMENT CAPITAL TOTAL
ENDED OF PERIOD (LOSS) GAIN (LOSS) OPERATIONS INCOME GAINS DISTRIBUTIONS
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
IDEX Class A 10/31/99(1)
Pilgrim Baxter -----------------------------------------------------------------------------------------------------------------
Mid Cap Growth Class B 10/31/99(1)
-----------------------------------------------------------------------------------------------------------------
Class M 10/31/99(1)(2)
- ------------------------------------------------------------------------------------------------------------------------------------
IDEX Class A 10/31/99(1)
Salomon -----------------------------------------------------------------------------------------------------------------
All Cap Class B 10/31/99(1)
-----------------------------------------------------------------------------------------------------------------
Class M 10/31/99(1)(2)
- ------------------------------------------------------------------------------------------------------------------------------------
IDEX Class A 10/31/99(1)
T. Rowe Price -----------------------------------------------------------------------------------------------------------------
Dividend Growth Class B 10/31/99(1)
-----------------------------------------------------------------------------------------------------------------
Class M 10/31/99(1)(2)
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
72
<PAGE>
<TABLE>
<CAPTION>
RATIO OF EXPENSES TO AVERAGE NET
ASSETS(10)(11) NET INVESTMENT
NET ASSET NET ASSETS ----------------------------------- INCOME (LOSS) PORTFOLIO
VALUE AT END TOTAL AT END OF EXCLUDING INCLUDING TO AVERAGE TURNOVER
OF PERIOD RETURN(9) PERIOD (000'S) CREDITS GROSS CREDITS NET ASSETS(11) RATE(12)
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
73
<PAGE>
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
(1) From commencement of investment operations, March 1, 1999.
(2) On March 1, 1999, the Fund changed the organizational structure of C Shares
and renamed them M Shares.
(3) For the month ended October 31, 1996. On October 1, 1996, each Fund changed
its fiscal year end from September 30 to October 31.
(4) Distributions from net realized capital gains include distributions in
excess of current net realized capital gains for IDEX Alger Aggressive
Growth Classes A, B and M, for the period ended 9/30/96, in the amount of
$1.02 and for IDEX JCC Global Classes A, B and M, 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 IDEX
GE/Scottish Equitable International Equity Classes A, B and M, for the
period ended 10/31/98 in the amount of $0.06, $0.01 and $0.02, respectively
and for IDEX JCC Capital Appreciation Classes A and M, for the period ended
9/30/96 in the amount of $.01 and for IDEX JCC Growth Class T for the
period ended 10/31/98 in the amount of $0.03 and for IDEX C.A.S.E. Growth
Classes A, B and M, for the period ended 10/31/97 in the amount of $.08.
(5) From commencement of investment operations, December 2, 1994.
(6) From commencement of investment operations, February 1, 1997.
(7) From commencement of investment operations, September 20, 1996.
(8) From commencement of investment operations, February 1, 1996.
(9) 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.
(10) 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).
(11) 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.
(12) Periods of less than one year are not annualized.
74
<PAGE>
APPENDIX A
BRIEF EXPLANATION OF RATING CATEGORIES
<TABLE>
<CAPTION>
BOND RATING EXPLANATION
----------- -----------
<S> <C> <C>
STANDARD & POOR'S CORPORATION AAA Highest rating; extremely strong capacity to pay principal and interest.
AA High quality; very strong capacity to pay principal and interest.
A Strong capacity to pay principal and interest; somewhat more susceptible
to the adverse effects of changing circumstances and economic conditions.
BBB Adequate capacity to pay principal and interest; normally exhibit adequate
protection parameters, but adverse economic conditions or changing
circumstances more likely to lead to a weakened capacity to pay principal
and interest than for higher rated bonds.
Predominantly speculative with respect to the issuer's capacity to meet
BB,B, and required interest and principal payments. BB - lowest degree of
CC,CC,C speculation; C - the highest degree of speculation. Quality and protective
characteristics outweighed by large uncertainties or major risk exposure to
adverse conditions.
D In default.
</TABLE>
PLUS (+) OR MINUS (-) -The ratings from "AA" to "BBB" may be modified by the
addition of a plus or minus sign to show relative standing within the major
rating categories.
UNRATED - Indicates that no public rating has been requested, that there is
insufficient information on which to base a rating, or that S&P does not rate a
particular type of obligation as a matter of policy.
<TABLE>
<S> <C> <C>
MOODY'S INVESTORS SERVICE, INC. Aaa Highest quality, smallest degree of investment risk.
Aa High quality; together with Aaa bonds, they compose the high-grade bond
group.
A Upper-medium grade obligations; many favorable investment attributes.
Baa Medium-grade obligations; neither highly protected nor poorly secured.
Interest and principal appear adequate for the present but certain
protective elements may be lacking or may be unreliable over any great
length of time.
Ba More uncertain, with speculative elements. Protection of interest
and principal payments not well safeguarded during good and bad
times.
B Lack characteristics of desirable investment; potentially low assurance of
timely interest and principal payments or maintenance of other contract
terms over time.
Caa Poor standing, may be in default; elements of danger with respect to
principal or interest payments.
Ca Speculative in a high degree; could be in default or have other marked
short- comings.
C Lowest-rated; extremely poor prospects of ever attaining investment
standing.
</TABLE>
UNRATED - Where no rating has been assigned or where a rating has been suspended
or withdrawn, it may be for reasons unrelated to the quality of the issue.
Should no rating be assigned, the reason may be one of the following:
1. An application for rating was not received or accepted.
2. The issue or issuer belongs to a group of securities or companies that
are not rated as a matter of policy.
3. There is a lack of essential data pertaining to the issue or issuer.
4. The issue was privately placed, in which case the rating is not
published in Moody's publications.
Suspension or withdrawal may occur if new and material circumstances arise, the
effects of which preclude satisfactory analysis; if there is no longer available
reasonable up-to-date data to permit a judgment to be formed; if a bond is
called for redemption; or for other reasons.
<PAGE>
IDEX MUTUAL FUNDS
IDEX JCC GROWTH
IDEX JCC GLOBAL
IDEX JCC BALANCED
IDEX JCC CAPITAL APPRECIATION
IDEX JCC FLEXIBLE INCOME
IDEX T. ROWE PRICE DIVIDEND GROWTH
IDEX T. ROWE PRICE SMALL CAP
IDEX GOLDMAN SACHS GROWTH
IDEX SALOMON ALL CAP
IDEX ALGER AGGRESSIVE GROWTH
IDEX PILGRIM BAXTER MID CAP GROWTH
IDEX PILGRIM BAXTER TECHNOLOGY
IDEX AEGON INCOME PLUS
IDEX AEGON TAX EXEMPT
IDEX GE INTERNATIONAL EQUITY
IDEX GE U.S. EQUITY
IDEX DEAN ASSET ALLOCATION
IDEX LKCM STRATEGIC TOTAL RETURN
IDEX NWQ VALUE EQUITY
IDEX C.A.S.E. GROWTH
IDEX TRANSAMERICA SMALL COMPANY
IDEX TRANSAMERICA EQUITY
STATEMENT OF ADDITIONAL INFORMATION
MARCH 1, 2000
IDEX MUTUAL FUNDS
570 Carillon Parkway
St. Petersburg, Florida 33716
Customer Service (888) 233-4339 (toll free)
The funds listed above 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, as amended (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, 2000 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 and
semi-annual report to shareholders are incorporated by reference into this SAI.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
INVESTMENT OBJECTIVES ............................................................... 1
Investment Restrictions, Policies and Practices ..................................... 1
Investment Restrictions of IDEX JCC Growth and IDEX JCC Flexible Income ............ 1
Investment Restrictions of IDEX JCC Global ......................................... 2
Investment Restrictions of IDEX JCC Capital Appreciation and IDEX JCC Balanced ..... 3
Investment Restrictions of IDEX T. Rowe Price Small Cap and IDEX T. Rowe Price
Dividend Growth .................................................................. 5
Investment Restrictions of IDEX Goldman Sachs Growth ............................... 6
Investment Restrictions of IDEX Salomon All Cap .................................... 7
Investment Restrictions of IDEX Alger Aggressive Growth ............................ 7
Investment Restrictions of IDEX Pilgrim Baxter Mid Cap Growth ...................... 8
Investment Restrictions of IDEX Pilgrim Baxter Technology .......................... 9
Investment Restrictions of IDEX AEGON Income Plus .................................. 10
Investment Restrictions of IDEX AEGON Tax Exempt ................................... 11
Investment Restrictions of IDEX GE International Equity ............................ 13
Investment Restrictions of IDEX GE U.S. Equity ..................................... 14
Investment Restrictions of IDEX Dean Asset Allocation .............................. 15
Investment Restrictions of IDEX LKCM Strategic Total Return ........................ 16
Investment Restrictions of IDEX NWQ Value Equity ................................... 18
Investment Restrictions of IDEX C.A.S.E. Growth .................................... 19
Investment Restrictions of IDEX Transamerica Small Company and IDEX
Transamerica Equity .............................................................. 20
OTHER POLICIES AND PRACTICES OF THE FUND ............................................ 21
Futures, Options and Other Derivative Instruments .................................. 21
Futures Contracts ................................................................. 21
Options on Futures Contracts ...................................................... 24
Options on Securities ............................................................. 25
Options on Foreign Currencies ..................................................... 27
Forward Contracts ................................................................. 28
Swaps and Swap-Related Products ................................................... 29
Index Options ..................................................................... 30
WEBS and Other Index-Related Securities ........................................... 31
Euro Instruments .................................................................. 31
Special Investment Considerations and Risks ....................................... 31
Additional Risks of Options on Foreign Currencies,
Forward Contracts and Foreign Instruments ....................................... 32
Other Investment Companies ......................................................... 33
When-Issued, Delayed Settlement and Forward Delivery Securities .................... 33
Zero Coupon, Pay-In-Kind and Step Coupon Securities ................................ 34
Income Producing Securities ........................................................ 34
Lending of Fund Securities ......................................................... 35
Joint Trading Accounts ............................................................. 35
</TABLE>
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<TABLE>
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Page
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Illiquid Securities ...................................................... 35
Repurchase and Reverse Repurchase Agreements ............................. 36
Pass-Through Securities .................................................. 36
High-Yield/High-Risk Bonds ............................................... 37
Warrants and Rights ...................................................... 38
U.S. Government Securities ............................................... 38
Money Market Reserves (IDEX T. Rowe Price Small Cap and IDEX T. Rowe Price
Dividend Growth) ....................................................... 38
Turnover Rate ............................................................ 39
Investment Advisory and Other Services ................................... 39
DISTRIBUTOR ............................................................... 45
ADMINISTRATIVE SERVICES ................................................... 46
CUSTODIAN, TRANSFER AGENT AND OTHER AFFILIATES ............................ 46
FUND TRANSACTIONS AND BROKERAGE ........................................... 47
TRUSTEES AND OFFICERS ..................................................... 49
PURCHASE OF SHARES ........................................................ 52
DEALER REALLOWANCES ....................................................... 52
DISTRIBUTION PLANS ........................................................ 53
DISTRIBUTION FEES ......................................................... 54
NET ASSET VALUE DETERMINATION ............................................. 56
DIVIDENDS AND OTHER DISTRIBUTIONS ......................................... 58
SHAREHOLDER ACCOUNTS ...................................................... 58
RETIREMENT PLANS .......................................................... 58
REDEMPTION OF SHARES ...................................................... 59
TAXES ..................................................................... 60
PRINCIPAL SHAREHOLDERS .................................................... 61
MISCELLANEOUS ............................................................. 62
Organization ............................................................. 62
Shares of Beneficial Interest ............................................ 63
Legal Counsel and Auditors ............................................... 63
Registration Statement ................................................... 63
PERFORMANCE INFORMATION ................................................... 63
FINANCIAL STATEMENTS ...................................................... 68
APPENDIX A-CERTAIN SECURITIES IN WHICH THE FUNDS MAY INVEST ............... A-1
</TABLE>
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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 JCC GROWTH AND
IDEX JCC FLEXIBLE INCOME
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, 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);
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;
and
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.
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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 Securities Act of 1933 (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. 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 JCC GLOBAL
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
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<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;
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 contracts; 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 (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;
(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 RESTRICITONS OF
IDEX JCC CAPITAL APPRECIATION
AND IDEX JCC BALANCED
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
3
<PAGE>
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;
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; and
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 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 fund's 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
4
<PAGE>
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 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; and
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 1933
Act 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. This restriction shall not apply to temporary
borrowings until the fund's net assets exceed $40,000,000;
(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 1933 Act 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;
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<PAGE>
(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 1940 Act; 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; and
(H) A fund may not sell securities short, except short sales "against the
box."
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' acceptances;
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; and
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 1933
Act 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 1933 Act 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. This restriction shall not apply to temporary
borrowings until the fund's assets exceed $40,000,000; and
6
<PAGE>
(D) The fund may not make short sales of securities, except short sales
"against the box."
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 1933 Act 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 1933
Act in connection with the purchase and sale of its fund securities in the
ordinary course of pursuing its investment objective; and
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 1933 Act 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; and
(C) The fund may not sell securities short except shart sales "against
the box".
INVESTMENT RESTRICTIONS OF
IDEX ALGER AGGRESSIVE GROWTH
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 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;
7
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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 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 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 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
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<PAGE>
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; and
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; and
(D) The fund may not purchase securities of other investment companies
except as permitted by the 1940 Act and the rules and regulations thereunder.
INVESTMENT RESTRICTIONS OF
IDEX PILGRIM BAXTER TECHNOLOGY
The fund may not, as a matter of fundamental policy:
1. Make loans, except that each fund, in accordance with its investment
objectives and policies, may (i) purchase debt instruments, and (ii) enter into
repurchase agreements.
2. Act as an underwriter of securities of other issuers, except as it may
be deemed an underwriter under the 1933 Act in connection with the purchase and
sale of portfolio securities.
3. Purchase or sell commodities or commodity contracts, except that, in
accordance with its investment objective and policies may: (i) invest in
readily marketable securities of issuers which invest or engage in such
activities; and (ii) enter into forward contracts, futures contracts and
options thereon.
4. Purchase or sell real estate, or real estate partnership interests,
except that this limitation shall not prevent the fund from investing directly
or indirectly in readily marketable securities of issuers which can invest in
real estate, institutions that issue mortgages, or real estate investment
trusts which deal with real estate or interests therein.
5. Issue senior securities (as defined in the 1940 Act), except as
permitted in connection with the fund's policies on borrowing and pledging, or
as permitted by rule, regulation or order of the SEC.
6. Purchase more than 10% of the voting securities of any one issuer or
purchase securities of any one issuer if, at the time of purchase, more than 5%
of its total assets will be invested in that issuer, except, up to 25% of its
assets may be invested without regard to these limits.
7. Invest 25% or more of its total assets at the time of purchase in
securities of one or more issuers (other than obligations issued or guaranteed
by the U.S. Government or its agencies and instrumentalities and repurchase
agreements collateralized by such obligations) whose principal business
activities are in the same industry. For purposes of this limitation,
supranational organizations are deemed to be issuers conducting their principal
business activities in the same industry; state and municipal governments and
their agencies and authorities are not deemed to be industries, utility
companies will be divided according to their services (e.g., gas, gas
transmission, electric, and telephone) and financial service companies will be
classified according to the end use of their service (e.g., automobile finance,
bank finance and diversified finance).
8. Borrow money except for temporary or emergency purposes and then only
in an amount not exceeding 10% of the value of the fund's total assets. This
borrowing provision is intended to facilitate the orderly sale of fund
securities to accomodate substantial redemption requests if they should occur,
and is not for
9
<PAGE>
investment purposes. All borrowings in excess of 5% of the fund's total assets
will be repaid before making investments.
9. Invest in companies for the purpose of exercising control.
10. Pledge, mortgage or hypothecate assets, except (i) to secure
temporary borrowings permitted by the fund's limitation on permitted
borrowings, or (ii) in connection with permitted transactions regarding options
and futures contracts.
11. Make short sales of securities, maintain a short position or purchase
securities on margin, except that the fund may (i) obtain short-term credits as
necessary for the clearance of security transactions and (ii) establish margin
accounts as may be necessary in connection with the fund's use of options and
futures contracts.
12. Purchase securities of other investment companies except as permitted
by the 1940 Act and the rules and regulations thereunder.
13. Invest in interests in oil, gas or other mineral exploration or
development programs.
The foregoing percentages will apply at the time of the purchase of a security.
NON-FUNDAMENTAL POLICIES
In addition to the foregoing, the fund has adopted additional investment
restrictions which may be amended by the Board of Trustees without a vote of
shareholders.
The fund may not:
1. Invest in illiquid securities in an amount exceeding, in the
aggregate, 15% of its net assets. This limitation does not include any Rule
144A restricted security that has been determined by, or pursuant to procedures
established by, the Board, based on trading markets for such security, to be
liquid.
2. Purchase or sell puts, calls, straddles, spreads, and any combination
thereof, if by reason thereof, the value of its aggregate investment in such
classes of securities will exceed 5% of its total assets.
INVESTMENT RESTRICITONS OF
IDEX AEGON INCOME PLUS
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 one-third 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 one-third
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 bankers'
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;
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<PAGE>
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 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:
(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 Commodity Futures Trading
Commission ("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
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
11
<PAGE>
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;
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 of Trustees 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 one-third 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, the fund may adopt policies permitting:
(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 the fund, 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 ("SEC") for exemption
from enforcement proceedings under Section 17(f) or 18(f) of 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.
The fund does not intend in the foreseeable future to adopt the foregoing
investment policies to permit trading
12
<PAGE>
in interest rate futures contracts, options thereon, and options on portfolio
securities.
As a matter of fundamental policy, the fund will invest 80% of its assets in tax
exempt securities that are not subject to alternate minimum tax. 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.
INVESTMENT RESTRICITONS OF
IDEX GE INTERNATIONAL EQUITY
(FORMERLY IDEX GE/SCOTTISH EQUITABLE
INTERNATIONAL EQUITY)
IDEX GE 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 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,
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<PAGE>
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. 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.
INVESTMENT RESTRICTIONS OF
IDEX GE U.S. EQUITY
The fund may not, as a matter of fundamental policy:
1. With respect to 75% of the fund's total assets, purchase the
securities of any one issuer (other than 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 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' acceptances. For purposes of this
restriction, (a) the government of a country, other than the United States, will
be viewed as one industry; and (b) all supranational organizations together will
be viewed as one industry.
3. 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).
4. Invest directly in real estate or interests in real estate; 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. 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 the repurchase
agreements).
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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 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 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 margin or guarantee positions in futures, options, swaps or forward
contracts, or the segregation of assets in connection with such contracts.
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 Fund 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 Commidity 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 commitment
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 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, 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 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. Investments by the fund in GEI Short-Term
Investment Fund, a private 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 ("GEIC"), are not subject to
this restriction, pursuant to and in accordance with necessary regulatory
approvals.
(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 margin or guarantee positions in futures,
options, swaps or forward contracts or the segregation of assets in connection
with such contracts.
(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 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.
(G) The fund may not invest in companies for the purpose of exercising
control or management.
With respect to investment restriction 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.
INVESTMENT RESTRICTIONS OF
IDEX DEAN ASSET ALLOCATION
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;
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<PAGE>
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
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;
16
<PAGE>
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 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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<PAGE>
INVESTMENT RESTRICTIONS OF
IDEX NWQ VALUE EQUITY
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;
18
<PAGE>
(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 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 C.A.S.E. GROWTH
IDEX C.A.S.E. 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 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;
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<PAGE>
(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 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 TRANSAMERICA SMALL COMPANY
AND IDEX TRANSAMERICA EQUITY
Each fund may not, as a matter of fundamental policy:
1. With respect to 75% of the fund's total assets, purchase the
securities of any one issuer (other than 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 exceed 5% 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. Borrow from banks for temporary or emergency (not leveraging)
purposes, including the meeting of redemption requests and cash payments of
dividends and distributions that might otherwise require the untimely
disposition of securities, in an amount not to exceed 33.33% of the value of the
fund's total assets (including the amount borrowed) valued at market less
liabilities (not including the amount borrowed) at the time the borrowing is
made. Whenever outstanding borrowings, not including reverse repurchase
agreements, represent 5% or more of the fund's total assets, the fund will not
make any additional investments.
3. Lend its assets or money to other persons, except through (a)
purchasing debt obligations, (b) lending securities in an amount not to exceed
33.33% of the fund's assets taken at market value, (c) entering into repurchase
agreements (d) trading in financial futures contracts, index futures contracts,
securities indexes and options on financial futures contracts, options on index
futures contracts, options on securities and options on securities indexes and
(e) entering into variable rate demand notes.
4. Purchase securities (other than U.S. government securities) of any
issuer if, as a result of the purchase, more than 5% of the fund's total assets
would be invested in the securities of the issuer, except that up to 25% of the
value of the total assets of the fund may be invested without regard to this
limitation. All securities of a foreign government and its agencies will be
treated as a single issuer for purposes of this restriction.
5. Purchase more than 10% of the voting securities of any one issuer, or
more than 10% of the oustanding securities of any class of issuer, except that
(a) this limitation is not applicable to the fund's investments in government
securities and (b) up to 25% of the value of the
20
<PAGE>
assets of the fund may be invested without regard to these 10% limitations. All
securities of a foreign government and its agencies will be treated as a single
issuer for purposes of this restriction. These limitations are subject to any
further limitations under the 1940 Act.
6. Invest more than 25% of the value of its total assets in securities
issued by companies engaged in any one industry, including non-domestic banks
or any foreign government. This limitation does not apply to securities issued
or guaranteed by the United States government, its agencies or
instrumentalities.
7. Underwrite any issue of securities, except to the extent that the sale
of securities in accordance with the fund's investment objective, policies and
limitations may be deemed to be an underwriting, and except that the fund may
acquire securities under circumstances in which, if the securities were sold,
the fund might be deemed to be an underwriter for purposes of the 1933 Act.
8. Purchase or sell real estate or real estate limited partnership
interests, or invest in oil, gas or mineral leases, or mineral exploration or
development programs, except that the fund may (a) invest in securities secured
by real estate, mortgages or interests in real estate or mortgages, (b)
purchase securities issued by companies that invest or deal in real estate,
mortgages or interests in real estate or mortgages, (c) engage in the purchase
and sale of real estate as necessary to provide it with an office for the
transaction of business or (d) acquire real estate or interests in real estate
securing an issuer's obligations, in the event of a default by that issuer.
9. Make short sales of securities or maintain a short position unless, at
all times when a short position is open, the fund owns an equal amount of the
securities or securities convertible into or exchangeable for, without payment
of any further consideration, securities of the same issue as, and equal in
amount to, the securities sold short.
10. Purchase securities on margin, except that the fund may obtain any
short-term credits necessary for the clearance of purchases and sales of
securities. For purposes of this restriction, the deposit or payment of initial
or variation margin in connection with futures contracts, financial futures
contracts or related options, and options on securities, and options on
securities indexes will not be deemed to be a purchase of securities on margin
by the fund.
11. Invest in commodities, except that the fund may invest in futures
contracts (including financial futures contracts or securities index futures
contracts) and related options and other similar contracts as described in this
Statement of Additional Information and in the prospectus.
Furthermore, the funds have adopted the following non-fundamental investment
restrictions which may be changed by the Board of Trustees without shareholder
approval:
(A) The fund 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 permitted under
the 1940 Act, if as a result of the purchase: (a) more than 10% of the value of
the fund's total assets would be invested in the securities of investment
companies; (b) more than 5% of the value of the fund's total assets would be
invested in the securities of any one investment company; or (c) the fund would
own more than 3% of the total outstanding voting securities of any investment
company.
(B) The fund may not invest in companies for the purposes of exercising
control or management.
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
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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 ("FTCM"), 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 FTCM 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 FTCM. 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 FTCM 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 FTCM 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 FTCM's other customers. The fund's sub-adviser will
attempt to minimize the risk by careful monitoring of the creditworthiness of
the FTCMs 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 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
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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 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
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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.
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.
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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 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
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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 other
deposited 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.
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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 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
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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.
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 upon
price (which may be in U.S. dollars or
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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.
The matching of the increase in value of a forward currency 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 contract.
While forward currency contracts are not currently regulated by the CFTC, the
CFTC may in the future assert authority to regulate forward currency contracts.
In such event, a fund's ability to utilize forward currency contracts may be
restricted. In addition, a fund may not always be able to enter into forward
currency 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
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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, enters 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 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.
INDEX OPTIONS. In seeking to hedge all or a portion of its investments, a fund
may purchase and write put and call options on securities indices listed on U.S.
or foreign securities exchanges or traded in the over-the-counter market, which
indices include securities held in the funds. The funds with such option writing
authority may write only covered options. A fund may also use securities index
options as a means of participating in a securities market without making direct
purchases of securities.
A securities index measures the movement of a certain group of securities by
assigning relative values to the securities included in the index. Options on
securities indices are generally similar to options on specific securities.
Unlike options on securities, however, options on securities indices do not
involve the delivery on an underlying security; the option in the case of an
option on a securities index represents the holder's right to obtain from the
writer in cash a fixed multiple of the
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amount by which the exercise price exceeds (in the case of a call) or is less
than (in the case of a put) the closing value of the underlying securities index
on the exercise date. A fund may purchase and write put and call options on
securities indices or securities index futures contracts that are traded on a
U.S. exchange or board of trade or a foreign exchange, to the extent permitted
under rules and interpretations of the CFTC, as a hedge against changes in
market conditions and interest rates, and for duration management, and may enter
into closing transactions with respect to those options to terminate existing
positions. A securities index fluctuates with changes in the market values of
the securities included in the index. Securities index options may be based on a
broad or narrow market index or on an industry or market segment.
