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. 35
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 1940 Act File
No. 811-4556
Amendment No. 37
(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.
[ ] 75 days after filing pursuant to paragraph (a) (2) of Rule 485.
[ ] On (date) pursuant to paragraph (a) (1) of Rule 485.
[X] On June 15, 2000 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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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 (10)
(ll) Form of Agreement for IDEX Great Companies - America(SM),
IDEX Great Companies- Technology(SM)
(mm) Form of Agreement for IDEX Federated Tax Exempt
(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 (10)
(oo) Form of Agreement for IDEX Pilgrim Baxter Technology (11)
(pp) Form of Agreement for IDEX Transamerica Small Company and
IDEX Transamerica Equity (10)
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(qq) Form of Agreement for IDEX Great Companies - America(SM)
and IDEX Great Companies- Technology(SM)
(rr) Form of Agreement for IDEX Federated Tax Exempt
(e) Underwriting Agreement (5)
(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 Agreements:
(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 (10)
(i) Form of Agreement for IDEX Great Companies -
America(SM), IDEX Great Companies - Technology(SM).
(i) Opinion of Counsel (12)
(j) (1) Consent of PricewaterhouseCoopers LLP (12)
(2) Consent of Sutherland Asbill & Brennan, LLP (12)
(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)
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(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 (10)
(tt) Form of Plan for IDEX Great Companies - America(SM) and
IDEX Great Companies - Technology(SM)
(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 (10)
(tt) Form of Plan for IDEX Great Companies - Americasm and
IDEX Great Companies - Technologysm
(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)
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(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 (10)
(tt) Form of Plan for IDEX Great Companies - America(SM) and
IDEX Great Companies - Technology(SM)
(4)Plan of Distribution under Rule 12b-1 - Class M 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 (10)
(tt) Form of Plan for IDEX Great Companies - America(SM) and
IDEX Great Companies - Technology(SM) (n) Not applicable
(o) Reserved
(p) Code of Ethics
(1)IDEX Mutual Funds
SUB-ADVISERS
(2) AEGON USA Investment Management, Inc.
(3) Fred Alger Management, Inc.
(4) C.A.S.E. Management, Inc.
(5) Dean Investment Associates
(6) Federated Investment Management Company
(7) GE Asset Management Incorporated
(8) Goldman Sachs Asset Management Inc.
(9) Janus Capital Corporation
(10) Luther King Capital Management Corporation
(11) NWQ Investment Management Company, Inc.
(12) Pilgrim Baxter & Associates, Ltd.
(13) Salomon Brothers Asset Management Inc
(14) Transamerica Investment Management, LLC
(15) T. Rowe Price Associates, Inc.
(16) Great Companies, L.L.C. (12)
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(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) Filed previously with Post-Effective Amendment No. 33 to Registration
Statement filed on December 17, 1999 (File No. 33-2659).
(11) Filed previously with Post-Effective Amendment No. 34 to Registration
Statement filed on February 28, 2000 (File No. 33-2659).
(12) 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 Federated 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, IDEX
Transamerica Equity, IDEX Great Companies - America(SM) and IDEX Great
Compnanies - Technology(SM) are not controlled by or under common control with
any other person. The Registrant has no subsidiaries.
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
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C.A.S.E. Growth, IDEX NWQ Value Equity, IDEX LKCM Strategic Total
Return, IDEX Dean Asset Allocation,, IDEX AEGON Income Plus, IDEX
Federated 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,
IDEX Transamerica Equity, IDEX Great Companies - America(SM) and
IDEX Great Companies - Technology(SM):
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, 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.
* * *
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GE Asset Management Incorporated ("GEAM") serves as Sub-Adviser for IDEX GE
International Equity and IDEX GE U.S. Equity. GEAM is a wholly-owned subsidiary
of General Electric Company ("GE"). GEAM's principal officers and directors
serve in similar capacities with respect to General Electric Investment
Corporation ("GEIC," and, together with GEAM, collectively referred to as "GE
Investments"), which like GEAM is a wholly-owned subsidiary of GE. The directors
and executive officers of GEAM 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 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
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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, 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 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
8
<PAGE>
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 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,
9
<PAGE>
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, 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
10
<PAGE>
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., 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
11
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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.
* * *
Great Companies, L.L.C., 8550 Ulmerton Road, Largo, Florida 33771, serves
as sub-adviser to IDEX Great Companies - Americasm and IDEX Great Companies -
Technologysm . John R. Kenney, Director, Chairman and Co-CEO, also serves as
Director, Chairman and President of WRL Investment Management, Inc., WRL
Investment Services, Inc., and WRL Series Fund, Inc.; Chairman, Trustee and
Chief Executive Officer of IDEX Mutual Funds; Director of Idex Management, Inc.;
Chairman and Chief Executive Officer of Western Reserve Life Assurance Co.(all
of St. Petersburg, FL), Senior Vice President of AEGON USA, Inc. (Cedar Rapids,
IA), Chairman of Idex Investor Services, Inc. (St. Petersburg, FL); James Hare
Huguet, Director, President and Co-CEO, also serves as Director and President of
Great Companies, Inc., 300 Everett Road, Easton, CT; Alan F. Warrick, Director,
also serves as Managing Director of AEGON USA (Cedar Rapids, IA) and Western
Reserve Life Assurance Co. of Ohio (St. Petersburg, FL); Thomas R. Moriarty,
Director, also serves as President and Chief Executive Officer of Idex Investor
Services, Inc., Director, President and Chief Executive Officer of Idex
Management, Inc., Senior Vice President, Principal Financial Officer and
Treasurer of IDEX Mutual Funds, Chairman, Director, President and CEO of
InterSecurities, Inc., Vice President of AFSG Securities, Inc. and Vice
President of Western Reserve Life Assurance Co. of Ohio (all of St. Petersburg,
FL); Jerome C. Vahl, Director, also serves as Director and President of Western
Reserve Life Assurance Co. of Ohio, Director of Idex Investor Services, Inc.,
Idex Management, Inc., WRL Investment Management, Inc. and WRL Investment
Services, Inc. (all of St. Petersburg, FL); and Gerald William Bollman,
Executive Vice President, also serves as Executive Vice President of Great
Companies, Inc., 300 Everett Road, Easton, CT.
12
<PAGE>
* * *
Federated Investment Management Company, Federated Investment Tower,
Pittsburgh, PA 15222-3779, Sub-Adviser to IDEX Federated Tax Exempt, is a
registered investment adviser under the Investment Advisers Act of 1940. It is a
subsidiary of Federated Investors, Inc.
The Sub-Adviser serves as investment adviser to a number of investment
companies and private accounts. Total assets under management or administered by
the Sub-Adviser and other subsidiaries of Federated Investors is approximately
$140 billion. The Trustees of the Sub-Adviser, their position with the
Sub-Adviser, and, in parenthesis, their principal occupations are as follows:
John F. Donahue, Trustee (Chairman and Trustee, Federated Investors, Federated
Advisers, Federated Management, and Federated Research; Chairman and Director,
Federated Research Corp. and Federated Global Research Corp.; President,
Passport Research, Ltd.); J. Christopher Donahue, Trustee (President and
Trustee, Federated Investors, Federated Advisers, Federated Management, and
Federated Research; President and Director, Federated Research Corp. and
Federated Global Research Corp.; President, Passport Research, Ltd; Trustee,
Federated Shareholder Services Company and Federated Shareholder Services;
Director, Federated Services Company); John W. McGonigle, Trustee (Executive
Vice President, Secretary and Trustee, Federated Investors; Trustee, Federated
Advisers, Federated Management, and Federated Research; Director, Federated
Research Corp. and Federated Global Research Corp.; Trustee, Federated
Shareholder Services Company and Federated Shareholder Services; Director,
Federated Services Company; and Director, Federated Securities Corp.); Mark D.
Olson, Trustee (Trustee, Federated Investors, Federated Advisers, Federated
Research, Federated Management, Federated Shareholder Services, and Federated
Shareholder Services Company; Partner, Wilson, Halbrook & Bayard, 107 W. Market
Street, Georgetown, Delaware 19947). The business address of the Trustees, with
the exception of Mark D. Olson, is Federated Investors Tower, Pittsburgh,
Pennsylvania 15222-3779.
The remaining Officers of the Sub-Adviser are: John B. Fisher, President;
William D. Dawson III, Henry A. Frantzen and J. Thomas Madden, Executive Vice
Presidents; Joseph M. Balestrino, Drew J. Collins, Jonathan C. Conley, Deborah
A. Cunnigham, Mark E. Durbiano, Sandra L. McInerney, Susan M. Nason, Mary Jo
Ochson and Robert J. Ostrowski ,Senior Vice Presidents; Todd A. Abraham, J.
Scott Albrecht, Randall S. Bauer, David A. Briggs, Micheal W. Casey, Kenneth J.
Cody, Alexandre de Bethmann, Michael P. Donnelly, Linda A. Duessel, Donald T.
Ellenberger, Kathleen M. Foody-Malus, Thomas M. Franks, Edward C. Gonzales,
James E. Grefenstette, Susan R. Hill, Stephen A. Keen, Robert K. Kinsey, Robert
M. Kowit, Jeff A. Kozemchak, Steven Lehman, Marian R. Marinack, Frank Semack,
Aash M. Shah, Christopher J. Smith, Tracy P. Stouffer, Edward J. Tiedge, Paige
M. Wilhelm, Arthur J. Barry, Marc Halperin, Richard J. Lazarchic, Keith Sabol
and Jolanta M. Wysocka, Vice Presidents; Robert E. Cauley, Lee R. Cunningham II,
Paul S. Drotch, Salvatore A. Esposito, Donna M. Fabiano, John T. Gentry, William
R. Jamison, Constantine Kartsonas, Natalie F. Metz, Joseph M. Natoli, Keith J.
Sabol, John Sheehy, Michael W. Sirianni, Leonardo A. Vila, Nancy J. Belz, B.
Anthony Delserone, Gary E. Falwell, John C. Kerber, Grant K. McKay and Lori A.
Wolff, Assistant Vice Presidents; Stephen A. Keen, Secretary, and Thomas R.
Donahue, Treasurer. The business address of each of the Officers of the
Sub-Adviser is Federated Investors Tower, Pittsburgh, Pennsylvania 15222-3779.
These individuals are also officers of some of the investment advisers to other
mutual funds.
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
</TABLE>
13
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
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
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
</TABLE>
14
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
Tracey Creighton 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, State Street Bank &
Trust Company, 801 Pennsylvania, Kansas City, MO 64105.
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, GEAM, Janus Capital,
C.A.S.E., NWQ, Luther King, Dean Investment, AEGON Management GSAM, T. Rowe
Price, SBAM, Pilgrim, Transamerica Great Companies and Federated pursuant to the
Management and Investment Advisory Agreements, the Investment Counsel
(Sub-Advisory) Agreements, the Administrative Services Agreements and the
Underwriting Agreement.
ITEM 30 UNDERTAKINGS
Not applicable
15
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant, IDEX Mutual Funds has duly
caused this Post-Effective Amendment No. 35 to its Registration Statement to be
signed on its behalf by the undersigned, thereunder duly authorized, in the City
of St. Petersburg, State of Florida, on the 30th day of March, 2000.
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. 35 to its Registration
Statement has been signed below by the following persons in the capacities and
on the dates indicated:
/s/ JOHN R. KENNEY Chairman, Trustee & CEO March 30, 2000
- ---------------------------
John R. Kenney
/s/ PATRICK S. BAIRD President and Trustee March 30, 2000
- --------------------------- (Principal Executive Officer)
Patrick S. Baird*
/s/ THOMAS R. MORIARTY Senior Vice President March 30, 2000
- --------------------------- Treasurer and Principal
Thomas R. Moriarty Financial Officer
/s/ CHRISTOPHER G. ROETZER Vice President, Assistant March 30, 2000
- --------------------------- Treasurer and Principal
Christopher G. Roetzer Accounting Officer
/s/ PETER R. BROWN Trustee March 30, 2000
- ---------------------------
Peter R. Brown *
/s/ DANIEL CALABRIA Trustee March 30, 2000
- ---------------------------
Daniel Calabria *
/s/ JAMES L. CHURCHILL Trustee March 30, 2000
- ---------------------------
James L. Churchill *
<PAGE>
/s/ CHARLES C. HARRIS Trustee March 30, 2000
- ---------------------------
Charles C. Harris*
/s/ WILLIAM W. SHORT, JR. Trustee March 30, 2000
- ---------------------------
William W. Short, Jr. *
/s/ JACK E. ZIMMERMAN Trustee March 30, 2000
- ---------------------------
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. 35 TO
REGISTRATION STATEMENT ON
FORM N-1A
IDEX MUTUAL FUNDS
REGISTRATION NO. 33-2659
<PAGE>
EXHIBIT INDEX
EXHIBIT NUMBER DESCRIPTION OF EXHIBIT
- -------------- ----------------------
23(d)(1)(ll) Form of Investment Advisory Agreement - IDEX Great Companies
- America(SM) , Great Companies - Technology(SM)
23(d)(1)(mm) Form of Investment Advisory Agreement for IDEX Federated Tax
Exempt
23(d)(2)(qq) Form of Sub-Advisory Agreement for IDEX Great Companies -
America(SM) and IDEX Great Companies - Technology(SM)
23(d)(2)(rr) Form of Sub-Advisory Agreement for IDEX Federated Tax Exempt
23(h)(2)(i) Form of Administrative Services Agreement - IDEX Great
Companies - America(SM) Great Companies - Technology(SM), and
IDEX Federated Tax Exempt
23(m)(1)(tt) Form of Plan of Distribution - Class A Shares - IDEX Great
Companies - America(SM) Great Companies - Technology(SM)
23(m)(2)(tt) Form of Plan of Distribution - Class B Shares - IDEX Great
Companies - America(SM) Great Companies - Technology(SM)
23(m)(3)(tt) Form of Plan of Distribution - Class C Shares - IDEX Great
Companies - America(SM) Great Companies - Technology(SM)
23(m)(4)(tt) Form of Plan of Distribution - Class M Shares - IDEX Great
Companies - America(SM) Great Companies - Technology(SM)
23(p) Code of Ethics for IDEX Mutual Funds and Sub-Advisers - AEGON
USA Investment Management, Inc., Fred Alger Management, Inc.,
C.A.S.E. Management, Inc., Dean Investment Associates,
Federated Investment Management Company, GE Asset Management
Incorporated, Goldman Sachs Asset Management Inc., Janus
Capital Corporation, Luther King Capital Management
Corporation, NWQ Investment Management Company, Inc., Pilgrim
Baxter & Associates, Ltd., Salomon Brothers Asset Management
Inc, Transamerica Management, LLC and T. Rowe Price
Associates, Inc.
EXHIBIT 23(d)(1)(ll)
FORM OF INVESTMENT ADVISORY AGREEMENT
ON BEHALF OF IDEX GREAT COMPANIES - AMERICA(SM) AND
GREAT COMPANIES - TECHNOLOGY(SM)
<PAGE>
IDEX MUTUAL FUNDS
FORM OF
INVESTMENT ADVISORY AGREEMENT
This Agreement, entered into as of June 15, 2000 between IDEX Mutual
Funds, a Massachusetts business trust (referred to herein as the "Trust") and
Idex Management, Inc., a Delaware corporation (referred to herein as "Idex
Management"), to provide certain advisory services to certain series of shares
of beneficial interest in the Trust as listed on the attached Schedule A to this
Agreement (each a "Fund," collectively the "Funds").
The Trust is registered as an open-end investment company registered
under the Investment Company Act of 1940 ("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 Trust 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 services for the Trust and to perform the
functions assigned to it under this Agreement for the considerations provided.
Accordingly, the parties of agreed as follows:
1. APPOINTMENT. The Trust hereby appoints Idex Management as the Trust's
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 Trust's Declaration of Trust, Bylaws
and current registration statement applicable to the Funds as it may be
supplemented from time to time, and with the instructions and direction of the
Board of Trustees of the Trust, 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 Trust, 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 Trust's Declaration of
Trust and each Fund's investment objective and policies adopted and
declared by the Board of Trustees and stated in the Funds' current
Prospectus;
(b) to cause the officers of Idex Management to attend meetings and
furnish oral or written reports, as the Trust may reasonably require, in
order to keep the Trustees and appropriate officers of the Trust fully
informed as to the conditions of the investment securities of the Funds,
the investment recommendations of Idex Management, and the investment
considerations which have given rise to those recommendations; and
<PAGE>
(c) to supervise the purchase and sale of securities as directed by the
appropriate officers of the Trust, including the selection of brokers
and dealers to execute such transactions, consistent with paragraph 8
hereof.
It is understood and agreed that Idex Management intends to enter into
Investment Counsel Agreements with various sub-advisers as listed on Schedule A
(each a "sub-adviser," collectively, "sub-advisers") pursuant to which Idex
Management may delegate some or all of its responsibilities under this Section
2. The compensation to be paid to each sub-adviser for such services shall be
set forth in each Investment Counsel Agreement; provided, however, that each
such Agreement shall be approved by the Board of Trustees, including a majority
of the directors who are not parties to the Sub-Advisory Agreements or
interested persons (within the meaning of Section 2(a)(19) of the 1949 Act) of
any such party (the "Disinterested Directors"), and by the holders of the
outstanding voting securities of each of the Funds 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, record-keeping,
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 Trust.
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 Trust'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)
<PAGE>
expenses of shareholders' meetings and of preparing, printing and
distributing proxy statements (unless otherwise agreed to by the Trust
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 Trust 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 12b-1 fees; and (xvi)
any extraordinary expenses incurred by the Trust 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 Trust, except for such
Trustees who are not interested persons (as defined in the 1940 Act) of
Idex Management;
(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 such expenses which exceed 1.20% of the Fund's average
daily net assets. 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 TRUST. The Trust 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
<PAGE>
(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 Trust may delegate to the appropriate officers of the Trust, 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 each sub-adviser the authority and direction to
place a Fund's securities transactions, only with brokers and dealers who render
satisfactory service in the execution of orders at the most favorable prices and
at reasonable commission rates; provided, however, that Idex Management or each
sub-adviser, 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
each sub-adviser 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 each
sub-adviser. Idex Management and each sub-adviser 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 fund business with such
broker-dealers, Idex Management and each sub-adviser 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 Trust 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
<PAGE>
followed by Idex Management and each sub-adviser 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 Trust.
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 Trust, 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 ending April 30,
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 Trust 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 Trust
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 Trust, 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 Trust, 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 Trust 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 Trust or
the Funds or any shareholder of the Funds for any error of judgment, mistake of
law or any loss arising out of any investment or other act or omission in the
course of, connected with or arising out of any service to be rendered
hereunder, except by reason of willful misfeasance, bad faith or gross
negligence in its performance of its duties or by reason of reckless disregard
of its obligations and duties under this Agreement.
<PAGE>
14. ASSIGNMENT. This Agreement shall terminate automatically in the
event of any assignment (as the term is defined in Section 2(a)(4) of the 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 Trust 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, unless otherwise
permitted by the 1940 Act,
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 Trust'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 Trust 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 Trust individually, but binding only upon the assets
and property of the Trust.
ATTEST: IDEX MANAGEMENT, INC.
______________________________ By: _____________________________
William G. Geiger Thomas R. Moriarty
Secretary President and Chief
Executive Officer
ATTEST: IDEX MUTUAL FUNDS
______________________________ By: ____________________________
John K. Carter, Esq. John R. Kenney
Secretary Chairman of the Board
<PAGE>
Management and Investment Advisory Agreement
SCHEDULE A
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------
FUND PERCENTAGE OF MONTHLY AVERAGE TERMINATION DATE
DAILY NET ASSETS
- ------------------------------------------------------------------------------------------
<S> <C> <C>
IDEX GREAT COMPANIES - AMERICA SM 0.80% of the first $500
million of the Fund's average
daily net assets and 0.70% of April 30, 2002
assets in excess of $500
million.
- ------------------------------------------------------------------------------------------
IDEX GREAT COMPANIES - 0.80% of the first $500
TECHNOLOGY SM million of the Fund's average
daily net assets and 0.70% of April 30, 2002
assets in excess of $500
million.
- ------------------------------------------------------------------------------------------
</TABLE>
EXHIBIT 23(d)(1)(ll)
FORM OF INVESTMENT ADVISORY AGREEMENTS
ON BEHALF OF IDEX FEDERATED TAX EXEMPT
<PAGE>
PROPOSED INVESTMENT ADVISORY AGREEMENT
IDEX MUTUAL FUNDS
This Agreement, entered into between IDEX Mutual Funds, a Massachusetts
business trust (referred to herein as the "Fund") and Idex Management, Inc., a
Delaware corporation (referred to herein as "Idex Management"), to provide
certain advisory services with respect to the series of shares of beneficial
interest in the Fund as listed on the attached Schedule A to this Agreement
(each a "fund," collectively the "funds").
The Fund is registered as an open-end investment company under the
Investment Company Act of 1940, as amended (the "1940 Act"), and consists of
more than one series of shares, including the funds. In managing the funds, as
well as in the conduct of certain of its affairs, the Fund wishes to have the
benefit of the investment advisory services of Idex Management and its
assistance in performing certain management, administrative and promotional
functions. Idex Management desires to furnish such services to the Fund and to
perform the functions assigned to it under this Agreement for the considerations
provided. Schedule A, which may be amended from time to time, lists the
effective date and the termination date of this Agreement for each fund of the
Fund. Accordingly, the parties have agreed as follows:
1. APPOINTMENT. The Fund hereby appoints Idex Management as the funds'
investment adviser and administrator for the period and on the terms set forth
in this Agreement. Idex Management accepts such appointment and agrees to render
or cause to be rendered the services set forth for the compensation herein
specified. In all matters relating to the performance of this Agreement, Idex
Management will act in conformity with the Fund's Declaration of Trust, Bylaws
and registration statement applicable to the funds and with the instructions and
direction of the Board of Trustees of the Fund, and will conform to and comply
with the 1940 Act and all other applicable federal or state laws and
regulations.
2. INVESTMENT ADVISORY SERVICES. In its capacity as investment adviser
to the funds, Idex Management shall have the following responsibilities:
(a) to provide a continuous investment program for each fund including
advice as to the acquisition, holding or disposition of any or all of
the securities or other assets which the funds may own or contemplate
acquiring from time to time, consistent with the Fund's Declaration of
Trust and each fund's investment objective and policies adopted and
declared by the Board of Trustees and stated in the Fund's current
Prospectus;
(b) to cause its officers to attend meetings and furnish oral or written
reports, as the Fund may reasonably require, in order to keep the
Trustees and appropriate officers of the Fund fully informed as to the
conditions of each investment portfolio of the funds, the investment
recommendations of Idex Management, and the investment considerations
which have given rise to those recommendations;
(c) to supervise the purchase and sale of securities as directed by the
appropriate officers of the Fund, including the selection of brokers and
dealers to execute such transactions, consistent with paragraph 8
hereof; and
(d) to maintain all books and records required to be maintained by the
Investment Adviser pursuant to the 1940 Act and the rules and
regulations promulgated thereunder with respect
<PAGE>
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-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
<PAGE>
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 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,
<PAGE>
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 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 as specified on
Schedule A, 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
<PAGE>
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 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
Effective Date: JUNE 15, 2000
---------------------
EXHIBIT 23(d)(2)(qq)
FORM OF SUB-ADVISORY AGREEMENT
ON BEHALF OF IDEX GREAT COMPANIES - AMERICA(SM) AND
GREAT COMPANIES - TECHNOLOGY(SM)
<PAGE>
FORM OF
SUB-ADVISORY AGREEMENT
BETWEEN
IDEX MANAGEMENT, INC.
AND
GREAT COMPANIES, LLC
SUB-ADVISORY AGREEMENT, made as of the 15th day of June, 2000, between
IDEX Management, Inc. ("Investment Adviser"), a corporation organized and
existing under the laws of the State of Delaware and Great Companies LLC
("Sub-Adviser"), a LLC organized and existing under the laws of the State of
Iowa.
WHEREAS, the Investment Adviser has entered into an Investment Advisory
Agreement dated as of the 1st day of July, 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 Great Companies -
America sm and IDEX Great Companies - Technology(SM ) (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
<PAGE>
(2) place orders and negotiate the commissions (if any) for the
execution of transactions in securities or other assets with or
through such brokers, dealers, underwriters or issuers as the
Sub-Adviser may select.
B. ADDITIONAL DUTIES OF SUB-ADVISER. In addition to the above,
Sub-Adviser shall:
(1) furnish continuous investment information, advice and
recommendations to 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, 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");
<PAGE>
(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 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.
<PAGE>
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.
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.
<PAGE>
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 an initial term ending April 30, 2002. 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 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.
<PAGE>
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.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
executed by their duly authorized signatories as of the date and year first
above written.
Attest: IDEX MANAGEMENT, INC.
_____________________________ By: _______________________________
William H. Geiger Name: Thomas R. Moriarty
Secretary Title:President and Chief
Executive Officer
Attest: Great Companies, L.L.C.
_____________________________ By _______________________________
Name:
Title:
EXHIBIT 23(M)(4)(TT)
FORM OF PLAN OF DISTRIBUTION - CLASS M SHARES
ON BEHALF OF IDEX GREAT COMPANIES - AMERICA(SM) AND
GREAT COMPANIES - TECHNOLOGY(SM)
<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.
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.
<PAGE>
5. All issued and outstanding Class C shares as of March 1, 1999 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, 1999 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" 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.
<PAGE>
Dated as of March 1, 2000
ATTEST: IDEX MUTUAL FUNDS
/s/ JOHN K. CARTER By:/s/ JOHN R. KENNEY
- --------------------------- ----------------------------
John K. Carter, Secretary John R. Kenney
Trustee and Chairman
<PAGE>
Schedule A
PARTICIPATING FUNDS AS OF JUNE 1, 2000
IDEX JCC Growth
IDEX JCC Global
IDEX JCC Balanced
IDEX JCC Flexible Income
IDEX JCC Capital Appreciation
IDEX AEGON Income Plus
IDEX Alger Aggressive Growth
IDEX C.A.S.E. Growth
IDEX NWQ Value Equity
IDEX GE / SE International Equity
IDEX Dean Asset Allocation
IDEX LKCM Strategic Total Return
IDEX GE U.S. Equity
IDEX Pilgrim Baxter Technology
IDEX Transamerica Small Company
IDEX Transamerica Equity
IDEX Great Companies - America(SM)
IDEX Great Companies - Technology(SM)
EXHIBIT 23(d)(2)(rr)
FORM OF SUB-ADVISORY AGREEMENT
ON BEHALF OF IDEX FEDERATED TAX EXEMPT
<PAGE>
PROPOSED
SUB-ADVISORY AGREEMENT
BETWEEN
IDEX MANAGEMENT, INC.
AND
FEDERATED INVESTMENT MANAGEMENT COMPANY
SUB-ADVISORY AGREEMENT made as of the 15th day of June, 2000, between
Idex Management, Inc. ("Investment Adviser"), a corporation organized and
existing under the laws of the State of Delaware and Federated Investment
Management Company ("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 July, 2000 ("Advisory Agreement") with the
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, the Fund is authorized to issue shares of the IDEX Federated
Tax Exempt (a "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 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 IDEX 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
<PAGE>
(2) place orders and negotiate the commissions (if any) for the
execution of transactions in securities or other assets with or
through such brokers, dealers, underwriters or issuers as the
Sub-Adviser may select.
B. ADDITIONAL DUTIES OF SUB-ADVISER. In addition to the above,
Sub-Adviser shall:
(1) furnish continuous investment information, advice and
recommendations to the fund as to the acquisition, holding or
disposition of any or all of the securities or other assets which
the fund may own or contemplate acquiring from time to time;
(2) cause its officers to attend meetings of 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 Declaration of Trust and By-Laws, as each may be amended or supplemented,
and currently effective Registration Statement (as defined below) and with the
written instructions and directions of the Board and the Investment Adviser, and
shall comply with the requirements of the 1940 Act, the Advisers Act, the rules
thereunder, and all other applicable federal and state laws and regulations.
3. COMPENSATION.
For the services provided and the expenses assumed by the Sub-Adviser
pursuant to this Agreement, the Sub-Adviser shall receive a monthly investment
management fee equal to 50% of the fees received by the Investment Adviser for
services rendered under the Advisory Agreement by the Investment Adviser with
respect to the Fund. The management fee shall be payable by the Investment
Adviser monthly to the Sub-Adviser upon receipt by the Investment Adviser from
the Fund of advisory fees payable to the Investment Adviser. If this Agreement
becomes effective or terminates before the end of any month, the investment
management fee for the period from the effective date to the end of such month
or from the beginning of such month to the date of termination, as the case may
be, shall be pro-rated according to the pro-ration which such period bears to
the full month in which such effectiveness or termination occurs.
4. DUTIES OF THE INVESTMENT ADVISER.
A. The Investment Adviser shall continue to have responsibility
for all services to be provided to the Fund pursuant to the Advisory Agreement
and shall oversee and review the Sub-Adviser's performance of its duties under
this Agreement.
B. The Investment Adviser has furnished the Sub-Adviser with
copies of each of the following documents and will furnish to the Sub-Adviser at
its principal office all future amendments and supplements to such documents, if
any, as soon as practicable after such documents become available:
(1) The Declaration of Trust of IDEX, as filed with the State of
Massachusetts, as in effect on the date hereof and as amended
from time to time ("Declaration");
(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");
<PAGE>
(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 upon) after receipt thereof.
5. BROKERAGE.
A. The Sub-Adviser agrees that, in placing orders with
broker-dealers for the purchase or sale of portfolio securities, it shall
attempt to obtain quality execution at favorable security prices (best price and
execution); provided that, on behalf of IDEX, 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 IDEX 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 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.
<PAGE>
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 Company, as appropriate, or in
the discharge of Sub-Adviser's overall responsibilities with respect to the
other accounts that it serves as investment manager or counselor, provided that
the Sub-Adviser shall at all times retain responsibility for making investment
recommendations with respect to the Fund.
10. LIMITATION OF LIABILITY OF THE SUB-ADVISER.
Neither the Sub-Adviser nor any of its officers, directors, or employees, nor
any person performing executive, administrative, trading, or other functions for
the Company, 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
Company or IDEX 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 Company or IDEX or from
reckless disregard by the Sub-Adviser or any such person of the duties of the
Sub-Adviser pursuant to this Agreement.
11. REPRESENTATIONS OF SUB-ADVISER.
The Sub-Adviser represents, warrants, and agrees as follows:
A. The Sub-Adviser: (i) is registered as an investment adviser
under the Advisers Act and will continue to be so registered for so long as this
Agreement remains in effect; (ii) is not prohibited by the 1940 Act or the
Advisers Act from performing the services contemplated by this Agreement; (iii)
has met, and will continue to meet for so long as this Agreement remains in
effect, any applicable federal or state requirements, or the applicable
requirements of any regulatory or industry self-regulatory agency, necessary to
be met in order to perform the services contemplated by this Agreement; (iv) has
the authority to enter into and perform the services contemplated by this
Agreement; and (v) will immediately notify the Investment Adviser of the
occurrence of any event that would disqualify the Sub-Adviser from serving as an
investment adviser of an investment company pursuant to Section 9 (a) of the
1940 Act or otherwise.
B. The Sub-Adviser has adopted a written code of ethics complying
with the requirements of Rule 17j-1 under the 1940 Act and has provided the
Investment Adviser and 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
<PAGE>
as most recently filed with the SEC and will, promptly after filing any
amendment to its Form ADV with the SEC, furnish a copy of such amendment to the
Investment Adviser.
12. INDEMNIFICATION
A. The Investment Adviser agrees to indemnify the Sub-Adviser, its
officers and directors, and any person who controls the Sub-Adviser within the
meaning of Section 15 of the 1933 Act for any loss or expense (including
attorney's fees) arising out of any claim, demand, action or suit in the event
that the Sub-Adviser has been found to be without fault and the Investment
Adviser or any other investment sub-adviser to the fund, or any person who
controls the Investment Adviser or such other investment sub-adviser within the
meaning of Section 15 of the 1933 Act has been found at fault (i) by the final
judgment of a court of competent jurisdiction or (ii) in any order of settlement
of any claim, demand, action or suit that has been approved by the Board of
Trustees of the Investment Adviser, such other investment sub-adviser or such
other controlling person.
B. The Sub-Adviser agrees to indemnify the Investment Adviser, its
officers and directors, and any person who controls the Investment Adviser
within the meaning of Section 15 of the 1933 Act for any loss or expense
(including attorney's fees) arising out of any claim, demand, action or suit in
the event that the Investment Adviser has been found to be without fault and the
Sub-Adviser or any person who controls the Sub-Adviser within the meaning of
Section 15 of the 1933 Act has been found at fault (i) by the final judgment of
a court of competent jurisdiction or (ii) in any order of settlement of any
claim, demand, action or suit that has been approved by the Board of Trustees of
the Sub-Adviser or such other controlling person.
13. TERM OF AGREEMENT.
This Agreement shall become effective upon the date first above written,
provided that this Agreement shall not take effect unless it has first been
approved (i) by a vote of a majority of those Trustees of the Fund who are not
parties to this Agreement or interested persons of any such party, cast in
person at a meeting called for the purpose of voting on such approval, and (ii)
by vote of a majority of the fund's outstanding voting securities. Unless sooner
terminated as provided herein, this Agreement shall continue in effect an
initial term ending April 30, 2002. 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.
<PAGE>
14. TERMINATION OF AGREEMENT.
Notwithstanding the foregoing, this Agreement may be terminated at any
time, without the payment of any penalty, by vote of the Board or by a vote of a
majority of the outstanding voting securities of the Fund on at least 60 days'
prior written notice to the Sub-Adviser. This Agreement may also be terminated
by the Investment Adviser: (i) on at least 60 days' prior written notice to the
Sub-Adviser, without the payment of any penalty; or (ii) if the Sub-Adviser
becomes unable to discharge its duties and obligations under this Agreement. The
Sub-Adviser may terminate this Agreement at any time, or preclude its renewal
without the payment of any penalty, on at least 60 days' prior notice to the
Investment Adviser. This Agreement shall terminate automatically in the event of
its assignment or upon termination of the Advisory Agreement.
15. AMENDMENT OF AGREEMENT.
No provision of this Agreement may be changed, waived, discharged, or
terminated orally, but only by an instrument in writing signed by the party
against which enforcement of the change, waiver, discharge, or termination is
sought, and no amendment of this Agreement shall be effective until approved by
vote of a majority of the Fund's outstanding voting securities and a vote of a
majority of those Trustees of 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.
16. MISCELLANEOUS.
A. GOVERNING LAW. This Agreement shall be construed in accordance
with the laws of the State of Massachusetts without giving effect to the
conflicts of laws principles thereof, and the 1940 Act. To the extent that the
applicable laws of the State of Massachusetts conflict with the applicable
provisions of the 1940 Act, the latter shall control.
B. CAPTIONS. The captions contained in this Agreement are
included for convenience of reference only and in no way define or delimit any
of the provisions hereof or otherwise affect their construction or effect.
C. ENTIRE AGREEMENT. This Agreement represents the entire
agreement and understanding of the parties hereto and shall supersede any prior
agreements between the parties relating to the subject matter hereof, and all
such prior agreements shall be deemed terminated upon the effectiveness of this
Agreement.
D. INTERPRETATION. Nothing herein contained shall be deemed to
require IDEX to take any action contrary to its Declaration or By-Laws, or any
applicable statutory or regulatory requirement to which it is subject or by
which it is bound, or to relieve or deprive the Board of its responsibility for
and control of the conduct of the affairs of 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.
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.
<PAGE>
Attest: IDEX MANAGEMENT, INC.
_____________________________ By: _________________________
William H. Geiger, Secretary Name: Thomas R. Moriarty
Title: President and Chief
Executive Officer
Attest: FEDERATED INVESTMENT MANAGEMENT COMPANY
_____________________________ By _________________________
Name:
Title:
EXHIBIT 23(h)(2)(i)
FORM OF ADMINISTRATIVE SERVICES AGREEMENT
ON BEHALF OF IDEX GREAT COMPANIES - AMERICA(SM) AND
GREAT COMPANIES - TECHNOLOGY(SM) , AND IDEX FEDERATED TAX EXEMPT
<PAGE>
IDEX MUTUAL FUNDS
ADMINISTRATIVE SERVICES AGREEMENT - D
This agreement is entered as of June 15, 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 July 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;
(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.
<PAGE>
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
ATTEST: IDEX MANAGEMENT, INC.
By:_______________________ By:_______________________
<PAGE>
SCHEDULE A
FUNDS
IDEX Great Companies - America(SM)
IDEX Great Companies - Technology(SM)
EXHIBIT 23(m)(1)(tt)
FORM OF PLAN OF DISTRIBUTION - CLASS A SHARES
ON BEHALF OF IDEX GREAT COMPANIES - AMERICA(SM) AND
GREAT COMPANIES - TECHNOLOGY(SM)
<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
(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 A
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 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 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 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 quarterly or at such other intervals as the Trust and ISI shall agree.
(C) 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 0.35%, 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 A 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 A shares of the 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.
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 A shares of the
Fund.
4. This Plan shall not take effect with respect to the Class A 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.
<PAGE>
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 A 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 A 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 A 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 A 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 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 the 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 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
/s/ JOHN K. CARTER By:/s/ JOHN R. KENNEY
- -------------------------- -------------------------
John K. Carter, Secretary John R. Kenney
Trustee and Chairman
<PAGE>
Schedule A
PARTICIPATING FUNDS AS OF JUNE 15, 2000
IDEX GE U.S. Equity
IDEX Pilgrim Baxter Technology
IDEX Transamerica Small Company
IDEX Transamerica Equity
IDEX Great Companies - America(SM)
IDEX Great Companies - Technology(SM)
EXHIBIT 23(m)(2)(tt)
FORM OF PLAN OF DISTRIBUTION - CLASS B SHARES
ON BEHALF OF IDEX GREAT COMPANIES - AMERICA(SM) AND
GREAT COMPANIES - TECHNOLOGY(SM)
<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 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 B
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 B 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 B 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 B 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 B 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
Class B 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 B shares.
(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 B 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 B shares of the 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 the
Fund.
4. This Plan shall not take effect with respect to the Class B 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.
<PAGE>
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 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 B 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 B 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 B 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 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 the 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 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 June 15, 2000
ATTEST: IDEX MUTUAL FUNDS
/s/ JOHN K. CARTER By: /s/ JOHN R. KENNEY
- -------------------------- ----------------------------
John K. Carter, Secretary John R. Kenney
Trustee and Chairman
<PAGE>
Schedule A
PARTICIPATING FUNDS AS OF JUNE 15, 2000
IDEX GE U.S. Equity
IDEX Pilgrim Baxter Technology
IDEX Transamerica Small Company
IDEX Transamerica Equity
IDEX Great Companies - America(SM)
IDEX Great Companies - Technology(SM)
EXHIBIT 23(m)(3)(tt)
FORM OF PLAN OF DISTRIBUTION - CLASS C SHARES
ON BEHALF OF IDEX GREAT COMPANIES - AMERICA(SM) AND
GREAT COMPANIES - TECHNOLOGY(SM)
<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.
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.
<PAGE>
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
/s/ JOHN K. CARTER By: /s/ JOHN R. KENNEY
- -------------------------- ----------------------------
John K. Carter, Secretary John R. Kenney
Trustee and Chairman
<PAGE>
Schedule A
PARTICIPATING FUNDS AS OF JUNE 15, 2000
IDEX GE U.S. Equity
IDEX Pilgrim Baxter Technology
IDEX Transamerica Small Company
IDEX Transamerica Equity
IDEX Great Companies - America(SM)
IDEX Great Companies - Technology(SM)
EXHIBIT 23(P)
CODE OF ETHICS
SAB INITIAL DRAFT
MARCH 24, 2000
Effective January 1, 1995
As Amended on December 8, 1997
As Amended September 13, 1999
As Amended March 30, 2000
IDEX MUTUAL FUNDS
IDEX INVESTOR SERVICES, INC.
IDEX MANAGEMENT, INC.
INTERSECURITIES, INC.
WRL SERIES FUND, INC.
WRL INVESTMENT SERVICES, INC
WRL INVESTMENT MANAGEMENT, INC.
AFSG SECURITIES CORPORATION
CODE OF ETHICS AND INSIDER TRADING POLICY
SECTION I: STATEMENT OF PURPOSE AND APPLICABILITY.
(A) COVERED ENTITIES AND THEIR RELATIONSHIPS. IDEX Mutual Funds (the "IDEX
Mutual Funds") and WRL Series Fund, Inc. (the "WRL Series Fund") are
registered investment companies pursuant to the Investment Company Act of
1940 (the "1940 Act"). The IDEX Mutual Funds and the WRL Series Fund are
hereinafter collectively referred to as the "Funds." Idex Management, Inc.
("IMI"), is a registered investment adviser which provide investment
advisory services to the IDEX Mutual Funds pursuant to the Investment
Advisers Act of 1940 (the "Advisers Act"), WRL Investment Management, Inc.
("WRLIM") is a registered investment adviser which provides investment
advisory services to the WRL Series Fund pursuant to the Advisers Act, and
InterSecurities, Inc. ("ISI") is an investment adviser that provides asset
allocation services, wrap fee programs and financial planning. WRL
Investment Services, Inc. ("WRLIS") is a registered transfer agent which
provides transfer agency and other services to the WRL Series Fund and
WRLIM. ISI also serves as the principal underwriter for IDEX Mutual Funds,
and is also a registered broker-dealer pursuant to the Securities Exchange
Act of 1934 (the "1934 Act"). AFSG Securities Corporation ("AFSG") serves
as principal underwriter for the WRL Series Fund. Idex Investor Services,
Inc ("IIS") is a registered transfer agent which provides transfer agency
services to the IDEX Mutual Funds. The IDEX Mutual Funds, the WRL Series
Fund, ISI, IMI, IIS, WRLIM, WRLIS and ASFG are sometimes hereinafter
collectively referred to as the "Companies."
(B) STATEMENT OF PURPOSE.
(1) INTRODUCTION. All of the Companies seek to foster a reputation for
integrity and professionalism. That reputation is a vital business
asset. The confidence and trust placed in us by investors in the
IDEX Mutual Funds and the WRL Variable Products and by the retail
clients of ISI is something we should value and endeavor to protect.
To further that goal, this Code of Ethics and Insider Trading Policy
(the "Policy") is designed to implement procedures to deter the
misuse of material nonpublic information and to avoid conflicts of
interest in connection with personal securities transactions. It is
not the intention of this Policy to prohibit personal securities
transactions by persons to whom this Policy applies, but rather to
prescribe rules designed to prevent actual and apparent conflicts of
interest. While it is not possible to specifically define and
prescribe rules addressing all possible situations in which
conflicts may arise, this Policy sets forth standards regarding
conduct in those situations in which conflicts are most likely to
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develop. It is also important to note that compliance with the
technical provisions of this Policy does not in every case prevent
scrutiny of personal securities transactions which show a pattern or
potential for abuse. The Companies recognize that an individual
legitimately may be uncertain about the application of this Policy
in a particular circumstance. Often, a single question can forestall
disciplinary action or complex legal problems. You should direct any
questions relating to this Policy to the Designated Officer or the
Law Department immediately if you have any reason to believe that a
violation of the Policy has occurred or is about to occur. This
Policy replaces all of the Codes of Ethics and Insider Trading
Policies previously in effect for the Companies.
Every person to whom this Policy is applicable (as defined below)
should keep in mind the following general principles:
(a) Persons to whom this Policy is applicable are fiduciaries. No
person to whom this Policy is applicable should knowingly
place his or her own interests ahead of those of any of the
Companies or the clients, shareholders or Variable Product
owners of the Companies; and
(b) No person to whom this Policy is applicable should use
knowledge of transactions by a Fund or ISI or its clients to
his or her profit or advantage or take inappropriate advantage
of his or her position with any of the Companies; and
(c) All personal securities transactions should be conducted
consistent with this Policy and in such a manner as to avoid
any actual or potential conflict of interest, the appearance
of a conflict of interest or any abuse of an individual's
position of trust and responsibility within the Companies.
(2) CODE OF ETHICS. Rule 17j-1 promulgated by the Securities and
Exchange Commission pursuant to Section 17(j) of the 1940 Act
imposes an obligation on registered investment companies and their
investment advisers (including investment sub-advisers) and
principal underwriters to adopt written Codes of Ethics covering the
securities activities of their trustees, directors, officers and
employees. This Code of Ethics is designed to ensure that those
persons who have access to information regarding the portfolio
securities activities of a Fund do not use that information for
their own personal benefit and/or to the detriment of the Fund.
(3) INSIDER TRADING POLICY. The federal securities laws, including the
antifraud provisions of Section 10(b) of the 1934 Act, Rule 10b-5
promulgated thereunder, and the Insider Trading and Securities Fraud
Enforcement Act of 1988 prohibit "insider trading." Insider trading
can be defined as trading based on Material Nonpublic Information or
communicating Material Nonpublic Information to others in violation
of the law. The Advisers Act and the 1934 Act require investment
advisers and broker-dealers, respectively, to establish, maintain
and enforce written policies and procedures reasonably designed,
taking into consideration the nature of the entity's business, to
prevent insider trading violations.
(C) APPLICABILITY. Section III, Code of Ethics, Section IV, Insider Trading
Policy, and Sections V and VI, Reporting Requirements and Sanctions, shall
apply to all "Access Persons" and/or "Advisory Persons" as those terms are
defined in Section II below. Sections IV, V and VI, Insider Trading
Policy, Reporting Requirements and Sanctions shall also apply to all
officers, directors, employees and registered representatives of ISI and
its branch offices.
(D) MONITORING OF SUB-ADVISERS. The following entities currently serve as
sub-advisers to a Fund or Portfolio thereof: Janus Capital Corporation,
AEGON USA Investment Management, Inc., Luther King Capital Management
Corporation, Van Kampen Asset Management Inc., Fred Alger Management,
Inc., C.A.S.E. Management, Inc., Dean Investment
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Associates, NWQ Investment Management Company, GE Investment Management
Incorporated, Federated Investment Management Company, J.P. Morgan
Investment Management Inc., T. Rowe Price Associates, Inc., Goldman Sachs
Asset Management, Pilgrim Baxter & Associates, Ltd., EQSF Advisers, Inc.,
Salomon Brothers Asset Management Inc,, Scottish Equitable Investment
Management Limited, The Dreyfus Corporation and Transamerica Investment
Management, LLC (individually, a "Sub-Adviser" and collectively, the
"Sub-Advisers"). Further, additional Sub-Advisers may serve the Funds in
the future. Each Sub-Adviser provides that Portfolio's investment adviser
with investment advice and recommendations, and supervises the purchase
and sale of all securities transactions on behalf of the Portfolio.