The delivery requirements of options on securities indices differ from options
on securities. Unlike a securities option, which contemplates the right to take
or make delivery of securities at a specified price, an option on a securities
index gives the holder the right to receive a cash "exercise settlement amount"
equal to (i) the amount, if any, by which the fixed exercise price of the option
exceeds (in the case of a put) or is less than (in the case of a call) the
closing value of the underlying index on the date of exercise, multiplied by
(ii) a fixed "index multiplier." Receipt of this cash amount will depend upon
the closing level of the securities index upon which the option is based being
greater than, in the case of a call, or less than, in the case of a put, the
exercise price of the option. The amount of cash received will be equal to the
difference between the closing price of the index and the exercise price of the
option expressed in dollars times a specified multiple. The writer of the option
is obligated, in return for the premium received, to make delivery of this
amount. The writer may offset its position in securities index options prior to
expiration by entering into a closing transaction on an exchange or it may allow
the option to expire unexercised.
The effectiveness of purchasing or writing securities index options as a hedging
technique will depend upon the extent to which price movements in the portion of
a securities portfolio being hedged correlate with price movements of the
securities index selected. Because the value of an index option depends upon
movements in the level of the index rather than the price of a particular
security, whether a fund realizes a gain or loss from the purchase of writing of
options on an index depends upon movements in the level of prices in the market
generally or, in the case of certain indices, in an industry or market segment,
rather than movements in the price of a particular security. As a result,
successful use by a fund of options on securities indices is subject to the
sub-adviser's ability to predict correctly movements in the direction of the
market generally or of a particular industry. This ability contemplates
different skills and techniques from those used in predicting changes in the
price of individual securities.
Securities index options are subject to position and exercise limits and other
regulations imposed by the exchange on which they are traded. The ability of a
fund to engage in closing purchase transactions with respect to securities index
options depends on the existence of a liquid secondary market. Although a fund
will generally purchase or write securities index options only if a liquid
secondary market for the options purchased or sold appears to exist, no such
secondary market may exist, or the market may cease to exist at some future
date, for some options. No assurance can be given that a closing purchase
transaction can be effected when the sub-adviser desires that a fund engage in
such a transaction.
WEBS AND OTHER INDEX-RELATED SECURITIES. A fund may invest in shares of an
investment company whose shares are known as "World Equity Benchmark Shares" or
"WEBS." WEBS have been listed for trading on the American Stock Exchange, Inc.
The funds also may invest in the CountryBaskets Index Fund, Inc., or another
fund the shares of which are the substantial equivalent of WEBS. A fund may
invest in S&P Depositary Receipts, or "SPDRs." SPDRs are securities that
represent ownership in a long-term unit investment trust that holds a portfolio
of common stocks designed to track the performance of the S&P 500 Index. A fund
investing in a SPDR would be entitled to the dividends that accrue to the S&P
500 stocks in the underlying portfolio, less trust expenses.
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
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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 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 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
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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
non-business 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.
GEI SHORT-TERM INVESTMENT FUND
The IDEX GE International Equity fund and IDEX GE U.S. Equity fund may invest in
the GEI Short-Term Investment Fund (the "Investment Fund"), an investment fund
created specifically to serve as a vehicle for the collective investment of cash
balances of accounts advised by GEIM or its affiliate, General Electric
Investment Corporation. The Investment Fund invests exclusively in certain money
market instruments. More particularly, the Investment Fund may invest in: (i)
securities issued or guaranteed by the U.S. government or one of its agencies or
instrumentalities, (ii) debt obligations of banks, savings and loan
institutions, insurance companies and mortgage bankers, (iii) commercial paper
and notes, including those with variable and floating rates of interest, (iv)
debt obligations of foreign branches of foreign banks, (v) debt obligations
issued or guaranteed by one or more foreign governments or any of their
political subdivisions, agencies or instrumentalities, including obligations of
supranational entities, (vi) debt securities issued by foreign issuers and (vii)
repurchase agreements. The Investment Fund is advised by GEIM. No advisory fee
is charged by GEIM to the Investment Fund, nor will the IDEX GE International
Equity fund and IDEX GE U.S. Equity fund incur any sales charge, redemption fee,
distribution fee or service fee in connection with its investments in the
Investment Fund.
WHEN-ISSUED, DELAYED SETTLEMENT AND
FORWARD DELIVERY SECURITIES
Securities may be purchased and sold on a "when-issued," "delayed settlement,"
or "forward (delayed) delivery" basis.
"When-issued" or "forward delivery" refers to securities whose terms are
available, and for which a market exists, but which are not available for
immediate delivery. When-issued or forward delivery transactions may be expected
to occur a month or more before delivery is due.
A fund may engage in when-issued transactions to obtain what is considered to be
an advantageous price and yield at the time of the transaction. When a fund
engages in when-issued or forward delivery transactions, it will do so for the
purpose of acquiring securities consistent with its investment objective and
policies and not for the purpose of investment leverage.
"Delayed settlement" is a term used to describe settlement of a securities
transaction in the secondary market which will occur sometime in the future. No
payment or delivery is made by a fund until it receives payment or delivery from
the other party for any of the above transactions.
The fund will segregate with its custodian cash, U.S. government securities or
other liquid assets at least equal to the value or purchase commitments until
payment is made. The segregated securities will either mature or, if necessary,
be sold on or before the settlement date. Typically, no income accrues on
securities purchased on a delayed delivery basis prior to the time delivery of
the securities is made, although a fund may earn income on securites it has
segregated to collateralize its delayed delivery purchases.
New issues of stocks and bonds, private placements and U.S. government
securities may be sold in this manner.
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RISK FACTORS
At the time of settlement, the market value of the security may be more or less
than the purchase price. A fund bears the risk of such market value
fluctuations. These transactions also involve the risk that the other party to
the transaction may default on its obligation to make payment or delivery. As a
result, the fund may be delayed or prevented from completing the transaction and
may incur additional costs as a consequence of the delay.
ZERO COUPON, PAY-IN-KIND AND
STEP COUPON SECURITIES
Subject to its 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 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 Fund 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
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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 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 adviser or
sub-adviser 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 its 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
35
<PAGE>
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 its 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.
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 has 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
36
<PAGE>
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 bonds, 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 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
37
<PAGE>
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 these funds will invest their 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. The RIF was created and is
operated pursuant to an Exemptive Order issued by the SEC (Investment Company
Act Release No. IC-22770, July 29, 1997).
The RIF must comply with the requirements of Rule 2a-7 under the 1940 Act
governing money market funds. To that end, the RIF invests at least 95% of its
total assets in prime money market instruments receiving the highest credit
rating from at least one Nationally Recognized Statistical Rating Organization.
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 the RIF to
the extent it is consistent with their objectives and programs and the terms of
the Exemptive Order issued by the SEC.
The 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.
38
<PAGE>
TURNOVER RATE
<TABLE>
<CAPTION>
FUND* OCTOBER 31, 1999 OCTOBER 31,1998
- ------------------------------------ ------------------ -----------------------------
<S> <C> <C>
IDEX Alger Aggressive Growth 142.08%
IDEX GE International Equity** 50.01%
IDEX JCC Capital Appreciation 136.59%
IDEX JCC Global 87.68%
IDEX JCC Growth 27.19%
IDEX C.A.S.E. Growth 147.01%
IDEX NWQ Value Equity 30.43%
IDEX LKCM Strategic Total Return 32.12%
IDEX Dean Asset Allocation 55.45%
IDEX JCC Balanced 61.50%
IDEX JCC Flexible Income 90.63%
IDEX AEGON Income Plus 53.09%
IDEX AEGON Tax Exempt 42.42%
IDEX Goldman Sachs Growth N/A
IDEX T. Rowe Price Dividend Growth N/A
IDEX T. Rowe Price Small Cap N/A
IDEX T. Rowe Price Salomon All Cap N/A
IDEX Pilgrim Baxter Mid Cap Growth N/A
</TABLE>
- ------------------------------
* Information is not included for IDEX Pilgrim Baxter Technology, IDEX GE U.S.
Equity, IDEX Transamerica Small Company and IDEX Transamerica Equity funds
as these funds commenced operations on March 1, 2000.
** Prior to March 1, 2000, Scottish Equitable Investment Management Limited
served as co-manager of this fund.
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.
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 the fund's average daily net 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
39
<PAGE>
assets; and for IDEX Alger Aggressive Growth, IDEX GE 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, IDEX T. Rowe
Price Small Cap, IDEX Pilgrim Baxter Technology, IDEX GE U.S. Equity, IDEX
Transamerica Small Company and IDEX Transamerica Equity, IMI receives 0.80% of
the first $500 million of each fund's average daily net assets and 0.70% of each
fund's average daily net assets over $500 million.
The duties and responsibilities of the investment adviser are specified in the
Advisory Agreement. The Advisory Agreement was approved by the Board of Trustees
(including a majority of trustees who are not parties to the Advisory Agreement
or interested persons, as defined by the 1940 Act, of any such party). The
Advisory 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 each fund and (b) by a majority vote of the Trustees who are not parties to
the Advisory Agreement or interested persons of any such party cast in person at
a special meeting called for such purposes.
The Advisory 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 Advisory Agreement relates, except for a breach of fiduciary duty or a
loss resulting from willful misfeasance, bad faith, gross negligence, or
reckless disregard on the part of IMI in the performance of its duties
thereunder.
The Advisory Agreement became effective as follows: IDEX AEGON Tax Exempt -
April 22, 1991; IDEX AEGON Income Plus - April 22, 1992; IDEX Alger Aggressive
Growth and IDEX LKCM Strategic Total Return - September 30, 1994; IDEX Dean
Asset Allocation - June 1, 1995; IDEX C.A.S.E. Growth - November 15, 1995; IDEX
NWQ Value Equity - October 30, 1996; IDEX GE International Equity - February 1,
1997; IDEX JCC Capital Appreciation, IDEX JCC Global, IDEX JCC Growth, IDEX JCC
Balanced and IDEX JCC Flexible Income - June 25, 1998; IDEX Pilgrim Baxter Mid
Cap Growth, IDEX T. Rowe Price Small Cap, IDEX Goldman Sachs Growth, IDEX T.
Rowe Price Dividend Growth, IDEX Salomon All Cap. - March 1, 1999; IDEX Pilgrim
Baxter Technology, IDEX GE U.S. Equity, IDEX Transamerica Small Company and IDEX
Transamerica Equity - March 1, 2000.
Each fund pays its allocable share of the fees and expenses of a fund's
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 funds permit 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 International Equity 1.45% of
average daily net assets; in the case of IDEX AEGON Income Plus, 1.25% of
average daily net assets; 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
other funds. The IDEX JCC Global does not have an expense limitation.
40
<PAGE>
<TABLE>
<CAPTION>
ADVISORY FEE AFTER REIMBURSEMENT
-------------------------------------------------
OCTOBER 31
-------------------------------------------------
FUND* ADVISER 1999 1998 1997
- ------------------------------------ --------- ------ -------------------- ---------------------
<S> <C> <C> <C> <C>
IDEX Alger Aggressive Growth IMI $ 344,018 $ 130,896
IDEX GE International Equity** IMI $ (64,180) $ (110,543)
IDEX JCC Capital Appreciation IMI $ 167,150 $ 45,071
IDEX JCC Global IMI $3,907,062 $ 2,224,062
IDEX JCC Growth IMI $1,352,188 $11,676,637
IDEX C.A.S.E. Growth IMI $ 36,124 $ (96,157)
IDEX NWQ Value Equity IMI $ 46,140 $ (63,589)
IDEX LKCM Strategic Total Return IMI $ 380,273 $ 127,630
IDEX Dean Asset Allocation IMI $ 325,285 $ 120,873
IDEX JCC Balanced IMI $ 206,736 $ (4,940)
IDEX JCC Flexible Income IMI $ 151,489 $ 60,744
IDEX AEGON Income Plus IMI $ 441,912 $ 416,928
IDEX AEGON Tax Exempt IMI $ 136,481 $ (7,330)
IDEX Goldman Sachs Growth IMI N/A N/A
IDEX T. Rowe Price Dividend Growth IMI N/A N/A
IDEX Salomon All Cap IMI N/A N/A
IDEX Pilgrim Baxter Mid Cap Growth IMI N/A N/A
IDEX T. Rowe Price Small Cap IMI N/A N/A
<CAPTION>
ADVISORY FEE REIMBURSEMENTS
-----------------------------------------
OCTOBER 31
-----------------------------------------
FUND* 1999 1998 1997
- ------------------------------------ ------ ------------------- --------------
<S> <C> <C> <C>
IDEX Alger Aggressive Growth $173,443 $192,695
IDEX GE International Equity** $117,653 $128,291
IDEX JCC Capital Appreciation $107,861 $193,491
IDEX JCC Global 0 0
IDEX JCC Growth 0 0
IDEX C.A.S.E. Growth $ 51,462 $150,161
IDEX NWQ Value Equity $ 93,563 $104,638
IDEX LKCM Strategic Total Return $ 30,860 $ 96,214
IDEX Dean Asset Allocation $ 8,119 $ 99,277
IDEX JCC Balanced $ 50,820 $139,247
IDEX JCC Flexible Income $ 186 $ 95,242
IDEX AEGON Income Plus 0 0
IDEX AEGON Tax Exempt $ 10,071 $155,172
IDEX Goldman Sachs Growth N/A N/A
IDEX T. Rowe Price Dividend Growth N/A N/A
IDEX Salomon All Cap N/A N/A
IDEX Pilgrim Baxter Mid Cap Growth N/A N/A
IDEX T. Rowe Price Small Cap N/A N/A
</TABLE>
- ------------------------------
* Information is not included for IDEX Pilgrim Baxter Technology, IDEX GE U.S.
Equity, IDEX Transamerica Small Company, and IDEX Transamerica Equity as
they did not commence operations until March 1, 2000.
** Prior to March 1, 2000, Scottish Equitable Investment Management Limited
served as co-manager of this fund.
Janus Capital Corporation ("JCC"), 100 Fillmore Street, Denver, CO 80206, serves
as sub-adviser to IDEX JCC Capital Appreciation, IDEX JCC Global, IDEX JCC
Growth, IDEX JCC Balanced and IDEX JCC Flexible Income pursuant to an Investment
Counsel Agreement dated June 25, 1998 with IMI.
Fred Alger Management, Inc. ("Alger"), 1 World Trade Center, Suite 9333, New
York, NY 10048, serves as sub-adviser to IDEX Alger Aggressive Growth pursuant
to an Investment Counsel Agreement dated September 30, 1994 with IMI.
Luther King Capital Management Corporation ("LKCM"), 301 Commerce Street, Suite
1600, Fort Worth, TX 76102, serves as 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 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 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 sub-adviser to IDEX NWQ Value Equity
pursuant to an Investment Counsel Agreement dated October 30, 1996.
GE Investment Management Inc. ("GEIM"), 3003 Summer Street, Stamford, CT 06905,
serves as sub-adviser to IDEX GE International Equity and IDEX GE U.S. Equity
pursuant to Sub-Advisory Agreements dated March 1, 2000
T. Rowe Price Associates, Inc. ("T. Rowe Price"), 100 E. Pratt Street,
Baltimore, MD 21202 serves as sub-adviser to 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 sub-adviser to IDEX Salomon All Cap pursuant to an Investment
Counsel Agreement dated March 1, 1999.
Pilgrim Baxter & Associates, Ltd. ("Pilgrim Baxter") 825 Dupportrail, Wayne, PA
19087 serves as sub-adviser to IDEX Pilgrim Baxter Mid Cap Growth pursuant to an
Investment Counsel Agreement dated March 1, 1999 and as sub-advisor to IDEX
Pilgrim Baxter Technology pursuant to a Sub-Advisory Agreement dated March 1,
2000.
41
<PAGE>
Goldman Sachs Asset Management ("GSAM") One New York Plaza, New York, NY 10004
serves as sub-adviser to 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 sub-adviser to IDEX AEGON Tax Exempt and IDEX
AEGON Income Plus pursuant to an Investment Counsel Agreement dated April 22,
1992.
Transamerica Investment Services, Inc., 1150 South Olive Street, Suite 2700, Los
Angeles, CA 90015, serves as sub-adviser to IDEX Transamerica Small Company and
IDEX Transamerica Equity pursuant to a Sub-Advisory Agreement dated March 1,
2000.
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 International Equity GE Investment Management 50% of the fees received by IMI under the
Incorporated Advisory Agreement
IDEX JCC Global Janus Capital Corporation 0.50% of the first $750 million of average daily
net assets; 0.45% of the 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 average daily net assets
IDEX Pilgrim Baxter Mid Cap Pilgrim Baxter & Associates, 0.50% of the first $100 million of average daily
Ltd. net assets; 0.40% of assets in excess of $100
million (from first dollar)
IDEX JCC Capital Appreciation Janus Capital Corporation 0.50% of the first $750 million of average daily
net assets; 0.45% of the 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. 50% of the fees received by IMI under the
Advisory Agreement, less 50% of any amount
reimbursed pursuant to its expense limitation
IDEX NWQ Value Equity NWQ Investment Management 50% of the fees received by IMI under the
Company, Inc. Advisory Agreement, less 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 average 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. 50% of the fees received by IMI under the
Advisory Agreement, less 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*
</TABLE>
42
<PAGE>
<TABLE>
<CAPTION>
FUND SUB-ADVISER SUB-ADVISORY FEE
- -------------------------------- -------------------------------- --------------------------------------------------
<S> <C> <C>
IDEX Goldman Sachs Growth Goldman Sachs Asset 0.50% of the first $50 million of average daily
Management 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 the first $100 million of average daily
Growth net assets and 0.40% of assets over $100
million (from first dollar)
IDEX Dean Asset Allocation Dean Investment Associates 50% of the fees received by IMI under the
Advisory Agreement, less 50% of any amount
reimbursed pursuant to its expense limitation
IDEX LKCM Strategic Total Luther King Capital 50% of the fees received by IMI under the
Return Management Corporation Advisory Agreement, less 50% of any amount
reimbursed pursuant to its expense limitation
IDEX JCC Balanced Janus Capital Corporation 0.50% of the 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 the 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 50% of the fees received by IMI under the
Management, Inc. Advisory Agreement, less 50% of any amount
reimbursed pursuant to its expense limitation
IDEX AEGON Tax Exempt AEGON USA Investment 50% of the fees received by IMI under the
Management, Inc. Advisory Agreement, less 50% of any amount
reimbursed pursuant to its expense limitation
IDEX Pilgrim Baxter Technology Pilgrim Baxter & Associates, 0.50% of the first $100 million or average daily
Ltd. assets; 0.40% of assets in excess of $100
million (from first dollar)
IDEX GE U.S. Equity GE Investment Management, 50% of the fees received by IMI under the
Inc. Advisory Agreement, less 50% of any amount
reimbursed pursuant to its expense limitation
IDEX Transamerica Small Transamerica Investment 50% of the fees received by IMI under the
Company Services, Inc. Advisory Agreement, less 50% of any amount
reimbursed pursuant to its expense limitation
IDEX Transamerica Equity Transamerica Investment 50% of the fees received by IMI under the
Services, Inc. Advisory Agreement, less 50% of any amount
reimbursed pursuant to its expense limitation
</TABLE>
- --------------
* Janus 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 $250 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.
43
<PAGE>
SUB-ADVISORY FEES PAID*
(NET OF FEES REIMBURSED)
<TABLE>
<CAPTION>
OCTOBER 31
---------------------------------------------------------------------
FUND 1999 1998 1997
- ------------------------------------ ----------- ------------------------------ ----------------------
<S> <C> <C> <C>
IDEX Alger Aggressive Growth $ $ 137,607 $ 52,325
IDEX GE International Equity $ $ 0 0
IDEX JCC Capital Appreciation $ $ 83,575 $ 22,536
IDEX JCC Global $ $1,953,531 $1,112,031
IDEX JCC Growth $ $6,769,684 $5,838,319
IDEX C.A.S.E. Growth $ $ 14,450 0
IDEX NWQ Value Equity $ $ 18,456 0
IDEX LKCM Strategic Total Return $ $ 152,109 $ 50,944
IDEX Dean Asset Allocation $ $ 130,114 $ 48,349
IDEX JCC Balanced $ $ 103,368 0
IDEX JCC Flexible Income $ $ 75,745 $ 30,372
IDEX AEGON Income Plus $ $ 220,956 $ 208,464
IDEX AEGON Tax Exempt $ $ 68,241 0
IDEX Goldman Sachs Growth $ N/A N/A
IDEX T. Rowe Price Dividend Growth $ N/A N/A
IDEX Salomon All Cap $ N/A N/A
IDEX Pilgrim Baxter Mid Cap Growth $ N/A N/A
IDEX T. Rowe Price Small Cap $ N/A N/A
</TABLE>
- ------------------------------
* Information is not included for IDEX Pilgrim Baxter Technology, IDEX GE U.S.
Equity, IDEX Transamerica Small Company, and IDEX Transamerica Equity as
they did not commence operations until March 1, 2000.
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 N.V., a Netherlands
corporation and publicly traded international insurance group.
Janus Capital has agreed that it will, until June 25, 2000, provided that it
continues to serve as sub-adviser to the funds it currently sub-advises and
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.
44
<PAGE>
DISTRIBUTOR
IDEX Mutual Funds has entered into an Underwriting Agreement with
InterSecurities, Inc. ("ISI"), located at 570 Carillon Parkway, St. Petersburg,
Florida 33716 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 FOR THE PERIOD COMMISSIONS RETAINED FOR THE
ENDED PERIOD ENDED
--------------------------------------- ---------------------------------
OCTOBER 31 OCTOBER 31
--------------------------------------- ---------------------------------
FUND 1999 1998 1997 1999 1998 1997
- ------------------------------------ ----------- ------------- ------------- ----------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
IDEX Alger Aggressive Growth $ $ 449,078 $ 330,689 $ $ 64,099 $ 47,828
IDEX GE International Equity** $ $ 64,324 $ 48,603 $ $ 9,250 $ 7,335
IDEX JCC Capital Appreciation $ $ 164,358 $ 271,016 $ $ 26,358 $ 42,668
IDEX JCC Global $ $2,784,651 $2,336,372 $ $401,257 $353,015
IDEX JCC Growth $ $2,848,238 $2,541,907 $ $424,803 $396,160
IDEX C.A.S.E. Growth $ $ 70,063 $ 69,637 $ $ 9,325 $ 10,625
IDEX NWQ Value Equity $ $ 172,567 $ 105,441 $ $ 25,433 $ 15,512
IDEX LKCM Strategic Total Return $ $ 419,778 $ 260,944 $ $ 67,470 $ 41,330
IDEX Dean Asset Allocation $ $ 186,182 $ 208,715 $ $ 28,499 $ 34,415
IDEX JCC Balanced $ $ 344,872 $ 174,256 $ $ 34,919 $ 27,931
IDEX JCC Flexible Income $ $ 40,463 $ 28,133 $ $ 1,530 $ 4,862
IDEX AEGON Income Plus $ $ 165,033 $ 99,411 $ $ 21,369 $ 17,322
IDEX AEGON Tax Exempt $ $ 30,201 $ 25,760 $ $ 5,356 $ 4,591
IDEX Goldman Sachs Growth $ $ $ $ $ $
IDEX T. Rowe Price Dividend Growth $ $ $ $ $ $
IDEX Salomon All Cap $ $ $ $ $ $
IDEX Pilgrim Baxter Mid Cap Growth $ $ $ $ $ $
IDEX T. Rowe Price Small Cap $ $ $ $ $ $
</TABLE>
For the Period Ended October 31, 1999:
<TABLE>
<CAPTION>
NET UNDERWRITING COMPENSATION ON
DISCOUNTS AND REDEMPTIONS AND BROKERAGE OTHER
FUND COMMISSIONS REPURCHASES COMMISSIONS COMPENSATION
- ------------------------------------ ------------------ ----------------- ------------- -------------
<S> <C> <C> <C> <C>
IDEX Alger Aggressive Growth $ $ $
IDEX GE 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
IDEX T. Rowe Price Small Cap
</TABLE>
- --------------
* Information is not included for IDEX Pilgrim Baxter Technology, IDEX GE U.S.
Equity, IDEX Transamerica Small Company, and IDEX Transamerica Equity as
they did not commence operations until March 1, 2000.
** Prior to March 1, 2000, Scottish Equitable Investment Management Limited
served as co-manager of this fund.
45
<PAGE>
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
Administrative Services Agreements ("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 each fund;
authorizing expenditures and approving bills for payment on behalf of each fund;
and providing executive, clerical and secretarial help needed to carry out its
duties.
ADMINISTRATIVE FEES*
ADMINISTRATIVE FEES FOR PERIOD ENDED
FUND OCTOBER 31, 1999
- ------------------------------- -------------------------------------
IDEX JCC Capital Appreciation $
IDEX JCC Global $
IDEX JCC Growth $
IDEX JCC Balanced $
IDEX JCC Flexible Income $
- ------------------------------
* Effective March 1, 1999, Idex Management, Inc. replaced ISI as investment
adviser to these funds.
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. ("IIS"), P. O. Box 9015, Clearwater, Florida
33758-9015, is the transfer agent for each fund, withholding agent and dividend
disbursing agent. IIS 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 $16.02 for each of its shareholder accounts in
existence, $2.79 for each new account opened and $1.67 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.") There were no brokerage credits received for
the periods ended October 31, 1999, 1998 and 1997.
46
<PAGE>
TRANSFER AGENCY FEES*
<TABLE>
<CAPTION>
FEES AND EXPENSES NET OF BROKERAGE CREDITS
FOR
THE PERIOD ENDED
--------------------------------------------
OCTOBER 31
FUND 1999 1998 1997
- ------------------------------------ ------------ ------------- -------------
<S> <C> <C> <C>
IDEX Alger Aggressive Growth $ $ 311,310 $ 217,941
IDEX GE International Equity** $ $ 25,385 $ 11,583
IDEX JCC Capital Appreciation $ $ 128,201 $ 133,515
IDEX JCC Global $ $1,032,225 $ 628,833
IDEX JCC Growth $ $2,628,305 $2,811,027
IDEX C.A.S.E. Growth $ $ 46,730 $ 32,500
IDEX NWQ Value Equity $ $ 71,985 $ 20,957
IDEX LKCM Strategic Total Return $ $ 145,685 $ 89,918
IDEX Dean Asset Allocation $ $ 107,100 $ 71,335
IDEX JCC Balanced $ $ 81,805 $ 48,876
IDEX JCC Flexible Income $ $ 32,859 $ 48,615
IDEX AEGON Income Plus $ $ 119,036 $ 86,126
IDEX AEGON Tax Exempt $ $ 21,690 $ 34,786
IDEX Goldman Sachs Growth $ $ $
IDEX T. Rowe Price Dividend Growth $ $ $
IDEX Salomon All Cap $ $ $
IDEX Pilgrim Baxter Mid Cap Growth $ $ $
IDEX T. Rowe Price Small Cap $ $ $
</TABLE>
- ------------------------------
* Information is not included for IDEX Pilgrim Baxter Technology, IDEX GE U.S.
Equity, IDEX Transamerica Small Company, and IDEX Transamerica Equity as
they did not commence operations until March 1, 2000.
** Prior to March 1, 2000, Scottish Equitable Investment Management Limited
served as co-manager of this fund.
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;
47
<PAGE>
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 funds' 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 exchanges and will retain
commissions in accordance with certain regulations of the 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, 1999, IDEX Alger Aggressive Growth paid
the following commissions to Fred Alger & Company, Incorporated:
COMMISSIONS PAID:
- -----------------
Fiscal 1999 $
Fiscal 1999 Percentages:
Commissions with affiliates to
total commissions %
Value of brokerage transactions
with affiliates to value of total
brokerage transactions %
As of October 31, 1999, IDEX JCC Balanced owned $___ and IDEX JCC Capital
Appreciation owned $___ 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 and IDEX JCC
Capital Appreciation during the fiscal year ended October 31, 1999.
As of October 31, 1999, IDEX LKCM Strategic Total Return owned a total of $___
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, 1999.
48
<PAGE>
BROKERAGE COMMISSIONS
<TABLE>
<CAPTION>
IDEX ALGER IDEX GE IDEX JCC IDEX NWQ
BROKERAGE COMMISSIONS PAID AGGRESSIVE INTERNATIONAL CAPITAL IDEX JCC IDEX JCC IDEX C.A.S.E. VALUE
(INCLUDING AFFILIATED BROKERAGE) GROWTH EQUITY* APPRECIATION GLOBAL GROWTH GROWTH EQUITY
- ---------------------------------- ------------ --------------- -------------- ---------- ------------- --------------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
October 31, 1999 $ $ $ $ $ $ $
October 31, 1998 $155,668 $17,998 $ 89,687 $954,707 $ 843,937 $38,910 $15,539
October 31, 1997 $ 79,346 $ 6,337 $108,748 $119,665 $1,301,654 $34,840 $10,553
AFFILIATED BROKERAGE PAID
- ----------------------------------
October 31, 1999 $ $ $ $ $ $ $
October 31, 1998 $154,866 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0
October 31, 1997 $ 78,761 0 0 0 0 0 0
</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, 1999 $ $ $ $ $ $
October 31, 1998 $39,334 $43,487 $46,796 $ 23,653 $0 $0
October 31, 1997 $26,187 $48,786 $42,482 $101,213 0 0
AFFILIATED BROKERAGE PAID
- ----------------------------------
October 31, 1999 $ $ $ $ $ $
October 31, 1998 $ 0 $ 0 $ 0 $ 0 $0 $0
October 31, 1997 0 0 0 0 0 0
</TABLE>
<TABLE>
<CAPTION>
IDEX PILGRIM
BROKERAGE COMMISSIONS PAID IDEX GOLDMAN IDEX T. ROWE PRICE IDEX SALOMON BAXTER IDEX T. ROWE PRICE
(INCLUDING AFFILIATED BROKERAGE) SACHS GROWTH DIVIDEND GROWTH ALL CAP MID CAP GROWTH SMALL CAP
- ---------------------------------- -------------- -------------------- -------------- ---------------- -------------------
<S> <C> <C> <C> <C> <C>
October 31, 1999 $ $ $ $ $
October 31, 1998 $ $ $ $ $
October 31, 1997 $ $ $ $ $
AFFILIATED BROKERAGE PAIC
- ----------------------------------
October 31, 1999 $ $ $ $ $
October 31, 1998 $ $ $ $ $
October 31, 1997 $ $ $ $ $
</TABLE>
- ------------------------------
* Prior to March 1, 2000, Scottish Equitable Investment Management Limited
served as co-manager of this fund.
During the fiscal year ended October 31, 1999, 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 $___ , $ ___ , $ ___ , $___ , $ ___ , $ ___ , $ ___ , $ ___ and $ ___
, respectively, which resulted in brokerage commission of $ ___ , $___ , $___ ,
$ ___ , $___ , $___ , $___ , $___ and $___ , 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 as 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
49
<PAGE>
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);
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.
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).
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).
PATRICK S. BAIRD (DOB / / ), 4333 Edgewood Road, NE, Cedar Rapids, Iowa
52499. President and Trustee (December 1999 - present);
JOHN E. KENNEY(1)(2) (DOB 02/08/38), Trustee (1987 to present) Chairman
(December 1989 to present), and CEO (December 1999 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 July 1999) and
Director (1985 to July 1999) 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.
THOMAS R. MORIARTY(1)(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 Funds; Director, Chief Executive Officer and
President (July 1999 to present) Senior Vice President (June 1991 to July
1999) 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).
JOHN K. CARTER (DOB / / ), Vice President, Secretary and Counsel (December
1999 - present), Assistant Vice President and Assistant Secretary (June
1999 - December 1999), of IDEX Mutual Funds; Assistant Vice President and
Counsel (September 1999 - present) of Western Reserve Life Insurance Co. of
Ohio.
THOMAS E. PIERPAN (1)((2)(DOB 10/18/43), Vice President and Assistant Secretary
(December 1999 - Present), Vice President, Associate General Counsel and
Secretary (December 1997 - December 1999), of IDEX Mutual Funds; Vice
President, Associate General Counsel and Secretary (December 1997 -
December 1999), 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); Senior Vice President and General Counsel (December 1999 -
present), Vice President (November 1993 - December 1999), Associate General
Counsel and Assistant Secretary (February 1995 - December 1999), Assistant
Vice President (November 1992 -
50
<PAGE>
November 1993) Western Reserve Life Assurance Co. of Ohio (life insurance).
CHRISTOPHER G. ROETZER(1)(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).
------------------------------
(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 $20,000 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) $4,000
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 $2,500 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 $2,500 plus incidental expenses 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, 1999.
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 ENDED 10/31/99 AS OF 10/31/99 10/31/99
<S> <C> <C> <C>
Peter R. Brown, Trustee $ $ $
Daniel Calabria, Trustee $ $ $
James L. Churchill, Trustee $ $ $
Charles C. Harris, Trustee $ $ $
Julian A. Lerner, Trustee $ $ $
William W. Short, Jr., Trustee $ $ $
Jack E. Zimmerman, Trustee $ $ $
Total $ $ $
</TABLE>
- ------------------------------
* Of this aggregate compensation, the total amounts deferred (including
earnings) and accrued for the benefit of the participating Trustees for the
year ended October 31, 1999 were as follows: Peter R. Brown, $___ ; Daniel
Calabria, $ ___ ; James L. Churchill, $___ ; and Jack E. Zimmerman, $ ___ .
** 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.
51
<PAGE>
The Fund has an Executive Committee whose members currently are John R. Kenney,
G. John Hurley and Peter R. Brown. The executive committee may perform all of
the functions which may be performed by the Board of Trustees, except as set
forth in the Declaration of Trust and By-Laws of the Fund or as prohibited by
applicable law.
During the fiscal year ended October 31, 1999, the Fund paid $167,404 in
trustees fees and expenses, and no trustee emeritus fees or expenses. As of
January 30, 2000, 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 four classes
of shares. (IDEX JCC Growth also includes a fifth class, Class T shares, which
are not available for new investors.) Class A, Class B, Class C 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, Class M and Class T shares.) The
prospectus contains detailed information about the purchase of fund shares.
DEALER REALLOWANCES
IDEX sells shares of its funds both directly and through authorized dealers.
When you buy shares, your fund receives the entire NAV of the shares you
purchase. ISI keeps the sales charge, then "reallows" a portion to the dealers
through which shares were purchased. This is how dealers are compensated.
From time to time, ISI will create special promotions in which dealers earn
larger reallowances in return for selling significant amounts of shares or for
certain training services. Sometimes, these dealers may earn virtually the
entire sales charge; at those times, they may be deemed underwriters as
described in the 1933 Act.
Promotions may also involve non-cash incentives such as prizes or merchandise.
Non-cash compensation may also be in the form of attendance at seminars
conducted by ISI, including lodging and travel expenses, in accordance with the
rules of the NASD.
Reallowances may also be given to financial institutions to compensate them for
their services in connection with Class A share sales and servicing of
shareholder accounts.
ISI may also pay dealers or financial institutions from its own funds or
administrative services for larger accounts.
CLASS A SHARE DEALER REALLOWANCES
(all funds except IDEX JCC Flexible Income, IDEX AEGON Income Plus
and IDEX AEGON Tax Exempt)
REALLOWANCE TO DEALERS AS A %
AMOUNT OF PURCHASE OF OFFERING PRICE
- -------------------------------- ------------------------------
Under $50,000 4.75%
$50,000 to under $100,000 4.00%
$100,000 to under $250,000 2.75%
$250,000 to under $500,000 2.25%
$500,000 to under $1,000,000 1.75%
$1,000,000 to under $2,500,000 1.00%
$2,500,000 to under $4,000,000 0.75%
$4,000,000 to under $5,000,000 0.50%
$5,000,000 and over 0.25%
52
<PAGE>
CLASS A SHARE DEALER REALLOWANCES
(IDEX JCC Flexible Income, IDEX AEGON Income Plus
and IDEX AEGON Tax Exempt)
REALLOWANCE TO DEALERS AS A %
AMOUNT OF PURCHASE OF OFFERING PRICE
- -------------------------------- ------------------------------
Under $50,000 4.00%
$50,000 to under $100,000 3.25%
$100,000 to under $250,000 2.75%
$250,000 to under $500,000 1.75%
$500,000 to under $1,000,000 1.00%
$1,000,000 to under $2,500,000 0.50%
$2,500,000 to under $4,000,000 0.35%
$4,000,000 to under $5,000,000 0.20%
$5,000,000 and over 0.15%
CLASS B SHARE DEALER REALLOWANCES
DEALER REALLOWANCE %
---------------------
All purchases 5.00%
CLASS T SHARE DEALER REALLOWANCES
(IDEX JCC Growth)
REALLOWANCE TO DEALERS AS A %
AMOUNT OF PURCHASE OF OFFERING PRICE
- --------------------- -----------------------------
$1,000,000 and over 1.00%
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, Class C 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
Agreements, the Trustees considered the possible advantages afforded
shareholders from adopting the Distribution Plans and Distribution Agreements.
The Trustees were informed by representatives of ISI that reimbursements of
distribution-related expenses by the Fund under the Distribution Plans 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 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 C shares (the "Class C Plans"), a fund may pay ISI an
annual distribution fee of
53
<PAGE>
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 C 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, Class C 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, Class C 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, Class C 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 Disinterested 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 Disinterested Trustees of the
Fund and have no direct or indirect financial interest in the operation of the
Plan or any agreement relating thereto, 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 Disinterested Trustees, cast in person at a meeting
called for the purpose of voting on such continuance.
DISTRIBUTION FEES
Distribution related expenses incurred by ISI for the fiscal year ended October
31, 1999 are listed in the table below. These expenses have been partially
reimbursed to ISI by a 12b-1 arrangement with the funds.
<TABLE>
<CAPTION>
IDEX ALGER IDEX GE/SCOTTISH EQUITABLE
AGGRESSIVE GROWTH INTERNATIONAL EQUITY
-------------------------------- ----------------------------
A B M* A B M*
SHARES SHARES SHARES SHARES SHARES SHARES
---------- ---------- ---------- ---------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Advertising $ $ $ $ $ $
Printing/mailing
prospectuses to
other than current
shareholders $ $ $ $ $ $
Compensation to
underwriters $ $ $ $ $ $
Compensation to dealers $ $ $ $ $ $
Compensation to sales
personnel $ $ $ $ $ $
Interest or other finance
charges $ $ $ $ $ $
Travel $ $ $ $ $ $
Office expenses $ $ $ $ $ $
Administrative processing
costs $ $ $ $ $ $
TOTAL $ $ $ $ $ $
<CAPTION>
IDEX JCC
CAPITAL APPRECIATION IDEX JCC GLOBAL
---------------------------- ----------------------------------
A B M* A B M*
SHARES SHARES SHARES SHARES SHARES SHARES
---------- -------- -------- ---------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Advertising $ $ $ $ $ $
Printing/mailing
prospectuses to
other than current
shareholders $ $ $ $ $ $
Compensation to
underwriters $ $ $ $ $ $
Compensation to dealers $ $ $ $ $ $
Compensation to sales
personnel $ $ $ $ $ $
Interest or other finance
charges $ $ $ $ $ $
Travel $ $ $ $ $ $
Office expenses $ $ $ $ $ $
Administrative processing
costs $ $ $ $ $ $
TOTAL $ $ $ $ $ $
</TABLE>
- --------------
* All shares designated as Class C shares prior to March 1, 1999 were renamed
as Class M shares on that date. Effective November 1, 1999, each fund began
offering a new Class C share that has different fees and expenses than the
previous Class C share. Information is not included for the new Class C
share because the Fund began offering those shares on November 1, 1999.
54
<PAGE>
<TABLE>
<CAPTION>
IDEX JCC GROWTH* IDEX C.A.S.E. GROWTH IDEX NWQ VALUE EQUITY
-------------------------------- -------------------------- ---------------------------
A B M** A B M** A B M**
SHARES SHARES SHARES SHARES SHARES SHARES SHARES SHARES SHARES
---------- ---------- ---------- -------- -------- -------- -------- -------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Advertising $ $ $ $ $ $ $ $ $
Printing/mailing prospectuses to other
than current shareholders $ $ $ $ $ $ $ $ $
Compensation to underwriters $ $ $ $ $ $ $ $ $
Compensation to dealers $ $ $ $ $ $ $ $ $
Compensation to sales personnel $ $ $ $ $ $ $ $ $
Interest or other finance charges $ $ $ $ $ $ $ $ $
Travel $ $ $ $ $ $ $ $ $
Office expenses $ $ $ $ $ $ $ $ $
Administrative processing costs $ $ $ $ $ $ $ $ $
TOTAL $ $ $ $ $ $ $ $ $
</TABLE>
<TABLE>
<CAPTION>
IDEX LKCM STRATEGIC TOTAL RETURN IDEX DEAN ASSET ALLOCATION
--------------------------------- --------------------------------
A B M** A B M**
SHARES SHARES SHARES SHARES SHARES SHARES
----------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Advertising $ $ $ $ $ $
Printing/mailing prospectuses to other
than current shareholders $ $ $ $ $ $
Compensation to underwriters $ $ $ $ $ $
Compensation to dealers $ $ $ $ $ $
Compensation to sales personnel $ $ $ $ $ $
Interest or other finance charges $ $ $ $ $ $
Travel $ $ $ $ $ $
Office expenses $ $ $ $ $ $
Administrative processing costs $ $ $ $ $ $
TOTAL $ $ $ $ $ $
<CAPTION>
IDEX JCC BALANCED
--------------------------------
A B M**
SHARES SHARES SHARES
---------- ---------- ----------
<S> <C> <C> <C>
Advertising $ $ $
Printing/mailing prospectuses to other
than current shareholders $ $ $
Compensation to underwriters $ $ $
Compensation to dealers $ $ $
Compensation to sales personnel $ $ $
Interest or other finance charges $ $ $
Travel $ $ $
Office expenses $ $ $
Administrative processing costs $ $ $
TOTAL $ $ $
</TABLE>
<TABLE>
<CAPTION>
IDEX JCC FLEXIBLE INCOME IDEX AEGON INCOME PLUS IDEX AEGON TAX EXEMPT
---------------------------- ------------------------------ -------------------------
A B M** A B M** A B M**
SHARES SHARES SHARES SHARES SHARES SHARES SHARES SHARES SHARES
---------- -------- -------- ---------- ---------- -------- -------- -------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Advertising $ $ $ $ $ $ $ $ $
Printing/mailing prospectuses to other
than current shareholders $ $ $ $ $ $ $ $ $
Compensation to underwriters $ $ $ $ $ $ $ $ $
Compensation to dealers $ $ $ $ $ $ $ $ $
Compensation to sales personnel $ $ $ $ $ $ $ $ $
Interest or other finance charges $ $ $ $ $ $ $ $ $
Travel $ $ $ $ $ $ $ $ $
Office expenses $ $ $ $ $ $ $ $ $
Administrative processing costs $ $ $ $ $ $ $ $ $
TOTAL $ $ $ $ $ $ $ $ $
</TABLE>
<TABLE>
<CAPTION>
IDEX T. ROWE PRICE
IDEX GOLDMAN SACHS GROWTH DIVIDEND GROWTH
------------------------------ --------------------------------
A B M** A B M**
SHARES SHARES SHARES SHARES SHARES SHARES
---------- -------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Advertising $ $ $ $ $ $
Printing/mailing prospectuses to other
than current shareholders $ $ $ $ $ $
Compensation to underwriters $ $ $ $ $ $
Compensation to dealers $ $ $ $ $ $
Compensation to sales personnel $ $ $ $ $ $
Interest or other finance charges $ $ $ $ $ $
Travel $ $ $ $ $ $
Office expenses $ $ $ $ $ $
Administrative processing costs $ $ $ $ $ $
TOTAL $ $ $ $ $ $
<CAPTION>
IDEX SALOMON ALL CAP
------------------------------
A B M**
SHARES SHARES SHARES
---------- -------- ----------
<S> <C> <C> <C>
Advertising $ $ $
Printing/mailing prospectuses to other
than current shareholders $ $ $
Compensation to underwriters $ $ $
Compensation to dealers $ $ $
Compensation to sales personnel $ $ $
Interest or other finance charges $ $ $
Travel $ $ $
Office expenses $ $ $
Administrative processing costs $ $ $
TOTAL $ $ $
</TABLE>
55
<PAGE>
<TABLE>
<CAPTION>
IDEX PILGRIM BAXTER MID CAP
GROWTH
------------------------------
A B M**
SHARES SHARES SHARES
---------- -------- ----------
<S> <C> <C> <C>
Advertising $ $ $
Printing/mailing prospectuses to other than current shareholders $ $ $
Compensation to underwriters $ $ $
Compensation to dealers $ $ $
Compensation to sales personnel $ $ $
Interest or other finance charges $ $ $
Travel $ $ $
Office expenses $ $ $
Administrative processing costs $ $ $
TOTAL $ $ $
<CAPTION>
IDEX T. ROWE PRICE SMALL CAP
--------------------------------
A B M**
SHARES SHARES SHARES
---------- ---------- ----------
<S> <C> <C> <C>
Advertising $ $ $
Printing/mailing prospectuses to other than current shareholders $ $ $
Compensation to underwriters $ $ $
Compensation to dealers $ $ $
Compensation to sales personnel $ $ $
Interest or other finance charges $ $ $
Travel $ $ $
Office expenses $ $ $
Administrative processing costs $ $ $
TOTAL $ $ $
</TABLE>
- --------------
* Class T shares of IDEX JCC Growth are not subject to annual distribution
and service fees.
** All shares designated as Class C shares prior to March 1, 1999 were renamed
as Class M shares on that date. Effective November 1, 1999, each fund began
offering a new Class C share that has different fees and expenses than the
previous Class C share. Information is not included for the new Class C
share because the Fund began offering those shares on November 1, 1999.
Expenses are not listed for IDEX Pilgrim Baxter Technology, IDEX GE U.S. Equity,
IDEX Transamerica Small Company, and IDEX Transamerica Equity as these funds
commenced operations March 1, 2000.
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 C, 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, Class M 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. (Information is not included in the chart below for IDEX Pilgrim
Baxter Technology, IDEX GE U.S. Equity, IDEX Transamerica Small Company, and
IDEX Transamerica Equity as these funds commenced operations March 1, 2000.)
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, 1999 (NET ASSETS/SHARES OUTSTANDING) SELLING COMMISSION CHARGE PER SHARE
- ------------------------------ --------------------------------- -------------------- ----------------- ---------------
<S> <C> <C> <C> <C>
IDEX Alger Aggressive Growth
Class A $ % $ $
Class B $ % $ $
Class M* $ % $ $
IDEX GE/Scottish Equitable
International Equity
Class A $ % $ $
Class B $ % $ $
Class M* $ % $ $
IDEX JCC Capital Appreciation
Class A $ % $ $
</TABLE>
56
<PAGE>
<TABLE>
<CAPTION>
NET ASSET VALUE PER SHARE ADD MAXIMUM AMOUNT OF SALES OFFERING PRICE
AS OF OCTOBER 31, 1999 (NET ASSETS/SHARES OUTSTANDING) SELLING COMMISSION CHARGE PER SHARE
- ----------------------------------- --------------------------------- -------------------- ----------------- ----------------
<S> <C> <C> <C> <C>
Class B $ % $ $
Class M* $ % $ $
IDEX JCC Global
Class A $ % $ $
Class B $ % $ $
Class M* $ % $ $
IDEX JCC Growth
Class A $ % $ $
Class B $ % $ $
Class M* $ % $ $
Class T $ % $ $
IDEX C.A.S.E. Growth
Class A $ % $ $
Class B $ % $ $
Class M* $ % $ $
IDEX NWQ Value Equity
Class A $ % $ $
Class B $ % $ $
Class M* $ % $ $
IDEX LKCM Strategic Total Return
Class A $ % $ $
Class B $ % $ $
Class M* $ % $ $
IDEX Dean Asset Allocation
Class A $ % $ $
Class B $ % $ $
Class M* $ % $ $
IDEX JCC Balanced
Class A $ % $ $
Class B $ % $ $
Class M* $ % $ $
IDEX JCC Flexible Income
Class A $ % $ $
Class B $ % $ $
Class M* $ % $ $
IDEX AEGON Income Plus
Class A $ % $ $
Class B $ % $ $
Class M* $ % $ $
IDEX AEGON Tax Exempt
Class A $ % $ $
Class B $ % $ $
Class M* $ % $ $
IDEX Goldman Sachs Growth
Class A $ % $ $
Class B $ % $ $
Class M* $ % $ $
IDEX T. Rowe Price Dividend Growth
Class A $ % $ $
Class B $ % $ $
Class M* $ % $ $
IDEX Salomon All Cap
Class A $ % $ $
Class B $ % $ $
Class M* $ % $ $
IDEX Pilgrim Baxter Mid Cap Growth
Class A $ % $ $
Class B $ % $ $
Class M* $ % $ $
IDEX T. Rowe Price Small Cap
Class A $ % $ $
Class B $ % $ $
Class M* $ % $ $
</TABLE>
- --------------
* All shares designated as Class C shares prior to March 1, 1999 were renamed
as Class M shares on that date. Effective November 1, 1999, each fund began
offering a new Class C share that has different fees and expenses than the
previous Class C share. Information is not included for the new Class C
share because the Fund began offering those shares on November 1, 1999.
57
<PAGE>
DIVIDENDS AND OTHER DISTRIBUTIONS
An investor may choose among several options with respect to dividends and
capital gains 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, Class C 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, Class C and Class M shares.
SHAREHOLDER ACCOUNTS
Detailed information about general procedures for Shareholder Accounts and
specific types of accounts isset 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. 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 identification 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 1-888-233-4339
(toll free) or write to 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.
58
<PAGE>
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 SHARE AND CLASS M SHARE AND CERTAIN CLASS A AND CLASS T 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 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 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 ("SWP")
with respect to the shareholder's investment in a fund. Under the SWP, a dollar
amount of a participating shareholder's investment in the fund will be redeemed
systematically by the fund on a periodic basis, and the proceeds paid in
accordance with the 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 SWP. The CDSC will be waived on
redemptions made under the SWP subject to the limitations described below.
The amount of a shareholder's investment in a fund at the time election to
participate in the SWP is made with respect to the fund is hereinafter referred
to as the "Initial Account Balance." The amount to be systematically withdrawn
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 SWP and the ability to offer the
SWP.
(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
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 59 1/2, 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.
59
<PAGE>
TAXES
Each fund has 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 a 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 the outstanding
voting securities of the issuer; and (3) at the close of each quarter of a
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 gains 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
IRS 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
60
<PAGE>
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). A fund 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 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 a RIC.