Accordingly, each of the Sub-Advisers is a registered investment adviser
under the Advisers Act, and is required to maintain, administer and
enforce a written Code of Ethics and Insider Trading Policy, in each case
tailored to the particular business activities of that Sub-Adviser. An
important aspect of this Code of Ethics and Insider Trading Policy,
therefore, is to monitor the administration and enforcement of the Code of
Ethics and Insider Trading Policies of each of the Sub-Advisers as set
forth in Section VII.
(E) COMPLIANCE WITH RECOMMENDATIONS OF THE INVESTMENT COMPANY INSTITUTE'S
ADVISORY GROUP ON PERSONAL INVESTING. This Policy is specifically designed
to comply with the recommendations of the Investment Company Institute's
("ICI") Advisory Group on Personal Investing, as contained in the Advisory
Group's Report dated May 9, 1994. However, the Securities and Exchange
Commission, the ICI Advisory Group and the ICI Board of Governors have all
officially recognized that each investment company's structure and
organization is unique, and that flexibility is therefore required in the
application of the specific recommendations of the Advisory Group to a
particular investment company. In large part, this Policy complies with
each of those specific recommendations. However, the operation of the
business of the Companies and the Funds' investment activities is unique
in that the day-to-day trading activities of the Funds are handled by the
Sub-Advisers, each of whom have adopted and separately administer their
own Code of Ethics and Insider Trading Policy. Moreover, the investment
decisions for the Funds are made by employees of the Sub-Advisers, not by
any of the persons to whom this Policy applies. Persons to whom this
Policy applies receive information about the Portfolios' trading
activities only after they have taken place. Accordingly, where this
Policy differs from the ICI recommendations, those differences are a
result of this structure.
SECTION II: DEFINITIONS.
(A) "Access Person" as to a Company means any trustee, director, officer, or
"Advisory Person" of that Company, except that a director or officer of
WRLIM, AFSG or WRLIS is an "Access Person" only if he or she, in
connection with his or her regular functions or duties, makes,
participates in or obtains information regarding the purchase or sale of a
security by the WRL Series Fund, or if his or her functions relate to the
making of any recommendations with respect to such purchases or sales.
(B) "Adviser" means IMI, ISI and WRLIM, as applicable.
(C) "Advisory Person" means (1) any employee of a Fund, an Adviser or any
company in a control relationship to a Fund, as defined under the 1940
Act, or an Adviser, who, in connection with his or her regular functions
or duties, makes, participates in, or obtains information regarding the
purchase or sale of a security by that Fund, or whose functions relate to
the making of any recommendations with respect to such purchases or sales;
and (2) any natural person in a control relationship to a Fund or an
Adviser who obtains information concerning recommendations made to the
Fund with regard to the purchase or sale of a security.
(D) A security is "being considered for purchase or sale" when a
recommendation to purchase or sell a security has been made and
communicated and, with respect to the person making the recommendation,
when such person seriously considers making such a recommendation.
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(E) "Beneficial Ownership" shall mean securities with respect to which an
individual, his/her spouse, dependent children or any person sharing the
same household has voting or investment power, as well as any account with
respect to which such individual exercises investment discretion or
provides investment advice.
(F) "Companies" means, collectively, IDEX Mutual Funds, WRL Series Fund, IMI,
ISI, IIS, WRLIM, WRLIS and AFSG. "Company" means any of the Companies
individually.
(G) "Control" shall have the same meaning as that set forth in Section 2(a)(9)
of the 1940 Act. Generally, control means the power to exercise a
controlling influence on the management or policies of a company, unless
such power is solely the result of an official position with such company.
(H) "Designated Officer" shall mean the officer of each of the Companies
designated by the Board of Directors or Trustees of a Company from time to
time to be responsible for management of compliance with this Policy. A
Designated Officer may appoint a designee to carry out certain of his or
her functions pursuant to this Policy.
(I) "Disinterested Trustee or Director" means a Trustee or Director of a Fund
who is not an "interested person" of the Fund within the meaning of
Section 2 (a)(19) of the 1940 Act.
(J) "Fund" means (i) IDEX Mutual Funds, or (ii) the WRL Series Fund, Inc.
(K) "Initial Public Offering" (IPO) means an offering of securities registered
under the Securities Act of 1933, as amended (the "1933 Act"), the issuer
of which, immediately before the registration, was not subject to the
reporting requirements of sections 13 or 15(d) of the Securities Exchange
Act of 1934, as amended (the "Act").
(L) "Limited Offering" is an offering that is exempt from registration under
the 1933 Act pursuant to sections 4(2) or 4(6) or pursuant to Rule 504,
Rule 505, or Rule 506 under the 1933 Act.
(M) "Material Information" generally means information that a reasonable
investor would consider important in making an investment decision.
Generally, this is information whose disclosure will have a substantial
effect on the price of a company's securities. No simple "bright line"
test exists to determine when information is material; assessments of
materiality involve a highly fact-specific inquiry. For further
guidance in determining whether information is material, see Section
IV.(C).
(N) "Non-public Information" means information that has not been disseminated
broadly to investors in the marketplace. Tangible evidence of such
dissemination is the best indication that the information is public. For
example, information is public after it has become available to the
general public through a public filing with the Securities and Exchange
Commission or some other governmental agency, the Dow Jones "tape" or THE
WALL STREET JOURNAL or some other publication of general circulation, and
after sufficient time has passed so that the information has been
disseminated widely. For further guidance in determining whether
information is non-public, see Section IV.(D).
(O) "Investment Company" shall have the same meaning as set forth in Section 3
of the 1940 Act.
(P) "Purchase or sale of a security" includes, among other things, the writing
of an option to purchase or sell a security, or the use of a derivative
product to take a position that would otherwise be prohibited if taken
directly.
(Q) "Security" shall have the meaning set forth in Section 2(a)(36) of the
1940 Act, except that (i) for purposes of this Policy, it shall include
futures, commodities and other investments in which the Funds may invest;
and (ii) for purposes of this Policy, it shall not include shares of
registered
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open-end investment companies, securities issued by the Government of the
United States, bankers' acceptances, bank certificates of deposit,
commercial paper, insurance annuities or policies, and short term debt
securities which are "government securities" within the meaning of
Section 2(a)(16) of the 1940 Act.
(R) "Sub-Adviser" shall mean Janus Capital Corporation, AEGON USA Investment
Management, Inc., Luther King Capital Management Corporation, Van Kampen
Asset Management Inc., Fred Alger Management, Inc., C.A.S.E. Management,
Inc., Dean Investment Associates, NWQ Investment Management Company, GE
Investment Management Incorporated, Federated Investment Counseling, J.P.
Morgan Investment Management Inc., Scottish Equitable Investment
Management Limited, T. Rowe Price Associates, Inc., Goldman Sachs Asset
Management Inc., Pilgrim Baxter & Associates, Ltd., EQSF Advisers, Inc.,
Salomon Brothers Asset Management Inc, Transamerica Investment Management,
LLC and The Dreyfus Corporation (individually, a "Sub-Adviser" and
collectively, the "Sub-Advisers"), and any other individual or entity
which may from time to time serve as a sub-adviser to any of the Funds or
any Portfolio thereof, as applicable.
SECTION III: CODE OF ETHICS.
(A) PROHIBITED TRANSACTIONS.
(1) No Access Person shall purchase or sell, directly or indirectly, any
security in which he or she has, or by reason of such transaction
acquires, any direct or indirect Beneficial Ownership if:
(a) such security has been purchased or sold by a Fund during the
15 calendar days immediately preceding the Access Person's
purchase or sale, or
(b) such Access Person knows or should have known at the time of
such purchase or sale that the security is being considered
for purchase or sale by a Fund.
Any profits realized by Access Persons on purchases or sales of
securities made in violation of this provision will be required to
be disgorged to the Fund.
(2) No Access Person may render investment advisory services to any
person or entity not (a) a client of ISI, or (b) a member of (or
trust or other arrangement for the benefit of) the family of, or a
close personal friend of, such Access Person, without first
obtaining the permission of the appropriate Designated Officer.
(3) No Advisory Person shall purchase, directly or indirectly, any
securities in which he or she has or by reason of such transaction
acquires, any direct or indirect Beneficial Ownership in an IPO.
(4) No Advisory Person shall directly or indirectly purchase any
securities in which he or she has or by reason of such transaction
acquires, any direct or indirect Beneficial Ownership pursuant to a
private placement or other Limited Offering of securities, UNLESS
such Advisory Person shall have obtained prior written approval for
such purpose from the Designated Officer or the Law Department. In
determining whether such prior approval shall be granted, the
Designated Officer or the Law Department shall take into account
whether the opportunity to purchase such securities is being offered
to the Advisory Person because of his or her position with the
Companies, and whether the opportunity to purchase such securities
should be reserved for the Funds. Advisory Persons who purchase
securities pursuant to such prior approval must disclose that
investment if they later become aware of or play a part in the
Fund's subsequent consideration of an investment in the issuer.
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(5) No Advisory Person shall profit in the purchase and sale, or sale
and purchase, directly or indirectly, of the same (or equivalent)
securities in which he or she has, or by reason of such transaction
acquires, any direct or indirect Beneficial Ownership within 60
calendar days. Transactions executed in violation of this provision
shall be reversed if practicable and, if not practicable, any
profits realized on such purchase and sale, or sale and purchase,
shall be required to be disgorged to the Funds. Exceptions to this
short-term trading prohibition may be made on a case-by-case basis
with the prior written approval of the Designated Officer or the Law
Department when no abuse appears to be involved and the equities of
the situation strongly support such an exception.
(6) No Advisory Person shall solicit or accept gratuities, gifts or fees
from any person with whom they may have contact in the course of
their business on behalf of the Companies. The following items are
excluded from this provision, as long as they do not have a value in
excess of $25.00: flowers, food items or business-related
promotional items.
(7) No Advisory Person shall serve on the Board of Directors of a
publicly traded company without prior written authorization of the
Designated Officer or the Law Department based upon a determination
that the board service would be consistent with the interest of the
Funds and their shareholders or variable contract owners. If such
board service is authorized, the Funds normally shall be prohibited
from investing in the securities of that company, and consideration
shall be given to the implementation of any additional procedures,
including "Chinese Wall" procedures, required to prevent an actual
or potential conflict of interest.
(B) EXEMPTED TRANSACTIONS. Section III. (A) of this Policy shall not apply
to:
(1) purchases or sales effected in any account over which the Access
Person has no direct or indirect ownership, influence or control,
(2) purchases or sales of securities which are not eligible for purchase
or sale by a Fund or Portfolio,
(3) purchases or sales which are non-volitional on the part of either
the Access Person or a Fund or Portfolio,
(4) purchases which are part of an automatic dividend reinvestment plan,
(5) purchases effected upon the exercise of rights issued by an issuer
PRO RATA to all holders of a class of its securities, to the extent
such rights were acquired from such issuer, and sales of such rights
so acquired,
(6) purchases or sales otherwise prohibited under this Policy where the
Access Person has received the prior approval of the Designated
Officer or the Law Department; provided, however, that Section V.
(A) of this Policy, which requires mandatory reporting of securities
transactions by Access Persons, will continue to apply to such
transactions where applicable,
(7) purchases and sales of 100 shares of an equity security per calendar
quarter if the issuer of the security has a market capitalization of
at least $1 billion and the security has an average daily trading
volume of at least 100,000 for the 30 days preceding the Access
Person's purchase; provided, however, that such purchases or sales
were not made in reliance on Material Information that the Access
Person has acquired by virtue of his
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position with the Company or information otherwise violative of the
federal securities or the Insider Trading Policy set forth in
Section IV below.
SECTION IV: INSIDER TRADING POLICY.
(A) BACKGROUND AND SCOPE. Trading securities while in possession of Material,
Nonpublic Information or improperly communicating that information to
others exposes an offender to stringent penalties. Criminal sanctions may
include a fine of up to $1,000,000 and/or ten years imprisonment. The
Securities and Exchange Commission can recover the profits gained or
losses avoided through the violative trading, impose a penalty of up to
three times the illicit windfall and issue an order permanently barring an
offender from the securities industry. Finally, an offender may be sued by
investors seeking to recover damages for insider trading violations.
Regardless of whether a government inquiry occurs, however, any violation
of this Insider Trading Policy is viewed seriously by the Companies. Such
violations constitute grounds for disciplinary sanctions, including
dismissal. This Insider Trading Policy is drafted broadly; it will be
applied and interpreted in a similar manner.
(B) STATEMENT OF POLICY.
(1) No person to whom this Section IV applies may purchase or sell any
security while in possession of Material Non-public Information
concerning the security.
(2) No person to whom this Section IV applies who knows of Material
Non-public Information may communicate that information to any other
person.
(3) Finally, no person to whom this Section IV applies who knows of
Material Non-public information may recommend trading in securities,
or otherwise cause the purchase or sale of any security, about which
he or she has Material Non-public Information.
(C) MATERIAL INFORMATION. It is impossible to list all types of information
that might be deemed material under particular circumstances. However,
information dealing with the following subjects is reasonably likely to be
found material in particular situations:
. proposals, plans or agreements, even if preliminary in nature,
involving mergers, acquisitions, divestitures, recapitalizations,
and purchases or sales of substantial assets,
. earnings results or changes in earnings estimates,
. major changes in management,
. changes in dividends,
. changes in debt ratings,
. public offerings,
. significant litigation or government agency investigations,
. liquidity problems, and
. pending statistical reports (E.G., consumer price index, money
supply and retail figures, interest rate developments).
Material Information may also relate to the market for a company's
securities. Information about a significant order to purchase or sell
securities may, in some contexts, be deemed material. Similarly,
prepublication information regarding reports in the financial press also
may be deemed material. For example, the Supreme Court upheld the criminal
convictions of insider trading defendants who capitalized on
prepublication information that was to be printed in THE WALL STREET
JOURNAL'S "Heard on the Street" column.
Material Information may be positive or adverse. If a lawsuit is brought
alleging that insider trading occurred, the benefit of hindsight may be
brought in to argue that the information was material. Therefore, when in
doubt about whether particular Non-public Information is material,
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exercise caution. Consult the appropriate Designated Officer or the Law
Department before making a decision to disclose such information or to
trade in or recommend securities to which that information relates.
(D) NON-PUBLIC INFORMATION. To show that information is public, you should be
able to point to some fact showing that it is widely disseminated, for
example, publication in daily newspapers, or disclosure in widely
circulated public disclosure documents. Even when there has been public
disclosure of information you learned about before its public disclosure,
you generally must wait until the information is absorbed by public
investors before you can treat the information as public.
NON-public Information may include
. information available to a select group of analysts or brokers or
institutional investors,
. undisclosed facts that are the subject of rumors, even if the rumors
are widely circulated, and
. information that has been entrusted to a Company on a confidential
basis until a public announcement of the information has been made
AND enough time has elapsed for the market to respond to a public
announcement of the information (normally two or three days).
As with questions of materiality, when in doubt about whether information
is non-public call the appropriate Designated Officer or the Law
Department or assume that the information is "Non-public" and therefore
treat it as confidential.
(E) IDENTIFYING INSIDE INFORMATION. Before executing any trade for yourself or
another person, including a Fund or a client of ISI, you must determine
whether you have access to Material, Non-public Information. If you think
you might have access to Material, Non-public Information, you should take
the following steps:
(1) Report the information and proposed trade immediately to the
appropriate Designated Officer or the Law Department.
(2) Do not purchase or sell the securities on behalf of yourself or
others, including the Funds or clients of ISI.
(3) Do not communicate the information inside or outside the Companies,
other than to the appropriate Designated Officer or the Law
Department.
(4) After the appropriate Designated Officer and/or the Law Department
has reviewed the issue, the appropriate Company or Companies will
determine whether the information is material and nonpublic and, if
so, what action the Company should take.
(F) HIGH-RISK TRADING ACTIVITIES. Certain high-risk trading activities, if
used in the management of a personal trading portfolio, are risky not only
because of the nature of the securities transactions themselves, but also
because of the potential that action necessary to close out the
transactions may become prohibited during the pendency of the
transactions. Examples of such activities include short sales of common
stock and trading in derivative instruments such as options contracts to
purchase ("call") or sell ("put") securities at certain predetermined
prices. Persons to whom this Insider Trading Policy is applicable should
understand that short sales and trading in derivative instruments involve
special risks -- derivative instruments, for example, ordinarily have
greater price volatility than the underlying security. The fulfillment of
the obligations owed to the Companies by each person to whom this Policy
is applicable may heighten those risks. For example, if a Company become
aware of Material, Non-public Information about the issuer of the
underlying securities, persons to whom this Policy is applicable may find
themselves "frozen" in a
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position in a derivative security. The Companies will not bear any losses
suffered by any person subject to this Policy as a result of the
implementation of this Policy.
If you have any questions, contact the appropriate Designated Officer or the Law
Department BEFORE you trade.
SECTION V: PROCEDURES TO IMPLEMENT CODE OF ETHICS AND INSIDER TRADING POLICY.
The following procedures have been established to aid the persons to whom this
Policy is applicable in avoiding a violation of this Policy, and to aid each
Company in preventing, detecting and imposing sanctions for violations of this
Policy. Every person to whom this Policy is applicable must follow these
procedures or risk serious sanctions, including dismissal, substantial personal
liability and criminal penalties. If you have any questions about these
procedures, you should contact the appropriate Designated Officer or the Law
Department.
(A) PRE-CLEARANCE OF SECURITIES TRANSACTIONS. All transactions in any
securities Beneficially Owned by an Access Person must be pre-cleared by
the Designated Officer or the Law Department. Once granted, such
pre-clearance remains effective for forty-eight (48) hours.
(B) MANDATORY REPORTING OF SECURITIES TRANSACTIONS. To assist each Company in
enforcing this Policy, all Access Persons of any of the Companies, other
than the Disinterested Trustees and Directors of the Funds as set forth
more fully below, and all officers, directors, employees and registered
representatives of ISI and its branch offices must file a written report
of their transactions in any Security with the Designated Officer within:
(i) 10 days after becoming an Access Person (an "Initial Report");
(ii) 10 after the end of each calendar quarter (a "Quarterly Report");
and
(iii) 30 days after the end of the fiscal year of a Company (an "Annual
Report") which contains information as of a date not more than 30
days prior to the date the Annual Report is submitted.
The Initial and Annual Report will contain the following information: (The
information contained in the Initial Report must be current as of a date
no more than 10 days after the person became an Access Person.)
(i) the title, number of shares, and principal amount of each Security
in which the Access Person had any direct or indirect beneficial
ownership interest.
(ii) The name of any broker, dealer, or bank with whom the Access Person
maintained an account in which any Securities were held for the
direct or indirect benefit of the Access Person.
A Quarterly Report will contain the following information:
(i) the date of the transaction, the name of the Security, and the
number of shares/units/principal of each security involved;
(ii) the nature of the transaction (i.e., purchase, sale, or any other
type of acquisition or disposition);
(iii) the price of the Security at which the transaction was effected;
(iv) the name of the broker, dealer, or bank with or through whom the
transaction was effected; and
(v) the name of any broker, dealer, or bank with whom the Access Person
established any account in which any Securities were held during the
applicable calendar quarter for the direct or indirect benefit of
the Access Person and the date such account was established.
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(C) In lieu of filing Quarterly Reports, copies of confirmations and periodic
(monthly/quarterly) brokerage account statements may be filed.
(D) For periods in which no reportable transactions were effected, a Quarterly
Report shall contain a representation that no transactions subject to the
reporting requirements set forth in this Policy were made.
(E) REPORTING BY DISINTERESTED TRUSTEES AND DIRECTORS. The Disinterested
Trustees and Directors of the Funds are not required to provide the
written reports described, or to obtain pre-clearance of their personal
securities transactions pursuant to Section V. (A) above.
Disinterested Trustees and Directors of a Fund must file a report with
the Designated Officer of the Fund in accordance with the requirements
set forth below with respect to any transaction in a security if such
Trustee or Director at the time of that transaction, knew or, in the
ordinary course of fulfilling his or her official duties as a Trustee
or Director of the Fund, should have known that, during the 15-day
period immediately preceding or following the date of the transaction
by the Trustee or Director, such security was purchased or sold by the
Fund or was being considered for purchase or sale by the Fund, its
Adviser or Sub-Adviser. The reports required under this Section V.(E)
shall be made not later than 10 days after the end of each calendar
quarter in which the transaction to which the report relates was
effected, and shall contain the following information:
(i) the date of the transaction, the title and number of shares, and the
principal amount of each security involved;
(ii) the nature of the transaction (i.e., purchase, sale or any other
type of acquisition or disposition);
(iii) the price at which the transaction was effected; and
(iv) the name of the broker, dealer or bank with or through whom the
transaction was effected.
(F) REVIEW OF REPORTS. The written reports specified above, or the duplicate
confirmations, account statements and reports submitted in lieu of such
reports, and required to be submitted under this Section V shall be
delivered to the appropriate Designated Officer. The appropriate
Designated Officer shall review such reports, duplicate confirmations, and
account statements and maintain copies thereof as required by Rule
17j-1(d), with a view to identifying any pattern of personal securities
transactions that suggests any actual or potential conflict of interest,
the appearance of a conflict of interest, or any abuse of such person's
position of trust and responsibility within the Companies. Before making
any determination that a violation has been committed by any person or
that any personal securities transaction is otherwise problematic under
this Policy and the purposes thereof, such person shall be given an
opportunity to supply additional explanatory material.
(F) ACKNOWLEDGMENT AND CERTIFICATION. Upon becoming subject to this Policy and
annually thereafter, all persons to whom this Policy is applicable are
required to sign an acknowledgment and certification of their receipt of
and intent to comply with this Policy, and their compliance with this
Policy, and return it to the Designated Officer.
(G) RECORDS. The Companies shall maintain records with respect to this Policy
in the manner and to the extent set forth below, which records may be
maintained on microfilm under the conditions described in Rule 31a-2(f)(1)
under the 1940 Act and shall be available for examination by
representatives of the Securities and Exchange Commission.
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(i) A copy of this Policy and any other Insider Trading Policy or Code
of Ethics with respect to any of the Companies which is, or at any
time within the past five years has been, in effect shall be
preserved in an easily accessible place.
(ii) A record of any violation of this Policy and of any action taken as
a result of such violation shall be preserved in an easily
accessible place for a period of not less than five years following
the end of the fiscal year in which the violation occurs.
(iii) A copy of each report made or duplicate confirmation or account
statement received pursuant to this Policy shall be preserved for a
period of not less than five years from the end of the fiscal year
in which it is made, the first two years in an easily accessible
place.
(iv) A list of all persons who are, or within the past five years have
been, required to submit duplicate confirmations or account
statements or to make reports pursuant to this Policy shall be
maintained in a easily accessible place.
(H) CONFIDENTIALITY. All duplicate confirmations, account statements, reports
of securities transactions and any other information filed with the
Companies or furnished to any person pursuant to this Policy shall be
treated as confidential, but are subject to review as provided herein and
by representatives of the Securities and Exchange Commission.
(I) REPORTS TO BOARD OF DIRECTORS/TRUSTEES. The Boards of Directors/Trustees
of the Funds shall receive an annual report from the Designated Officer of
the Funds which summarizes existing procedures for compliance with this
Policy and any changes in the procedures made during the past year and
identifies any recommended changes in existing restrictions or procedures
based upon the Funds' experience with the Policy, evolving industry
practice, or developments in applicable laws or regulations. In addition,
the Boards of Trustees/Directors of the Funds shall receive a quarterly
report from the Designated Officer of the Funds with respect to any
violations requiring significant remedial action during the preceding
calendar quarter.
SECTION VI: SANCTIONS. Upon determination that a violation of this Policy has
occurred, the Board of Directors or Trustees of the affected Fund(s),
Adviser(s), ISI, IIS, WRLIM or WRLIS, or AFSG, as the case may be, may impose
such sanctions as it deems appropriate, including, among other things, a letter
of censure or suspension or termination of the employment of the violator. All
violations of this Policy and any sanctions imposed with respect thereto shall
be periodically reported to the Boards of Directors or Trustees of the Funds,
the Advisers, ISI, IIS, WRLIM or WRLIS, or AFSG as appropriate.
SECTION VII: MONITORING OF SUB-ADVISERS AND PRINCIPAL UNDERWRITERS.
(A) REQUIRED MAINTENANCE AND ENFORCEMENT OF CODE OF ETHICS AND INSIDER TRADING
POLICY. Each Sub-Adviser and Principal Underwriter must maintain and
enforce a Code of Ethics and Insider Trading Policy appropriate to the
Sub-Adviser's or Underwriter's business activities.
(B) COMPLIANCE. Each Sub-Adviser and Principal Underwriter shall have, prior
to entering into any advisory or distribution agreement with any Fund,
submitted it Code of Ethics and Insider Trading Policy to the appropriate
Fund's Board of Trustees/Directors for its approval. Each Sub-Adviser and
Underwriter also shall be required to submit promptly any proposed
material amendments to such policies.
(C) In the event a Sub-Adviser or Underwriter submits a Code of Ethics or
Insider Trading Policy that is approved by the appropriate Board of
Trustees or Directors, such Sub-Adviser or Underwriter, as the case may
be, shall:
(i) Promptly Furnish to the appropriate Board upon request at any time
and no less frequently than once during each fiscal year of the
applicable Fund, copies of any reports
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made pursuant to such Code by any employee of the Sub-Adviser or
Underwriter who would be deemed to be an Advisory or Access Person
with respect to a Fund under this Policy if such person were
employed by one of the Companies; and
(ii) Immediately furnish to the appropriate Fund, without request, all
material information regarding any violation of such Code by any
employee of the Sub-Adviser or Underwriter who would be deemed to be
an Advisory or Access Person with respect to a Fund under this
Policy of such person were employed by one of the Companies.
(D) QUARTERLY REPORTING. Each Sub-Adviser and Underwriter shall report to the
Board of Directors/Trustees of the appropriate Fund on a quarterly basis
with respect to the administration and enforcement of its Code of Ethics
and Insider Trading Policy. Such report shall include a certification that
such Code of Ethics and Insider Trading Policy is being appropriately
administered and enforced by the Sub-Adviser or Underwriter in accordance
with the terms thereof. Such report shall include information with respect
to any violations of such Code of Ethics and Insider Trading Policy that
could potentially affect the Fund which the Sub-Adviser advises, as well
as the action taken by the Sub-Adviser with respect to any such violation.
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ACKNOWLEDGMENT AND CERTIFICATION
I acknowledge receipt of the Code of Ethics and Insider Trading Policy of
IDEX Mutual Funds, the WRL Series Fund, Inc., Idex Management, Inc.,
InterSecurities, Inc., Idex Investor Services, Inc., WRL Investment Management,
Inc., WRL Investment Services, Inc. and AFSG Securities, Inc. I have read and
understand such Policy and agree to be governed by it at all times. Further, if
I have been subject to the Policy during the preceding year, I certify that I
have complied with the requirements of the Policy and have disclosed or reported
all personal securities transactions required to be disclosed or reported
pursuant to the requirements of the Policy.
_______________________________________
(signature)
______________________________________
(please print name)
Date: _________________________
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PERSONAL SECURITIES ACCOUNT INFORMATION
Signature_____________________________________ Date _____________________
A/C NUMBER A/C NAME(S) SECURITIES FIRM AND ADDRESS
I certify that the foregoing is a complete and accurate list of all securities
accounts in which I have any direct or indirect legal or Beneficial Ownership.
__________________________________________
Signature
14
CODE OF ETHICS
AEGON USA INVESTMENT MANAGEMENT, INC.
I. INTRODUCTION
AEGON USA Investment Management, Inc. ("ADVISER") is a registered
investment adviser. In recent years, the personal securities practices of
investment advisers to investment companies have come under increased regulatory
scrutiny by the Securities and Exchange Commission. Investment advisers and
their personnel owe clients the highest duty of trust and fair dealing and must
place their clients' interests ahead of their own. Investment adviser personnel,
when making investment decisions for themselves, may not place their personal
interests ahead of the client's interests. Accordingly, conflicts of interest
can arise when certain investment adviser personnel (E.G., those who may have
knowledge of impending client transactions) buy and sell securities for their
personal accounts ("PERSONAL INVESTMENT ACTIVITIES").
Section l7(j) of the Investment Company Act of 1940 (the "1940 ACT") and
rule 17j-1 thereunder are intended to address the potential conflicts arising
from the personal investment activities of investment company personnel,
including the company's investment adviser. Rule 17j-1, in relevant part, (a)
prohibits an investment adviser and its affiliated persons (E.G., officers,
directors, employees) from engaging in fraudulent acts in connection with their
personal transactions in securities held or to be acquired by the investment
company, (b) requires the investment adviser to adopt a code of ethics
reasonably designed to prevent their "access persons" (generally, personnel that
are involved in the portfolio management process) from engaging in fraudulent
acts, and (c) requires access persons to report their personal securities
transactions. The Adviser, as an investment adviser to investment companies, is
subject to the 1940 Act and therefore adopted this code of ethics (the "CODE").
Because of the recent scrutiny on personal investment activities, the
Investment Company Institute, a national association for the investment company
industry, has recommended investment companies and their advisers adopt various
measures in their particular code of ethics to obviate the conflicts, to prevent
and detect any abusive practices, and to preserve the confidence of investors.
The Adviser has amended its Code to reflect substantially the institute's
recommendations.
In amending its Code, the Adviser has given considerable thought to
developing a Code which would not inhibit unnecessarily responsible personal
investment by professional investment personnel. The Adviser believes that
personal investment experience over time can lead to better performance of the
individual's professional investment responsibility. Accordingly, the Code is
intended to permit personal investment, subject to reasonable restrictions
designed to address the concerns of possible conflicts of interests and to
preclude any overreaching.
<PAGE>
You should note that this Code is applicable to all employees and members of the
Adviser's board of directors, unless otherwise indicated below. The Code
addresses personal transactions in securities within the context of section
17(j) and rule 17j-l of the 1940 Act. The Code does not encompass all possible
areas of potential liability under the federal securities laws, including the
1940 Act. For instance, the federal securities laws preclude investors from
trading on the basis of material, nonpublic information or communicating this
information in breach of a fiduciary duty ("insider trading" or "tipping").
Other provisions of the 1940 Act also address transactions involving investment
companies and their affiliated persons (such as the investment adviser) which
may involve fraud or raise other conflict issues. For example, section 17(a) of
the 1940 Act generally prohibits sales or purchases of securities or other
property between a registered investment company and an affiliated person and
section 17(e) prohibits an affiliated person of a registered investment company,
acting as agent, from receiving from any source any compensation (other than
regular salary from the registered investment company) for the purchase or sale
of any property to or for such company. Accordingly, persons covered by this
Code are advised to seek advice before engaging in any transactions other than
the purchase or redemption of fund shares or the regular performance of their
normal business duties if the transaction directly or indirectly involves
themselves and one or more of the clients.
II. DEFINITION OF TERMS
A. "ACCESS PERSON" means any director, officer, general partner, or
advisory person of the Adviser.
B. "ADVISER" means AEGON USA Investment Management, Inc.
C. "ADVISORY PERSON" means (i) an employee of the Adviser or of any
company in a control relationship to the Adviser who, in connection with
his regular functions or duties, makes, participates in, or obtains
information regarding the purchase or sale of a security by an Investment
Company, or whose functions relate to the making of any recommendations
with respect to such purchases or sales; and (ii) any natural person in a
control relationship to the Adviser who obtains information concerning
recommendations made to an Investment Company with regard to the purchase
or sale of a security.
D. A security is "BEING CONSIDERED FOR PURCHASE OR SALE" when a
recommendation to purchase or sell a security has been made and
communicated and, with respect to the person making the recommendation,
when such person seriously considers making such a recommendation.
E."BENEFICIAL OWNERSHIP" shall be interpreted in the same manner as it
would be under rule 16a-l(a)(2) of the Securities Exchange Act of 1934 (the
"EXCHANGE ACT") in determining whether a person has beneficial ownership of
a security for purposes of section 16 of the Exchange Act and the rules and
regulations thereunder. In this regard, beneficial ownership will be deemed
to exist if a person, directly or indirectly, through any contract,
arrangement, understanding, relationship or otherwise has a direct or
indirect pecuniary interest in the securities (I.E.,: an opportunity,
directly or indirectly, to profit or share in any profit derived from
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<PAGE>
a transaction in the securities). Under this definition, beneficial
ownership by a person includes securities held by members of a person's
immediate family sharing the same household.
F. "CONTROL" shall have the same meaning as that set forth in Section
2(a)(9) of the 1940 Act.
G. "INVESTMENT COMPANY" means a company registered under the 1940 Act
for which the Adviser is the investment adviser.
H. "INVESTMENT PERSONNEL" means Portfolio Managers and other employees
who provide information and advice to a Portfolio Manager or who help
execute the Portfolio Manager's decision.
I. "PORTFOLIO MANAGER" means those employees entrusted with the
authority and responsibility to make investment decisions affecting an
Investment Company.
J. "PURCHASE OR SALE OF A SECURITY" includes, INTER ALIA, the writing
of an option to purchase or sell a security.
K. "REVIEW OFFICER" shall mean the President of AEGON USA Investment
Management, Inc. or his designated representative. As of the date of this
document, Donald E. Flynn, Executive Vice President, is the designated
representative.
L."SECURITY" shall have the meaning set forth in Section 2(a)(36) of
the 1940 Act, except that it shall not include shares of registered
open-end investment companies, securities issued by the Government of the
United States, short-term debt securities which are "government securities"
within the meaning of Section 2(a)(16) of the Investment Company Act,
bankers' acceptances, bank certificates of deposit, commercial paper and
such other money market instruments as designated by the Review Officer.
III. STATEMENT OF GENERAL PRINCIPLES
A. The Code is based on the principle that the officers, directors,
and employees of Adviser owe a fiduciary duty to our clients to conduct
their personal securities transactions in a manner which does not interfere
with client portfolio transactions or otherwise take unfair advantage of
their relationship to the clients. 1 In light of this fiduciary obligation,
personal investment activities of Access persons are subject to the
following general principles:
- ----------------
(1) Persons covered by this Code must adhere to its general principles as well
as comply with the Code's specific provisions. It bears emphasis that
technical compliance with the Code's procedures will not automatically
insulate from scrutiny trades that show a pattern of abuse of the
individual's fiduciary duties to the clients.
3
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1. No Access person shall enter into or engage in a security transaction,
business activity, or other relationship which may result in any financial or
other conflict of interest between such person and any client;
2. No personal investment activities by an Access person shall conflict
with the duty to place the interests of clients before any personal interests;
3. All personal investment activities shall be conducted consistent with
the requirements and standards set forth in this Code in such a manner as to
avoid any actual or potential conflict of interest or any abuse of an
individual's position of trust;
4. No Access person shall, directly or indirectly, take inappropriate
advantage of his or her position with any client. This principle includes, but
is not limited to, the following:
a. No Access person in a fiduciary relationship with respect to a
portfolio shall profit, directly or indirectly, due to his or her
position with respect to such portfolio. A person who learns about any
corporate opportunity due to their position may not take advantage of
and profit from such corporate opportunity.
b.No Access person shall accept any special favors, benefits or
preferential treatment due to his or her fiduciary relationship with
any portfolio, except for the usual and ordinary benefits directly
provided by the Adviser or any portfolio managed thereby.
c. No Access person shall release any information regarding
actual or contemplated securities transactions by any portfolio or any
actual or proposed portfolio changes, except in the performance of
employment duties, or in connection with any official report or
disclosure which makes such information public knowledge.
IV. EXEMPTED TRANSACTIONS
The provisions of Section V of this Code shall not apply to:
A. Purchases or sales of securities effected in any account over which
the Access person has no direct or indirect influence or control.
B. Purchases or sales of securities which are not eligible for
purchase or sale by an Investment Company.
C. Purchases or sales of securities which are nonvolitional on the
part of either the Access person or an Investment Company (e.g., purchases
through dividend reinvestment plans, transactions in corporate mergers,
stock splits, tender offers).
4
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D. Purchases effected upon the exercise of rights issued by an issuer
PRO RATA to all holders of a class of its securities, to the extent such
rights were acquired from such issuer, and sales of such rights so
acquired.
E. Purchases or sales of securities issued by companies with market
capitalization of at least $1 billion. Please note the fiduciary principles
outlined above still apply.
F. De minimis purchases and sales of securities. A de minimis purchase
or sale means a securities transaction involving 100 shares or less issued
by the same issuer per year. Please note the fiduciary obligations outlined
above still apply.
G. Purchases or sales which receive the prior approval of the Review
Officer to exempt the transaction. The Review Officer may grant an
exception from one or more provisions of the Code only after careful
consideration of the proposed transacti6n or activity, the potential
conflicts it may raise, and whether it is consistent with the objectives
and spirit of the Code.
V. RESTRICTIONS ON PERSONAL INVESTING
The Advisor has adopted the following substantive restrictions to
guard against the most likely cases in which conflicts occur.
A. Access persons shall not purchase or sell, directly or indirectly,
any security in which he or she has, or by reason of such transaction
acquires, any direct or indirect beneficial ownership and which to his or
her actual knowledge at the time of such purchase or sale (a) is being
considered for purchase or sale by an Investment Company; or (b) is being
purchased or sold by an Investment Company.
Without limiting the generality of the foregoing, (a) no
Portfolio Manager may purchase or sell any security within seven (7)
calendar days before and after any portfolio of an Investment Company which
he or she manages trades in that security, and (b) no Access person shall
purchase or sell any security on the same day there is a pending buy or
sell order in that security by any of Investment Companies advised by the
Adviser. Any profits realized on trades within the prescribed periods will
be disgorged.
B. Investment Personnel shall not acquire any securities in an initial
public offering, unless such person has received approval from the Review
Officer.
C. Investment Personnel shall not acquire any securities in a private
placement exempt from the registration requirements of the Securities Act
of 1933, as amended, pursuant to section 4(2) of the Act, unless the person
has received written approval by the Review Officer. In granting such
approval, the Review Officer will take into account, among other things,
whether the investment opportunity should be reserved for Investment
Companies and whether the opportunity is being offered to an individual by
virtue of his or her position with the Adviser. Any person authorized to
acquire securities in a private placement must disclose such investment
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if he or she is involved in any manner with a client's subsequent
consideration of an investment in the same or an affiliated issuer. In such
circumstances, the decision to purchase securities of the issuer for the
Investment Company will be subject to independent review by a designated
Access person with no personal interest in the issuer.
D. Investment Personnel shall not purchase and sell, or sell and
purchase, the same equivalent) securities within sixty (60) calendar days,
without prior written approval of the Review Officer. In granting such
approval, the Review Officer shall determine that no abuses are involved
and the equities of the situation strongly support an exception. Approval,
however, is not required for exchange-traded options that are purchased to
establish a bona fide hedge position on securities held over 60 days, or
for futures or options on U.S. bonds, treasuries or notes. Any profits
realized on short-term trades in violation of this provision may be
disgorged.
VI. RESTRICTIONS ON GIFTS AND SERVICES AS A DIRECTOR
A. Investment Personnel may not receive any gift or other thing of more
than de minimis value from any person or entity that does business with or
on behalf of any client.
B. Investment Personnel shall not serve on the boards of directors of
publicly traded companies without prior written authorization from the
Review Officer. In granting such authorization, the Review Officer shall
determine that the board service would be consistent with the interests of
Investment Companies and their shareholders. If board service is
authorized, the Review Officer shall establish appropriate "Chinese Walls"
or other procedures to isolate the person serving on the board from those
making investment decisions as to securities of any such company.
VII. COMPLIANCE PROCEDURES
The Adviser must not only adopt a Code, but must implement and enforce
its provisions effectively. Accordingly, the Adviser has adopted the
following compliance measures:
A. Pre-clearance
Access persons must receive prior approval of their personal
investment transactions in securities, as defined above, from the Review
Officer. Such authorization will be effective for five business days. The
pre-clearance requirement shall not apply to the Exempted Transactions
listed in Section IV.
B. Reporting Requirements
1. All Access persons must disclose a listing ("personal holdings
report") of all securities directly or indirectly beneficially owned by the
Access person at the time he or she becomes an access person. The personal
holdings report must be filed with the Review Officer within 10 days of the
event that causes the employee to become an Access person (E.G., hiring,
promotion, or change of position). The reports required hereunder shall
provide the title, CUSIP
6
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number (if any), number of shares and principal amount with respect to each
security.
2. Every Access person must direct his or her broker to supply to the
Review Officer duplicate copies of confirmations of all transactions in
securities in which the Access person has, or by reason of such transaction
acquires, any direct or indirect beneficial ownership in the security, and
copies of periodic statements for all securities accounts.
Such confirmations must be provided not later than 10 days after
the end of the calendar quarter in which the transaction to which the
confirmation relates was effected and shall contain the following
information:
a. The date of the transaction, the title, CUSIP number (if any)
and the number of shares, and the principal amount of each security
involved;
b. The nature of the transaction (i.e., purchase, sale or any
other type of acquisition or disposition);
c. The price at which the transaction was effected; and
d. The name of the broker, dealer or bank with or through whom
the transaction was effected.
If the confirmation statement or account statement does not
contain all the information required above and the information has not
otherwise been supplied to the Review Officer, the Access person shall
submit a report within the above time period providing the missing
information. In addition, in the event the broker is unable to supply the
confirmations, such as the Schwab discretionary account with Adviser's
401(k) program, the employee must file a report containing the information
and within the time period specified above.
3. Notwithstanding subsection B, no person shall be required to file a
report with respect to transactions effected for any account over which
such person does not have any direct or indirect influence or control.
C. Certifications
1. Each new employee will be given the Code upon becoming an employee.
Within ten (10) days thereafter, the employee must file a report with the
Review Officer or other designated person that he or she has read the Code
and understands that he or she is subject to the Code's provisions.
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2. All Access Persons will be required to certify on an annual basis
that they: (a) have read and understood the Code, (b) recognize that they
are subject to the Code, and (c) have complied with the requirements of the
Code and disclosed or reported all personal securities transactions
required thereunder.
D. Monitoring Procedures
The Review Officer or other designated personnel will monitor the
personal investment activities of Access persons. The Review Officer or
other designated persons shall review the reports and confirmations filed
by each Access person. In monitoring these transactions, the reviewer may
also, among other things,
1. Compare preclearance logs and confirmation statements for
discrepancies;
2. Compare preclearance logs and confirmation statements with
Investment Company transactions to determine if any potential conflict
existed;
3. Compare preclearance logs and confirmation statements of employees
in the same department or brokerage statements of different employees who
use the same broker;
4. Compare annual reports of personal holdings with Investment Company
transactions during the same 12-month period;
5. Notify immediately an employee of an apparent discrepancy or
potential conflict, request a written explanation, report the apparent
discrepancy or potential conflict to senior management, and take corrective
action if necessary;
6. Provide continuing education programs to remind employees of the
importance of the Code provisions and to provide a special opportunity to
ask questions; and
7. Review the Code on a regular basis and update the Code and its
procedures as necessary.
VIII. SANCTIONS
Upon discovering a violation of this Code, the Adviser may impose such
sanctions as it deems appropriate, including, INTER ALIA, a letter of
censure, suspension, termination of the employment, or criminal referral of
the violator. All material violations of this Code shall be referred to
senior management to determine the appropriate sanction. To the extent
practicable, the referral will not disclose the employee's identity unless
otherwise requested by the employee. The employee will have the opportunity
to submit a written statement in either anonymous or disclosed form. The
employee may be represented by counsel at any time the employee's
supervisor makes a presentation with respect to an employee.
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CODE OF ETHICS CERTIFICATION
I hereby certify that:
- I have read and understand the Code;
- I am subject to the Code;
- I have complied and will continue to comply with the requirements
of the Code; and
- I have disclosed and will continue to disclose all personal
securities transactions required to be disclosed pursuant to the
Code.
------------------------------
(Signature)
-----------------------------
(Print Name)
-----------------------------
(Date)
<PAGE>
CODE OF ETHICS
I. GENERAL PRINCIPLES
This Code of Ethics ("Code") establishes rules of conduct that govern
personal investment activities of employees of Fred Alger Management,
Inc. ("Alger"), Fred Alger & Company, Incorporated ("Alger Inc.") and
each registered investment company for which Alger acts as investment
adviser ("Alger Fund").
The following categories of personnel are covered by the Code:
(1) PORTFOLIO MANAGERS - those employees who have direct responsibility
and authority to make investment decisions affecting an Alger Fund
and their immediate family members residing in the same household;
(2) INVESTMENT PERSONNEL - portfolio managers and all persons such as
securities analysts and traders, who provide information and advice
to a PORTFOLIO MANAGER or who help execute the PORTFOLIO MANAGER's
decisions and their immediate family members residing in the same
household; and
(3) ACCESS PERSONS - all employees of Alger and Alger Inc. (including
iNVESTMENT PERSONNEL) and their immediate family members residing in
the same household; and "interested" directors or trustees and
officers of Alger, Alger Inc. or any Alger Fund.
(4) An independent trustee or director of any Alger Fund will be subject
to the preclearance and reporting requirements of Section III of the
Code only if such person, at the time of his transaction, knows, or
in the ordinary course of fulfilling his official duties as a
director of such company should know, that during the 15-day period
immediately preceding or after the date of the transaction by such
person, the security such person purchases or sells, is or was
purchased or sold by any Alger Fund or is being considered for
purchase or sale by any Alger Fund or Alger.
Certain general fiduciary principles govern the personal investment
activities of all employees:
(1) the duty at all times to place the interests of Alger Fund
shareholders and Alger investment accounts first;
(2) the requirement that all personal securities transactions be conducted
consistent with the Code and in such a manner as to avoid any actual
or potential conflict of interest or any abuse of an individual's
position of trust and responsibility; and
<PAGE>
(3) the fundamental standard that Alger personnel should not take
inappropriate advantage of their positions.
The restrictions and procedures of the Code apply to all accounts in which
an ACCESS PERSON has, or by reason of the subsequent transaction acquires,
any direct or indirect beneficial ownership (as defined in Exhibit A).
For purposes of the Code, the term "security" shall not include government
securities, bankers' acceptances, bank certificates of deposit, commercial
paper and shares of registered open-end investment companies.
II. RESTRICTIONS ON PERSONAL INVESTING
A. Initial Public Offerings
- INVESTMENT PERSONNEL may not acquire any securities in
an initial public offering.