The treatment of income dividends and capital gains 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_____ , 2000, 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 LKCM Strategic Total Return, IDEX Dean Asset Allocation, IDEX
JCC Balanced or IDEX JCC Flexible Income. National Heritage Foundation for the
benefit of VORA, Falls Church, Virginia, owns approximately ___ % of the
outstanding shares of beneficial interest of the IDEX GE/Scottish Equitable
International Equity-A; Donaldson, Lufkin & Jenrette Securities Corporation,
Jersey City, New Jersey, owns approximately ___ % of the outstanding shares of
beneficial interest of the IDEX GE International Equity-A, and ISI owned
beneficially or of record approximately ___ % of the IDEX GE International
61
<PAGE>
Equity-A; Alan R. and Donna May Hostetler JD, Williamsburg, VA own
approximately % of outstanding shares of beneficial ownership of IDEX GE
International Equity-M; Timothy and Deborah O'Donnell, Orlando, FL own % of
the outstanding shares of beneficial ownership of IDEX GE International
Equity-M; and ISI owns % of GE International Equity-M, and % of IDEX
C.A.S.E. Growth-A, % of IDEX NWQ Value Equity-A, % of IDEX Goldman Sachs
Growth-A, % of IDEX Goldman Sachs Growth-B, % of IDEX Goldman Sachs
Growth-M, % of IDEX T. Rowe Price Dividend Growth-A, % of IDEX T. Rowe
Price Dividend Growth-B, % of IDEX T. Rowe Price Dividend Growth-M, %
of IDEX T. Rowe Price Small Cap-A, % of IDEX T. Rowe Price Small Cap-B,
% of IDEX T. Rowe Price Small Cap-M, % of IDEX Salomon All Cap-A, 12.8%
of IDEX Salomon All Cap-B, % of IDEX Salomon All Cap-M, % of IDEX
Pilgrim Baxter Mid Cap Growth-A, % of IDEX Pilgrim Baxter Mid Cap Growth-B
and % of IDEX Pilgrim Baxter Mid Cap Growth-M; Bear Stearns Securities
Corp., Brooklyn, NY owns approximately % of the outstanding shares of
beneficial interest of IDEX AEGON Tax Exempt-A; Donald Lufkin & Jenrette
Securities Corporation, Inc. owns approximately % of the outstanding shares
of beneficial interest of IDEX AEGON Tax Exempt-M; Stephen P. Elias owns
approximately % of the outstanding shares of beneficial interest of IDEX
AEGON Tax Exempt-M; Prudential Securities, Inc. owns approximately % of the
outstanding shares of beneficial interest of IDEX AEGON Income Plus-M on behalf
of Patricia Jennings Bober Trust, approximately % of IDEX AEGON Income
Plus-M on behalf of the Neal B.Schneider Family Trust, approximately % of
IDEX AEGON Income Plus-M on behalf of the James Schneider Family Trust,
approximately % of the IDEX JCC Flexible Income-B on behalf of R.C.
Gambatesa, and approximately % of IDEX Salomon All Cap-M; Neil & Walana N.
Ulrich, Clear Lake, WI own approximately % of the outstanding shares of
beneficial interest of IDEX AEGON Tax Exempt-B; Irby & Jessie Judice, Beaumont,
Texas own approximately % of the outstanding shares of beneficial interest
of IDEX AEGON Tax Exempt-B; Ernest Roodhouse, Greenville, IL owns approximately
% of the outstanding shares of beneficial interest of IDEX AEGON Tax
Exempt-B; Margaret Wallace, Cedar Rapids, IA owns approximately % of the
outstanding shares of beneficial interest of IDEX AEGON Tax Exempt-B; A.G.
Edwards & Sons on behalf of Eleonora Karanauskas, New York, NY, owns
approximately % of the outstanding shares of beneficial ownership of IDEX
Goldman Sachs Growth-M; Donaldson Lufkin & Jenrette Securities Corporation,
Inc. owns approximately % of the outstanding shares of beneficial ownership
of IDEX T. Rowe Price Dividend Growth-M; First Clearing Corporation, Augusta,
GA on behalf of David Fitzgerald owns approximately % of the outstanding
shares of beneficial interest of T. Rowe Price Dividend Growth-M; Investors
Fiduciary Trust Co. on behalf of Christopher Mills owns approximately % of
the outstanding shares of beneficial ownership of IDEX T. Rowe Price Dividend
Growth-M and approximately % of the outstanding shares of beneficial
ownership of IDEX Salomon All Cap-B on behalf of Margaret Freeman; Gordon
Davis, Forest Hills, NY owns approximately % of the outstanding shares of
beneficial interest in IDEX T. Rowe Price Small Cap-M approximately % of the
outstanding shares of beneficial interest in IDEX Salomon All Cap-M; and
Compania Financiera De Inversiones FHR S.A., Miami, FL owns approximately %
of IDEX Pilgrim Baxter Mid Cap Growth-B; and State Street Bank and Trust
Company as Trustee for the ConAgra Retirement Income Savings Plan, Boston,
Massachusetts, owned approximately % of the outstanding shares of
beneficial interest of IDEX JCC Growth.
As of ,2000 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 % of the outstanding shares and PFL Life
Insurance Company owned % of the outstanding shares.
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
62
<PAGE>
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 four classes,
Class A, Class B, Class C and Class M shares; IDEX JCC Growth includes a fifth
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 and
are subject to a CDSC on purchases of $1 million or more if redeemed within 24
months of purchase; Class B shares are subject to a CDSC, or back-end load, at a
declining rate; Class C shares are not subject to an initial sales charge or
CDSC; Class M shares are subject to an initial sales charge and are subject to a
CDSC if redeemed within 18 months of purchase; Class B, Class C 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 and are subject to a CDSC if redeemed with 24
months of purchase. Class T shares have 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 a 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
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<PAGE>
(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, M and Class T shares) is deducted from the initial $1,000
investment and all dividends and distributions are paid in additional shares.
(No information is included for the new Class C shares as the Fund began
offering those shares on
November 1, 1999.)
AVERAGE ANNUAL TOTAL RETURN
<TABLE>
<CAPTION>
IDEX ALGER AGGRESSIVE IDEX GE INTERNATIONAL IDEX JCC CAPITAL
GROWTH EQUITY APPRECIATION
AS OF OCTOBER 31, 1999 CLASS CLASS**** CLASS
- -------------------------------------- -------------------------- -------------------------- -------------------------
A B M*** A B M*** A B M***
-------- -------- -------- -------- -------- -------- -------- -------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Inception Date
Sales Charge * *
12b-1 Fee
Average Annual Total Return Including
Sales Charges:
1 year
5 years
10 years
Inception
Average Annual Total Return Without
Deduction of Sales Charge:
1 year
5 years
10 years
Inception
Cumulative Total Return Without
Deduction of Sales Charge:
1 year
5 years
10 years
Inception
</TABLE>
- --------------
**** Prior to March 1, 2000, Scottish Equitable Investment Management Limited
co-managed this fund.
<TABLE>
<CAPTION>
IDEX JCC GLOBAL IDEX JCC GROWTH IDEX C.A.S.E. GROWTH
AS OF OCTOBER 31, 1999 CLASS CLASS CLASS
- -------------------------------------- -------------------------- ----------------------------------- -------------------------
A B M*** A B M*** T** A B M**
-------- -------- -------- -------- -------- -------- -------- -------- -------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Inception Date
Sales Charge * *
12b-1 Fee
Average Annual Total Return Including
Sales Charges:
1 year
5 years
10 years
Inception
Average Annual Total Return Without
Deduction of Sales Charge:
1 year
5 years
10 years
Inception
Cumulative Total Return Without
Deduction of Sales Charge:
1 year
5 years
10 years
Inception
</TABLE>
64
<PAGE>
<TABLE>
<CAPTION>
TION
IDEX LKCM STRATEGIC TOTAL
IDEX NWQ VALUE EQUITY RETURN IDEX DEAN ASSET ALLOCA
AS OF OCTOBER 31, 1999 CLASS CLASS CLASS
- -------------------------------------- -------------------------- -------------------------- -------------------------
A B M*** A B M*** A B M***
-------- -------- -------- -------- -------- -------- -------- -------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Inception Date
Sales Charge
12b-1 Fee
Average Annual Total Return
Including Sales Charges:
1 year
5 years
10 years
Inception
Average Annual Total Return Without
Deduction of Sales Charge:
1 year
5 years
10 years
Inception
Cumulative Total Return Without
Deduction of Sales Charge:
1 year
5 years
10 years
Inception
</TABLE>
<TABLE>
<CAPTION>
IDEX JCC BALANCED IDEX JCC FLEXIBLE INCOME IDEX AEGON INCOME PLUS
AS OF OCTOBER 31, 1999 CLASS CLASS CLASS
- -------------------------------------- -------------------------- -------------------------- -------------------------
A B M*** A B M*** A B M***
-------- -------- -------- -------- -------- -------- -------- -------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Inception Date
Sales Charge
12b-1 Fee
Average Annual Total Return Including
Sales Charge:
1 year
5 years
10 years
Inception
Average Annual Total Return Without
Deduction of Sales Charge:
1 year
5 years
10 years
Inception
Cumulative Total Return Without
Deduction of Sales Charge:
1 year
5 years
10 years
Inception
</TABLE>
65
<PAGE>
<TABLE>
<CAPTION>
IDEX T. ROWE PRICE SMALL
IDEX PILGRIM BAXTER MID CA CAP
IDEX AEGON TAX EXEMPT GROWTH P
AS OF OCTOBER 31, 1999 CLASS CLASS CLASS
- ------------------------------------ -------------------------- -------------------------- -------------------------
A B M*** A B M A B M
-------- -------- -------- -------- -------- -------- -------- -------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Inception Date
Sales Charge
12B-1 Fee
Average Annual Total Return
Including Sales Charges:
1 year
5 years
10 years
Inception
Average Annual Total Return Without
Deduction of Sales Charge:
1 year
5 years
10 years
Inception
Cumulative Total Return Without
Deduction of Sales Charge:
1 year
5 years
10 years
Inception
</TABLE>
<TABLE>
<CAPTION>
IDEX T. ROWE PRICE DIVIDEND
GROWTH IDEX GOLDMAN SACHS GROWTH
AS OF OCTOBER 31, 1999 CLASS CLASS
- ------------------------------------ -------------------------- -------------------------
A B M A B M
-------- -------- -------- -------- -------- -------
<S> <C> <C> <C> <C> <C> <C>
Inception Date
Sales Charge
12B-1 Fee
Average Annual Total Return
Including Sales Charges:
1 year
5 years
10 years
Inception
Average Annual Total Return Without
Deduction of Sales Charge:
1 year
5 years
10 years
Inception
Cumulative Total Return Without
Deduction of Sales Charge:
1 year
5 years
10 years
Inception
</TABLE>
- --------------
* The contingent 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 A, M and T 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.
**** Prior to March 1, 2000, Scottish Equitable Investment Management Limited
co-managed this fund.
66
<PAGE>
Information is not included for IDEX Pilgrim Baxter Technology, IDEX GE U.S.
Equity, IDEX Transamerica Small Company, and IDEX Transamerica Equity as they
did not commence operations until March 1, 2000.
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 10/31/99
---------------
<S> <C>
IDEX LKCM STRATEGIC TOTAL RETURN
Class A %
Class B %
Class M* %
IDEX JCC BALANCED
Class A %
Class B %
Class M* %
IDEX JCC FLEXIBLE INCOME
Class A %
Class B %
Class M* %
IDEX AEGON TAX EXEMPT
Class A %
Class B %
Class M* %
IDEX AEGON INCOME PLUS
Class A %
Class B %
Class M* %
IDEX DEAN ASSET ALLOCATION
Class A %
Class B %
Class M* %
</TABLE>
- ------------------------------
* All shares designated as Class C shares prior to March 1, 1999 were renamed
as Class M shares on that date. Effective November 1, 1999, each fund began
offering a new Class C share that has different fees and expenses than the
previous Class C share. Information is not included for the new Class C
share because the Fund began offering those shares on November 1, 1999.
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 Class A, Class B and Class M shares based on a 30-day period ended
October 31, 1999 was %, % and %, 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 WEKK, MONEY, MODERN MATURITY,
67
<PAGE>
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 M 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, Class M and Class T shares or the contingent deferred sales charge
applicable to Class B and under certain circumstances Class A, Class M and Class
T 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, 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 for the fiscal
year ended October 31, 1999 are incorporated by reference from the Fund's Annual
Report dated October 31, 1999.
68
<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:
A-1
<PAGE>
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 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
A-2
<PAGE>
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.
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. 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
A-3
<PAGE>
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.
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 1940 Act, 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
A-4
<PAGE>
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 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.
A-5
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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
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.
A-6
<PAGE>
IDEX MUTUAL FUNDS
OTHER INFORMATION
PART C
ITEM 23. EXHIBITS
- -------- --------
List all exhibits filed as part of the Registration Statement.
(a) Restatement of Declaration of Trust (1)
(b) Bylaws, as amended (1)
(c) Not Applicable
(d) (1) Management and Investment Advisory Agreement
(aa) IDEX Alger Aggressive Growth (1)
(bb) IDEX GE International Equity (1)
(cc) Agreement for IDEX JCC Capital Appreciation,
Global, Growth, Balanced and Flexible Income (6)
(dd) IDEX C.A.S.E. Growth (3)
(ee) IDEX NWQ Value Equity (2)
(ff) IDEX LKCM Strategic Total Return (1)
(gg) IDEX Dean Asset Allocation (1)
(hh) IDEX AEGON Income Plus (1)
(ii) IDEX AEGON Tax Exempt (1)
(jj) Form of 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(6)
(kk) Form of Agreement for IDEX GE U.S. Equity,
IDEX Transamerica Small Company. IDEX
Transamerica Equity and IDEX Pilgrim Baxter
Technology
(2) Investment Counsel (Sub-Advisory) Agreement
(aa) IDEX Alger Aggressive Growth (1)
(bb) (i) IDEX GE Equitable International Equity (2)
(cc) Agreement for IDEX JCC Capital Appreciation,
Global, Growth, Balanced and Flexible Income (6)
(dd IDEX C.A.S.E. Growth (3)
(ee) IDEX NWQ Value Equity (5)
(ff) IDEX LKCM Strategic Total Return (1)
(gg) IDEX Dean Asset Allocation (4)
(hh) IDEX AEGON Income Plus (1)
(ii) IDEX AEGON Tax Exempt (1)
(jj) Form of Agreement for IDEX Goldman Sachs Growth (6)
(kk) Form of Agreement for IDEX T. Rowe Price Dividend
Growth and Small Cap (6)
(ll) Form of Agreement for IDEX Salomon All Cap (6)
(mm) Form of Agreement for IDEX Pilgrim Baxter Mid Cap
Growth (6) (nn) Form of Agreement for IDEX GE U.S.
Equity
(oo) Form of Agreement for IDEX Pilgrim Baxter Technology
(pp) Form of Agreement for IDEX Transamerica Small Company
and IDEX Transamerica Equity
(e) Underwriting Agreement (5)
1
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(1) Dealer's Sales Agreement (9)
(2) Service Agreement (9)
(3) Wholesaler's Agreement (3)
(f) Trustees/Directors Deferred Compensation Plan (2)
(g) Custody Agreement (2)
(h) (1) Transfer Agency Agreement with Idex Investor Services, Inc.
(1)
(2) Administrative Services Agreement
(a) IDEX JCC Capital Appreciation (1)
(b) IDEX JCC Global (1)
(c) IDEX JCC Growth (1)
(d) IDEX JCC Balanced (1)
(e) IDEX JCC Flexible Income (1)
(f) Form of Agreement for IDEX Alger Aggressive Growth,
IDEX GE International Equity, IDEX C.A.S.E. Growth,
IDEX NWQ Value Equity, IDEX LKCM Strategic Total
Return, IDEX Dean Asset Allocation, IDEX AEGON Income
Plus and IDEX AEGON Tax Exempt. (6)
(g) Form of Agreement for 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. (6)
(h) Form of Agreement for IDEX Pilgrim Baxter Technology,
IDEX GE U.S. Equity, IDEX Transamerica Small Company
and IDEX Transamerica Equity
(i) Opinion of Counsel (10)
(j) (1) Consent of PricewaterhouseCoopers LLP (10)
(2) Consent of Sutherland Asbill & Brennan, LLP (10)
(k) Not Applicable
(l) Investment Letter from Sole Shareholder (1)
(m) (1) Plan of Distribution under Rule 12b-1 - Class A Shares
(aa) IDEX Alger Aggressive Growth (1)
(bb) IDEX GE International Equity (1)
(cc) IDEX JCC Capital Appreciation (1)
(dd) IDEX JCC Global (1)
(ee) IDEX JCC Growth (1)
(ff) IDEX C.A.S.E. Growth (3)
(gg) IDEX NWQ Value Equity (1)
(hh) IDEX LKCM Strategic Total Return (1)
(ii) IDEX Dean Asset Allocation (5)
(jj) IDEX JCC Balanced (1)
(kk) IDEX JCC Flexible Income (1)
(ll) IDEX AEGON Income Plus (1)
(mm) IDEX AEGON Tax Exempt (1)
(nn) Form of Plan for IDEX Goldman Sachs Growth (6)
- ----------
2
<PAGE>
(oo) Form of Plan for IDEX T. Rowe Price Dividend Growth
(6)
(pp) Form of Plan for IDEX Salomon All Cap (6)
(qq) Form of Plan for IDEX Pilgrim Baxter Mid Cap Growth
(6)
(rr) Form of Plan for IDEX T. Rowe Price Small Cap (6)
(ss) Form of Plan for IDEX Pilgrim Baxter Technology,
IDEX GE U.S. Equity, IDEX Transamerica Small
Company and IDEX Transamerica Equity
(2) Plan of Distribution under Rule 12b-1 - Class B Shares
(aa) IDEX Alger Aggressive Growth (1)
(bb) IDEX GE International Equity (1)
(cc) IDEX JCC Capital Appreciation (1)
(dd) IDEX JCC Global (1)
(ee) IDEX JCC Growth (1)
(ff) IDEX C.A.S.E. Growth (4)
(gg) IDEX NWQ Value Equity (1)
(hh) IDEX LKCM Strategic Total Return (1)
(ii) IDEX Dean Asset Allocation (5)
(jj) IDEX JCC Balanced (1)
(kk) IDEX JCC Flexible Income (1)
(ll) IDEX AEGON Income Plus (1)
(mm) IDEX AEGON Tax-Exempt (1)
(nn) Form of Plan for IDEX Goldman Sachs Growth (6)
(oo) Form of Plan for IDEX T. Rowe Price Dividend Growth
(6)
(pp) Form of Plan for IDEX Salomon All Cap (6)
(qq) Form of Plan for IDEX Pilgrim Baxter Mid Cap Growth
(6)
(rr) Form of Plan for IDEX T. Rowe Price Small Cap (6)
(ss) Form of Plan for IDEX Pilgrim Baxter Technology, IDEX
GE U.S. Equity, IDEX Transamerica Small Company and
IDEX Transamerica Equity
(3) Plan of Distribution under Rule 12b-1 - Class C Shares (9)
(aa) IDEX Alger Aggressive Growth (9)
(bb) IDEX GE International Equity (9)
(cc) IDEX JCC Capital Appreciation (9)
(dd) IDEX JCC Global (9) (ee) IDEX JCC Growth (9)
(ff) IDEX C.A.S.E. Growth (9)
(gg) IDEX NWQ Value Equity (9)
(hh) IDEX LKCM Strategic Total Return (9)
(ii) IDEX Dean Asset Allocation (9)
(jj) IDEX JCC Balanced (9)
(kk) IDEX JCC Flexible Income (9)
(ll) IDEX AEGON Income Plus (9)
(mm) IDEX AEGON Tax Exempt (9)
(nn) Form of Plan for IDEX Goldman Sachs Growth (9)
(oo) Form of Plan for IDEX T. Rowe Price Dividend Growth
(9)
(pp) Form of Plan for IDEX Salomon All Cap (9)
(qq) Form of Plan for IDEX Pilgrim Baxter Mid Cap Growth
(9)
(rr) Form of Plan for IDEX T. Rowe Price Small Cap (9)
(ss) Form of Plan for IDEX Pilgrim Baxter Technology, IDEX
GE U.S. Equity, IDEX Transamerica Small Company and
IDEX Transamerica Equity
(4) Plan of Distribution under Rule 12b-1 - Class M Shares
(aa) IDEX Alger Aggressive Growth (1)
3
<PAGE>
(bb) IDEX GE International Equity (1)
(cc) IDEX JCC Capital Appreciation (1)
(dd) IDEX JCC Global (1)
(ee) IDEX JCC Growth (1)
(ff) IDEX C.A.S.E. Growth (4)
(gg) IDEX NWQ Value Equity (1)
(hh) IDEX LKCM Strategic Total Return (1)
(ii) IDEX Dean Asset Allocation (5)
(jj) IDEX JCC Balanced (1)
(kk) IDEX JCC Flexible Income (1)
(ll) IDEX AEGON Income Plus (1)
(mm) IDEX AEGON Tax Exempt (1)
(nn) Form of Plan for IDEX Goldman Sachs Growth (6)
(oo) Form of Plan for IDEX T. Rowe Price Dividend Growth
(6)
(pp) Form of Plan for IDEX Salomon All Cap (6)
(qq) Form of Plan for IDEX Pilgrim Baxter Mid Cap Growth
(6)
(rr) Form of Plan for IDEX T. Rowe Price Small Cap (6)
(ss) Form of Plan for IDEX Pilgrim Baxter Technology,
IDEX GE U.S. Equity, IDEX Transamerica Small
Company and IDEX Transamerica Equity
(n) Financial Data Schedule (10)
(o) Multiple Class Shares (9)
- ----------
(1) Filed previously with Post-Effective Amendment No. 24 to Registration
Statement filed on November 15, 1996 (File No. 33-2659).
(2) Filed previously with Post-Effective Amendment No. 25 to Registration
Statement filed on January 31, 1997 (File No. 33-2659)
(3) Filed previously with Post-Effective Amendment No. 20 to Registration
Statement filed on November 17, 1995 (File No. 33-2659).
(4) Filed previously with Post-Effective Amendment No. 18 to Registration
Statement filed on June 30, 1995 (File No. 33-2659).
(5) Filed previously with Post-Effective Amendment No. 26 to Registration
Statement filed on July 16, 1997 (File No. 33-2659).
(6) Filed previously with Post-Effective Amendment No. 29 to Registration
Statement filed on December 15, 1998 (File No. 33-2659).
(7) Filed previously by the registrant with the registration statement filed on
Form N-14 on June 3, 1996 (File No. 33-05113).
(8) Filed previously with Post-Effective Amendment No. 30 to Registration
Statement filed on March 1, 1999 (File No. 33-2659).
(9) Filed previously with Post-Effective Amendment No. 31 to Registration
Statement filed on September 2, 1999 (File No. 33-2659).
(10) To be filed by amendment.
ITEM 24 PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT
To the knowledge of the Registrant, IDEX GE International Equity, IDEX
Alger Aggressive Growth, 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, IDEX Goldman Sachs
Growth, IDEX T. Rowe Price Dividend Growth, IDEX Salomon All Cap, IDEX Pilgrim
Baxter Mid Cap Growth, IDEX T. Rowe Price Small Cap, IDEX Pilgrim Baxter
Technology, IDEX GE U.S. Equity, IDEX Transamerica Small Company and IDEX
Transamerica Equity are not controlled by or under common control with any other
person. The Registrant has no subsidiaries.
4
<PAGE>
ITEM 25 INDEMNIFICATION
Provisions relating to indemnification of the Registrant's Trustees and
employees are included in Registrant's Restatement of Declaration of Trust and
Bylaws which are incorporated herein by reference.
Insofar as indemnification for liability arising under the Securities
Act of 1933 may be permitted to Trustees, officers and controlling persons, or
otherwise, Registrant has been advised that in the opinion of the Commission
such indemnification may be against public policy as expressed in the Act and
may be, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by Registrant of expenses
incurred or paid by a Trustee, officer or controlling person of Registrant in
the successful defense of any action, suit or proceeding) is asserted by such
Trustee, officer or controlling person in connection with the securities being
registered, Registrant will, unless in the opinion of its counsel the matter has
been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
ITEM 26 BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISERS
(a). IDEX JCC Capital Appreciation, IDEX JCC Global, IDEX JCC
Growth, IDEX JCC Balanced, IDEX JCC Flexible Income, IDEX
Alger Aggressive Growth, IDEX GE International Equity, IDEX
CA.S.E. Growth, IDEX NWQ Value Equity, IDEX LKCM Strategic
Total Return, IDEX Dean Asset Allocation,, 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, IDEX T. Rowe Price Small Cap,
IDEX Pilgrim Baxter Technology, IDEX GE U.S. Equity, IDEX
Transamerica Small Company and IDEX Transamerica Equity:
The only business of Idex Management, Inc. ("IMI") is to serve as the
investment adviser to each Fund of IDEX Mutual Funds.
* * *
Janus Capital Corporation also serves as sub-adviser to certain of the
mutual funds within the WRL Series Fund and as investment adviser or sub-adviser
to other mutual funds, and for private and retirement accounts. Thomas H.
Bailey, Trustee, Chairman and President of Janus Investment Fund and Janus Aspen
Series, Chairman, CEO, Director and President of the Sub-Adviser Director of
Janus Distributors, Inc., and Chairman and Director of Idex Management, Inc.,
has no business, profession, vocation or employment of a substantial nature
other than his positions with Idex Management, Inc. and Janus Capital
Corporation. James P. Craig, Executive Vice President and Trustee of Janus
Investment Fund and Janus Aspen Series, Director, Vice Chairman and Chief
Investment Officer of Janus Capital Corporation, has no substantial business,
profession, vocation or employment other than his positions with Janus Capital
Corporation. Michael N. Stolper, a Director of Janus Capital Corporation, is
President of Stolper & Company, 525 "B" Street, Suite 1080, San Diego, CA 92101,
an investment performance consultant. Michael E. Herman, a Director of Janus
Capital Corporation, is Chairman of the Finance Committee of Ewing Marion
Kauffman Foundation, 4900 Oak, Kansas City, MO 64112. Thomas A. McDonnell, a
Director of Janus Capital Corporation, is President, Director and CEO of DST
Systems, Inc., 333 West 11th Street, 5th Floor, Kansas City, MO 64105, a
provider of data processing and recordkeeping services for various mutual funds.