B. Private Placements
- INVESTMENT PERSONNEL must obtain prior approval of any acquisition
of securities in a private placement.
(a) Any such approved acquisition must be disclosed if the
INVESTMENT PERSON subsequently participates in any Alger
Fund's consideration of an investment in the issuer.
(b) Any Alger Fund's subsequent decision to purchase securities
of the issuer will be subject to independent review by
INVESTMENT PERSONNEL with no personal interest in the
issuer.
C. Blackout Periods
1. An ACCESS PERSON may not execute a securities transaction at a
time when any Portfolio Manager is considering the purchase or
sale of that security. If the Alger Fund is in the middle of a
buying or selling program for that security, the program must be
completed before the ACCESS PERSON may execute his or her
transaction.
(a) An ACCESS PERSON may not recommend any securities
transaction by an Alger Fund without having disclosed his or
her interest, if any, in such securities or the issuer
thereof, including without limitation:
<PAGE>
(1) direct or indirect beneficial ownership of any
securities of the issuer;
(2) any position with the issuer or its affiliates; and
(3) any present or proposed business relationship between
the issuer or its affiliates and such person or any
party in which such person has a significant interest.
2. A PORTFOLIO MANAGER may not buy or sell a security within seven
calendar days before and after the Alger Fund that he or she
manages trades in that security unless one of the following
situations exists:
(a) The Alger Fund receives a better price on its transaction
made within seven days of the PORTFOLIO MANAGER's
transaction.
(b) If a PORTFOLIO MANAGER has recommended a security for
purchase or sale by an Alger Fund and his or her
recommendation is overruled by Senior Management, he or she
may purchase or sell that security for his or her own
account. If Senior Management subsequently changes its
position regarding that security and decides to purchase or
sell the security for an Alger Fund within 7 days of the
PORTFOLIO MANAGER's transaction for his or her own account,
the Fund's purchase or sale will not require disgorgement by
the PORTFOLIO MANAGER.
(c) The PORTFOLIO MANAGER can demonstrate that a hardship exists
which requires the sale of the security within the
prohibited time period.
3. Any profits realized on trades within the proscribed periods must
be disgorged to the appropriate Alger Fund or to charity.
D. Short-term Trading
INVESTMENT PERSONNEL may not profit in the purchase and sale, or sale
and purchase, of the same (or equivalent) securities* within 60
calendar days unless the security is not held by any Alger Fund and is
not eligible for purchase by any Alger Fund.
- The Compliance Officer will consider exemptions to this
prohibition on a case-by-case basis when it is clear that no
abuse is involved and the equities of the situation strongly
support an exemption.
* Includes options and short sales
<PAGE>
E. Gifts
INVESTMENT PERSONNEL may not accept any gift or other thing of more
than DE MINIMUS value from any person or entity that does business
with or on behalf of an Alger Fund.
F. Service as a Director
INVESTMENT PERSONNEL must obtain prior authorization to serve on the
board of directors of a publicly traded company. Such authorization
will be based on a determination that the board service would be
consistent with the interests of the Alger Fund and its shareholders.
III. COMPLIANCE PROCEDURES
A. Preclearance
All ACCESS PERSONS must preclear their personal securities
transactions with the Compliance Officer.
- The Compliance Officer must preclear the personal securities
transactions of all access persons with the Portfolio Managers in
addition to preclearance with the trading desk.
- Any approval will be valid only for the day on which it is
granted.
B. Brokerage Confirmations and Statements
All ACCESS PERSONS should direct their brokers to supply duplicate
copies of all confirmations and periodic statements to the firm's
Compliance Officer.
C. Disclosure of Personal Holdings
All INVESTMENT PERSONNEL must disclose their personal securities
holdings upon commencement of employment and thereafter on an annual
basis.
<PAGE>
D. Certification of Compliance With the Code
All ACCESS PERSONS must certify annually that:
- they have read and understood the Code;
- they are subject to the Code;
- they have complied with the requirements of the Code; and
- they have disclosed all personal securities transactions required
to be disclosed pursuant to the Code.
E. The management of each Alger Fund will prepare an annual report to the
Fund's Board of Trustees/Directors that:
- summarizes existing procedures concerning personal investing and
any changes made during the previous year;
- identifies any violations requiring significant remedial action
during the previous year; and
- identifies any recommended changes in existing restrictions or
procedures.
IV. SANCTIONS
Upon discovering that an ACCESS PERSON has not complied with the
requirements of this Code, the Board of Directors of Alger or of any Alger
Fund may impose on that person whatever sanctions the Board deems
appropriate, including, among other things, censure, suspension or
termination of employment.
V. CONFIDENTIALITY
All information obtained from any ACCESS PERSON hereunder shall be kept in
strict confidence, except that reports of securities transactions hereunder
will be made available to the Securities and Exchange Commission or any
other regulatory or self-regulatory organization to the extent required by
law or regulation.
<PAGE>
VI. OTHER LAWS, RULES AND STATEMENTS OF POLICY
Nothing contained in this Code shall be interpreted as relieving any ACCESS
PERSON from acting in accordance with the provision of any applicable law,
rule, or regulation or any other statement of policy or procedure adopted
by Alger or by an Alger Fund governing the conduct of such person.
03/17/2000
<PAGE>
EXHIBIT A
For purposes of the attached Code of Ethics, "beneficial ownership" shall
be interpreted in the same manner as it would be in determining whether a person
is subject to the provisions of Section 16 of the Securities Exchange Act of
1934 and the rules and regulations thereunder, except that the determination of
direct or indirect beneficial ownership shall apply to all securities that an
Access Person has or acquires. The term "beneficial ownership" of securities
would include not only ownership of securities held by an Access Person for his
own benefit, whether in bearer form or registered in his name or otherwise, but
also ownership of securities held for his benefit by others (regardless of
whether or how they are registered) such as custodians, brokers, executors,
administrators, or trustees (including trusts in which he has only a remainder
interest), and securities held for his account by pledgees, securities owned by
a partnership in which he is a member, if he may exercise a controlling
influence over the purchase, sale or voting of such securities held for his
account by pledgees, securities owned by a partnership in which he is a member,
if he may exercise a controlling influence over the purchase, sale or voting of
such securities and securities owned by any corporation. Correspondingly, this
term would exclude securities held by an Access Person for the benefit of
someone else.
Ordinarily, this term would not include securities held by executors or
administrators in estates in which an Access Person is a legatee or beneficiary
unless there is a specific legacy to such person of such securities or such
person is the sole legatee or beneficiary and there are other assets in the
estate sufficient to pay debts ranking ahead of such legacy, or the securities
are held in the estate more than a year after the decedent's death.
Securities held in the name of another should be considered as
"beneficially" owned by an Access Person where such person enjoys "benefits
substantially equivalent to ownership". The Securities and Exchange Commission
has said that although the final determination of beneficial ownership is a
question to be determined in the light of the facts of the particular case,
generally a person is regarded as the beneficial owner of securities held in the
name of his or her spouse and their minor children. Absent special circumstances
such relationship ordinarily results in such person obtaining benefits
substantially equivalent to ownership, E.G., application of the income derived
from such securities to maintain a common home, to meet expenses that such
person otherwise would meet from other sources, or the ability to exercise a
controlling influence over the purchase, sale or voting of such securities.
An Access Person also may be regarded as the beneficial owner of securities
held in the name of another person, if by reason of any contract, understanding,
relationship, agreement, or other arrangement, he obtains therefrom benefits
substantially equivalent to those of ownership.
<PAGE>
Moreover, the fact that the holder is a relative or relative of a spouse and
sharing the same home as an Access Person may in itself indicate that the Access
Person would obtain benefits substantially equivalent to those of ownership from
securities held in the name of such relative. Thus, absent countervailing facts,
it is expected that securities held by relatives who share the same home as an
Access Person will be treated as being beneficially owned by the Access Person.
An Access Person also is regarded as the beneficial owner of securities
held in the name of a spouse, minor children or other person, even though he
does not obtain therefrom the aforementioned benefits of ownership, if he can
vest or revest title in himself at once or at some future time.
<PAGE>
C.A.S.E. MANAGEMENT, INC.
CODE OF ETHICS
I. PREAMBLE
The officers, directors, employees and other affiliated persons (as that
term is defined in the Investment Company Act of 1940) of C.A.S.E.
Management, Inc. (the "Advisor") will in varying degrees participate in or
be aware of decisions made to implement the investment policies of certain
registered investment companies (hereinafter sometimes referred to
individually as the "Fund" and collectively as the "Funds"). The
relationship thus created mandates adherence to the highest standards of
conduct and integrity by each and every director, officer, employee and
other affiliate of the Advisor. The establishment of high standards of
behavior is intended to prevent any intentional or unintentional
transgression, while not unnecessarily interfering with the privacy and
freedom of the individuals concerned.
II. SCOPE
It is intended that all investments or investment practices involving a
possible conflict of interest will be avoided so as to prevent any
impairment of a person's ability to be disinterested in making investment
decisions and any use for the benefit of a personal account (as
hereinafter defined) of information relating to transactions being
effected on behalf of or to be recommended to any of the Funds.
III. APPLICABILITY
Except as otherwise provided in Section VI hereof, the provisions of this
Code shall apply to all access persons (as hereinafter defined) of the
Advisor.
IV. DEFINITIONS
A. "Access Person" shall mean any director, officer or advisory person of
the Advisor who, with respect to any of the Funds, makes any
recommendation or decision regarding the purchase or sale of a
security by any of the Funds, or participates in the determination of
such a recommendation or decision; or who, in connection with his or
her duties, obtains any information concerning such securities
recommendations or decision.
B. "Act" shall mean the Investment Company Act of 1940.
C. "Advisory Person" of the Advisor shall mean:
(i) Any employee of the Advisor (or of any company in a control
relationship to the Advisor) who, in connection with his or her
regular functions or duties, makes participates in, or obtains
information regarding the purchase or sale of a
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<PAGE>
security by any of the Funds, or whose functions relate to the making
of any recommendations or decisions with respect to such purchases or
sales; and
(ii) Any natural person in a control relationship to the Advisor who
obtains information concerning recommendations made to any of the
Funds or decisions with regard to the purchase or sale of a
security for any of the Funds.
D. "Beneficial Ownership" of securities by any person subject to this
Code shall mean a direct or indirect pecuniary interest in the
security. A "direct pecuniary interest" is the opportunity, directly
or indirectly, to profit, or to share the profit, from a transaction.
An "indirect pecuniary interest" is any nondirect financial interest,
but is specifically defined in the Rules to include securities held by
members of a person's immediate family sharing the same household;
securities held by a partnership of which a person is a general
partner; securities held by a trust of which a person is the settlor
if the person can revoke the trust, or a beneficiary if the person has
or shares investment control with the trustee; and equity securities
which may be acquired upon exercise of an option or other right, or
through conversion."
E. "Control" shall have the same meaning as that set forth in Section
2(a)(9) of the Act.
F. "Personal Account" of any person subject to this Code shall mean:
(i) Accounts as to which such person has beneficial ownership;
(ii) Accounts of any of other individual or entity whose accounts are
managed or controlled by or through such person; and
(iii) Accounts of any other individual or entity to whom such person
gives advice with regard to the acquisition or disposition of
securities, other than any of the Funds; provided, however, that
the term "personal account" shall not be construed in a manner
which would impose a limitation or restriction upon the normal
conduct of business by directors, officers, employees and
affiliates of the Advisor.
G. "Purchase or sale of a security" shall include, among other things,
the writing of an option to purchase or sell a security.
H. "SEC" shall mean the Securities and Exchange Commission.
I. "Security" shall have the meaning set forth in Section 2(a)(36) of the
Act, except that it shall not include securities issued by the
Government of the United States, bankers' acceptances, bank
certificates of deposit, commercial paper and shares of registered
open-end investment companies.
2
<PAGE>
J. "Security held or to be acquired by any of the Funds" shall mean any
security which, within the most recent 15 days:
(i) Is or has been held by any of the Funds, or
(ii) Is being of has been considered by any of the Funds or the
Advisor for purchase by any of the Funds.
V. STANDARDS OF CONDUCT
A. CONFLICT OF INTEREST - GENERAL RULE. In any matter involving both the
personal account of a person to whom this Code is applicable and
securities held or to be acquired by any of the Funds, the person
subject to this Code shall resolve any known or reasonably to be
anticipated conflict of interest in favor of the Funds. All
investments or investment practices involving a possible conflict of
interest shall be avoided in order to prevent any impairment of an
access person's ability to be disinterested in making investment
decisions and any use of information as to possible actions being or
to be recommended to any of the Funds for the benefit of a personal
account. It is anticipated that because of the breadth of the Funds'
portfolios, many types of investments will be under regular
consideration. However, since most investments for personal accounts
will be of modest size and not likely to influence the market price,
the Advisor deems it unnecessarily restrictive to prohibit all
purchases and sales in all such securities at any time that they are
contemplated for purchase or sale or are the subject of a program for
purchase or disposition by any of the Funds.
In connection with direct or indirect purchase or sale of a security
held or to be acquired by any of the Funds for a personal account no
person to whom this Code is applicable shall:
(i) Employ any device, scheme or artifice to defraud any of the
Funds;
(ii) Make to any of the Funds any untrue statement of a material fact
or omit to state to any of the Funds a material fact necessary
in order to make the statements made, in light of the
circumstances under which they are made, not misleading;
(iii) Engage in any act, practice, or course of business which
operates or would operate as a fraud or deceit upon any of the
Funds; or
(iv) Engage in any manipulative practice with respect to any of the
Funds.
3
<PAGE>
B. PROHIBITED TRANSACTIONS
1. REPORTS. Written reports relating to a particular activity or to an
industry prepared for the Advisor's or any of the Funds' use shall not
go outside the office without written permission of the President of
the Advisor or an officer designated by him.
2. NEW ISSUES. Officers and employees of the Advisor shall observe great
caution in purchasing new issues, particularly those reputed to be in
short supply.
3. GIFTS AND OTHER BENEFITS. No officer or employee of the Advisor shall
accept a gift from a person doing business with any of the Funds if
receipt of the gift may adversely affect the business judgment of the
officer or employee. This is not meant to constrain normal meetings
with brokers, hosted by them, which the officer or employee believes
will benefit the Funds.
4. DISCLOSURE OF MATERIAL POSITIONS OR RECENT TRADING. At no time may any
access person recommend or authorize the holding, purchase or sale of
any security by any of the Funds without first disclosing the
existence of any material (in relationship to personal financial
circumstances) position (long or short) in such security held by, or
recent trading in such security by, any personal account of such
access person. Such disclosure shall be made to the President of the
Advisor or an officer designated by him.
VI. REPORTING REQUIREMENTS
A. REQUIREMENT. Except as otherwise provided herein, every access person
of the Advisor shall make a report containing the information
described in Section VI(B) hereof to the President of the Advisor or
an officer designated by him with respect to transactions in any
security in which such access person has, or by reason of such
transaction acquires, any beneficial ownership. The Advisor shall
identify all access persons who are under a duty to make such reports
and shall inform such persons of such duty.
B. REPORT. Each report in the form attached hereto as Exhibit A required
to be made hereunder shall be delivered to the President of the
Advisor or an officer designated by him not later than 10 days after
the end of the calendar quarter in which the transaction to which the
report relates was effected.
Such reports will be received regularly by the President of the
Advisor or an officer designated by him on behalf of the Advisor. Any
such report may contain a statement that the report shall not be
construed as an admission by the person making such report that he has
any direct or indirect beneficial ownership in the security. If
required by law, the report will also be available for inspection by
the SEC staff, but will otherwise be afforded confidential treatment.
4
<PAGE>
C. EXCEPTION. Notwithstanding Paragraph VI(A) hereof, no person shall be
required to make a report with respect to transactions effected for
any account over which such person does not have any direct or
indirect influence or control.
VII. SANCTIONS. Violations of this Code or any section hereof shall be grounds
for appropriate sanctions, including dismissal. All material violations of
this Code and any sanctions imposed with respect thereto shall be reported
periodically to the Boards of Directors or Trustees of the Funds.
VIII. INTERPRETATIONS AND EXCEPTIONS. Any questions regarding the applicability,
meaning or administration of the Code shall be referred by the person
concerned in advance of any contemplated transaction to the President of
the Advisor or to an officer designated by him. Exemptions will be granted
(in addition to those pursuant to Section VI hereof) by said officer if,
in his judgement, the obligation of the person involved pursuant to this
Code of Ethics is not compromised.
IX. ACCEPTANCE. Each person to whom this Code is applicable shall receive a
copy of same. Any amendments to this Code shall be similarly furnished to
each person to whom this Code is applicable. Each officer and employee of
the Advisor to whom this Code is applicable shall sign a statement that he
or she has read this Code and will abide by it. The signed statement shall
then be kept in the files of the Advisor. A form of the statement is
attached hereto as Exhibit B.
X. RECORDS. This code, a copy of each report by an access person, any report
hereunder to the Boards of Directors or Trustees of the Funds and lists of
all persons required to make reports shall be preserved with the Advisor's
records for the period required by Rule 17j-1 of the Act.
XI. EFFECTIVE DATE. The provisions of this Code shall be effective on and
after August 17, 1992, and amendments shall become effective when
promulgated.
5
<PAGE>
EXHIBIT A
C.A.S.E. MANAGEMENT, INC.
Securities Transaction Report
For the Calendar Quarter Ended _______________
(mo. / day / yr. )
To C.A.S.E. Management, Inc., the Investment Advisor to certain registered
investment companies.
During the quarter referred to above, the following transactions were
effected in securities of which I had, or by reason of such transaction
acquired, direct or indirect beneficial ownership, and which are required to be
reported pursuant to the Code of Ethics:
<TABLE>
<CAPTION>
Number of Nature of Broker/Dealer or
Shares of Dollar Amount Transaction Bank Through
Date of Principal of Transaction (Purchase) Sale, Whom Effected
Security Transaction Amount Other Price
<S> <C> <C> <C> <C> <C> <C>
</TABLE>
This report (i) excludes transactions with respect to which I had no direct or
indirect influence or control, (ii) other transactions not required to be
reported and (iii) is not an admission that I have had any direct or indirect
beneficial ownership in the securities listed above.
Date: Signature: ________________________
6
<PAGE>
EXHIBIT B
STATEMENT RE CODE OF ETHICS
C.A.S.E. MANAGEMENT, INC.
The undersigned hereby certifies that he or she has read and will abide
by the Code of Ethics dated as of August 17, 1992, or as subsequently amended,
and that he or she knows such failure may constitute a violation of federal and
state securities laws and regulations which may subject him or her to civil
liabilities and criminal penalties. The undersigned acknowledges that failure to
observe the provisions of said Code shall be basis for any appropriate sanction,
including dismissal.
Date: Signature: _______________________
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
PAGE
<S> <C>
SECTION I. POLICY STATEMENT ON ETHICAL STANDARDS............................... 1
General Statement........................................................... 1
Prohibited Business Practices............................................... 2
Securities Trading Restrictions............................................. 4
SECTION II. POLICY STATEMENT ON INSIDER TRADING................................ 5
Policy Statement On Insider Trading......................................... 5
Insider..................................................................... 5
Material Information........................................................ 6
Non-Public Information...................................................... 6
Penalties for Insider Trading............................................... 6
SECTION III. PROCEDURES TO IMPLEMENT THE CODE.................................. 7
Identifying Inside Information.............................................. 7
Restricting Access to Material Non-Public Information....................... 7
Holdings Reports............................................................ 8
Exceptions to the Requirement to Submit Holdings Reports.................... 9
Quarterly Transaction Reports............................................... 9
Exceptions to the Requirement to Submit Quarterly Transaction Reports....... 10
Annual Certification........................................................ 11
Disclosure of Ownership..................................................... 11
Preclearance Requirements for Trades and Investments by Advisory Persons.... 11
SECTION IV. SANCTIONS.......................................................... 14
SECTION V. SUPERVISORY PROCEDURES............................................. 15
Prevention of Insider Trading and Promotion of Ethical Standards............ 15
Detection of Insider Trading and Unethical Practices........................ 15
Special Reports to Management............................................... 16
Annual Reports to Management................................................ 16
</TABLE>
<PAGE>
SECTION I. POLICY STATEMENT ON ETHICAL STANDARDS
A. GENERAL STATEMENT
Rule 17j-1 under the Investment Company Act of 1940 (the "1940 Act")
requires registered investment companies and their investment advisers,
sub-advisers and principal underwriters to adopt codes of ethics to prevent
fraudulent, deceptive and manipulative practices and to institute
procedures to prevent violations of the code of ethics.
The Dean Family of Funds (the "Trust") is registered as an open-end
management investment company under the Act. Pursuant to Rule 17j-1 under
the 1940 Act, the Trust had adopted this Code of Ethics and Insider Trading
Policy (the "Code").
C. H. Dean & Associates, Inc. ("Dean & Associates") is the investment
adviser for the Trust. 2480 Securities LLC ("2480 Securities"), a
subsidiary of C. H. Dean & Associates, Inc., is the principal underwriter
for the Trust. Pursuant to Rule 17j-1 under the 1940 Act, Dean & Associates
and 2480 Securities (collectively, the "Company") also have adopted the
Code.
The Company operates under the careful scrutiny of federal and state
regulatory authorities. The Company's historic commitment to strict ethical
standards stems not only from this scrutiny, but also from a belief that
the Company's clients have brought it success due to its hard work and high
ethical standards. High ethical standards are a fundamental part of the
Company's operations, and the role its employees play in its success.
Except as otherwise specified herein, this Code applies to the following
persons:
o All employees of the Company;
o All officers of the Company;
o All directors of the Company;
o All officers of the Trust;
o All Trustees of the Trust; and
o Persons in a control relationship to the Trust or the Company who
obtain information concerning recommendations made to the Trust
with regard to the purchase or sale of securities by the Trust.
These persons are called "Access Persons" in this document.
<PAGE>
This Code is intended to insure that the personal securities transactions
of Access Persons are conducted in accordance with the following
principles:
o A duty at all times to place first the interests of clients;
o The requirement that all personal securities transactions be
conducted consistent with this Code and in such a manner to avoid
any actual or potential conflict of interest or any abuse of an
individual's responsibility and position of trust; and
o The fundamental standard that Company personnel not take
inappropriate advantage of their positions.
COMPLIANCE WITH THE CODE, HOWEVER, DOES NOT RELIEVE AN ACCESS PERSON OF ANY
OBLIGATION UNDER ANY LAWS OR RULES PERTAINING TO THE ACTIVITIES OF AN
ACCESS PERSON, INCLUDING FEDERAL AND STATE SECURITIES LAWS AND THE RULES OF
THE NATIONAL ASSOCIATION OF SECURITIES DEALERS, INC. ("NASD").
Every Access Person must read and retain this Code. Any questions regarding
the following policies and procedures should be referred to the person
designated by the Company and/or the Trust as its Compliance Officer.
B. PROHIBITED BUSINESS PRACTICES
The Company is a fiduciary, and has a duty to act primarily for the benefit
of its clients. While the nature and extent of this duty will vary
according to the nature of the relationship between the Company and the
client and the circumstances of each case, certain practices are clearly
dishonest and unethical. To insure compliance with the Company's high
ethical standards, and its fiduciary obligations to clients, no Access
Person shall engage in any of the following business practices:
1. Knowingly sell any security to, or purchase any security from, a
client while acting as a principal for his or her own account or for
the Company's account, or knowingly effect a sale or purchase of a
security for the account of a client while acting as a broker for
another, without disclosing to the client in writing before execution
of the transaction the capacity in which he or she is acting and
obtaining the consent of the client to the transaction.