Landon H. Rowland, a Director of Janus Capital, President and Chief Executive
Officer of Kansas City Southern Industries, Inc. Steven R. Goodbarn is Vice
President and Chief Financial Officer of Janus Investment Fund and Janus Aspen
Series, Vice President of Finance, Treasurer and Chief Financial officer of
Janus Capital Corporation, Janus Service Corporation and Janus Distributors,
Inc., Director of Janus Distributors, Inc., Janus Service Corporation, and Idex
Management, Inc. and Vice President of Finance of Janus Capital International
Ltd., Margie G. Hurd, Vice President and Chief Operations Officer of Janus
Capital, Director and President of Janus Service Corporation. Mark B. Whiston,
Vice President and Chief Marketing Officer of Janus Capital, Director and
President of Janus Capital International, Ltd. Sandy R. Rufenacht, Executive
Vice President of Janus Investment Fund and Aspen Series, and Assistant Vice
President of Janus Capital. Helen Young Hayes, Scott W. Schoelzel, and Ronald V.
Speaker are each a Vice President of Janus Capital Corporation and an Executive
Vice President of Janus Investment Fund and Janus Aspen Series.
* * *
Fred Alger Management, Inc. ("Alger Management"), the Sub-Adviser to
IDEX Alger Aggressive Growth,
5
<PAGE>
is a wholly-owned subsidiary of Fred Alger & Company, Incorporated ("Alger,
Inc.") which in turn is a wholly-owned subsidiary of Alger Associates, Inc., a
financial services holding company. Alger Management is generally engaged in
rendering investment advisory services to mutual funds, institutions and, to a
lesser extent, individuals.
Fred M. Alger III, serves as Chairman of the Board, David D. Alger
serves as President and Director, Gregory S. Duch serves as Treasurer and Mary
Marsden-Cochran serves as Secretary of the following companies: Alger
Associates, Inc.; Alger Management; Alger, Inc.; Alger Properties, Inc., Alger
Shareholder Services, Inc.; Alger Life Insurance Agency, Inc.; and Castle
Convertible Fund, Inc. Fred M. Alger also serves as Chairman of the Board of
Analysts Resources, Inc. ("ARI") and Chairman of the Board and Trustee of The
Alger Fund, The Alger American Fund, Spectra Fund and The Alger Retirement Fund.
David D. Alger also serves as Executive Vice President and Director of ARI and
as President and Trustee of The Alger Fund, The Alger American Fund, Spectra
Fund and The Alger Retirement Fund. Gregory S. Duch also serves as Treasurer of
ARI, The Alger Fund, The Alger American Fund, Spectra Fund and The Alger
Retirement Fund. Mary Marsden-Cochran also serves as Secretary of ARI, The Alger
Fund, Spectra Fund, The Alger American Fund and The Alger Retirement Fund. The
principal business address of each of the companies listed above, other than
Alger, Inc., is 1 World Trade Center, Suite 9333, New York, NY 10048. The
principal business address of Alger, Inc. is 30 Montgomery Street, Jersey City,
NJ 07302.
* * *
GE Investment Management Incorporated ("GEIM") serves as Sub-Adviser
for IDEX GE International Equity and IDEX GE U.S. Equity. GEIM is a wholly-owned
subsidiary of General Electric Company ("GE"). GEIM's principal officers and
directors serve in similar capacities with respect to General Electric
Investment Corporation ("GEIC," and, together with GEIM, collectively referred
to as "GE Investments"), which like GEIM is a wholly-owned subsidiary of GE. The
directors and executive officers of GEIM are: John H. Myers, President and
Director, Michael J. Cosgrove, Executive Vice President and Director, Alan M.
Lewis, Executive Vice President, General Counsel, and Director; Robert A.
MacDougall, Executive Vice President; Eugene K. Bolton, Executive Vice President
and Director; Donald W. Torey, Executive Vice President and Director, Ralph R.
Layman, Executive Vice President and Director, Thomas J. Szkutak, Executive Vice
President, Chief Financial Officer and Director and Geoffrey R. Norman,
Executive Vice President and Director. All of these officers and/or directors
have no substantial business, profession, vocation or employment other than
their positions with GEIC and its affiliates.
* * *
C.A.S.E. Management, Inc. ("C.A.S.E".), sub-adviser to IDEX C.A.S.E.
Growth, is a registered investment advisory firm and a wholly-owned subsidiary
of C.A.S.E., Inc. C.A.S.E., Inc. is indirectly controlled by William Edward
Lange, President and Chief Executive Officer of C.A.S.E. C.A.S.E. provides
investment management services to financial institutions, high net worth
individuals, and other professional money managers.
William E. Lange is the President, Chief Executive Officer and Founder;
Robert G. Errigo, Executive Vice President; John Gordon, Senior Vice President;
and Bruce H. Jordan, Senior Vice President. Officers of C.A.S.E. have no other
business, professions, vocations or employments of a substantial nature. The
business address of each of the officers is 5355 Town Center Road, Suite 702,
Boca Raton, FL 33486.
* * *
NWQ Investment Management Company, Inc. ("NWQ") serves as Sub-Adviser
for IDEX NWQ Value Equity. NWQ is a Massachusetts corporation and is a
wholly-owned subsidiary of United Asset Management Corporation. NWQ provides
investment advice to individuals, pension funds, profit sharing funds,
charitable institutions, educational institutions, trust accounts, corporations,
insurance companies, municipalities and governmental agencies.
The directors and officers of NWQ are listed below. Unless otherwise
indicated, each director and officer has held the positions listed for at least
the past two years and is located at NWQ's principal business address of 2049
Century Park East, 4th Floor, Los Angeles, CA 90067: David A. Polak, President,
Chief Investment Officer; Edward C. Friedel, Jr., Managing Director; Jon D.
Bosse, Executive Managing Director (Feb. 1999)/Director Equity Research; James
H. Galbreath (Denver), Managing Director; Mary-Gene Slaven, Secretary/Treasurer
& Managing Director; James P. Owen, Managing Director; Michael C. Mendez
(Scottsdale, AZ), Executive Managing Director (Feb. 1999); Phyllis G. Thomas,
Managing Director; Louis T. Chambers (Atlanta), Vice President, Justin T.
Clifford, Managing
6
<PAGE>
Director; Jeffrey M. Cohen, Vice President; Ronald R. Halverson (Minneapolis,
MN), Vice President; Thomas J. Laird, Managing Director, Karen S. McCue, Vice
President; Martin Pollack, Vice President; Ronald R. Sternal (Minneapolis, MN),
Vice President and Michael Wood (San Fransisco), Vice President.
* * *
Luther King Capital Management Corporation, the Sub-Adviser to the IDEX LKCM
Strategic Total Return, is a registered investment adviser providing investment
management services.
Luther King Capital Management Corporation also provides investment
management services to individual and institutional investors on a private
basis. J. Luther King, Jr., President of the Sub-Adviser, Paul W. Greenwell,
Robert M. Holt, Jr., Scot C. Hollmann, David L. Dowler, Joan M. Maynard, Vincent
G. Melashenko, Steven R. Purvis, Timothy E. Harris, and Barbara S. Garcia,
officers of Luther King Capital Management Corporation, have no substantial
business, profession, vocation or employment other than their positions with
Luther King Capital Management Corporation.
* * *
Dean Investment Associates ("Dean"), the Sub-Adviser to IDEX Dean Asset
Allocation, is a division of C.H. Dean and Associates, Inc. Dean is the money
management division of C.H. Dean and Associates, Inc. Dean became a registered
investment adviser in October, 1972 and will assume all of the investment
advisory functions. C.H. Dean and Associates is a Nevada corporation (6/30/95)
which was an Ohio corporation originally incorporated on March 28, 1975.
Chauncey H. Dean is the Chairman and Chief Executive Officer; Robert D.
Dean is President; Frank H. Scott is Senior Vice President; John C. Riazzi is
Vice President and Director of Consulting Services; Richard M. Luthman is Senior
Vice President. The business address of each of the Officers of the Sub-Adviser
is 2480 Kettering Tower, Dayton, Ohio 45423-2480.
* * *
AEGON USA Investment Management, Inc. ("AIMI"), the Sub-Adviser to IDEX
AEGON Income Plus and IDEX AEGON Tax Exempt, is an Iowa corporation which was
incorporated on April 12, 1989. AIMI became a registered investment adviser on
March 16, 1992 and has assumed all of the investment advisory functions of AEGON
USA Securities, Inc. ("AEGON Securities"). AIMI and AEGON Securities are
wholly-owned subsidiaries of First AUSA Holding Company which is a wholly-owned
subsidiary of AEGON USA, Inc.
AIMI also serves as sub-adviser to WRL Series Fund's WRL AEGON Balanced
and WRL AEGON Bond. Douglas C. Kolsrud is Director, Chairman of the Board and
President of AIMI; Director, Senior Vice President, Chief Investment Officer and
Corporate Actuary of Life Investors Insurance Company of America ("LIICA"),
Bankers United Life Assurance Company ("Bankers United"), PFL Life Insurance
Company ("PFL Life"); First AUSA Life Insurance Company ("First AUSA") and
Monumental Life Insurance Company ("Monumental Life"); Director, Chief
Investment Officer and Vice President of Monumental General Casualty Company
("Monumental General") and Commonwealth General Corporation; Senior Vice
President, Chief Investment Officer and Corporate Actuary of Western Reserve
Life Assurance Co. of Ohio ("Western Reserve"); Director and President of AIMI;
Executive Vice President of AEGON USA, Inc.; Chief Investment Officer of
Diversified Financial Products Inc., and Director of United Financial Services,
Inc., Realty Information Systems, Inc., AEGON USA Realty Advisors Inc.,
Southlife, Inc.and Quantra Corporation; Brenda K. Clancy, Director, Treasurer,
Vice President and Chief Financial Officer of LIICA and Monumental Life;
Treasurer, Vice President and Chief Financial Officer of Bankers United and PFL
Life; Director, Treasurer and Vice President of First AUSA and Investors
Warranty of America, Inc.; Director, Treasurer and Cashier of Massachusetts
Fidelity Trust Company; Director and Vice President of Peoples Benefit Life
Insurance Company, Academy Life Insurance Company and Pension Life Insurance
Company of America; Director and Vice President of Veterans Life Insurance
Company; Treasurer and Vice President of Money Services, Inc. and Commonwealth
General Corporation; Director and Treasurer of Zahorik Company, Inc.; Vice
President of Western Reserve, Commonwealth General Assignment Corporation;
Monumental Agency Group, Inc. and AEGON Assignment Corporation of Kentucky;
Director of AEGON USA Securities, Inc., AEGON USA Investment Management, Inc.
and AEGON USA Realty Advisors Inc.; Treasurer of AUSA Life and AUSA Holding
Company; Assistant Secretary of Benefit Plans, Inc.; Senior Vice President and
Treasurer of AEGON USA, Inc.; Assistant Treasurer of Diversified Financial
Products, Inc., Independence Automobile Association, Inc. and Independence
Automobile Club, Inc. and Senior Vice President, Treasurer and
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Controller of Cadet Holding Corp.; Craig D. Vermie, Director of AIMI; Director,
Secretary, Vice President and General Counsel of LIICA, Bankers United, PFL
Life, and First AUSA; Director, Vice President, General Counsel and Assistant
Secretary of Monumental Life; Vice President, Corporate Counsel and Assistant
Secretary of Western Reserve; Director, Vice President and Assistant Secretary
of Monumental General Casualty Company and Zahorik Company, Inc.; Director,
Secretary and Vice President of Investors Warranty of America, Inc.; Secretary,
Vice President and General Counsel of AEGON USA, Inc.; Director, Counsel,
Assistant Secretary of Commonwealth General Corporation; Director and Vice
President of The Whitestone Corporation; Director and Secretary of Peoples
Benefit Life Assurance Company, Veterans Life Insurance Company, Massachusetts
Fidelity Trust Company, AUSA Holding Company, Cadet Holding Corp., AEGON
Management Company and AEGON USA Charitable Foundation, Inc.; Director and
Assistant Secretary of Academy Life Insurance Company, Providian Auto & Home
Insurance Company, Providian Life Insurance Company, Providian Property &
Casualty Insurance Company, Monumental Agency Group, Inc., Creditor Resources,
Inc., Great American Insurance Agency, Inc. and Monumental General Mass
Marketing, Inc.; Director, Pension Life Insurance Company of America, Monumental
General Insurance Group, Inc, United Financial Services, Inc., AEGON Financial
Services Group, Inc., AIMI, Southlife, Inc., Durco Agency, Inc., Executive
Management & Consultant Services, Inc., Monumental General Administrators, Inc.,
AUSA Financial Markets, Inc., Short Hills Management Company, Corpa Reinsurance
Company, AEGON Special Markets Group and Monumental General Mass Marketing,
Inc.; Secretary, AUSA Life Insurance Company , Inc., Money Services, Inc.,
Supplemental Insurance Division, Inc.; Assistant Secretary, Bankers Financial
Life Insurance Company, ZCI, Inc.; Clifford A. Sheets, Executive Vice President,
Director of Securities of AIMI; Vice President of Life Investors Insurance
Company of America, Bankers United Life Assurance Company, PFL Life Insurance
Company, First AUSA Life Insurance Company, Western Reserve Life Assurance Co.
of Ohio, AUSA Life Insurance Company, Inc., Monumental General
Casualty Company and Monumental Life Insurance Company; Second Vice President of
Peoples Benefit Life Insurance Company, Academy Life Insurance Company, Veterans
Life Insurance Company Providian Auto & Home Insurance Company, Providian Fire
Insurance Company, Providian Property & Casualty Insurance Company; Eric B.
Goodman, Executive Vice President and Head of Portfolio Management of AIMI, Vice
President of Life Investors Insurance Company of America, Bankers United Life
Assurance Company, PFL Life Insurance Company, Western Reserve Life Assurance
Co. of Ohio, AUSA Life Insurance Company, Inc. and Monumental Life Insurance
Company; Second Vice President of Peoples Benefit Life Insurance Company,
Academy Life Insurance Company, Pension Life Insurance Company of America,
Veterans Life Insurance Company, Providian Auto & Home Insurance Company,
Providian Fire Insurance Company and Providian Property & Casualty Insurance
Company; William S. Cook, Executive Vice President and Head of Portfolio
Management of AIMI, Vice President of Life Investors Insurance Company of
America, Bankers United Life Assurance Company, PFL Life Insurance Company,
Western Reserve Life Assurance Co. of Ohio, AUSA Life Insurance Company, Inc.
and Monumental Life Insurance Company; Second Vice President of Peoples Benefit
Life Insurance Company, Academy Life Insurance Company, Pension Life Insurance
Company of America, Veterans Life Insurance Company, Providian Auto & Home
Insurance Company, Providian Fire Insurance Company and Providian Property &
Casualty Insurance Company; David R. Ludke, Executive Vice President of AIMI
Chief Actuary and Vice President of Diversified Financial Products Inc., Second
Vice President of Academy Life Insurance Company, Pension Life Insurance Company
of America, Veterans Life Insurance Company, Providian Auto & Home Insurance
Company, Providian Fire Insurance Company and Providian Property & Casualty
insurance Company; David M. Carney, Senior Vice President and Chief Financial
Officer of AIMI, Vice President of Life Investors Insurance Company of America,
Peoples Benefit Life Insurance Company, Bankers United Life Assurance Company,
Academy Life Insurance Company, Pension Life Insurance Company of America, PFL
Life Insurance Company, Western Reserve Life Insurance Co. of Ohio, AUSA Life
Insurance Company, Inc. Veterans Life Insurance Company, Monumental General
Insurance Group, Inc., Monumental General Casualty Company, Monumental Life
Insurance Company, Commonwealth General Corporation and Investors Warranty of
America, Inc.; Ralph M. O'Brian, Senior Vice President of AIMI, Vice President
of Life Investors Insurance Company of America, Bankers United Life Assurance
Company, PFL Life Insurance Company, First AUSA Life Insurance Company, Western
Reserve Life Assurance Co. of Ohio, AUSA Life Insurance Company, Inc.,
Monumental General Casualty Company, Monumental Life Insurance Company and AEGON
USA Managed Portfolios, Inc.; Second Vice President of Peoples Benefit Life
Insurance Company, Academy Life Insurance Company, Pension Life Insurance
Company of America, Veterans Life Insurance Company, Providian Auto & Home
Insurance Company, Providian Fire Insurance Company and Providian Property &
Casualty Insurance Company; Trust Officer of Massachusetts Fidelity Trust
Company; David R. Halfpap, Senior Vice President of AIMI, Vice President and
Assistant Secretary of AEGON USA Managed Portfolios, Inc.; Vice President of
Life Investors Insurance Company of America, Bankers United Life Assurance
Company, PFL Life Insurance Company, First AUSA Life Insurance Company, Western
Reserve Life Assurance Co. of Ohio, AUSA Life Insurance Company, Inc.,
Monumental General
8
<PAGE>
Casualty Company and Monumental Life Insurance Company, Second Vice President of
Peoples Benefit Life Insurance Company, Academy Life Insurance Company, Pension
Life Insurance Company of America, Veterans Life Insurance Company, Providian
Auto & Home Insurance Company. Providian Fire Insurance Company and Providian
Property & Casualty Insurance Company; Steven P. Opp, Senior Vice President of
AIMI; Kirk W. Buese, Senior Vice President of AIMI; Vice President of Life
Investors Insurance Company of America, Bankers United Life Assurance Company,
PFL Life Insurance Company, Western Reserve Life Assurance Co. of Ohio, AUSA
Life Insurance Company, Inc., Monumental Life Insurance Company, PB Investment
Advisors, Inc.; Second Vice President of Peoples Benefit Life Insurance Company,
Academy Life Insurance Company of America, Veterans Life Insurance Company,
Providian Auto & Home Insurance Company, Providian Fire Insurance Company,
Providian Property & Casualty Insurance Company; Gregory W. Theobald, Vice
President and Assistant Secretary of AIMI, Life Investors Insurance Company of
America, Bankers United Life Assurance Company, PFL Life Insurance Company,
First AUSA Insurance Company, Western Reserve Life Assurance Co. of Ohio, AUSA
Life Insurance Company, Inc., Monumental General Casualty Company, Monumental
Life Insurance Company, Vice President of Money Services, Inc., Secretary of
AEGON USA Managed Portfolios, Inc.; Lewis O. Funkhouser, Vice President of AIMI;
Jon D. Kettering, Vice President of AIMI, Life Investors Insurance Company of
America, Bankers United Life Assurance Company, PFL Life Insurance Company,
First AUSA Life Insurance Company, Western Reserve Life Assurance Co. of Ohio,
AUSA Life Insurance Company, Inc., Monumental General Casualty Company,
Monumental Life Insurance Company; Second Vice President of Peoples Benefit Life
Insurance Company, Academy Life Insurance Company, Pension Life Insurance
Company of America, Veterans Life Insurance Company, Providian Auto & Home
Insurance Company, Providian Fire Insurance Company and Providian Property &
Casualty Insurance Company; Robert L. Hanson, Vice President of AIMI, Life
Investors Insurance Company of America, Bankers United Life Assurance Company,
PFL Life Insurance Company, First AUSA Life Insurance Company, Western Reserve
Life Assurance Co. of Ohio, AUSA Life Insurance Company, Inc., Monumental
General Casualty Company, Monumental Life Insurance Company; Second Vice
President of Peoples Benefit Life Insurance Company, Academy Life Insurance
Company, Pension Life Insurance Company of America, Veterans Life Insurance
Company, Providian Auto & Home Insurance Company, Providian Fire Insurance
Company and Providian Property & Casualty Insurance Company; Bradley Beman, Vice
President of AIMI, Michael B. Simpson, Vice President of AIMI, Life Investors
Insurance Company of America, Bankers United Life Assurance Company, PFL Life
Insurance Company, Western Reserve Life Assurance Co. of Ohio, AUSA Life
Insurance Company, Inc., Monumental Life Insurance Company; Second Vice
President of Peoples Benefit Life Insurance Company, Academy Life Insurance
Company, Pension Life Insurance Company of America, Veterans Life Insurance
Company, Providian Auto & Home Insurance Company, Providian Fire Insurance
Company and Providian Property & Casualty Insurance Company; Douglas A. Dean,
Vice President of AIMI; Stephanie M. Phelps, Vice President of AIMI; Jon L.
Skaags, Vice President of AIMI, Life Investors Insurance Company of America,
Bankers United Life Assurance Company, PFL Life Insurance Company, First AUSA
Life Insurance Company, Monumental Life Insurance Company; Second Vice President
of Peoples Benefit Life Insurance Company, Academy Life Insurance Company,
Pension Life Insurance Company of America, Veterans Life Insurance Company,
Providian Auto & Home Insurance Company, Providian Fire Insurance Company,
Providian Property & Casualty Insurance Company; Daniel P. Fox, Vice President
of AIMI; Robert S. Jett III, Secretary of AIMI, Assistant Secretary of AUSA Life
Insurance Company, Money Services, Inc. and AUSA Financial Markets, Inc.; and
Counsel and Vice President of Investors Warranty of America, Inc. and Blaine E.
Rolland, Treasurer of AIMI.
* * *
Goldman Sachs Asset Management ("GSAM"), located at One New York Plaza,
New York, NY 10004, serves as sub-adviser to the IDEX Goldman Sachs Growth.
David B. Ford serves as Co-Head of GSAM and as Managing Director of Goldman
Sachs, & Co.; John P. McNulty serves as Co-Head of GSAM and Managing Director of
Goldman, Sachs & Co.
* * *
Salomon Brothers Asset Management Inc ("SBAM"), 7 World Trade Center,
New York, NY, 10048 serves as sub-adviser to IDEX Salomon All Cap. Michael S.
Hyland, President and Managing Director, also serves as Managing Director of
Salomon Brothers Inc., New York, NY, Director and Chairman of Salomon Brothers
Asset Management Limited, London, England; Director of Salomon Brothers Asset
Management Japan Limited, Tokyo, Japan, and Chairman of Salomon Brothers Asset
Management (Ireland) Limited ; Vilas V. Gadkari, Managing Director, also serves
as Managing Director and Chief Investment Officer of Salomon Brothers Asset
Management Limited,
9
<PAGE>
London England, Managing Director of Salomon Brothers Inc., New York, NY, and
Salomon Brothers International Limited, London, England ; Zacharay Snow,
Secretary also serves as Managing Director of Salomon Brothers Inc, New York,
NY; Alan M. Mandel, Vice President and Chief Operating Officer, serves as
Director of Salomon Brothers Inc., New York, NY; Mutual Funds; Mitchel E.
Schulman, Director and Chief Operating Officer - Mutual Funds also serves as
Director and Chief Operating Officer of Salomon Brothers Inc., New York, NY;
Marcus A. Peckman, Director, Vice President and Chief Financial Officer also
serves as Director of Salomon Brothers, Inc., New York, NY; Jeffrey S. Scott,
Chief Compliance Officer; Michael F. Rosenbaum, Chief Legal Officer, also serves
as Chief Legal Officer of Salomon Brothers Asset Management Limited, London,
England, Chief Legal officer of Salomon Brothers Asset Management Asia Pacific
Limited, Hong Kong, Corporate Secretary of The Travelers Investment Management
Company, New York, NY, and General Counsel to Asset Management, Travelers Group
Inc., New York, NY and its predecessors; and Thomas W. Jasper, Treasurer, also
serves as Managing Director of Salomon Brothers Inc, New York, NY.
* * *
T. Rowe Price Associates, Inc., ("T. Rowe") 100 E. Pratt Street,
Baltimore, MD 21202, serves as sub-adviser to IDEX T. Rowe Price Dividend Growth
and IDEX T. Rowe Price Small Cap. James E. Halbkat, Jr., Director of T. Rowe.
Mr. Halbkat is President of U.S. Monitor Corporation, a provider of public
response systems. Mr. Halbkat's address is P.O. Box 23109, Hilton Head Island,
South Carolina 29925; Richard L. Menschel, Director of T. Rowe. Mr. Menschel is
a limited partner of The Goldman Sachs Group, L.P., an investment banking firm.
Mr. Menschel's address is 85 Broad Street, 2nd Floor, New York, New York 10004.
Robert L. Strickland, Director of T. Rowe. Mr. Strickland retired as Chairman of
Lowe's Companies, Inc., a retailer of specialty home supplies, as of January 31,
1998 and continues to serve as a Director. He is a Director of Hannaford Bros.,
Co., a food retailer. Mr. Stickland's address is: 2000 W. First Street, Suite
604, Winston-Salem, North Carolina 27104. Philip C. Walsh, Director of T. Rowe
is a retired mining industry executive. Mr. Walsh's address is Pleasant Valley,
Peapack, New Jersey 07977. Anne Marie Whittemore, Director of T. Rowe. Mrs.
Whittemore is a partner of the law firm of McGuire, Woods, Battle & Boothe
L.L.P. and a Director of Owens & Minor, Inc., Fort James Corporation; and
Albemarle Corporation. Mrs. Whittemore's address is: One James Center, Richmond,
Virginia 23219. Henry H. Hopkins Director and Managing Director of T. Rowe;
Director of T. Rowe Price Insurance Agency, Inc.; Vice President and Director of
T. Rowe Price (Canada), Inc., T. Rowe Price Investment Services, Inc., T. Rowe
Price Services, Inc., T. Rowe Price Threshold Fund Associates, Inc., T. Rowe
Price Trust Company, TRP Distribution, Inc., and TRPH Corporation; Director of
T. Rowe Price Insurance Agency, Inc.; Vice President of Price-Fleming, T. Rowe
Price Real Estate Group, Inc., T. Rowe Price Retirement Plan Services, Inc., T.