2. Recommend to a client the purchase, sale or exchange of any security
without reasonable grounds to believe that the recommendation is
suitable for the client on the basis of information furnished by the
client after reasonable inquiry concerning the client's investment
objectives, financial situation and needs, and any other information
known or acquired after reasonable examination of the client's
financial records.
3. Place an order to purchase or sell a security for the account of a
client without authority to do so.
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<PAGE>
4. Place an order to purchase or sell a security for the account of a
client upon instruction of a third party (such as a broker-dealer or
another adviser) without first having obtained a written third-party
authorization from the client.
5. Exercise any discretionary power in placing an order for the purchase
or sale of securities for a client, without obtaining written
discretionary authority from the client promptly after the date of the
first transaction placed pursuant to oral discretionary authority, but
in no event later than 10 business days after the first transaction,
unless the discretionary power relates solely to the price at which or
the time when an order involving a definite amount of a specified
security shall be executed.
6. Induce trading in a client's account that is excessive in size or
frequency in view of the financial resources, investment objectives
and character of the account.
7. Borrow money or securities from a client unless the client, is a
broker-dealer or a financial institution engaged in the business of
loaning funds or securities.
8. Loan money to a client.
9. Misrepresent to any client or prospective client the qualifications of
the Company or any employee of the Company, or misrepresent the nature
of the advisory services being offered or fees to be charged for such
services, or omit to state a material fact necessary to make
statements regarding qualifications, services or fees, in light of the
circumstances under which they were made, not misleading.
10. Provide a report or recommendation to any client prepared by someone
other than the Company without disclosing that fact, other than with
respect to published research reports, or statistical analyses
normally used or ordered by the Company in providing advisory
services.
11. Charge a client an unreasonable advisory fee.
12. Fail to disclose to a client in writing before any advice is rendered
any material conflict of interest relating to the Company or any of
its employees that could reasonably be expected to impair the
rendering of unbiased and objective advice including:
o Compensation arrangements connected with advisory services to
clients, which are in addition to compensation from such clients
for such services; and
o Charging a client an advisory fee for rendering advice, when a
commission for executing securities transactions pursuant to such
advice will be received by the Company or its employees.
13. Guarantee a client that a specific result will be achieved (gain or
loss) as a result of the advice provided to the client.
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<PAGE>
14. Publish, circulate or distribute any advertisement which does not
comply with the following laws and rules:
o The Investment Company Act of 1940 and the rules under the 1940
Act;
o The Investment Advisers Act of 1940 and the rules under the
Advisers Act; and
o The NASD rules.
15. Disclose the identity, affairs or investments of any client to any
third party, unless required by law to do so, or unless the client
consents to the disclosure.
16. Enter into, extend or renew any investment advisory contract, unless
the contract is in writing and discloses, in substance, the services
to be provided, the term of the contract, the advisory fee, the
formula for computing the fee, the amount of prepaid fee to be
returned in the event of contract termination or nonperformance,
whether the contract grants discretionary power to the Company, and
that no assignment of the contract shall be made by the Company
without the consent of the other party to the contract.
17. Fail to disclose to a client or prospective client each material fact
with respect to:
o Any financial condition of the Company that is reasonably likely
to impair the ability of the Company to meet contractual
commitments to a client; or
o A legal or disciplinary action that is material to an evaluation
of the Company's integrity, or ability to meet contractual
commitments to a client.
The conduct set forth above is not all inclusive. Engaging in other
conduct, such as nondisclosure, incomplete disclosure, frontrunning, or
other deceptive, manipulative or fraudulent practices, is considered an
unethical business practice and prohibited by Rule 17j-1 under the Act as
well as other securities laws.
Engaging in any unethical business practice can subject the Company and the
person involved to civil and criminal liability, and will result in the
Company imposing serious sanctions on the person(s) involved, including
dismissal.
C. SECURITIES TRADING RESTRICTIONS
Policies and restrictions concerning personal securities trading are set
forth in Section III of this document.
Page 4
<PAGE>
SECTION II. POLICY STATEMENT ON INSIDER TRADING
A. POLICY STATEMENT ON INSIDER TRADING
The Company forbids any of its Access Persons from trading securities,
either personally or on behalf of others (such as accounts managed by the
Company), based on material non-public information, and from communicating
material non-public information about issuers of securities to others in
violation of the law. This conduct is frequently referred to as "insider
trading."
The Company's policy applies to every Access Person, and extends to
activities within and outside their duties at the Company.
While the term "insider trading" is not defined in the federal securities
laws, for purposes of these policies and procedures, it shall be presumed
to include the use of material non-public information to trade in
securities (whether or not one is an "insider" with respect to the issuer
of the securities), and the communication of material non-public
information to others, including any of the following practices:
o Trading by an insider (e.g., an officer, director or employee of
an issuer, or anyone with a confidential relationship with the
issuer), while in possession of material non-public information;
o Trading by a non-insider, while in possession of material
non-public information, where the information either was
disclosed to the non-insider in violation of an insider's duty to
keep it confidential, or was misappropriated; and
o Communicating material non-public information to others.
The elements of insider trading and the penalties for such unlawful conduct
are discussed below.
B. INSIDER
For purposes of these policies and procedures, an "insider" is defined to
include officers, directors, trustees and employees of an issuer of
securities, as well as outside persons in a special confidential
relationship with the issuer who are given access to information solely for
the issuer's purposes. Such "temporary insiders" can include, among others,
a company's attorneys, accountants, consultants, bank lending officers, and
the employees of such organizations. However, for such an outside person to
be considered a "temporary insider," the issuer must expect such person to
keep confidential the non-public information, which has been disclosed to
him, and the relationship must at least imply such a duty.
Access Persons should be aware that, under this definition, the Company (or
an employee of the Company) may become a temporary insider of a company if
it advises that company or performs other services for it. There may even
be circumstances in which the Company (or an employee of the Company) could
become a temporary insider in a company that it investigates for the
purpose of making or recommending an investment, or in which it holds a
portfolio position on behalf of a client.
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<PAGE>
C. MATERIAL INFORMATION
Trading on inside information is not a basis for liability unless the
information is material. For purposes of these policies and procedures,
"material information" is defined as information for which there is a
substantial likelihood that a reasonable investor would consider it
important in making his or her investment decisions, or information that is
reasonably certain to have a substantial effect on the price of a company's
securities. Information with respect to a company that should be considered
material includes, but is not limited to: dividend changes, earnings
estimates, changes in previously released earnings estimates, significant
merger or acquisition proposals or agreements, major litigation, liquidity
problems, and extraordinary management developments.
D. NON-PUBLIC INFORMATION
For purposes of these policies and procedures, information will be
considered to be non-public until there is a reasonable basis for believing
that it has been effectively communicated to the market place. For example,
information found in the following places would be considered public:
o A report filed with the SEC;
o A press release; or
o A publication of general circulation such as Dow Jones, "Reuters
Economic Services," or the WALL STREET JOURNAL.
E. PENALTIES FOR INSIDER TRADING
Access Persons of the Company should be aware that penalties for trading
on, or communicating, material non-public information are severe, both for
individuals involved in such unlawful conduct and their employers,
regardless of whether they benefit from the violation. These penalties
include:
o Civil injunctions;
o Treble damages;
o Disgorgement of profits;
o Jail sentences;
o Fines for the person who committed the violation of up to 3 times
the profit gained or loss avoided, whether or not the person
actually benefited; and
o Fines for the employer or other controlling person of up to the
greater of $1 million, or 3 times the amount of the profit gained
or loss avoided.
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SECTION III. PROCEDURES TO IMPLEMENT THE CODE
The following procedures are established to aid Access Persons in avoiding any
activities in violation of the principles set forth herein, and to aid the
Company and the Trust in preventing, detecting, and imposing sanctions against
these activities. Every Access Person must follow these procedures or risk
serious sanctions, including dismissal, substantial personal liability, and
criminal penalties. Questions about these procedures should be directed to the
Compliance Officer.
A. IDENTIFYING INSIDE INFORMATION
Before an Access Person engages in trading in the securities of a company
about which the Access Person may have potential inside information,
whether trading for himself/herself or others (including investment
companies or private accounts managed by the Company), the following
questions should be answered:
o IS THE INFORMATION MATERIAL? Is this information that an investor
would consider important in making his or her investment
decisions? Is this information that would substantially affect
the market price of the securities if generally disclosed?
o IS THE INFORMATION NON-PUBLIC? To whom has this information been
provided? Has the information been effectively communicated to
the marketplace by being published in "Reuters Economic
Services," the WALL STREET JOURNAL, or other publications of
general circulation?
If an Access Person either believes that the information is material and
non-public, or has any question as to whether the information is material
and non-public, the Access Person should take the following steps:
o Report the matter immediately to the Compliance Officer.
o Refrain from purchasing or selling the securities on behalf of
himself or others, including investment companies or private
accounts managed by the Company.
o Refrain from communicating the information inside or outside the
Company or the Trust, other than to the Compliance Officer.
After the Compliance Officer has reviewed the issue, the Access Person will
be instructed to continue to refrain from trading and communicating the
information, or will be allowed to trade and communicate the information.
B. RESTRICTING ACCESS TO MATERIAL NON-PUBLIC INFORMATION
Information in the possession of an Access Person that is material and
non-public may not be communicated to anyone, including persons within the
Company or the Trust, except to the Compliance Officer or to other persons
identified by the Compliance Officer. In addition, care should be taken so
that the information is secure. For example,
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files containing material non-public information should be sealed, and
access to computer files containing material non-public information should
be restricted.
C. HOLDINGS REPORTS
Each Access Person must submit written and signed reports containing
information about securities (including options) in which the Access Person
had any direct or indirect beneficial ownership ("Holdings Reports").
Each Access Person must submit to the Compliance Officer an Initial
Holdings Report no later than 10 days after he or she becomes an Access
Person. The information included in the Initial Holdings Report must
reflect the Access Person's holdings as of the date he or she became an
Access Person.
Each Access Person must submit to the Compliance Officer an Annual Holdings
Report no later than January 30 of each year. The information included in
the Annual Holdings Report must reflect the Access Person's holdings as of
December 31 of the prior year.
If an Access Person is not required to report any information on an Initial
Holdings Report or an Annual Holdings Report, the Access Person must submit
a written and signed statement to that effect to the Compliance Officer by
the date on which the applicable Holdings Report is due.
Each Initial Holdings Report and each Annual Holdings Report must include
the following information:
o Title of each security in which the Access Person had any direct
or indirect beneficial ownership;
o Number of shares and principal amount of each security in which
the Access Person had any direct or indirect beneficial
ownership;
o Name of any broker, dealer or bank with whom the Access Person
maintains an account in which any securities were held for the
direct or indirect benefit of the Access Person; and
o Date the Holdings Report is submitted by the Access Person.
Each Holdings Report must also include information about securities held by
any of the following persons or entities and information about accounts
maintained by any the following persons or entities:
o The Access Person's family including his/her spouse, his/her
minor children and adults living in the same household as the
Access Person;
o Trusts of which the Access Person is a trustee, or in which the
Access Person or his/her family members have a beneficial
interest; and
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o Any account in which the Access Person or his/her family members
hold a direct or indirect beneficial interest, retain investment
authority or exercise a power of attorney.
D. EXCEPTIONS TO THE REQUIREMENT TO SUBMIT HOLDINGS REPORTS
An Access Person does not have to include in his or her Holdings Reports
information about the following securities or accounts: direct obligations
of the U.S. Government, mutual fund investments, bankers' acceptances, bank
certificates of deposit, commercial paper, and high quality short-term debt
instruments.
An Access Person does not have to include in his or her Holding Reports
information about bank accounts.
An Access Person does not have to include in his or her Holdings Reports
information about securities held in any account over which the Access
Person has no direct or indirect influence or control.
A disinterested trustee of the Trust does not have to make any Holdings
Reports.
E. QUARTERLY TRANSACTION REPORTS
Each Access Person must submit a report ("Quarterly Transaction Report")
containing information about:
o Every securities transaction (including every option transaction)
during the quarter in which the Access Person had any direct or
indirect beneficial interest; and
o Every account established by the Access Person in which any
securities (including options) were held during the quarter for
the direct or indirect benefit of the Access Person.
Each Access Person must also arrange for duplicate trade confirmations of
every securities transaction (including every option transaction) in which
the Access Person had any direct or indirect beneficial interest to be sent
to the Compliance Officer directly from the broker, dealer or bank.
A Quarterly Transaction Report must be submitted to the Compliance Officer
no later than 10 days after the end of a calendar quarter.
If an Access Person is not required to report any information on a
Quarterly Transaction Report, the Access Person must submit a written and
signed statement to that effect to the Compliance Officer by the date on
which the applicable Quarterly Transaction Report is due.
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A Quarterly Transaction Report must include the following information:
o Date of each transaction;
o Title of each security;
o Interest rate and maturity date of the security, if applicable;
o Number of shares and principal amount of each security;
o Nature of the transaction;
o Price at which the transaction was effected;
o Name of the broker, dealer or bank with or through which the
transaction was effected;
o Name of the broker, dealer or bank with whom the Access Person
established the account;
o Date the account was established; and
o Date the Quarterly Transaction Report is submitted by the Access
Person.
Each Quarterly Transaction Report must also include information about the
securities transactions in which any of the following persons or entities
participated and information about accounts established by any of the
following persons or entities:
o The Access Person's family including his/her spouse, his/her
minor children and adults living in the same household as the
Access Person;
o Trusts of which the Access Person is a trustee or in which the
Access Person or his/her family members have a beneficial
interest; and
o Accounts in which the Access Person or his/her family members
hold a direct or indirect beneficial interest, retain investment
authority, or exercise a power of attorney.
F. EXCEPTIONS TO THE REQUIREMENT TO SUBMIT QUARTERLY TRANSACTION REPORTS
An Access Person does not have to report transactions involving the
following securities or accounts: direct obligations of the U.S.
Government, mutual fund investments, bankers' acceptances, bank
certificates of deposit, commercial paper, and high quality short-term debt
instruments.
An Access Person does not have to report transactions involving bank
accounts.
An Access Person does not have to report transactions effected for any
account over which the Access Person has no direct or indirect influence or
control.
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An Access Person does not have to make a Quarterly Transaction Report if
the report would duplicate information contained in broker trade
confirmations or account statements received by the Compliance Officer no
later than 10 days after the end of the calendar quarter and all of the
required information is contained in the broker trade confirmations or
account statements.
A disinterested trustee of the Trust does not have include any information
in his or her Quarterly Transaction Report about any security transaction
unless, at the time of the transaction, the trustee knew or, in the
ordinary course of fulfilling his or her official duties as a trustee,
should have known that, during the 15-day period immediately before or
after the date of the transaction by the trustee, the Trust purchased or
sold the security or the Trust or the Company considered purchasing or
selling the security.
G. ANNUAL CERTIFICATION
Each Access Person, except a disinterested trustee of the Trust, must
annually certify that he or she has read and understands this Code and
recognizes that he or she is subject to its provisions.
Each Access Person, except a disinterested trustee of the Trust, must
annually certify in writing that all information required to be reported by
the Access Person in a Holdings Report or a Quarterly Transaction Report
has been reported to the Compliance Officer.
H. DISCLOSURE OF OWNERSHIP
The Company or the Trust may, in its discretion, require an Access Person
to disclose, in connection with a report, recommendation or decision of the
Access Person to purchase or sell a security for the Trust or any client of
the Company, any direct or indirect beneficial ownership of that security
by the Access Person.
I. PRECLEARANCE REQUIREMENTS FOR TRADES AND INVESTMENTS BY ADVISORY PERSONS
1. GENERAL PRECLEARANCE REQUIREMENT
An Advisory Person (as defined below) must obtain preclearance from the
Compliance Officer or his designee before the Advisory Person trades,
directly or indirectly, in the following securities:
o Any security appearing on the Company's restricted list;
o Securities convertible into or exchangeable for any security on
the Company's restricted list; and
o Options to purchase or sell any security whether or not on the
Company's restricted list.
Generally any security currently being considered for purchase or sale by
the Trust or any other client of the Company, or any security that has been
purchased or sold by the Trust or any other client of the Company within
the previous 7 days, will appear on the
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Company's restricted list. The restricted list will be provided to the
Compliance Department by the Research Department on a weekly basis.
2. PRECLEARANCE REQUIREMENT FOR INVESTMENTS IN IPOS AND LIMITED OFFERINGS
An Advisory Person (as defined below) must obtain preclearance from the
Compliance Officer or his designee before the Advisory Person directly or
indirectly acquires beneficial ownership in any securities in an Initial
Public Offering or in a Limited Offering.
An Initial Public Offering means an offering of securities registered under
the Securities Act of 1933, the issuer of which, immediately before the
registration, was not subject to the reporting requirements of Section 13
or 15(d) of the Securities Exchange Act of 1934.
A Limited Offering means an offering that is exempt from registration under
the Securities Act of 1933 pursuant to Section 4(2) or Section 4(6), or
pursuant to Rule 504, Rule 505 or Rule 506, under the Securities Act of
1933.
3. DEFINITION OF ADVISORY PERSON
The term "Advisory Person" includes:
o Any employee of the Company who, in connection with his or her
regular functions or duties, makes, participates in, or obtains
information regarding the purchase or sale of a security by the
Trust or any client of the Company;
o Any employee of the Company whose functions relate to the making
of any recommendations with respect to such purchases or sales;
o Any employee of the Company who in connection with his or her
regular functions or duties, makes or participates in making
recommendations regarding the purchase or sale of securities by
the Trust or any client of the Company; and
o Any person in a control relationship to the Trust or the Company
who obtains information concerning recommendations made to the
Trust or any client of the Company with regard to the purchase or
sale of a security by the Trust or any client of the Company.
4. ACCOUNTS COVERED BY THE PRECLEARANCE REQUIREMENTS
The preclearance requirements apply to trades and investments for accounts
of the following persons:
o Personal accounts of the Advisory Person;
o Accounts of the Advisory Person's family including his/her
spouse, his/her minor children and adults living in the same
household as the Advisory Person;
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o Accounts for trusts of which the Advisory Person is a trustee or
in which the Advisory Person or his/her family members have a
beneficial interest; and
o Accounts in which the Advisory Person or his/her family members
hold a direct or indirect beneficial interest, retain investment
authority or exercise a power of attorney.
5. EXCEPTIONS TO THE GENERAL PRECLEARANCE REQUIREMENT
The general preclearance requirement does not apply to the transactions
listed below. THERE ARE NO EXCEPTIONS TO THE PRECLEARANCE REQUIREMENT
FOR INVESTMENTS IN INITIAL PUBLIC OFFERINGS AND LIMITED OFFERINGS.
o Purchases and sales for accounts that are managed by the Company;
o Purchases and sales for retirement plans sponsored by the Company
(which are not self directed);
o Purchases and sales for retirement plans sponsored by the
employer of a family member of an Advisory Person (which are not
self directed);
o Purchases and sales of U.S. Government securities, bankers'
acceptances, bank certificates of deposit, commercial paper, high
quality short-term debt instruments, mutual fund investments and
money market accounts;
o Purchases and sales of municipal securities (other than those
issued by the Company's clients); and
o Purchases and sales of "large cap securities."
The term "large cap securities" means securities when the issuer
of the securities has a market capitalization greater than $1
billion. Market capitalization will be calculated by multiplying
the number of outstanding shares of the issuer by the current
price per share.
THIS EXCEPTION DOES NOT APPLY TO PURCHASES OR SALES OF OPTIONS ON
A LARGE CAP SECURITY. OPTION TRADES ON ANY SECURITY, INCLUDING
ANY LARGE CAP SECURITY, FOR ANY ACCOUNT DESCRIBED ABOVE MUST BE
PRECLEARED BY THE COMPLIANCE OFFICER OR HIS DESIGNEE.
6. PRECLEARANCE PROCEDURES
To obtain preclearance for a specific transaction, an Advisory Person
should request preclearance from the Compliance Officer or his designee.
Preclearance will be valid only if the Advisory Persons receives either
written approval or approval through e-mail. The Advisory Person may engage
in the specific transaction for which he or she has obtained preclearance
for 3 days from the receipt of preclearance.
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SECTION IV. SANCTIONS
Violations by an Access Person or Advisory Person of the policies and procedures
set forth in this Code will be handled in the following manner:
o First violation:
A written warning will be given to the Access Person or the
Advisory Person.
o Second violation:
A written warning will be given to the Access Person or Advisory
Person and he or she will be required to attend a meeting with
senior management of the Company to review the violation and the
applicable policies and procedures of this Code.
o Third violation:
A fine of up to $1,000 will be assessed against the Access Person
or Advisory Person. The fine will be donated to charity or used
for other appropriate purposes as determined by senior management
of the Company.
o Fourth violation:
Senior management of the Company will conduct a review to
determine the proper additional disciplinary action to be taken
against the Access Person or Advisory Person, which could include
termination of employment.
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SECTION V. SUPERVISORY PROCEDURES
The following supervisory procedures will be implemented by the Company to
insure compliance with this Code:
A. PREVENTION OF INSIDER TRADING AND PROMOTION OF ETHICAL STANDARDS
To prevent insider trading, and to promote and maintain ethical standards,
the Compliance Officer will:
o Require that each Access Person review and sign a statement that
he/she has read and understands Sections I through IV of these
policies and procedures, and will comply with them, which
statement will be maintained in that Access Person's personnel
file;
o Provide, on a regular basis, an educational program to
familiarize Access Persons with the Company's and Trust's
policies and procedures with respect to insider trading and
ethical standards;
o Answer questions regarding these policies and procedures;
o Review on a regular basis, and update as necessary, these
policies and procedures;
o Resolve issues of whether information received by an Access
Person is material and non-public, or whether any proposed
activity is an unethical business practice;
o When it has been determined that an Access Person has material
non-public information, implement measures to prevent
dissemination of the information and, if necessary, restrict
Access Persons from trading the securities; and
o Promptly review, and either approve or disapprove in writing or
by e-mail, each request from an Advisory Person for preclearance
to trade.
B. DETECTION OF INSIDER TRADING AND UNETHICAL PRACTICES
To detect insider trading and unethical business practices, the
Compliance Officer will:
o Review the Quarterly Transaction Reports and Holdings Reports
filed by each Access Person;
o Review the duplicate confirmations and account statements
received from brokers, dealers and banks;
o Review the trading activity of mutual funds and private accounts
managed by the Company;
o Review the trading activity of the Company's own account;
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o Coordinate the review of the reports with other appropriate
officers, directors or employees of the Company; and
o Review the Company's sales, marketing and other business
activities and operations regularly.
C. SPECIAL REPORTS TO MANAGEMENT
Upon learning of a potential violation of these policies and procedures,
the Compliance Officer will report promptly to management of the Company
and/or to the Board of Trustees of the Trust, as appropriate, providing
full details and recommendations for further action.
D. ANNUAL REPORTS TO MANAGEMENT
On an annual basis, the Compliance Officer will prepare a written report to
the management of the Company and to the Board of Trustees of the Trust
setting forth the following:
o A summary of existing procedures to detect and prevent insider
trading and unethical business practices;
o A description of any issues that have arisen under the Code and
the related procedures including information about material
violations of the Code and sanctions imposed in response to the
material violations;
o An evaluation of the current procedures and any recommendation
for improvement;
o A description of the Company's continuing educational program
regarding insider trading and ethical standards, including the
dates of the programs since the last report to management; and
o A certification that the Trust and the Company have adopted
procedures reasonably necessary to prevent Access Persons from
violating the Code.
673102.12
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CODE OF ETHICS FOR ACCESS PERSONS
REVISED JANUARY 1, 2000
1
<PAGE>
TABLE OF CONTENTS
SECTION PAGE
1. General Fiduciary Principles 2
2. Definitions 2
3. Exempt Transactions 4
4. Prohibited Transactions and Activities 5
5. Pre-clearance Requirement and Exempted 7
Transactions
6. Prohibition on the Receipt of Gifts 8
7. REPORTING REQUIREMENTS 8
Initial Reporting Requirements 9
Quarterly Reporting Requirements 9
Annual Reporting Requirements 10
Exemption for Disinterested Directors 11
8. Sanctions 11
Procedures for Prior Approval of Personal Securities 12
Transactions by Access Persons
o Preclearing Foreign Securities 13
Procedures for the Reporting and Review of Personal 18
Transaction Activity
<PAGE>
CODE OF ETHICS REGARDING PERSONAL SECURITIES TRADING
Pursuant to rule 17j-1 under the Investment Company Act of 1940, this Code of
Ethics has been adopted on behalf of the Adviser, the Underwriters, and each
investment company that is both advised and distributed by an Adviser and an
Underwriter.*
1) GENERAL FIDUCIARY PRINCIPLES
(a) Each Access Person:
(i) Must place the Funds' interests ahead of the Access Person's
personal interests;
(ii) Must avoid conflicts or apparent conflicts of interest with the
Funds; and
(iii) Must conduct his or her personal transactions in a manner which
neither interferes with Fund portfolio transactions nor
otherwise takes unfair or inappropriate advantage of the Access
Person's relationship to the Fund.
The failure to recommend or purchase a Covered Security for the
Fund may be considered a violation of this Code.
(b) Every Access Person must adhere to these general fiduciary principles,
as well as comply with the specific provisions and Associated
Procedures of this Code. TECHNICAL COMPLIANCE WITH THE TERMS OF THIS
CODE AND THE ASSOCIATED PROCEDURES MAY NOT BE SUFFICIENT WHERE THE
TRANSACTIONS UNDERTAKEN BY AN ACCESS PERSON SHOW A PATTERN OF ABUSE OF
THE ACCESS PERSON'S FIDUCIARY DUTY.
2) DEFINITIONS
(a) The "1940 Act" means the Investment Company Act of 1940, as amended.
(b) "Access Person" means any director, trustee, officer, managing general
partner, general partner, or Advisory Person of a Fund, of the
Underwriter, and of the Adviser and all family members permanently
residing in the same household. (If non-family members also reside in
the household, the Access Person must either declare that the Access
Person has no influence on the investment decisions of the other party
or the Access Person must report the party as an Access Person.).
(c) "Adviser" means any registered investment adviser that is an affiliate
or subsidiary of Federated Investors, Inc.
(d) "Advisory Person" means (i) any employee of the Underwriter, of the
Adviser or of any company in a control relationship to the Underwriter
(which would include any operating company that is an affiliate or a
subsidiary of Federated
- -------------
* As the context requires, references herein to the singular include the plural
and masculine promouns include the feminine.
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Investors, Inc.), who, in connection with the employee's regular
functions or duties, makes, participates in, or obtains information
regarding the purchases or sales of a Covered Security by the Fund, or
whose functions relate to the making of any recommendations with
respect to such purchases or sales; and (ii) any natural person in a
control relationship to the Fund who obtains information concerning
recommendations made to the Fund with regard to the purchase of a
Covered Security.
(e) "Associated Procedures" means those policies, procedures and/or
statements that have been adopted by the Underwriter, the Adviser or
the Fund, and which are designed to supplement this Code and its
provisions.
(f) "Beneficial ownership" will be attributed to an Access Person in all
instances where the Access Person (i) possesses the ability to
purchase or sell the Covered Securities (or the ability to direct the
disposition of the Covered Securities); (ii) possesses voting power
(including the power to vote or to direct the voting) over such
Covered Securities; or (iii) receives any benefits substantially
equivalent to those of ownership. Beneficial ownership shall be
interpreted in the same manner as it would be in determining whether a
person is subject to the provisions of Section 16a-1(a)(2) of the
Securities Exchange Act of 1934, and the rules and regulations
thereunder, except that the determination of direct or indirect
beneficial ownership shall apply to all Covered Securities which an
Access Person has or acquires.
(g) "Control" shall have the same meaning as that set forth in Section
2(a)(9) of the 1940 Act.
(h) Except as provided in this definition, "Covered Security" shall
include any Security, including without limitation: equity and debt
securities; derivative securities, including options on and warrants
to purchase equity or debt securities; shares of closed-end investment
companies; investments in unit investment trusts; and Related
Securities. "Related Securities" are instruments and securities that
are related to, but not the same as, a Covered Security. For example,
a Related Security may be convertible into a Covered Security, or give
its holder the right to purchase the Covered Security. For purposes of
reporting, "Covered Security" shall include futures, swaps and other
derivative contracts.
"Covered Security" shall not include: direct obligations of the
Government of the United States (regardless of their maturities);
bankers' acceptances; bank certificates of deposit; commercial paper;
high quality short-term debt instruments; including repurchase
agreements; and shares of registered open-end investment companies.
(i) "Disinterested director" means a director, trustee or managing general
partner of the Fund who is not an "interested person" of the Fund
within the meaning of Section 2(a)(19) of the 1940 Act.
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(j) "Fund" means each investment company registered under the 1940 Act
(and any series or portfolios of such company) and any other account
advised by an Adviser.
(k) "Initial Public Offering" means an offering of securities registered
under the Securities Act of 1933, the issuer of which, immediately
before the registration, was not subject to the reporting requirements
of sections 13 or 15(d) of the Securities Exchange Act of 1934.
(l) "Investment Personnel" include: Access Persons with direct
responsibility and authority to make investment decisions affecting
the Fund (such as portfolio managers and chief investment officers);
Access Persons who provide information and advice to such portfolio
managers (such as securities analysts); and Access Persons who assist
in executing investment decisions for the Fund (such as traders).
(m) "Private Placement" or "limited offering" means an offering that is
exempt from registration under Section 4(2) or Section 4(6) of the
Securities Act of 1933 or pursuant to rule 504, rule 505 or rule 506
under the Securities Act of 1933.
(n) "Purchase or sale of a Covered Security" includes, INTER ALIA, the
writing of an option, future or other derivative contract to purchase
or sell a Covered Security.
(o) "Security" shall have the meaning set forth in Section 2(a)(36) of the
1940 Act.
(p) "Underwriter" means Federated Securities Corp. and Edgewood Services
Co.
3) EXEMPT TRANSACTIONS
The prohibitions or requirements of Section 4 and Section 5 of this Code
shall not apply to:
(a) Purchases or sale of the following Securities:
(i) Direct obligations of the Government of the United States
(regardless of their maturities). This exemption does not apply
to indirect obligations of the U.S. Government, including FNMAs,
GNMAs or FHLMCs.
(ii) Bankers' acceptances;
(iii) Bank certificates of deposit;
(iv) Commercial paper;
(v) High quality short-term debt instruments, including repurchase
agreements; and
(vi) Shares of registered open-end investment companies.
(b) Purchases or sales effected in any account over which the Access
Person has no direct or indirect influence or control.
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4) PROHIBITED TRANSACTIONS AND ACTIVITIES
(a) Every Access Person is prohibited from acquiring any Security
distributed in an initial public offering; however, subject to
provisions of this Code and its Associated Procedures, an Access
Person may acquire the security in the secondary market.
(b) Every Access Person is prohibited from acquiring any Security in a
private placement or other limited offering, without the express prior
approval of the Compliance Department. In instances where an
Investment Personnel, after receiving prior approval, acquires a
Security in a private placement, the Investment Personnel has an
affirmative obligation to disclose this investment to the Chief
Investment Officer (or his designee) if the Investment Personnel
participates in any subsequent consideration of any potential
investment by the Fund in the issuer of that Security. Following a
purchase by an Investment Personnel in an approved personal
transaction, any purchase by the Fund of Securities issued by the same
company (other than secondary market purchases of publicly traded
Securities) will be subject to an independent review by the Compliance
Department.
(c) Every Access Person is prohibited from executing a personal
transaction in any Covered Security on a day during which the Fund has
a pending, "buy" or "sell" order for that Covered Security, until the
Fund's orders are either executed or withdrawn.
All Investment Personnel are prohibited from purchasing or selling any
Covered Security within seven (7) days AFTER the Fund purchases or
sells the same Covered Security. Members of an Investment Personnel
Group, as defined by the Compliance Department, are prohibited from
purchasing or selling any Covered Security within seven (7) days
BEFORE any Fund advised by that group purchases or sells the same
Covered Security.
(d) Every Access Person is prohibited from profiting in the purchase and
sale, or sale and purchase, of the same (or equivalent) Covered
Security within 60 calendar days. For purposes of this prohibition,
each personal transaction in the Covered Security will begin a new 60
calendar day period. As an illustration, if an Access Person purchases
1000 shares of Omega Corporation on June 1st, 500 shares on July 1st,
and 250 shares on August 1st, the profit from the sale of the 1000
shares purchased on June 1st is prohibited for any transaction prior
to October 1st (i.e. 60 calendar days following August 1st). In
circumstances where a personal transaction in a Covered Security
within the proscribed period is involuntary (for example, due to
unforeseen corporate activity, such as a merger), the Access Person
must notify the Compliance Department.
In circumstances where an Access Person can document personal
exigencies, the Chief Compliance Officer may grant an exemption from
the prohibition of profiting in the purchase and sale, or sale and
purchase, of the same (or
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equivalent) Covered Security within 60 calendar days. Such an
exemption is wholly within the discretion of the Chief Compliance
Officer, and any request for such an exemption will be evaluated on
the basis of the facts of the particular situation.
(e) All Investment Personnel are prohibited from serving on the boards of
directors of any issuer of a Covered Security, absent express prior
authorization from the Compliance Department. Authorization to serve
on the board of such a company may be granted in instances where
Compliance Department determines that such board service would be
consistent with the interests of the Investment Company and its
shareholders. If prior approval to serve as a director of a company is
granted, Investment Personnel have an affirmative duty to recuse
themselves from participating in any deliberations by the Fund
regarding possible investments in the securities issued by the company
on whose board the Investment Personnel sit. (This shall not limit or
restrict service on the Board of Federated Investors, Inc.)
(f) Every Access Person is prohibited from purchasing or selling, directly
or indirectly, any Covered Security in which he or she has, or by
reason of such transaction acquires, a direct or indirect beneficial
ownership interest and which he or she knows, or should have known, at
the time of such purchase or sale:
(i) Is being considered for purchase or sale by the Fund; or
(ii) Is being purchased or sold by the Fund.
(g) Every Access Person is prohibited, in connection with the purchase or
sale, directly or indirectly, by the Access Person of a Security Held
or to be Acquired by the Fund:
(i) From employing any device, scheme or artifice to defraud the
Fund;
(ii) From making any untrue statement of a material fact to the Fund
or omit to state a material fact necessary in order to make the
statements made to the Fund, in light of the circumstances under
which they are made, not misleading;
(iii) From engaging in any act, practice or course of business that
operates or would operate as a fraud or deceit on the Fund; or
(iv) From engaging in any manipulative practice with respect to the
Fund.
Examples of this would include causing the Fund to purchase a Covered
Security owned by the Access Person for the purpose of supporting or
driving up the price of the Covered Security, and causing the Fund to
refrain from selling a Covered Security in an attempt to protect the
value of the Access Person's investment,
6
<PAGE>
such as an outstanding option. One test which will be applied in
determining whether this prohibition has been violated will be to
review the Covered Securities transactions of Access Persons for
patterns. However, it is important to note that a violation could
result from a single transaction if the circumstances warranted a
finding that the provisions of Section 1 of this Code have been
violated.
(h) Notwithstanding the other restrictions of this Code to which
Disinterested directors are subject, subparagraphs (a) through (d) of
this Section 4 shall not apply to Disinterested directors.
5) PRE-CLEARANCE REQUIREMENT AND EXEMPTED TRANSACTIONS
(a) Every Access Person is prohibited from executing a personal
transaction in any Covered Security (including transactions in pension
or profit-sharing plans in which the Access Person has a beneficial
interest), without express prior approval of the Compliance
Department, in accordance with the Associated Procedures governing
pre-clearance. A purchase or sale of Covered Securities not otherwise
approved pursuant to the Associated Procedures may, upon request made
prior to the personal transaction, nevertheless receive the approval
of the Compliance Department if such purchase or sale would be: only
remotely potentially harmful to the Fund; very unlikely to affect a
highly institutional market; or clearly not related economically to
the securities to be purchased, sold or held by the Fund.
Notwithstanding the receipt of express prior approval, any purchases
or sales by any Access Person undertaken in reliance on this provision
remain subject to the prohibitions enumerated in Section 4 of this
Code.
(b) The pre-clearance requirement in Section 5(a) SHALL NOT apply to:
(i) Purchases or sales which are non-volitional on the part of
either the Access Person or the Fund, subject to the provisions
of Section 4(g) of this Code.
(ii) Purchases which are either made solely with the dividend
proceeds received in a dividend reinvestment plan; or part of an
automatic payroll deduction plan, whereby an employee purchases
securities issued by an employer.
(iii) Purchases effected upon the exercise of rights issued by an
issuer PRO RATA to all holders of a class of its Covered
Securities, to the extent such rights were acquired from such
issuer, and any sales of such rights so acquired.
(iv) Purchases and sales of a Security that represents an interest in
certain indices as determined by the Compliance Department.
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<PAGE>
(v) Transactions in a Covered Security which involve the giving of
gifts or charitable donations.
(vi) Purchases and sales of Covered Securities executed by a person
deemed to be an Access Person SOLELY by reason of his position
as an Officer and/or Director or Trustee of the Fund. This
exemption does not apply to those persons who are officers
and/or Directors of an Underwriter or Adviser.
(c) Notwithstanding the other restrictions of this Code to which
Disinterested directors are subject, Section 5 shall not apply to
Disinterested directors.
6) PROHIBITION ON THE RECEIPT OF GIFTS
Every Access Person is prohibited from receiving any gift, favor,
preferential treatment, valuable consideration, or other thing of more than
a DE MINIMIS value in any year from any person or entity from, to or
through whom the Fund purchases or sells Securities, or an issuer of
Securities. For purposes of this Code, "DE MINIMIS value" is equal to $100
or less. This prohibition shall not apply to:
(i) Salaries, wages, fees or other compensation paid, or expenses
paid or reimbursed, in the usual scope of an Access Person's
employment responsibilities for the Access Person's employer;
(ii) The acceptance of meals, refreshments or entertainment of
reasonable value in the course of a meeting or other occasion,
the purpose of which is to hold bona fide business discussions;
(iii) The acceptance of advertising or promotional material of nominal
value, such as pens, pencils, note pads, key chains, calendars
and similar items;
(iv) The acceptance of gifts, meals, refreshments, or entertainment
of reasonable value that are related to commonly recognized
events or occasions, such as a promotion, new job, Christmas, or
other recognized holiday; or
(v) The acceptance of awards, from an employer to an employee, for
recognition of service and accomplishment.
7) REPORTING
Every Access Person is required to submit reports of transactions in
Covered Securities to the Compliance Department as indicated below. Any
such report may contain a statement that the report shall not be construed
as an admission by the
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<PAGE>
person making such report that he or she has any direct or indirect
beneficial ownership in the Covered Security to which the report relates.
INITIAL REPORTING REQUIREMENTS
(a) Within 10 calendar days of commencement of employment as an Access
Person, the Access Person will provide a list including;
(i) The title, number of shares and principal amount of each Covered
Security in which the Access Person had any direct or indirect
beneficial ownership when the person became an Access Person;
(ii) The name of the broker, dealer or bank maintaining an account in
which any Security was held for the direct or indirect benefit
of the Access Person as of the date of employment as an Access
Person; and
(iii) The date the report is submitted to the Compliance Department.
(b) Every Access Person is required to direct his broker to forward to the
Chief Compliance Officer (or his designee), on a timely basis,
duplicate copies of both confirmations of all personal transactions in
Covered Securities effected for any account in which such Access
Person has any direct or indirect beneficial ownership interest and
periodic statements relating to any such account.
QUARTERLY REPORTING REQUIREMENTS
(c) Every Access Report shall report the information described in Section
7(d) of this Code with respect to transactions in any Covered Security
(other than those personal transactions in Securities exempted under
Section 3 of this Code) in which such Access Person has, or by reason
of such transaction acquires, any direct or indirect beneficial
ownership.
(d) Every report shall be made not later than 10 calendar days after the
end of the calendar quarter in which the transaction to which the
report relates was effected, shall be dated and signed by the Access
Person submitting the report, and shall contain the following
information:
(i) The date of the transaction, the title and number of shares, the
principal amount, the interest rate and maturity date, if
applicable of each Covered Security involved;
(ii) The nature of the transaction (i.e. purchase, sale or any other
type of acquisition or disposition);
(iii) The price at which the transaction was effected;
9
<PAGE>
(iv) The name of the broker, dealer or bank through whom the
transaction was effected; and
(v) If there was no personal transactions in any Covered Security
during the period, either a statement to that effect or the word
"None" (or some similar designation).
(e) Every Access Person shall report any new account established with a
broker, dealer or bank in which any Security was transacted or held
for the direct or indirect benefit of the Access Person during the
quarter. The report shall include the name of the entity with whom the
account was established and the date on which it was established.
ANNUAL REPORTING REQUIREMENTS
(f) Every Access Person, on an annual basis or upon request of the
Compliance Department, will be required to furnish a list including
the following information (which information must be current as of a
date no more than 30 days before the report is submitted) within 10
calendar days of the request:
(i) The title, number of shares and principal amount of each Covered
Security in which the Access Person has any direct or indirect
beneficial ownership;
(ii) The name of the broker, dealer or bank maintaining an account in
which any Covered Security was held for the direct or indirect
benefit of the Access Person, and
(iii) The date the report is submitted to the Compliance Department.
(g) In addition, every Access Person is required, on an annual basis, to
certify that they have received, read, and understand the provisions
of this Code and its Associated Procedures, and that they recognize
that they are the subject to its provisions. Such certification shall
also include a statement that the Access Person has complied with the
requirements of this Code and its Associated Procedures and that the
Access Person has disclosed or reported all personal transactions in
Securities that are required to be disclosed or reported pursuant to
the requirements of the Code.
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EXEMPTION FOR DISINTERESTED DIRECTORS
(h) A Disinterested director is exempt from the "initial reporting
requirements" and "annual reporting requirements" contained in Section
7.
(i) A Disinterested director shall be exempt from the "quarterly reporting
requirements" contained in Section 7, so long as at the time of the
personal transaction in the Covered Security, the Disinterested
director neither knew, nor, in the ordinary course of fulfilling his
official duties as a director of the Fund, should have known that
during the 15-day period immediately preceding or after the date of
the transaction in the Covered Security by the Disinterested director
the Covered Security was purchased or sold by the Fund, or considered
for purchase or sale.
8) SANCTIONS
(a) Upon discovering a violation of this Code or its Associated
Procedures, the Compliance Department may take such actions or impose
such sanctions, if any, as it deems appropriate, including, but not
limited to:
(i) A letter of censure;
(ii) Suspension;
(iii) A fine;
(iv) The unwinding of trades;
(v) The disgorging of profits; or
(vi) The termination of the employment of the violator.
(In instances where the violation is committed by a member of the
Access Person's household, any sanction would be imposed on the Access
Person.)
(b) The filing of any false, incomplete or untimely reports, as required
by Section 7 of this Code, may be considered a violation of this Code.
(c) All material violations of this Code and any sanctions imposed with
respect thereto shall be reported to the Board of Directors of the
Fund at least annually.
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PROCEDURES FOR PRIOR APPROVAL OF PERSONAL SECURITIES
TRANSACTIONS BY ACCESS PERSONS
PROCESS
PRECLEARANCE APPROVAL USING TRADECOMPLY
(a) An Access Person (defined to include all members of the Access
Person's household) who wishes to effect a personal securities
transaction, whether a purchase, sale, or other disposition, must
preclear the Covered Security in TradeCOMPLY prior to engaging in the
transaction. [Because TradeCOMPLY does not include securities being
contemplated for purchase by the Federated Global Management portfolio
managers, Access Persons executing transactions in foreign securities
must complete additional preclearance steps. See "Preclearing Foreign
Securities".]
(b) When trading options, the Access Person must preclear the underlying
security before entering into the option contract.
(c) Based on established criteria, TradeCOMPLY determines whether the
contemplated transaction should be permitted. The primary criteria
applied is whether the Covered Security is on the Federated Equity
Watch List (which is updated weekly in TRADECOMPLY) or Open Order
lists, or whether the Covered Security was traded by any of the
Federated advised funds (fund trade information is updated nightly in
TradeCOMPLY).
(d) Approval is either granted or denied immediately in TradeCOMPLY.
(e) If approval is denied, the Access Person is given a specific reason
for the denial. The contemplated personal transaction in that Covered
Security is prohibited until prior approval is subsequently granted
upon request in TradeCOMPLY.
(f) If approval is granted, the Access Person is free to effect the
personal transaction in that Covered Security DURING THAT TRADING DAY
ONLY. In this regard, open orders for more than one trading day (good
till cancel) must be approved daily in TradeCOMPLY to comply with the
Code.
(g) All trade requests and their dispositions are maintained in
TradeCOMPLY and reviewed by the Compliance Department in conjunction
with other information provided by Access Persons in accordance with
the Code.
(h) The Compliance Department reviews all exceptions generated on
TradeCOMPLY due to a fund trade occurring after preclearance approval
has been granted. The Compliance Department determines the appropriate
action to be taken to resolve each exception.
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PRECLEARING FOREIGN SECURITIES
(i) All access persons wishing to execute a personal trade in a
foreign security must first preclear the security in TRADECOMPLY.
TradeCOMPLY will approve or deny the preclearance request based
on its knowledge of any fund activity in the security as well as
the access person's trading restrictions as defined in their
assigned compliance group. If the preclearance request in
TradeCOMPLY is denied (Red Light), then the personal trade may
not be executed. If, however, the preclearance request in
TradeCOMPLY is approved (Green Light or Yellow Light), then the
access person MUST OBTAIN A SECOND PRECLEARANCE APPROVAL from the
Federated Global trading desk prior to executing the personal
trade.
(j) The Head Trader or Senior Vice President in the New York office
will be responsible for granting or denying approval to the
SECOND preclearance request. If approval is granted, then the
personal trade may be executed by the access person. If, however,
approval is denied then the personal trade may not be executed
(even though the first approval was granted in TradeCOMPLY).
(k) If approval is granted, the following "Personal Transaction
Notification" form must be completed so that the Head Trader can
maintain a record of all preclearance requests.
(l) The Head Trader sends a copy of any completed forms, whether
approval was granted or denied, to the Compliance Department.
If extraordinary circumstances exist, an appeal may be directed to the
Chief Compliance Officer, Brian Bouda at (412) 288-8634. Appeals are
solely within the discretion of the Chief Compliance Officer.