Rowe Price Stable Asset Management, Inc., and T. Rowe Price Strategic Partners
Associates, Inc.; James A.C. Kennedy III, Director and Managing Director of T.
Rowe, President and Director of T. Rowe Price Strategic Partners Associates,
Inc.; Director and Vice President of T. Rowe Price Threshold Fund Associates,
Inc.; John H. LaPorte, Jr., Director and Managing Director of T. Rowe; William
T. Reynolds, Director and Managing Director of T. Rowe; Chairman of the Board of
T. Rowe Price Stable Asset Management, Inc.; Director of TRP Finance, Inc.;
James S. Riepe, Vice-Chairman of the Board, Director, and Managing Director of
T. Rowe; Chairman of the Board and President of T. Rowe Price Trust Company;
Chairman of the Board of T. Rowe Price (Canada), Inc., T. Rowe Price Investment
Services, Inc., T. Rowe Price Investment Technologies, Inc. T. Rowe Price
Retirement Plan Services, Inc., and T. Rowe Price Services, Inc.; Director of
Price-Fleming, T. Rowe Price Insurance Agency, Inc., and TRPH Corporation;
Director and President of TRP Distribution, Inc., TRP Suburban Second, Inc., and
TRP Suburban, Inc.; and Director and Vice President of T. Rowe Price Stable
Asset Management, Inc.; George A. Roche, Chairman of the Board, President and
Managing Director of T. Rowe; Chairman of the Board of TRP Finance, Inc.,
Director of Price-Fleming, T. Rowe Price Retirement Plan Services, Inc., and T.
Rowe Price Strategic Partners, Inc.; and Director and Vice President of T. Rowe
Price Threshold Fund Associates, Inc., TRP Suburban Second, Inc., and TRP
Suburban, Inc.; Brian C. Rogers, Director and Managing Director of T. Rowe, Vice
President of T. Rowe Price Trust Company; M. David Testa, Vice-Chairman of the
Board, Chief Investment Officer, and Managing Director of T. Rowe; Chairman of
the Board of Price-Fleming; President and Director of T. Rowe Price (Canada),
Inc.; Director and Vice President of T. Rowe Price Trust Company; and Director
of TRPH Corporation; Edward C. Bernard, Managing Director of T. Rowe; Director
and President of T. Rowe Price Insurance Agency, Inc., and T. Rowe Price
Investment Services, Inc.; Director of T. Rowe Price Services, Inc.; Vice
President of TRP Distribution, Inc.; Michael A. Goff, Managing Director of T.
Rowe; Director and the President of T. Rowe Price Investment Technologies, Inc.;
Charles E. Vieth, Managing Director of T. Rowe; Director and President of T.
Rowe Price Retirement Plan Services, Inc.; Director and Vice President of T.
Rowe Price Investment Services, Inc. and T. Rowe Price Services, Inc.; Vice
President of T. Rowe Price (Canada), Inc.,
10
<PAGE>
T. Rowe Price Trust Company, and TRP Distribution, Inc.; Alvin M. Younger, Jr.,
Chief Financial Officer, Managing Director, Secretary and Treasurer of T. Rowe;
Director, Vice President, Treasurer, and Secretary of TRP Suburban Second, Inc.
and TRP Suburban, Inc.; Director of TRP Finance, Inc.; Secretary and Treasurer
for Price-Fleming, T. Rowe Price (Canada), Inc., T. Rowe Price Insurance Agency,
Inc., T. Rowe Price Investment Services, Inc., T. Rowe Price Real Estate Group,
Inc., T. Rowe Price Retirement Plan Services, Inc., T. Rowe Price Services,
Inc., T. Rowe Price Stable Asset Management, Inc., T. Rowe Price Strategic
Partners Associates, Inc., T. Rowe Price Threshold Fund Associates, Inc., T.
Rowe Price Trust Company, TRP Distribution, Inc., and TRPH Corporation;
Treasurer and Clerk of T. Rowe Price Insurance Agency of Massachusetts, Inc.;
Preston G. Athey, Managing Director of T. Rowe; Brian W.H. Berghuis, Managing
Director of T. Rowe; Stephen W. Boesel, Managing Director of T. Rowe; Vice
President of T. Rowe Price Trust Company; Gregory A. McCrickard, Managing
Director of T. Rowe; Vice President of T. Rowe Price Trust Company; Mary J.
Miller, Managing Director of T. Rowe; Charles A. Morris, Managing Director of T.
Rowe; George A. Murnaghan, Managing Director of T. Rowe; Executive Vice
President of Price-Fleming; Vice President of T. Rowe Price Investment Services,
Inc., and T. Rowe Price Trust Company; Edmund M. Notzon III, Managing Director
of T. Rowe; Vice President of T. Rowe Price Trust Company; Wayne D. O'Melia,
Managing Director of T. Rowe; Director and President of T. Rowe Price Services,
Inc.; Vice President of T. Rowe Price Trust Company; Larry J. Puglia, Managing
Director of T. Rowe; Vice President of T. Rowe Price (Canada), Inc.; John R.
Rockwell, Managing Director of T. Rowe; Director and Senior Vice President of T.
Rowe Price Retirement Plan Services, Inc.; Director and Vice President of T.
Rowe Price Stable Asset Management, Inc. and T. Rowe Price Trust Company; Vice
President of T. Rowe Price Investment Services, Inc.; R. Todd Ruppert, Managing
Director of T. Rowe; President and Director of TRPH Corporation; Vice President
of T. Rowe Price Retirement Pan Services, Inc., and T. Rowe Price Trust Company;
Robert W. Smith, Managing Director of T. Rowe; Vice President of Price-Fleming;
William J. Stromberg, Managing Director of T. Rowe; Richard T. Whitney, Managing
Director of T. Rowe; Vice President of Price-Fleming and T. Rowe Price Trust
Company.
* * *
Pilgrim Baxter & Associates, Ltd., ("Pilgrim") 825 Duportail Road,
Wayne, PA 19087, serves as sub-adviser to IDEX Pilgrim Baxter Mid Cap Growth and
IDEX Pilgrim Baxter Technology. Harold J. Baxter, Chairman, Chief Executive
Officer and Director, also serves as Trustee to PBHG Fund Distributors;
Director, Chairman and Chief Executive Officer of Pilgrim Baxter Value
Investors, Inc., Director and Chairman of PBHG Insurance Series Fund, Inc.,
Trustee of PBHG Fund Services, and Chairman and Director of The PBGH Funds, Inc.
and PBHG Advisor Funds, Inc.; Gary L. Pilgrim, Chief Investment Officer,
President and Director, Director and President of Pilgrim Baxter Value
Investors, Inc., Trustee of PBHG Fund Services, and President of PBHG Advisor
Funds, Inc., PBHG Insurance Series Fund, Inc., and The PBHG Funds, Inc.; Eric C.
Schnieder, Chief Financial Officer and Treasurer, is Chief Financial Officer and
Treasurer of Pilgrim Baxter Value Investors, Inc., and Chief Financial Officer
of PBHG Fund Services and Trustee and Chief Financial Officer of PBHG Fund
Distributors; Amy S. Yuter, Chief Compliance Officer, is Chief Compliance
Officer of PBHG Fund Distributors, Pilgrim Baxter Value Investors, Inc., and is
Director of NSCP, an industry association; and John M. Zerr, General Counsel and
Secretary, also serves as General Counsel and Secretary of Pilgrim Baxter Value
Investors, Inc., PBHG Fund Distributors, PBHG Fund Services, and as Vice
President and Secretary of PBHG Advisor Funds, Inc., The PBHG Funds, Inc. and
PBHG Insurance.
Each person and entity may be reached c/o Pilgrim Baxter & Associates,
Ltd., at the above address.
* * *
Transamerica Investment Services, Inc., 1150 South Olive Street, Suite
2700, Los Angeles, California 90015 serves as sub-adviser to IDEX Transamerica
Small Company and IDEX Transamerica Equity. Thomas J. Cusack, Director, also
serves as Senior Vice President to Transamerica Corporation, San Francisco, CA;
Richard H. Finn, Director, also serves as Executive Vice President of
Transamerica Corporation, San Francisco, CA; Edgar H. Grubb, Director, also
serves as Senior Vice President of Transamerica Corporation, San Francisco, CA;
Frank C. Herringer, Director, also serves as Chairman of the Board, President
and CEO of Transamerica Corporation, San Francisco, CA; Susan R. Hughes, Vice
President, CFO and Secretary; Richard N. Latzer, President and CEO; Gary U.
Rolle, Executive Vice President; and Susan A. Silbert, Senior Vice President.
11
<PAGE>
ITEM 27 PRINCIPAL UNDERWRITER
InterSecurities, Inc.
(a) The Registrant has entered into an Underwriting Agreement with
InterSecurities, Inc. ("ISI"), whose address is P.O. Box 9053,
Clearwater, FL 33758-9053, to act as the principal underwriter
of Fund shares.
(b) Directors and Officers of Principal Underwriter
<TABLE>
<CAPTION>
NAME POSITIONS AND OFFICES WITH UNDERWRITER POSITIONS AND OFFICES WITH REGISTRANT
---- -------------------------------------- -------------------------------------
<S> <C> <C>
William H. Geiger Director and Secretary Vice President and Assistant
Secretary
Thomas R. Moriarty President and Chief Executive Officer Senior Vice President, Treasurer
and Principal Financial Officer
Cynthia L. Remley Vice President and Associate N/A
General Counsel
A. Kenneth Fine Vice President and Counsel N/A
Herbert Pontzer Vice President - Compliance N/A
William G. Cummings Vice President and Treasurer N/A
Gary Richardson Vice President N/A
Kenneth W. Marlow Vice President N/A
Kimberly Scouller Vice President and Counsel N/A
Michael V. Williams Vice President N/A
Kristy L. Dowd Vice President N/A
Terry L. Garvin Vice President N/A
Christopher G. Roetzer Assistant Vice President Vice President, Assistant Treasurer
And Principal Accounting Officer
Nathan Anguiano Assistant Vice President N/A
Stephen Breininger Assistant Vice President N/A
Donna Craft Assistant Vice President N/A
Michael Lane Assistant Vice President N/A
Scott M. Lenhart Assistant Vice President N/A
Teresa Rooney Assistant Vice President N/A
Scott Russell Assistant Vice President N/A
</TABLE>
12
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
Frank Wollett Assistant Vice President N/A
Diane Rogers Assistant Vice President N/A
Russell W. Crooks Assistant Vice President N/A
Greg Limardi Assistant Vice President N/A
Christine M. Goodwin Assistant Vice President N/A
Stuart Walsky Assistant Vice President N/A
Duncan H. Cameron Assistant Vice President N/A
Tracey Creighton Assistant Secretary N/A
Meg Cullem-Fiore Assistant Secretary N/A
Jayne Flood Assistant Secretary N/A
Kristina Mackowiak Assistant Secretary N/A
Carol Ann MacLean Assistant Secretary N/A
Laura Hunt Assistant Secretary N/A
Carlene Endick Assistant Vice President N/A
</TABLE>
ITEM 28 LOCATION OF ACCOUNTS AND RECORDS
The accounts, books and other documents required to be maintained by
Section 31(a) of the 1940 Act and the rules promulgated thereunder are
maintained as follows:
(a) Shareholder records are maintained by the Registrant's transfer
agent, Idex Investor Services, Inc., P.O. Box 9015, Clearwater,
FL 33758-9015.
(b) All other accounting records of the Registrant are maintained
at the offices of the Registrant at 570 Carillon Parkway, St.
Petersburg, Florida 33716 and are in the physical possession of
the officers of the Fund, or at the offices of the Custodian,
Investors Fiduciary Trust Company, 801 Pennsylvania, Kansas
City, MO 64105-1307.
ITEM 29 MANAGEMENT SERVICES
The Registrant has no management-related service contract that is not
discussed in Part I of this form. See the section of the Prospectus entitled
"Investment Advisory and Other Services" for a discussion of the management and
advisory services furnished by IMI, ISI, Alger Management, Scottish Equitable,
GEIM, Janus Capital, C.A.S.E., NWQ, Luther King, Dean Investment, AEGON
Management GSAM, T. Rowe Price, SBAM and Pilgrim pursuant to the Management and
Investment Advisory Agreements, the Investment Counsel Agreements, the
Administrative Services Agreements and the Underwriting Agreement.
ITEM 30 UNDERTAKINGS
Not applicable
13
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, IDEX Mutual Funds has duly caused this
Post-Effective Amendment No. 33 to its Registration Statement to be signed on
its behalf by the undersigned, thereunto duly authorized in the City of St.
Petersburg, State of Florida, on the 15th day of December 1999.
IDEX Mutual Funds
By: /s/ JOHN R. KENNEY
----------------------------------
John R. Kenney
Chairman and Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933 and
Investment Company Act of 1940, this Post-Effective Amendment No. 33 to its
Registration Statement has been signed below by the following persons in the
capacities and on the dates indicated:
JOHN R. KENNEY Chairman, Trustee & CEO December 15, 1999
- -------------------------
John R. Kenney
JOHN K. CARTER President and Trustee December 15, 1999
- ------------------------- (Principal Executive Officer)
Patrick S. Baird*
THOMAS R. MORIARTY Senior Vice President December 15, 1999
- ------------------------- Treasurer and Principal
Thomas R. Moriarty Financial Officer
CHRISTOPHER G. ROETZER Vice President, Assistant December 15, 1999
- ------------------------- Treasurer and Principal
Christopher G. Roetzer Accounting Officer
/s/ JOHN K. CARTER Trustee December 15, 1999
- -------------------------
Peter R. Brown *
/s/ JOHN K. CARTER Trustee December 15, 1999
- -------------------------
Daniel Calabria *
/s/ JOHN K. CARTER Trustee December 15, 1999
- -------------------------
James L. Churchill *
<PAGE>
/s/ JOHN K. CARTER Trustee December 15, 1999
- -------------------------
Charles C. Harris*
/s/ JOHN K. CARTER Trustee December 15, 1999
- -------------------------
William W. Short, Jr. *
/s/ JOHN K. CARTER Trustee December 15, 1999
- -------------------------
Jack E. Zimmerman *
/s/ JOHN K. CARTER
- -------------------------
*Signed by John K. Carter
Attorney in Fact
<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
EXHIBITS FILED WITH
POST-EFFECTIVE AMENDMENT NO. 33 TO
REGISTRATION STATEMENT ON
FORM N-1A
IDEX MUTUAL FUNDS
REGISTRATION NO. 33-2659
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT INDEX
EXHIBIT NUMBER DESCRIPTION OF EXHIBIT
- -------------- ----------------------
<S> <C>
23(d)(1)(kk) Form of Investment Advisory Agreement - IDEX Pilgrim Baxter
Technology.
IDEX GE U.S. Equity, IDEX Transamerica Small Cap and IDEX
Transamerica Equity
23(d)(2)(nn) Form of Sub-Advisory Agreement - IDEX GE U.S. Equity
23(d)(2)(oo) Form of Sub-Advisory Agreement - IDEX Pilgrim Baxter Technology
23(d)(2)(pp) Form of Sub-Advisory Agreement - IDEX Transamerica Small Company and
IDEX Transamerica Equity
23(h)(2)(h) Form of Administrative Services Agreement on behalf of IDEX Pilgrim Baxter
Technology, IDEX GE U.S. Equity, IDEX Transamerica Small Company and IDEX
Transamerica Equity
23(m)(1)(ss) Form of Plan of Distribution (Class A) - IDEX Pilgrim Baxter Technology, IDEX
GE U.S. Equity, IDEX Transamerica Small Company and IDEX Transamerica Equity
23(m)(2)(ss) Form of Plan of Distribution (Class B) - IDEX Pilgrim Baxter Technology, IDEX
GE U.S. Equity, IDEX Transamerica Small Company and IDEX Transamerica Equity
23(m)(3)(ss) Form of Plan of Distribution (Class C) - IDEX Pilgrim Baxter Technology, IDEX
GE U.S. Equity, IDEX Transamerica Small Company and IDEX Transamerica Equity
23(m)(4)(ss) Form of Plan of Distribution (Class M) - IDEX Pilgrim Baxter Technology, IDEX
GE U.S. Equity, IDEX Transamerica Small Company and IDEX Transamerica Equity
</TABLE>
EXHIBIT 23(d)(1)(kk)
FORM OF INVESTMENT ADVISORY AGREEMENT
<PAGE>
FORM OF 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 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-
<PAGE>
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.
(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
<PAGE>
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.
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
<PAGE>
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 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
<PAGE>
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:___________________________
John K. Carter, Secretary John R. Kenney
Chairman of the Board
<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
- ---------------------------------------------------------------------------------------------------
IDEX GE U.S. Equity 0.80% of the first $500
million of the fund's
average daily net 1.20% March 1, 2002
assets; 0.70% of assets
in excess of $500 million
- ---------------------------------------------------------------------------------------------------
IDEX Transamerica Equity 0.80% of the first $500
million of the fund's
average daily net 1.20% March 1, 2002
assets; 0.70% of assets
in excess of $500 million
- ---------------------------------------------------------------------------------------------------
IDEX Transamerica 0.80% of the first $500
Small Company million of the fund's
average daily net 1.20% March 1, 2002
assets; 0.70% of assets
in excess of $500 million
- ---------------------------------------------------------------------------------------------------
IDEX Pilgrim Baxter 0.80% of the first $500
Technology million of the fund's
average daily net 1.20% March 1, 2002
assets; 0.70% of assets
in excess of $500 million
- ---------------------------------------------------------------------------------------------------
</TABLE>
EXHIBIT 23(d)(2)(nn)
FORM OF SUB-ADVISORY AGREEMENT
IDEX GE U.S. EQUITY
<PAGE>
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
IDEX Mutual Funds ("IDEX"), 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, IDEX is authorized to issue shares of IDEX GE U.S. Equity
("Fund"), a separate series of IDEX;
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 IDEX 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 IDEX 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 IDEX 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) 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
<PAGE>
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 IDEX 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 IDEX and furnish
oral or written reports, as IDEX may reasonably require, in
order to keep IDEX 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 IDEX 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 IDEX Restatement of 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 monthly, (i) an
investment management fee as specified in Schedule A of this Agreement, (ii)
less 50% of any amount reimbursed to the Fund by the Investment Adviser pursuant
to any expense limitations. 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.
Any amount borne by Sub-Adviser pursuant to (ii) above in this paragraph
constitutes an agreement between the Investment Adviser and the Sub-Adviser only
for the first twelve months following commencement of the Fund's investment
operations. The fee payable to the Sub-Adviser pursuant to this paragraph will
not be waived by the Sub-Adviser or otherwise reduced by any waiver or expense
limitation affecting the fee that is payable to the Investment Adviser under the
Investment Advisory Agreement, except as mutually agreed to by the Sub-Adviser
and the Investment Adviser. In no event will any amount to be borne by the
Sub-Adviser pursuant to (ii) above or pursuant to such further mutual agreement
between the Sub-Adviser and the Investment Adviser exceed the amount of fee
payable to the Sub-Adviser pursuant to (i) above in this paragraph.
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 IDEX Restatement of Declaration of Trust, as filed
with the State of Massachusetts,
<PAGE>
as in effect on the date hereof and as amended from time to
time ("Trust");
(2) The By-Laws of IDEX as in effect on the date hereof and as
amended from time to time ("By-Laws");
(3) Certified resolutions of the Board of IDEX authorizing the
appointment of the Investment Adviser and the Sub-Adviser and
approving the form of the Advisory Agreement and this
Agreement;
(4) The IDEX 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 IDEX under the 1940
Act on Form N-8A as filed with the SEC and any amendments
thereto;
(6) The IDEX Prospectus (as defined above); and
(7) A certified copy of any publicly available financial
statement or report prepared for IDEX 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) 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-Adviser considers to be the most
<PAGE>
equitable and consistent with its fiduciary obligations to IDEX 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
IDEX. 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 IDEX are
the property of IDEX, (ii) to preserve for the periods prescribed by Rule 31a-2
under the 1940 Act any records that it maintains for IDEX and that are required
to be maintained by Rule 31a-1 under the 1940 Act and (iii) agrees to surrender
promptly to IDEX any records that it maintains for IDEX upon request by IDEX;
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 IDEX, 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 Sub-Adviser, 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 Sub-Adviser, IDEX (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 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 behalf of the Fund or from reckless
disregard by the Sub-Adviser or any such person of the duties of the Sub-Adviser
pursuant to this Agreement.
<PAGE>
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, if it has
not already done so, will provide the Investment Adviser and IDEX with a copy of
such code of ethics, together with evidence of its adoption.
C. The Sub-Adviser has provided the Investment Adviser and
IDEX 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. 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 Directors of IDEX 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 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
IDEX who are not parties to this Agreement or interested persons of any such
party. The Sub-Adviser shall furnish to IDEX, 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.
13. 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.
14. 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
<PAGE>
majority of the Fund's outstanding voting securities and a vote of a majority of
those Trustees of IDEX 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.
15. 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 IDEX to take any action contrary to its Trust 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 IDEX.
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 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.
<PAGE>
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:
- ------------------------------- -------------------------------
Secretary Name: Thomas R. Moriarty
Title: President and Chief Executive Officer
Attest:
GE INVESTMENT MANAGEMENT INCORPORATED
By
- ------------------------------- -------------------------------
Name:
Title:
<PAGE>
SCHEDULE A
- --------------------------------------------------------------------------------
FUND COMPENSATION TERMINATION DATE
- --------------------------------------------------------------------------------
IDEX GE U.S. EQUITY 50% of the fees received by IMI April 30, 2002
under the Advisory Agreement
- --------------------------------------------------------------------------------
EXHIBIT 23(d)(2)(oo)
FORM OF AGREEMENT FOR
IDEX PILGRIM BAXTER TECHNOLOGY
<PAGE>
IDEX MUTUAL FUNDS
SUB-ADVISORY AGREEMENT
This Agreement is entered into as of March 1, 2000 between IDEX
MANAGEMENT, INC., a Delaware corporation (referred to herein as "Idex
Management"), and Pilgrim Baxter and Associates, Ltd. a Delaware corporation
(referred to herein as "Pilgrim Baxter").
WHEREAS, Idex Management entered into a Management and Investment
Advisory Agreement (referred to herein as the "Advisory Agreement"), dated as of
March 1, 2000 with IDEX Mutual Funds, a Massachusetts business trust (referred
to herein as "IDEX"), an open-end management investment company registered under
The Investment Company Act of 1940 (the "1940 Act"), on behalf of IDEX Pilgrim
Baxter Technology (the "Fund"), under which Idex Management has agreed, among
other things, to act as investment adviser to the Fund.
WHEREAS, the Advisory Agreement provides that Idex Management may
engage Pilgrim Baxter to furnish investment information and advice to assist
Idex Management in carrying out its responsibilities under the Advisory
Agreement as investment adviser to the Fund.
WHEREAS, it is the purpose of this Agreement to express the mutual
agreements of the parties hereto with respect to the services to be provided by
Pilgrim Baxter to Idex Management and the terms and conditions under which such
services will be rendered.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
set forth herein, the parties hereto agree as follows:
1. SERVICES OF PILGRIM BAXTER. Pilgrim Baxter shall act as investment
adviser to Idex Management with respect to the Fund. In this capacity, Pilgrim
Baxter shall have the following responsibilities:
(a) to provide a continuous investment program for the Fund
including management of the acquisition, holding or
disposition of any or all of the securities or other assets
which the Fund may own or contemplate acquiring from time to
time;
(b) Pilgrim Baxter will place orders for the purchase and sale of
securities primarily with or through such persons, brokers or
dealers whom it believes will provide the most favorable price
and efficient execution. Within the framework of this policy
and in accordance with Section 28(e) of the Securities &
Exchange Act of 1934, Pilgrim Baxter may consider the
financial responsibility, research and investment information
and other services provided by brokers or dealers who may
effect or be a party to any such transaction or other
transactions to which Pilgrim Baxter's other clients may be a
party. It is understood that it is desirable for the Fund that
Pilgrim Baxter have access to supplemental investment and
market research and security and economic analysis provided by
brokers who may execute brokerage transactions at a higher
cost to the Fund that may result when allocating brokerage to
other brokers solely on the basis of seeking the most
favorable price. Therefore, Pilgrim Baxter is authorized to
place orders for the purchase and sale of securities for the
Fund with such brokers, subject to review by Idex Management
and the IDEX Board of Trustees, from time to time, with
respect to the extent and continuation of this practice. It is
understood that the services provided by such brokers also may
be useful to Pilgrim Baxter in connection with Pilgrim
Baxter's services to other clients.
On occasions when Pilgrim Baxter deems the purchase or sale of
a security to be in the best interest of the Fund as well as
other clients of Pilgrim Baxter, to the extent permitted by
applicable laws and regulations, Pilgrim Baxter may, but shall
be under no obligation to, aggregate the securities to be so
purchased or sold in order to obtain the most 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 Pilgrim Baxter in the manner it considers to be the
most equitable and consistent with its fiduciary obligations
to the Fund and to such other clients.
<PAGE>
(c) to cause its officers to attend meetings of Idex Management or
the Fund and furnish oral or written reports, as Idex
Management may reasonably require, in order to keep Idex
Management and its officers and the Trustees of IDEX and
appropriate officers of IDEX fully informed as to the
condition of the investment portfolio of the Fund, the
investment recommendations of Pilgrim Baxter, and the
investment considerations which have given rise to those
recommendations;
(d) to furnish such statistical and analytical information and
reports as may reasonably be required by Idex Management from
time to time; and
(e) to supervise the purchase and sale of securities.
2. OBLIGATIONS OF IDEX MANAGEMENT. Idex Management shall have the
following obligations under this Agreement:
(a) to keep Pilgrim Baxter continuously and fully informed as to
the composition of the Fund's investment portfolio and the
nature of the Fund's assets and liabilities from time to time;
(b) to furnish Pilgrim Baxter with a certified copy of the IDEX
By-laws and with a certified copy of any financial statement
or report prepared for the Fund by certified or independent
public accountants, and with copies of any financial
statements or reports made by the Fund to its shareholders or
to any governmental body or securities exchange;
(c) to promptly furnish Pilgrim Baxter with copies of the Fund's
current prospectus and statement of additional information,
together with any investment restrictions or limitations
imposed upon the management of the assets of the Fund by the
IDEX Board of Trustees or officers, or those imposed by Idex
Management, and copies of any or all Exemptive Orders or
no-action letters received by the Trust from the Securities
and Exchange Commission which may apply to the Fund.
(d) to furnish Pilgrim Baxter with any further materials or
information which Pilgrim Baxter may reasonably request to
enable it to perform its functions under this Agreement;
(e) to compensate Pilgrim Baxter for its services provided, and
the expenses assumed under this Agreement, by (i) the payment
of a monthly fee as set forth on schedule A attached to this
Agreement, as it may be amended from time to time in
accordance with Section 10 below. In the event that this
Agreement shall be effective for only part of a period to
which any such fee received by Idex Management is
attributable, then an appropriate pro-ration of the fee that
would have been payable hereunder if this Agreement had
remained in effect until the end of such period shall be made,
based on the number of calendar days in such period and the
number of calendar days during the period in which this
Agreement was in effect. The fees payable to Pilgrim Baxter
hereunder shall be payable upon receipt by Idex Management
from the Fund of fees payable to Idex Management under Section
6 of the Advisory Agreement; and
3. TREATMENT OF INVESTMENT ADVICE. Idex Management may direct Pilgrim
Baxter to furnish its investment information, advice and recommendations
directly to officers of IDEX.
4. PURCHASES BY AFFILIATES. Neither Pilgrim Baxter nor any of its
officers or Directors shall take a long or short position in the securities
issued by the Fund. This prohibition, however, shall not prevent the purchase
from the Fund of shares issued by the Fund on behalf of the Fund by the officers
and Directors of Pilgrim Baxter (or deferred benefit plans established for their
benefit) at the current price available to the public, or at such price with
reductions in sales charge as may be permitted in the Fund's current prospectus
in accordance with Section 22(d) of the Investment Company Act of 1940, as
amended (the "1940 Act").
5. LIABILITY OF PILGRIM BAXTER. Pilgrim Baxter may rely on information
provided to it by Idex Management or IDEX reasonably believed by it to be
accurate and reliable. Except as may otherwise be
<PAGE>
provided by the 1940 Act, neither Pilgrim Baxter nor its officers, directors,
employees or agents shall be subject to any liability to the Fund or any
shareholders of the Fund or to Idex Management 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 the performance of its duties or by reason of reckless disregard
of its obligations and duties under this Agreement.
6. COMPLIANCE WITH LAWS. Pilgrim Baxter represents that it is, and will
continue to be throughout the term of this Agreement, an investment adviser
registered under all applicable federal and state laws. In all matters relating
to the performance of this Agreement, Pilgrim Baxter will act in conformity with
the IDEX Declaration of Trust, Bylaws, and current prospectus and with the
instructions and direction of Idex Management and IDEX Trustees, and will
conform to and comply with the 1940 Act and all other applicable federal or
state laws and regulations.
7. TERMINATION. This Agreement shall terminate automatically with
respect to the Fund upon the termination of the Advisory Agreement with respect
to such Fund. This Agreement may be terminated at any time with respect to the
Fund, without penalty, by Idex Management or by IDEX by giving 60 days' written
notice of such termination to Pilgrim Baxter at its principal place of business,
provided that, if terminated by IDEX, such termination is approved by the Board
of Trustees of IDEX or by vote of a majority of the outstanding voting
securities (as that phrase is defined in Section 2(a)(42) of the 1940 Act) of
the Fund. This Agreement may be terminated at any time by Pilgrim Baxter by
giving 60 days' written notice of such termination to IDEX and Idex Management
at their respective principal places of business.
8. ASSIGNMENT. This Agreement shall terminate automatically in the
event of any assignment (as that term is defined in Section 2(a)(4) of the 1940
Act) of this Agreement.
9. TERM. This Agreement shall continue in effect, unless sooner
terminated in accordance with its terms, for an initial term ending April 30,
2002, and shall continue in effect from year to year thereafter so long as such
continuance is specifically approved at least annually by the vote of a majority
of the Trustees of IDEX who are not parties hereto or interested persons (as
that term 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
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 (as that
phrase is defined in Section 2(a)(42) of the 1940 Act).
10. AMENDMENTS. This Agreement may be amended with respect to the Fund
only with the approval by the affirmative vote of a majority of the outstanding
voting securities (as that phrase is defined in Section 2(a)(42) of the 1940
Act) of such Fund and the approval by the vote of a majority of the Trustees of
IDEX who are not parties hereto or interested persons (as that term 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,
unless otherwise permitted by the 1940 Act.
11. PRIOR AGREEMENTS. This agreement supersedes all prior agreements
between the parties relating to the subject matter hereof, and all such prior
agreements are deemed terminated upon the effectiveness of this agreement.
12. MISCELLANEOUS
(a) Pilgrim Baxter shall not be required to pay any expenses of the
Fund. In particular, but without limiting the generality of the foregoing,
Pilgrim Baxter shall not be responsible for the following expenses of the Fund:
organization and certain offering expenses of the Fund, legal expenses; auditing
and accounting expenses; interest expenses; telephone, telex, facsimile, postage
and other communications expenses; taxes and governmental fees; fees, dues and
expenses incurred by or with respect to the Fund in connection with membership
in investment company trade organization; costs of insurance relating to
fidelity coverage for the Fund's officers and employees; fees and expenses of
the Fund's custodian, any subcustodian, transfer agent registrar, or dividend
disbursing agent; payments to Idex Management for maintaining the Fund's
financial books and records and calculating the daily net
<PAGE>
asset value; other payments for portfolio pricing or valuation services to
pricing agents, accountants, bankers and other specialists, if any; expenses of
preparing share certificates; other expenses in connection with the issuance,
offering, distribution, sale or redemption of securities issued by the Fund;
expenses relating to investor and public relations; expenses of registering and
qualifying shares of the Fund for sale; freight, insurance and other charges in
connection with the shipment of the Fund's portfolio securities; brokerage
commissions or other costs of acquiring or disposing of any portfolio securities
or other assets of the Fund, or of entering into other transactions or engaging
in any investment practices with respect to the Fund; expenses of printing and
distributing prospectuses, Statements of Additional Information, reports,
notices and dividends to stockholders; costs of stationery; any litigation
expenses; and costs of stockholders' meetings; costs relating to meetings of the
Board of Trustees of IDEX except for travel expenses for representatives of
Pilgrim Baxter to the extent that such expenses relate to attendance at meetings
of the Board of Trustees of IDEX with respect to matters concerning the Fund, or
any committees thereof or advisers thereto.
(b) It is understood that the services of Pilgrim Baxter are not
exclusive, and that nothing in this Agreement shall prevent Pilgrim Baxter from
providing similar services to other investment companies or to other series of
investment companies, or from engaging in other activities, provided such other
services and activities do not, during the term of the Agreement, interfere in a
material manner with Pilgrim Baxter's ability to meet its obligations to the
Fund hereunder. When Pilgrim Baxter recommends the purchase or sale of the same
security for the Fund, it is understood that in light of its fiduciary duty to
the Fund, such transactions will be executed on a basis that is fair and
equitable to the Fund. In connection with purchases or sales of portfolio
securities for the account of the Fund, neither Pilgrim Baxter nor any of its
directors, officers or employees shall act as principal or agent or receive any
commission, provided that portfolio transactions for the Fund may be executed
through firms affiliated with Pilgrim Baxter in accordance with applicable legal
requirements, and procedures adopted by the Trustees of the Fund.
(1) During the term of this Agreement, Idex Management agrees to
furnish Pilgrim Baxter, at is principal office, all
prospectuses, proxy statements, reports to shareholders, sales
literature or other materials prepared for distribution to
shareholders of the Fund, IDEX or the public that refer to
Pilgrim Baxter or its clients in any way.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
ATTEST: THE PILGRIM BAXTER & ASSOCIATES, LTD.
By:
- ------------------------------------ ----------------------------------
Secretary Title:
ATTEST: IDEX MANAGEMENT, INC.
By:
- ------------------------------------ ----------------------------------
Thomas E. Pierpan Thomas R. Moriarty
Assistant Vice President, Compliance President and Chief Executive
Officer and Assistant Secretary Officer
<PAGE>
Sub-Advisory Agreement
<TABLE>
<CAPTION>
SCHEDULE A
- ------------------------------------------ --------------------------------------- --------------------------
FUND COMPENSATION TERMINATION DATE
- ------------------------------------------ --------------------------------------- --------------------------
<S> <C> <C>
IDEX PILGRIM BAXTER TECHNOLOGY 0.50% of the first $100 million of April 30, 2002
the Fund's average daily net assets;
0.40% of assets in excess of $100
million (from first dollar)*
- ------------------------------------------ --------------------------------------- --------------------------
</TABLE>
*If a similar fund is offered by the WRL Series Fund, Inc. at some future date,
the fees payable for the Fund will be based upon the average daily net assets,
on a combined basis, for both the WRL and IDEX similar funds.
EXHIBIT 23(d)(2)(pp)
FORM OF AGREEMENT
IDEX TRANSAMERICA SMALL COMPANY AND
IDEX TRANSAMERICA EQUITY
<PAGE>
SUB-ADVISORY AGREEMENT
BETWEEN
IDEX MANAGEMENT, INC.
AND
TRANSAMERICA INVESTMENT SERVICES, INC.
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 Transamerica Investment
Services, Inc. ("Sub-Adviser"), a corporation organized and existing under the
laws of the State of _________.
WHEREAS, the Investment Adviser has entered into an Investment Advisory
Agreement dated as of the 1st day of March, 2000 ("Advisory Agreement") with
IDEX Mutual Funds ("IDEX"), 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, IDEX is authorized to issue shares of IDEX Transamerica Small
Company and IDEX Transamerica Equity ( each a "Fund," collectively, the
"Funds"), separate series of IDEX;
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 each 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 each 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 IDEX 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 each Fund in accordance with each Fund's investment
objective, policies, and restrictions as provided in the IDEX 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 IDEX 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 each Fund in a manner consistent with each Fund's investment
objective, policies, and restrictions. In furtherance of this duty, the
Sub-Adviser, on behalf of each Fund, is authorized, in its discretion and
without prior consultation with each Fund or the Investment Adviser, to:
(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
<PAGE>
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 IDEX as to the acquisition, holding or
disposition of any or all of the securities or other assets which
each Fund may own or contemplate acquiring from time to time;
(2) cause its officers to attend meetings of IDEX and furnish oral
or written reports, as IDEX may reasonably require, in order to
keep IDEX and its officers and Board fully informed as to the
condition of the investment securities of each 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 IDEX 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 IDEX Restatement of 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 monthly, (i) an
investment management fee as specified in Schedule A of this Agreement, (ii)
less 50% of any amount reimbursed to a Fund by the Investment Adviser pursuant
to any expense limitations. 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.
Any amount borne by Sub-Adviser pursuant to (ii) above in this paragraph
constitutes an agreement between the Investment Adviser and the Sub-Adviser only
for the first twelve months following commencement of a Fund's investment
operations. The fee payable to the Sub-Adviser pursuant to this paragraph will
not be waived by the Sub-Adviser or otherwise reduced by any waiver or expense
limitation affecting the fee that is payable to the Investment Adviser under the
Investment Advisory Agreement, except as mutually agreed to by the Sub-Adviser
and the Investment Adviser. In no event will any amount to be borne by the
Sub-Adviser pursuant to (ii) above or pursuant to such further mutual agreement
between the Sub-Adviser and the Investment Adviser exceed the amount of fee
payable to the Sub-Adviser pursuant to (i) above in this paragraph.
4. DUTIES OF THE INVESTMENT ADVISER.
A. The Investment Adviser shall continue to have
responsibility for all services to be provided to each 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 IDEX Restatement of Declaration of Trust, as filed
with the State of Massachusetts,
<PAGE>
as in effect on the date hereof and as amended from time to
time ("Trust");
(2) The By-Laws of IDEX as in effect on the date hereof and as
amended from time to time ("By-Laws");
(3) Certified resolutions of the Board of IDEX authorizing the
appointment of the Investment Adviser and the Sub-Adviser and
approving the form of the Advisory Agreement and this
Agreement;
(4) The IDEX 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 each Fund and its shares and all amendments thereto
("Registration Statement");
(5) The Notification of Registration of IDEX under the 1940
Act on Form N-8A as filed with the SEC and any amendments
thereto;
(6) The IDEX Prospectus (as defined above); and
(7) A certified copy of any publicly available financial
statement or report prepared for IDEX by certified or
independent public accountants, and copies of any financial
statements or reports made by each 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 each 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) 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 a 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-Adviser considers to be the most
<PAGE>
equitable and consistent with its fiduciary obligations to IDEX 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
each 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
IDEX. 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 IDEX are
the property of IDEX, (ii) to preserve for the periods prescribed by Rule 31a-2
under the 1940 Act any records that it maintains for IDEX and that are required
to be maintained by Rule 31a-1 under the 1940 Act and (iii) agrees to surrender
promptly to IDEX any records that it maintains for IDEX upon request by IDEX;
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 IDEX, 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 Sub-Adviser, 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 each 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 Sub-Adviser, IDEX (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 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 behalf of the Fund or from reckless
disregard by the Sub-Adviser or any such person of the duties of the Sub-Adviser
pursuant to this Agreement.
<PAGE>
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, if it has
not already done so, will provide the Investment Adviser and IDEX with a copy of
such code of ethics, together with evidence of its adoption.
C. The Sub-Adviser has provided the Investment Adviser and
IDEX 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. 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 Directors of IDEX 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 each 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 each Fund, subject to the
termination provisions and all other terms 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 each
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
IDEX who are not parties to this Agreement or interested persons of any such
party. The Sub-Adviser shall furnish to IDEX, 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.
13. 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 each 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.
14. 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
<PAGE>
majority of each Fund's outstanding voting securities and a vote of a majority
of those Trustees of IDEX 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.
15. 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 IDEX to take any action contrary to its Trust 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 IDEX.
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 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.
<PAGE>
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:
- ------------------------------------ ----------------------------------
Secretary Name: Thomas R. Moriarty
Title: President and Chief
Executive Officer
Attest: Transamerica Investment Services, Inc.
By
- ------------------------------------ ----------------------------------
Name:
Title:
<PAGE>
Sub-Advisory Agreement
<TABLE>
<CAPTION>
SCHEDULE A
SUB-ADVISORY FEE
- ------------------------------------------ --------------------------------------- --------------------------
FUND COMPENSATION TERMINATION DATE
- ------------------------------------------ --------------------------------------- --------------------------
<S> <C> <C>
IDEX TRANSAMERICA SMALL COMPANY * 50% of the fees received by the April 30, 2002
Investment Adviser under the Advisory
Agreement
- ------------------------------------------ --------------------------------------- --------------------------
IDEX TRANSAMERICA EQUITY * 50% of the fees received by the April 30, 2002
Investment Adviser under the Advisory
Agreement
- ------------------------------------------ --------------------------------------- --------------------------
</TABLE>
*If a similar fund is offered by the WRL Series Fund, Inc. at some future date,
the fees payable for the Fund will be based upon the average daily net assets,
on a combined basis, for both the WRL and IDEX similar funds.
EXHIBIT 23(h)(2)(h)
ADMINISTRATIVE SERVICES AGREEMENT
<PAGE>
IDEX MUTUAL FUNDS
ADMINISTRATIVE SERVICES AGREEMENT - C
This agreement is entered as of March 1, 2000 by IDEX MANAGEMENT, INC., a
Delaware corporation ("Idex Management"), and INTERSECURITIES, INC., a Delaware
corporation (the "Distributor").
WHEREAS, Idex Management has entered into an Investment Advisory Agreements
(referred to herein as the "Advisory Agreements") dated March 1, 2000 with IDEX
Mutual Funds, a Massachusetts business trust (referred to herein as the
"Trust"), under which Idex Management has agreed among other things, to provide
management and administrative services to certain series of beneficial interest
in the Trust. (See Schedule A)
WHEREAS, the Advisory Agreements provides that Idex Management may engage the
Distributor to furnish it with management and administrative services to assist
Idex Management in carrying out certain of its functions under the Advisory
Agreements.
WHEREAS, it is the purpose of this Agreement to express the mutual agreement of
the parties hereto with respect to the services to be provided by the
Distributor to Idex Management and the terms and conditions under which such
services will be rendered.
NOW, THEREFORE, in consideration of the mutual covenants and agreements set
forth herein, the parties hereto agree as follows:
1. SERVICES OF THE DISTRIBUTOR. The Distributor shall provide executive
and management services to Idex Management and the Funds. Subject to
the overall supervision of Idex Management and the Trustees, the
Distributor shall furnish to the Funds the services of executive and
administrative personnel to supervise the performance of all
administrative, recordkeeping, shareholder relations, regulatory
reporting and compliance, and all other functions of the Funds other
than the investment function, and shall supervise and coordinate the
Trust's Custodian and its Transfer Agent and monitor their services to
the Funds. The Distributor shall also assist Idex Management and the
Funds in maintaining communications and relations with shareholders of
the Funds, answer shareholder inquiries or supervise such activity by
the Trust's transfer agent, assist in preparations of reports to
shareholders of the Funds and prepare sales literature promoting the
sale of the Trust's shares as requested by Idex Management and the
Funds. The Distributor shall provide the Funds with necessary office
space, telephones and other communications facilities.
2. OBLIGATIONS OF IDEX MANAGEMENT. Idex Management shall have the
following obligations under this Agreement:
(a) to provide the Distributor with access to all information,
documents and records of and about the Funds that are
necessary to permit the Distributor to carry out its functions
and responsibilities under this Agreement;
<PAGE>
(b) to furnish the Distributor with a certified copy of any
financial statement or report prepared for the Funds by
certified or independent public accountants, and with copies
of any financial statement or reports made by the Funds to its
shareholders or to any governmental body or security exchange;
(c) to compensate the Distributor for its services under this
Agreement by the payment of fees equal to (i) gross Advisory
Fees pursuant to Schedule A of the Advisory Agreements,
less(ii) gross Sub-Advisory Fees pursuant to Schedule A of the
Sub-Advisory Agreements, less (iii) the Distributor's share of
any amount reimbursed to the Fund by Idex Management pursuant
to the provisions of Section 4(c) of the Advisory Agreements.
In the event that this Agreement shall be effective for only
part of a period to which any such fee received by Idex
Management is attributable, then an appropriate proration of
the fee that would have been payable hereunder if this
Agreement had remained in effect until the end of such period
shall be made, based on the number of calendar days in such
period and the number of calendar days during the period which
this Agreement was in effect. The fees payable to the
Distributor hereunder shall be payable upon receipt by Idex
Management from each Fund of fees payable to Idex Management
under the Advisory Agreements.
3. INVESTMENT COMPANY ACT COMPLIANCE. In performing services hereunder,
the Distributor shall at all times comply with the applicable
provisions of the Investment Company Act of 1940, as amended (the "1940
Act") and any other federal or state securities laws.
4. PURCHASES BY AFFILIATES. Neither the Distributor nor any of its
officers shall take a long or short position in the securities issued
by each Fund. The prohibition, however shall not prevent the purchase
from the Fund of shares issued by the Fund by the officers and
Directors of the Distributor (or deferred benefit plans established for
their benefit) at the current price available to the public, or at such
price with reductions in sales charge as may be permitted by the Fund's
current prospectus, in accordance with Section 22 of the 1940 Act.
5. TERMS AND TERMINATION. This Agreement shall continue in effect until
terminated pursuant to the provisions hereof. This Agreement shall
terminate automatically upon the termination of the Advisory
Agreements. This Agreement may be terminated at any time, without
penalty, by Idex Management or by the Trust by giving 60 days' written
notice of such termination to the Distributor at its principal place of
business, or may be terminated at any time by the Distributor by giving
60 days' written notice of such termination to the Trust and Idex
Management at their respective places of business.
6. ASSIGNMENT. This Agreement shall terminate automatically in the event
of any assignment (as that term is defined in Section 2(a)(4) of the
1940 Act of this Agreement.
7. AMENDMENTS. This Agreement may be amended only by written instrument
signed by the parties hereto.
8. 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.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date firs above written.
ATTEST: INTERSECURITIES, INC.
By: By:
--------------------------------- ------------------------
Secretary Thomas R. Moriarty
Chairman of the Board
ATTEST: IDEX MANAGEMENT, INC.
By: By:
---------------------------------- ------------------------
Secretary
<PAGE>
SCHEDULE A
FUNDS
IDEX GE U.S. Equity
IDEX Pilgrim Baxter Technology
IDEX Transamerica Small Company
IDEX Transamerica Equity
EXHIBIT 23(m)(1)(ss)
PLAN OF DISTRIBUTION - CLASS A SHARES
<PAGE>
CLASS A SHARES
IDEX MUTUAL FUNDS
PLAN OF DISTRIBUTION PURSUANT TO
RULE 12B-1 UNDER THE INVESTMENT COMPANY ACT OF 1940
WHEREAS, IDEX Mutual Funds (the "Trust") is registered under the Investment
Company Act of 1940, as amended ("1940 Act"), as an open-end management
investment company, and offers for public sale shares of beneficial interest;
WHEREAS, the Trust desires to adopt a Plan of Distribution ("Plan") pursuant to
Rule 12b-1 under the 1940 Act applicable to the Class A shares of each fund
listed on Schedule A (each a "Fund," together the "Funds"), series of shares of
the Trust; and
WHEREAS, the Trust has entered into an Underwriting Agreement ("Underwriting
Agreement") with InterSecurities, Inc. ("ISI"), pursuant to which ISI serves as
Distributor of the various series and classes of shares of the Trust during the
continuous offering of its shares.
NOW THEREFORE, the Trust hereby adopts this Plan with respect to the Class A
shares of each Fund in accordance with Rule 12b-1 under the 1940 Act.
1. (A). Each Fund is authorized to pay to ISI, as compensation for ISI's
services as Distributor of the Fund's Class A shares, a distribution
fee at the rate of up to 0.35% on an annualized basis of the average
daily net assets of the Fund's Class A shares. Such fee shall be
calculated and accrued daily and paid monthly or at such other
intervals as the Trust and ISI shall agree.
(B). Each Fund is authorized to pay to ISI, as compensation for ISI's
services as Distributor of the Fund's Class A shares, a service fee at
the rate of up to 0.25% on an annualized basis of the average daily net
assets of the Fund's Class A shares. Such fee shall be calculated and
accrued daily and paid monthly or at such other intervals as the Trust
and ISI shall agree.
(C). To the extent that a Fund pays a service fee pursuant to paragraph
1(B) of this Plan, the amount available to be paid pursuant to
paragraph 1(A) of this Plan shall be reduced pro tanto, so that the
total fees payable under this Plan by the Fund with respect to its
Class A shares shall not exceed the rate of 0.35% on an annual basis of
the average daily net assets of the Fund's Class A shares.
(D). Each Fund may pay a distribution or service fee to ISI at a lesser
rate than the fees specified in paragraphs 1(A) and 1(B), respectively,
of this Plan, in either case as agreed upon by the Trust and ISI and as
approved in the manner specified in paragraph 4 of this Plan.
2. As Distributor of the Class A shares of each Fund, ISI may spend such amounts
as it deems appropriate on any activities or expenses primarily intended to
result in the sale of the Class A shares of a Fund or the servicing and/or
maintenance of Class A shareholder accounts, including, but not limited to:
compensation to employees of ISI; compensation to and expenses, including
overhead and telephone expenses, of ISI and other selected dealers who engage in
or 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 costs of
preparing, printing and distributing sales literature and advertising materials.
<PAGE>
3. This Plan shall not take effect with respect to the Class A shares of a Fund
unless it first has been approved, together with any related agreements, by
votes of a majority of both (a) the Board and (b) those Trustees of the Trust
who are not "interested persons" of the Trust and have no direct or indirect
financial interest in the operation of this Plan or any agreements related
thereto ("Independent Trustees"), cast in person at a meeting or (meetings)
called for the purpose of voting on such approval; and until the Trustees who
approve the Plan's taking effect have reached the conclusion required by Rule
12b-1(e) under the 1940 Act.
4. If approved as set forth in paragraph 3, this Plan shall continue thereafter
in full force and effect with respect to the Class A shares of a Fund for so
long as such continuance is specifically approved at least annually in the
manner provided for approval of this Plan in paragraph 3.
5. ISI shall provide to the Board and the Board shall review, at least
quarterly, a written report of the amounts expended by ISI under this Plan and
the Underwriting Agreement and the purposes for which such expenditures were
made. ISI shall submit only information regarding amounts expended for
"distribution activities," as defined in this paragraph 5, to the Board in
support of the distribution fee payable hereunder and shall submit only
information regarding amounts expended for "service activities," as defined in
this paragraph 5, to the Board in support of the service fee payable hereunder.
For purposes of this Plan, "distribution activities" shall mean any activities
in connection with ISI's performance of its obligations under this Plan or the
Underwriting Agreement that are not deemed "service activities." "Service
activities" shall mean activities in connection with the provision by ISI or
other entity of personal service and/or the maintenance of shareholder accounts
with respect to the Class A shares of a Fund, within the meaning of the
definition of "service fee" for purposes of Section 2830(b) (formerly Section
26(d)) of the Rules of Fair Practice of the National Association of Securities
Dealers, Inc. Overhead and other expenses of ISI related to its "distribution
activities" or "service activities," including telephone and other
communications expenses, may be included in the information regarding amounts
expended for such activities.
6. This Plan may be terminated at any time by vote of the Board, by vote of a
majority of the Independent Trustees, or by vote of a majority of the
outstanding voting securities of the Class A shares of a Fund.
7. This Plan may not be amended to increase materially the amount of fees
provided for in paragraph 1 hereof unless such amendment is approved by a vote
of a majority of the outstanding voting securities of the Class A shares of each
Fund, and no material amendment to the Plan shall be made unless approved in the
manner provided for approval and annual renewal in paragraph 4 hereof.
8. The amount of the fees payable by each Fund to ISI under paragraph 1 hereof
and the Underwriting Agreement is not related directly to expenses incurred by
ISI on behalf of a Fund in serving as Distributor of the Class A shares, and
paragraph 2 hereof and the Underwriting Agreement do not obligate the Trust to
reimburse ISI for such expenses. The fees set forth in paragraph 1 hereof will
be paid by each Fund to ISI unless and until either the Plan or the Underwriting
Agreement is terminated or not renewed with respect to the Class A shares. If
either the Plan or the Underwriting Agreement is terminated or not renewed with
respect to the Class A shares, any distribution expenses incurred by ISI on
behalf of the Class A shares of a Fund in excess of the payments of the fees
specified in paragraph 1 hereof and the Underwriting Agreement which ISI has
received or accrued through the termination date are the sole responsibility and
liability of ISI, and are not obligations of the Trust.
9. While this Plan is in effect, the selection and nomination of Trustees who
are not interested persons of the Trust shall be committed to the discretion of
the Trustees who are not interested persons of the Trust.
10. As used in this Plan, the terms "majority of the outstanding voting
securities" and "interested person" shall have the same meaning as those terms
have in the 1940 Act.
11. The Trust shall preserve copies of this Plan (including any amendments
thereto) and any related agreements and all reports made pursuant to paragraph 5
hereof for a period of not less than six years from the date of this Plan, the
first two years in an easily accessible place.
<PAGE>
IN WITNESS WHEREOF, the Trust has executed this Plan of Distribution on the day
and year set forth below in St. Petersburg, Florida.
Dated as of March 1, 2000
ATTEST: IDEX MUTUAL FUNDS
By:
- ------------------------------------ ----------------------------------
John K. Carter, Secretary John R. Kenney
Chairman and Chief Executive
Officer
<PAGE>
Schedule A
PARTICIPATING FUNDS AS OF MARCH 1, 2000
IDEX GE U.S. Equity
IDEX Pilgrim Baxter Technology
IDEX Transamerica Small Company
IDEX Transamerica Equity
EXHIBIT 23(m)(2)(ss)
PLAN OF DISTRIBUTION - CLASS B SHARES
<PAGE>
CLASS B SHARES
IDEX MUTUAL FUNDS
PLAN OF DISTRIBUTION PURSUANT TO
RULE 12B-1 UNDER THE INVESTMENT COMPANY ACT OF 1940
WHEREAS, IDEX Mutual Funds (the "Trust") is registered under the Investment
Company Act of 1940, as amended ("1940 Act"), as an open-end management
investment company, and offers for public sale shares of beneficial interest;
WHEREAS, the Trust desires to adopt a Plan of Distribution ("Plan") pursuant to
Rule 12b-1 under the 1940 Act applicable to the Class B shares of the funds
listed on Schedule A (each a "Fund," collectively, the "Funds"), series of
shares of the Trust; and
WHEREAS, the Trust has entered into an Underwriting Agreement ("Underwriting
Agreement") with InterSecurities, Inc. ("ISI"), pursuant to which ISI serves as
Distributor of the various series and classes of shares of the Trust during the
continuous offering of its shares.
NOW THEREFORE, the Trust hereby adopts this Plan with respect to the Class B
shares of each Fund in accordance with Rule 12b-1 under the 1940 Act.
1. (A). Each Fund is authorized to pay to ISI, as compensation for ISI's
services as Distributor of each Fund's Class B shares, a distribution
fee at the rate of up to 0.75% on an annualized basis of the average
daily net assets of a Fund's Class B shares. Such fee shall be
calculated and accrued daily and paid monthly or at such other
intervals as the Trust and ISI shall agree.
(B). Each Fund is authorized to pay to ISI, as compensation for ISI's
services as Distributor of each Fund's Class B shares, a service fee at
the rate of up to 0.25% on an annualized basis of the average daily net
assets of a Fund's Class B shares. Such fee shall be calculated and
accrued daily and paid monthly or at such other intervals as the Trust
and ISI shall agree.
(C). The total fees payable under this Plan by each Fund with respect
to its Class B shares shall not exceed the maximum rate of 1.00% on an
annual basis of the average daily net assets of a Fund's Class B
shares.
(D). Each Fund may pay a distribution or service fee to ISI at a lesser
rate than the fees specified in paragraphs 1(A) and 1(B), respectively,
of this Plan, in either case as agreed upon by the Trust and ISI and as
approved in the manner specified in paragraph 4 of this Plan.
2. As Distributor of the Class B shares of a Fund, ISI may spend such amounts as
it deems appropriate on any activities or expenses primarily intended to result
in the sale of the Class B shares of a Fund or the servicing and/or maintenance
of Class B shareholder accounts, including, but not limited to: compensation to
employees of ISI; compensation to and expenses, including overhead and telephone
expenses, of ISI and other selected dealers who engage in or 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 costs of preparing,
printing and distributing sales literature and advertising materials.
3. This Plan shall not take effect unless it first has been approved by a vote
of a majority of the outstanding voting securities of the Class B shares of a
Fund.
-1-
<PAGE>
4. This Plan shall not take effect with respect to the Class B shares of a Fund
unless it first has been approved, together with any related agreements, by
votes of a majority of both (a) the Board and (b) those Trustees of the Trust
who are not "interested persons" of the Trust and have no direct or indirect
financial interest in the operation of this Plan or any agreements related
thereto ("Independent Trustees"), cast in person at a meeting or (meetings)
called for the purpose of voting on such approval; and until the Trustees who
approve the Plan's taking effect have reached the conclusion required by Rule
12b-1(e) under the 1940 Act.
5. If approved as set forth in paragraphs 3 and 4, this Plan shall continue
thereafter in full force and effect with respect to the Class B shares of a Fund
for so long as such continuance is specifically approved at least annually in
the manner provided for approval of this Plan in paragraph 4.
6. ISI shall provide to the Board and the Board shall review, at least
quarterly, a written report of the amounts expended by ISI under this Plan and
the Underwriting Agreement and the purposes for which such expenditures were
made. ISI shall submit only information regarding amounts expended for
"distribution activities," as defined in this paragraph 6, to the Board in
support of the distribution fee payable hereunder and shall submit only
information regarding amounts expended for "service activities," as defined in
this paragraph 6, to the Board in support of the service fee payable hereunder.
For purposes of this Plan, "distribution activities" shall mean any
activities in connection with ISI's performance of its obligations under this
Plan or the Underwriting Agreement that are not deemed "service activities."
"Service activities" shall mean activities in connection with the provision by
ISI or other entity of personal service and/or the maintenance of shareholder
accounts with respect to the Class B shares of a Fund, within the meaning of the
definition of "service fee" for purposes of Section 2830(b) (formerly Section
26(d)) of the Rules of Fair Practice of the National Association of Securities
Dealers, Inc. Overhead and other expenses of ISI related to its "distribution
activities" or "service activities," including telephone and other
communications expenses, may be included in the information regarding amounts
expended for such activities.
7. This Plan may be terminated at any time by vote of the Board, by vote of a
majority of the Independent Trustees, or by vote of a majority of the
outstanding voting securities of the Class B shares of each Fund.
8. This Plan may not be amended to increase materially the amount of fees
provided for in paragraph 1 hereof unless such amendment is approved by a vote
of a majority of the outstanding voting securities of the Class B shares of each
Fund, and no material amendment to the Plan shall be made unless approved in the
manner provided for approval and annual renewal in paragraph 5 hereof.
9. The amount of the fees payable by each Fund to ISI under paragraph 1 hereof
and the Underwriting Agreement is not related directly to expenses incurred by
ISI on behalf of each Fund in serving as Distributor of the Class B shares, and
paragraph 2 hereof and the Underwriting Agreement do not obligate the Trust to
reimburse ISI for such expenses. The fees set forth in paragraph 1 hereof will
be paid by each Fund to ISI unless and until either the Plan or the Underwriting
Agreement is terminated or not renewed with respect to the Class B shares. If
either the Plan or the Underwriting Agreement is terminated or not renewed with
respect to the Class B shares, any distribution expenses incurred by ISI on
behalf of the Class B shares of each Fund in excess of the payments of the fees
specified in paragraph 1 hereof and the Underwriting Agreement which ISI has
received or accrued through the termination date are the sole responsibility and
liability of ISI, and are not obligations of the Trust.
10. While this Plan is in effect, the selection and nomination of Trustees who
are not interested persons of the Trust shall be committed to the discretion of
the Trustees who are not interested persons of the Trust.
11. As used in this Plan, the terms "majority of the outstanding voting
securities" and "interested person" shall have the same meaning as those terms
have in the 1940 Act.
-2-
<PAGE>
12. The Trust shall preserve copies of this Plan (including any amendments
thereto) and any related agreements and all reports made pursuant to paragraph 6
hereof for a period of not less than six years from the date of this Plan, the
first two years in an easily accessible place.
IN WITNESS WHEREOF, the Trust has executed this Plan of Distribution on the day
and year set forth below in St. Petersburg, Florida.
Dated as of March 1, 2000
ATTEST: IDEX MUTUAL FUNDS
By:
- ------------------------------------ ----------------------------------
John K. Carter, Secretary John R. Kenney
Chairman and Chief Executive
Officer
-3-
<PAGE>
Schedule A
PARTICIPATING FUNDS AS OF MARCH 1, 2000
IDEX GE U.S. Equity
IDEX Pilgrim Baxter Technology
IDEX Transamerica Small Company
IDEX Transamerica Equity
-4-
EXHIBIT 23(m)(3)(ss)
PLAN OF DISTRIBUTION - CLASS C SHARES
<PAGE>
CLASS C SHARES
IDEX MUTUAL FUNDS
PLAN OF DISTRIBUTION PURSUANT TO
RULE 12B-1 UNDER THE INVESTMENT COMPANY ACT OF 1940
WHEREAS, IDEX Mutual Funds (the "Trust") is registered under the Investment
Company Act of 1940, as amended ("1940 Act"), as an open-end management
investment company, and offers for public sale shares of beneficial interest;
WHEREAS, the Trust desires to adopt a Plan of Distribution ("Plan") pursuant to
Rule 12b-1 under the 1940 Act applicable to the Class C shares of each fund
(each a "Fund," collectively, the "Funds") listed on Schedule A hereto, each a
series of shares of the Trust; and
WHEREAS, the Trust has entered into an Underwriting Agreement ("Underwriting
Agreement") with InterSecurities, Inc. ("ISI"), pursuant to which ISI serves as
Distributor of the various series and classes of shares of the Trust during the
continuous offering of its shares.
NOW THEREFORE, the Trust hereby adopts this Plan with respect to the Class C
shares of the Fund in accordance with Rule 12b-1 under the 1940 Act.
1. (A) The Fund is authorized to pay to ISI, as compensation for ISI's
services as Distributor of the Fund's Class C shares, a distribution
fee at the rate of up to 0.75% on an annualized basis of the average
daily net assets of the Fund's Class C shares. Such fee shall be
calculated and accrued daily and paid quarterly or at such other
intervals as the Trust and ISI shall agree.
(B) The Fund is authorized to pay ISI, as compensation for ISI's
services as Distributor of the Fund's Class C shares, a service fee at
the rate of up to 0.25% on an annualized basis of the average daily net
assets of the Fund's Class C shares. Such fee shall be calculated and
accrued daily and paid quarterly or at such other intervals as the
Trust and ISI shall agree.
(C) The total fees payable under this Plan by the Fund with respect to
its Class C shares shall not exceed the maximum rate of 1.00% on an
annual basis of the average daily net assets of the Fund's Class C
shares. To the extent the sum of any service fee paid under Paragraph
1(B) plus the distribution fee paid under paragraph 1(A) would
otherwise exceed such maximum rate of 1.00%, the distribution fee paid
under paragraph 1(A) shall be reduced pro tanto so that such maximum
rate is not exceeded.
(D) The Fund may pay a distribution or service fee to ISI at a lesser
rate than the fees specified in paragraphs 1(A) and 1(B), respectively,
of this Plan, in either case as agreed upon by the Trust and ISI and as
approved in the manner specified in paragraph 4 of this Plan.
2. As Distributor of the Class C shares of the Fund, ISI may spend such amounts
as it deems appropriate on any activities or expenses primarily intended to
result in the sale of the Class C shares of the Fund or the servicing and/or
maintenance of Class C shareholder accounts, including, but not limited to:
compensation to employees of ISI; compensation to and expenses, including
overhead and telephone expenses, of ISI and other selected dealers who engage in
or 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 costs of
preparing, printing and distributing sales literature and advertising materials.
3. This Plan shall not take effect unless it first has been approved by a vote
of a majority of the outstanding voting securities of the Class C shares of the
Fund.
<PAGE>
4. This Plan shall not take effect with respect to the Class C shares of the
Fund unless it first has been approved, together with any related agreements, by
votes of a majority of both (a) the Board and (b) those Trustees of the Trust
who are not "interested persons" of the Trust and have no direct or indirect
financial interest in the operation of this Plan or any agreements related
thereto ("Independent Trustees"), cast in person at a meeting or (meetings)
called for the purpose of voting on such approval; and until the Trustees who
approve the Plan's taking effect have reached the conclusion required by Rule
12b-1(e) under the 1940 Act.
5. If approved as set forth in paragraphs 3 and 4, this Plan shall continue
thereafter in full force and effect with respect to the Class C shares of the
Fund for so long as such continuance is specifically approved at least annually
in the manner provided for approval of this Plan in paragraph 4.
6. ISI shall provide to the Board and the Board shall review, at least
quarterly, a written report of the amounts expended by ISI under this Plan and
the Underwriting Agreement and the purposes for which such expenditures were
made. ISI shall submit only information regarding amounts expended for
"distribution activities," as defined in this paragraph 6, to the Board in
support of the distribution fee payable hereunder and shall submit only
information regarding amounts expended for "service activities," as defined in
this paragraph 6, to the Board in support of the service fee payable hereunder.
For purposes of this Plan, "distribution activities" shall mean any activities
in connection with ISI's performance of its obligations under this Plan or the
Underwriting Agreement that are not deemed "service activities." "Service
activities" shall mean activities in connection with the provision by ISI or
other entity of personal service and/or the maintenance of shareholder accounts
with respect to the Class C shares of the Fund, within the meaning of the
definition of "service fee" for purposes of Section 2830(b) (formerly Section
26(d)) of the Rules of Fair Practice of the National Association of Securities
Dealers, Inc. Overhead and other expenses of ISI related to its "distribution
activities" or "service activities," including telephone and other
communications expenses, may be included in the information regarding amounts
expended for such activities.
7. This Plan may be terminated at any time by vote of the Board, by vote of a
majority of the Independent Trustees, or by vote of a majority of the
outstanding voting securities of the Class C shares of the Fund.
8. This Plan may not be amended to increase materially the amount of fees
provided for in paragraph 1 hereof unless such amendment is approved by a vote
of a majority of the outstanding voting securities of the Class C shares of the
Fund, and no material amendment to the Plan shall be made unless approved in the
manner provided for approval and annual renewal in paragraph 5 hereof.
9. The amount of the fees payable by the Fund to ISI under paragraph 1 hereof
and the Underwriting Agreement is not related directly to expenses incurred by
ISI on behalf of the Fund in serving as Distributor of the Class C shares, and
paragraph 2 hereof and the Underwriting Agreement do not obligate the Trust to
reimburse ISI for such expenses. The fees set forth in paragraph 1 hereof will
be paid by the Fund to ISI unless and until either the Plan or the Underwriting
Agreement is terminated or not renewed with respect to the Class C shares. If
either the Plan or the Underwriting Agreement is terminated or not renewed with
respect to the Class C shares, any distribution expenses incurred by ISI on
behalf of the Class C shares of the Fund in excess of the payments of the fees
specified in paragraph 1 hereof and the Underwriting Agreement which ISI has
received or accrued through the termination date are the sole responsibility and
liability of ISI, and are not obligations of the Trust.
10. While this Plan is in effect, the selection and nomination of Trustees who
are not interested persons of the Trust shall be committed to the discretion of
the Trustees who are not interested persons of the Trust.
11. As used in this Plan, the terms "majority of the outstanding voting
securities" and "interested person" shall have the same meaning as those terms
have in the 1940 Act.
12. The Trust shall preserve copies of this Plan (including any amendments
thereto) and any related agreements and all reports made pursuant to paragraph 6
hereof for a period of not less than six years from the date of this Plan, the
first two years in an easily accessible place.
<PAGE>
IN WITNESS WHEREOF, the Trust has executed this Plan of Distribution on the day
and year set forth below in St. Petersburg, Florida.
Dated as of March 1, 2000
ATTEST: IDEX MUTUAL FUNDS
By:
- ------------------------------------ ----------------------------------
Thomas E. Pierpan, Secretary John R. Kenney
Trustee and Chairman
<PAGE>
Schedule A
PARTICIPATING FUNDS AS OF MARCH 1, 2000
IDEX GE U.S. Equity
IDEX Pilgrim Baxter Technology
IDEX Transamerica Small Company
IDEX Transamerica Equity
EXHIBIT 23(m)(4)(ss)
PLAN OF DISTRIBUTION - CLASS M SHARES
<PAGE>
CLASS M SHARES
IDEX MUTUAL FUNDS
PLAN OF DISTRIBUTION PURSUANT TO
RULE 12B-1 UNDER THE INVESTMENT COMPANY ACT OF 1940
WHEREAS, IDEX Mutual Funds (the "Trust") is registered under the Investment
Company Act of 1940, as amended ("1940 Act"), as an open-end management
investment company, and offers for public sale shares of beneficial interest;
WHEREAS, the Trust desires to adopt a Plan of Distribution ("Plan") pursuant to
Rule 12b-1 under the 1940 Act applicable to the Class M shares of each fund (the
"Fund") listed on Schedule A hereto, each a series of shares of the Trust; and
WHEREAS, the Trust has entered into an Underwriting Agreement ("Underwriting
Agreement") with InterSecurities, Inc. ("ISI"), pursuant to which ISI serves as
Distributor of the various series and classes of shares of the Trust during the
continuous offering of its shares.
NOW THEREFORE, the Trust hereby adopts this Plan with respect to the Class M
shares of the Fund in accordance with Rule 12b-1 under the 1940 Act.
1. (A) The Fund is authorized to pay to ISI, as compensation for ISI's services
as Distributor of the Fund's Class M shares, a distribution fee at the rate
of up to 0.75% on an annualized basis of the average daily net assets of the
Fund's Class M shares. Such fee shall be calculated and accrued daily and
paid quarterly or at such other intervals as the Trust and ISI shall agree.
(B) The Fund is authorized to pay ISI, as compensation for ISI's services as
Distributor of the Fund's Class M shares, a service fee at the rate of up to
0.25% on an annualized basis of the average daily net assets of the Fund's
Class M shares. Such fee shall be calculated and accrued daily and paid
quarterly or at such other intervals as the Trust and ISI shall agree.
(C) The total fees payable under this Plan by the Fund with respect to its
Class M shares shall not exceed the maximum rate of 1.00% on an annual basis
of the average daily net assets of the Fund's Class M shares. To the extent
the sum of any service fee paid under Paragraph 1(B) plus the distribution
fee paid under paragraph 1(A) would otherwise exceed such maximum rate of
1.00%, the distribution fee paid under paragraph 1(A) shall be reduced pro
tanto so that such maximum rate is not exceeded.
(D) The Fund may pay a distribution or service fee to ISI at a lesser rate
than the fees specified in paragraphs 1(A) and 1(B), respectively, of this
Plan, in either case as agreed upon by the Trust and ISI and as approved in
the manner specified in paragraph 4 of this Plan.
2. As Distributor of the Class M shares of the Fund, ISI may spend such amounts
as it deems appropriate on any activities or expenses primarily intended to
result in the sale of the Class M shares of the Fund or the servicing and/or
maintenance of Class M shareholder accounts, including, but not limited to:
compensation to employees of ISI; compensation to and expenses, including
overhead and telephone expenses, of ISI and other selected dealers who engage in
or 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 costs of
preparing, printing and distributing sales literature and advertising materials.
3. This Plan shall not take effect unless it first has been approved by a vote
of a majority of the outstanding voting securities of the Class M shares of the
Fund.
<PAGE>
4. This Plan shall not take effect with respect to the Class M shares of the
Fund unless it first has been approved, together with any related agreements, by
votes of a majority of both (a) the Board and (b) those Trustees of the Trust
who are not "interested persons" of the Trust and have no direct or indirect
financial interest in the operation of this Plan or any agreements related
thereto ("Independent Trustees"), cast in person at a meeting or (meetings)
called for the purpose of voting on such approval; and until the Trustees who
approve the Plan's taking effect have reached the conclusion required by Rule
12b-1(e) under the 1940 Act.
5. All issued and outstanding Class C shares as of March 1, 2000 are designated
Class M shares, are subject to their existing fees, and are not subject to the
distribution and service fee rates described in paragraph 1 hereof. Class M
shares purchased on or after March 1, 2000 are subject to the distribution and
service fee rates described in paragraph 1 hereof.
6. If approved as set forth in paragraphs 3 and 4, this Plan shall continue
thereafter in full force and effect with respect to the Class M shares of the
Fund for so long as such continuance is specifically approved at least annually
in the manner provided for approval of this Plan in paragraph 4.
7. ISI shall provide to the Board and the Board shall review, at least
quarterly, a written report of the amounts expended by ISI under this Plan and
the Underwriting Agreement and the purposes for which such expenditures were
made. ISI shall submit only information regarding amounts expended for
"distribution activities," as defined in this paragraph 7, to the Board in
support of the distribution fee payable hereunder and shall submit only
information regarding amounts expended for "service activities," as defined in
this paragraph 7, to the Board in support of the service fee payable hereunder.
For purposes of this Plan, "distribution activities" shall mean any activities
in connection with ISI's performance of its obligations under this Plan or the
Underwriting Agreement that are not deemed "service activities." "Service
activities" shall mean activities in connection with the provision by ISI or
other entity of personal service and/or the maintenance of shareholder accounts
with respect to the Class M shares of the Fund, within the meaning of the
definition of "service fee" for purposes of Section 2830(b) (formerly Section
26(d)) of the Rules of Fair Practice of the National Association of Securities
Dealers, Inc. Overhead and other expenses of ISI related to its "distribution
activities" or "service activities," including telephone and other
communications expenses, may be included in the information regarding amounts
expended for such activities.
8. This Plan may be terminated at any time by vote of the Board, by vote of a
majority of the Independent Trustees, or by vote of a majority of the
outstanding voting securities of the Class M shares of the Fund.
9. This Plan may not be amended to increase materially the amount of fees
provided for in paragraph 1 hereof unless such amendment is approved by a vote
of a majority of the outstanding voting securities of the Class M shares of the
Fund, and no material amendment to the Plan shall be made unless approved in the
manner provided for approval and annual renewal in paragraph 6 hereof.
10. The amount of the fees payable by the Fund to ISI under paragraph 1 hereof
and the Underwriting Agreement is not related directly to expenses incurred by
ISI on behalf of the Fund in serving as Distributor of the Class M shares, and
paragraph 2 hereof and the Underwriting Agreement do not obligate the Trust to
reimburse ISI for such expenses. The fees set forth in paragraph 1 hereof will
be paid by the Fund to ISI unless and until either the Plan or the Underwriting
Agreement is terminated or not renewed with respect to the Class M shares. If
either the Plan or the Underwriting Agreement is terminated or not renewed with
respect to the Class M shares, any distribution expenses incurred by ISI on
behalf of the Class M shares of the Fund in excess of the payments of the fees
specified in paragraph 1 hereof and the Underwriting Agreement which ISI has
received or accrued through the termination date are the sole responsibility and
liability of ISI, and are not obligations of the Trust.
11. While this Plan is in effect, the selection and nomination of Trustees who
are not interested persons of the Trust shall be committed to the discretion of
the Trustees who are not interested persons of the Trust.
12. As used in this Plan, the terms "majority of the outstanding voting
securities" and "interested person"
<PAGE>
shall have the same meaning as those terms have in the 1940 Act.
13. The Trust shall preserve copies of this Plan (including any amendments
thereto) and any related agreements and all reports made pursuant to paragraph 7
hereof for a period of not less than six years from the date of this Plan, the
first two years in an easily accessible place.
IN WITNESS WHEREOF, the Trust has executed this Plan of Distribution on the day
and year set forth below in St. Petersburg, Florida.
Dated as of March 1, 2000
ATTEST: IDEX MUTUAL FUNDS
By:
- ------------------------------------ ----------------------------------
Thomas E. Pierpan, Secretary John R. Kenney
Trustee and Chairman
<PAGE>
Schedule A
PARTICIPATING FUNDS AS OF MARCH 1, 2000-
IDEX GE U.S. Equity
IDEX Pilgrim Baxter Technology
IDEX Transamerica Small Company
IDEX Transamerica Equity