TRANSACTIONS COVERED AND EXEMPTIONS
These procedures apply to Access Persons' personal transactions in
"Covered Security" as defined in Section 2 of the Code. A Covered
Security includes: equity and debt securities; options and warrants to
purchase equity or debt securities; shares of closed-end investment
companies; and investments in unit investment trusts.
These procedures do NOT apply to contemplated transactions in the
following instructions:
(a) Direct obligations of the Government of the United States
(regardless of their maturities). This exemption does not apply
to indirect obligations of the U.S. Government, including FNMAs,
GNMAs or FHLMCs.);
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<PAGE>
(b) Bankers' acceptances;
(c) Bank certificates of deposit;
(d) Commercial Paper;
(e) High quality short-term debt instructions, including repurchase
agreements; and
(f) Shares of registered open-ended investment companies.
In addition, these procedures do NOT apply to the following
transactions:
(g) Purchases or sales effected in any account over which the Access
Person has no direct or indirect influence or control;
(h) Purchases or sales which are non-volitional on the part of either
the Access Person or the Fund, subject to the provisions of the
Code;
(i) Purchases which are either: made solely with the dividend
proceeds received in a dividend reinvestment plan; or part of an
automatic payroll deduction plan, whereby an employee purchases
securities issued by an employer; and
(j) Purchases effected upon the exercise of rights issued by an
issuer PRO RATA to all holders of a class of its Securities, to
the extent such rights were acquired from such issuer, and any
sales of such rights so acquired.
(k) Purchases and sales of a Security that represents an interest in
certain indices as determined by the Compliance Department.
(l) Transactions in a Covered Security which involve the giving of
gifts or charitable donations.
(m) Purchases and sales of Covered Securities executed by a person
deemed to be an Access Person SOLELY by reason of his position as
an Officer and/or Director or Trustee of the Fund. This exemption
does not apply to those persons who are Officers and/or Directors
of an Underwriter or Adviser.
SANCTIONS
Failure to comply with the preclearance process may result in any of
the following sanctions being imposed as deemed appropriate by the
Compliance Department:
(i) A letter of censure;
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<PAGE>
(ii) Suspension;
(iii) A fine;
(iv) The unwinding of trades;
(v) The disgorging of profits; or
(vi) The termination of the employment of the violator.
(In instances where the violation is committed by a member of the
Access Person's household, any sanction would be imposed on the
Access Person.)
15
<PAGE>
PERSONAL TRANSACTION NOTIFICATION
I, _________________________________________ intend to buy/sell shares of
____________________________________________________ for my personal account or
an account for which I have discretion. I am aware of no conflict this
transaction may pose with any mutual fund managed by Federated Investors or
Federated Global Research.
Signed by:________________________
Date ________________________
Acknowledged by:__________________
(Head Trader or Sr. VP)
16
<PAGE>
Date
Broker-Dealer Name
Address
Re: Your Name
Brokerage Account Number: 1234-5678
Dear Sir/Madam:
As a (n) [employee] [relative residing in the household of an employee] of
Federated Investors, I am subject to certain requirements applicable to my
personal securities transactions, in accordance with the Codes of Ethics adopted
by the various investment companies, investment advisers and broker/dealers
affiliated with Federated Investors. These requirements also assist Federated
Investors in carrying out its responsibilities under the Insider Trading and
Security Fraud Enforcement Act of 1988. Among these requirements is my
obligation to provide to Federated Investors duplicate brokerage confirmations
and account statements.
Therefore, I hereby request that you provide duplicate confirmations and account
statements with respect to securities in which I have any beneficial ownership
or interest, including securities held in street name or in house, family, joint
or partnership accounts. These duplicate account memoranda should occur with
respect to all transactions including, but not limited to, those involving
options, warrants, shares of closed end investment companies and futures
contracts. Please forward this information to:
Brian P. Bouda
Chief Compliance Officer
Federated Investors, Inc.
Federated Investors Tower
Pittsburgh, PA 15222-3779
Any questions concerning these matters can be directed to Lisa Ling at (412)
288-6399. Your serious attention to this matter is greatly appreciated.
Sincerely,
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<PAGE>
PROCEDURES FOR THE REPORTING AND REVIEW OF PERSONAL
TRANSACTION ACTIVITY
INITIAL REPORTING PROCESS
1. A member of the Compliance Department meets with each new Access Person and
reviews the Code of Ethics, the Insider Trading Policy and the procedures
for preclearing personal securities transactions through TradeCOMPLY.
2. The Access Person is required to complete the "Certification and
Acknowledgement Form" to acknowledge his/her understanding of the Code of
Ethics and return it to the designated Compliance Assistant within 10
calendar days.
3. In addition, the Access Person is required to complete the "Personal
Security Portfolio Form" which includes the following information:
(a) The title, number of shares and principal amount of each Covered
Security in which the Access Person had any direct or indirect
beneficial ownership when the person became an Access Person;
(b) The name and address of any broker, dealer or bank with whom the
Access Person maintained an account in which any Covered Security was
held for the direct or indirect benefit of the Access Person as of the
date of employment as an Access Person; and
(c) The date the report is submitted to the Compliance Department.
4. A separate form must be completed for the Access Person and all household
members as defined in Section 2(c) of the Code. The signed form(s) must be
returned to the Compliance Department within 10 calendar days.
5. A member of the Compliance Department inputs current portfolio holdings
information into TradeCOMPLY as "initial" holdings.
6. The Compliance Department notifies each broker, dealer or bank that
duplicate confirmations and statements for the Access Person and household
members, if applicable, must be sent to Brian P. Bouda, Chief Compliance
Officer, effective immediately.
18
<PAGE>
QUARTERLY REPORTING PROCESS
1. On the first business day after each calendar quarter end, the Compliance
Assistant sends an e-mail to each Access Person giving step-by-step
instructions on how to complete the quarterly reporting requirements using
TradeCOMPLY.
2. Within 10 calendar days of the quarter end, the Access Person is required
to:
(a) Review for accuracy all Covered Security transactions recorded during
the previous calendar quarter in all personal and household members
accounts;
(b) Review all open account information, including names of brokers, banks
and dealers, addresses and account numbers;
(c) Notify the Compliance Department of any new accounts established with
brokers, banks or dealers during the quarter and the date the account
was established;
(d) Resolve any discrepancies with the Compliance Department;
(e) Record an electronic signature on TradeCOMPLY.
3. Covered Security transactions executed by an Access Person during the
calendar quarter are reviewed by Lisa Ling, Compliance Officer,
periodically throughout the quarter using the Compliance Monitor function
in TradeCOMPLY.
4. The Compliance Department issues memos to each Access Person if any
transactions he or she has executed during the quarter have been deemed to
be either exceptions to or violations of the Code's requirements.
5. Based on the activity and the responses to the memos, the Compliance
Department may impose any of the sanctions identified in Section 8.
19
<PAGE>
ANNUAL REPORTING PROCESS
1. At least annually, the Compliance Department requires that each Access
Person read the Code and certify and acknowledge his/her understanding of
the Code and its requirements.
2. This re-certification is required to be completed within 10 calendar days
of the request. The Compliance Department monitors compliance with this
requirement through the electronic signatures on TradeCOMPLY.
3. At the same time, the Compliance Department provides each Access Person
with a current list of securities held in the Access Person's account(s) on
TradeCOMPLY.
4. Within 10 calendar days of this request, the Access Person is required to:
(a) Review for accuracy all securities held in all personal and household
member accounts, including the title, number of shares and principal
amount of each Covered Security in which the Access Person had any
direct or indirect beneficial ownership;
(b) Review all open account information, including names of brokers, banks
and dealers, addresses and account numbers;
(c) Notify the Compliance Department of any new accounts established with
brokers, banks or dealers;
(d) Resolve any discrepancies with the Compliance Department;
(e) Record an electronic signature on TradeCOMPLY.
REPORTING TO THE BOARD OF DIRECTORS
1. Each quarter, the Compliance Department reports any violations of the Code
to the Board of Directors. Violations of the Code include:
(a) Failure to preclear a transaction;
(b) Failure to complete the initial, quarterly or annual reporting
requirements timely, regardless of whether the Access Person executed
any transactions;
(c) Recognition of a profit on the sale of a security held less than 60
days;
(d) Failure to comply with the receipt of gifts requirements; and
(e) Any trends or patterns of personal securities trading which are deemed
by the Compliance Department to be violations of the Code.
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<PAGE>
2. The Compliance Department provides the Board with the name of the Access
Person; the type of violation; the details of the transaction(s); and the
types of sanctions imposed, if any.
RECORDKEEPING REQUIREMENTS
The Compliance Department maintains the following books and records in
TradeCOMPLY for a period no less than 6 calendar years:
(a) A copy of the Code of Ethics;
(b) A record of any violation of the Code of Ethics and any action taken as a
result of the violation;
(c) A copy of each report made by an Access Person, including initial,
quarterly and annual reporting;
(d) A record of all Access Persons (current and for the past five years);
(e) A record of persons responsible for reviewing reports; and
(f) A copy of any supporting documentation used in making decisions regarding
action taken by the Compliance Department with respect to personal
securities trading.
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- --------------------------------------------------------------------------------
POLICIES AND g GE ASSET LEGAL OPERATION NUMBER
PROCEDURES MANAGEMENT 10.4J
- --------------------------------------------------------------------------------
Code of Ethics: Issued by: Executive Vice President,
General Counsel & Secretary
INSIDER TRADING AND -------------------------------------
SECURITIES TRANSACTIONS EFFECTIVE DATE: MARCH 15, 1999
- --------------------------------------------------------------------------------
I. NEED FOR POLICY
GE Asset Management (GEAM) is committed to ensuring compliance with all
laws and General Electric Company (GE or the Company) Policy 20.13, Insider
Trading and Stock Tipping. In addition, as registered investment advisers,
GEAM and their employees have additional ethical and legal obligations
which must be fulfilled in order to maintain the confidence and trust of
our clients and to protect the assets entrusted to us.
The purpose of this Policy is to state the Company's requirement that all
employees comply fully with the laws prohibiting insider trading and
tipping, and to set forth additional requirements and guidelines relating
to employee's personal securities transactions. This Policy is designed to
avoid even the appearance of impropriety, but is not, however, intended to
set legal standards or to result in the imposition of criminal liability,
or civil liability to third parties, that would not otherwise exist in the
absence of the Policy.
II. PENALTIES FOR VIOLATION
Disciplinary action, up to and including discharge, may be taken against
employees who violate this policy. Violation of the laws prohibiting
insider trading and tipping could both damage GEAM's reputation and subject
the Company, as a "controlling person under applicable securities laws, to
significant civil liability and fines. Additionally, employees violating
the laws could face individual criminal penalties.
III. INSIDER TRADING, TIPPING AND CONFIDENTIAL INFORMATION
It is the policy of GEAM that employees:
o Must not buy, sell or recommend or suggest that anyone else buy, sell,
or retain, the securities of any company (including GE) while in
possession of inside information regarding such company. This
prohibition on insider trading applies not only to your personal
transactions, but also bars trading for client accounts when in
possession of insider information.
o Must not disclose inside information to anyone, inside or outside GEAM
(including family members), except to those who have a need to know
such information in order for GEAM to carry on its business properly
and effectively. Also, any permitted disclosure may only be made under
circumstances which make it reasonable to believe that the information
will not be misused or improperly disclosed by the recipient.
o Must use GEAM's confidential information solely for legitimate Company
purposes and must not improperly disclose such information.
o Must use and protect all confidential information received from others
strictly in accordance with the terms of the express or implied
agreement or understanding under which the information was received
and with at least the same degree of care that would be applied to
comparable GEAM confidential information.
PAGE 1 OF 9
<PAGE>
- --------------------------------------------------------------------------------
Code of Ethics: Issued by: Executive Vice President,
General Counsel & Secretary
g INSIDER TRADING AND ----------------------------------------------
SECURITIES TRANSACTIONS EFFECTIVE DATE: MARCH 15, 1999 NUMBER
10.4
- --------------------------------------------------------------------------------
o If an employee believes that they have come into possession of inside
information, it is recommended that they promptly discuss this
information with GEAM's General Counsel or other available member of
the GEAM Legal Operation. It will be the responsibility of the Legal
Operation to safeguard the confidentiality of this information and
determine any appropriate action, such as restricting trading in
effected securities, which needs to be taken.
IV. REQUIREMENTS FOR EMPLOYEES' SECURITIES TRANSACTIONS
GEAM employees are permitted to invest for their own account, provided that
such investment activity must always comply with applicable laws and
regulations, and must be carried out in a manner consistent with GEAM's
policy. In addition, personal securities transactions must avoid even the
appearance of conflict of interest. The procedures and guidelines which
follow set forth reporting obligations and additional rules of conduct
which must be adhered to by GEAM's employees working in GEAM's office
facilities and any other persons who may be determined by the management of
GEAM to have potential access to current portfolio trading information
(i.e., knowledge of a purchase or sale of a security within 15 days
following its occurrence and/or knowledge of an intent to make a purchase
or sale of a security within 15 days prior to its occurrence).
PRE-CLEARANCE AND REPORTING OF PERSONAL SECURITIES TRANSACTIONS AND OTHER
RULES UNDER THIS POLICY DO NOT RELIEVE EMPLOYEES FROM RESPONSIBILITY FOR
COMPLIANCE WITH THE PROSCRIPTIONS AGAINST INSIDER TRADING AD TIPPING SET
FORTH ABOVE.
All requirements of this policy pertain to each employee's transactions AND
transactions of associated accounts ( Section IV (B) ).
IV. (A) CENTRALIZED BROKER/REPORTING REQUIREMENT
1. All employees are required to use a centralized broker designated by
GEAM. This requirement also applies to Associated Accounts. An
employee may request an exemption to this rule from the compliance
Department if special circumstances exist. All employees must
authorize the centralized broker to provide duplicate confirmations
and monthly statements to the Compliance Officer.
2. Duplicate confirmations and monthly statements are required for exempt
accounts, which are to be mailed directly to the Compliance Officer by
the broker.
3. Duplicate confirmations and monthly statements are required for all
other investments account not held with the centralized broker,
including dividend reinvestment plans (DRIP's), and "blind" managed
accounts.
4. Unaffiliated open-end mutual funds shares are exempt from
pre-clearance and reporting.
PAGE 2 OF 9
<PAGE>
- --------------------------------------------------------------------------------
Code of Ethics: Issued by: Executive Vice President,
General Counsel & Secretary
g INSIDER TRADING AND ----------------------------------------------
SECURITIES TRANSACTIONS EFFECTIVE DATE: MARCH 15, 1999 NUMBER
10.4
- --------------------------------------------------------------------------------
IV. (B) TRADING AND PRE-CLEARANCE REQUIREMENTS (SUMMARY GUIDELINES AND
CHECKLIST - SCHEDULE A ATTACHED)
1. All employees must receive pre-clearance from the GEAM Trading Room
IMMEDIATELY-PRIOR to engaging in a transaction involving any publicly
traded equity security (or any options or futures relating to such a
security). Pre-clearance must be obtained by receiving an approval log
number and may be obtained by e-mail. If clearance is not given, the
employee must NOT proceed with the transaction. The fact that
clearance is denied should be considered confidential information and
must not be disclosed.
2. All GEAM Employees are prohibited from investing in non-public
securities without the proper approval of the EVP of Private
Placements. Private Placement employees must receive pre-clearance
from the EVP of Private Placements IMMEDIATELY PRIOR to engaging in
any transaction in a PUBLICLY TRADED SECURITY in GEAM's Private
Placements Portfolio or a security being considered as an addition to
the Private Placement Portfolio, IN ADDITION TO PRE-CLEARANCE WITH THE
TRADING ROOM.
3. Transactions in fixed income securities must be cleared by an
appropriate department portfolio manager (i.e. Taxable, Tax-Exempt)
IMMEDIATELY PRIOR to engaging in a transaction. A pre-clearance log
number may be obtained in person or by calling the department. If
clearance is not given, the employee must NOT proceed with the
transaction. The fact that clearance is denied should be considered
confidential information and must not be disclosed.
4. Employees must provide the ticker, security name, and type of order
(market, limit, buy/sell) to the Trading Room and Clearing Managers.
Clearance will not be granted if there is a pending buy or sell order
for a managed account.
5. Transactions not effected the day clearance is granted must be
re-cleared. Clearance expires 24 hours after clearance is granted or
at the end of the business day on the Monday following a Friday
request.
6. All transactions for the employee, his/her spouse, minor child, other
household members, accounts subject to your discretion and control
(e.g. custodial and trust accounts), other accounts in which you have
a beneficial interest and ability to influence transactions (e.g.
joint accounts, co-trustee accounts, partnerships, investment clubs,
associated accounts) must be pre-cleared in accordance with this
policy.
7. Employees are prohibited from participation in initial public
offerings (IPO's). Any purchases of new issues are allowed only in the
secondary markets.
8. Any employee directly participating in the decision or recommendation
to buy, sell, or retain a particular security must disclose to the
appropriate Executive Vice President any direct or indirect personal
ownership of the security or any affiliation (including any
directorships) with the issues which is the subject of the decision or
recommendation.
PAGE 3 OF 9
<PAGE>
- --------------------------------------------------------------------------------
Code of Ethics: Issued by: Executive Vice President,
General Counsel & Secretary
g INSIDER TRADING AND ----------------------------------------------
SECURITIES TRANSACTIONS EFFECTIVE DATE: MARCH 15, 1999 NUMBER
10.4
- --------------------------------------------------------------------------------
9. No analyst or portfolio manager may buy or sell a security for his/her
own account within 7 calendar days before or after all transactions
for his/her assigned accounts have been completed for that security.
The client's interests must always take precedence even if it requires
the employee to delay taking action and suffer financial loss.
10. Portfolio managers are required to notify their managers in advance of
any personal transactions in excess of $25,000 or Yen equivalent in
any registered investment company or investment trust over which they
have discretionary trading authority. Mangers will maintain a written
record of such notification.
11. Orders placed with the Trading Room should be treated with the highest
degree of confidentially. Such orders should not be discussed with
anyone until they have been filled.
12. All information received by an employee as a result of the employee's
employment with GEAM is received in trust for GEAM's clients. Subject
to the restriction on insider trading and tipping, and any
requirements to keep such information confidential, it is the
obligation of the employee to make such information known to other
analysts and portfolio managers whose accounts might be interested in
such information and not to misappropriate such information for the
employee's own financial benefit.
13. Particular attention should be paid to transactions in thinly traded
issues where even small transactions for an employee's account might
affect the market. A similar concern attaches to trading in derivative
securities (options, futures, convertible bonds, etc.) where only a
small movement in a security's price may be significant due to
leverage.
14. In order to avoid the appearance of opportunistic trading in front of
transactions for GEAM accounts, employees should seek to avoid
day-trades and should be prepared to hold investments for a
significant interval. Employees shall not profit from the purchase and
sale of the same (or equivalent) securities within 60 calendar days.
15. No employee may solicit or accept any offer made by any person if as a
result the employee would be able to purchase or sell any security at
a price or under conditions more favorable than those offered to
GEAM's clients.
16. Employees are prohibited from selling any security short, except that
short sales may be made "against the box" (the individual already owns
the stock) for tax or hedging purposes WITH THE APPROVAL OF THE
APPROPRIATE EXECUTIVE VICE PRESIDENT.
17. Although GEAM employees may conduct trading for their own account
within the limits of the policy, trading during working hours should
be limited. Extensive trading that my affect on-the job performance
may be considered a violation of this policy and GEAM reserve the
right to restrict trading in such circumstances. In addition, GEAM
reserve the right to prohibit employees from trading in certain
securities or markets.
PAGE 4 OF 9
<PAGE>
- --------------------------------------------------------------------------------
Code of Ethics: Issued by: Executive Vice President,
General Counsel & Secretary
g INSIDER TRADING AND ----------------------------------------------
SECURITIES TRANSACTIONS EFFECTIVE DATE: MARCH 15, 1999 NUMBER
10.4
- --------------------------------------------------------------------------------
IV. (C) TRANSACTIONS EXEMPT FROM PRE-CLEARANCE
The following transactions are not subject to the pre-clearance procedures:
o All open-end mutual fund shares
o Direct Obligations of the Japanese Government Securities, Postal
Deposits and other Japanese savings vehicles
o GE Interest Plus
o Dividend Re-Investment Programs
o "Blind" Managed Accounts
o GE S&S Program Transactions [401 (k) Plan]:
Contributions: Payroll deductions
Changes in contribution percentages
Changes in investment vehicle direction or percentages
Investment vehicle switches (transfers)
All Loan Activity
All Withdrawals
V. RESPONSIBILITY
1. The provisions of this Policy must be strictly observed by all
employees. An employee's actions with respect to matters governed by
this Policy are significant indications of the individual's judgement,
ethics, and competence.
2. Any actions in violation of this Policy will constitute an important
element in the evaluation of the employee for retention, assignment,
and promotion.
3. Violations of this Policy will be grounds for appropriate disciplinary
action. Disciplinary action may include disgorging of profits,
liquidation of holdings, suspension of trading privileges, and
discharge.
4. All Managers are required to take appropriate measures to ensure that
their employees understand and comply with this Policy. Managers shall
maintain educational programs, with the assistance of the Legal and
Compliance Operations, to familiarize employees with laws and
regulations governing insider trading or tipping, and the terms of the
policy statement.
5. All employees shall acknowledge in writing, when first assigned to
GEAM and annually thereafter, their commitment to comply with this
Policy.
PAGE 5 OF 9
<PAGE>
- --------------------------------------------------------------------------------
Code of Ethics: Issued by: Executive Vice President,
General Counsel & Secretary
g INSIDER TRADING AND ----------------------------------------------
SECURITIES TRANSACTIONS EFFECTIVE DATE: MARCH 15, 1999 NUMBER
10.4
- --------------------------------------------------------------------------------
6. The Legal Operation and Finance and Administration shall be
responsible for the interpretation and enforcement of this Policy.
Employees with questions concerning whether conduct is consistent with
the mandates of this Policy shall consult the Legal Operation prior to
engaging in such conduct. Employees who believe any other employee is
engaged in conduct prohibited by this Policy, or that any other person
or firm representing GEAM is engaged in such conduct, will promptly
report such information to the appropriate level of management and the
Legal Operation. The Legal Operation in consultation with Finance and
Administration will promptly investigate the matter and take timely
and appropriate action.
7. Upon request, employees shall submit copies of brokerage account
statements, confirmations, and other related materials with respect to
their personal and associated accounts to be used to audit compliance
with these reporting and clearance procedures and with the
proscriptions against insider trading and tipping set forth above.
VI DEFINITIONS
For purposes of this Policy:
o "INSIDE INFORMATION" means non-public information (i.e.
information which is not available to investors generally) that a
reasonable investor would consider to be important in deciding
whether to buy, sell or retain a security (e.g., stock; bond;
option) including, for example, nonpublic information relating to
a pending merger, acquisition, disposition, joint venture,
contract award or termination, major lawsuit or claim, earnings
announcement or change in dividend policy, significant product
development, or the gain or loss of a significant customer or
supplier. Any non-public information may be inside information
regardless or whether it is developed internally or obtained from
others (e.g., the issuer, current or prospective customers,
suppliers or business partners) and whether it relates to GE or
any other company or entity. Information is still considered
non-public until the market has had a reasonable time after
public announcement to assimilate and react to the information.
o "CONFIDENTIAL INFORMATION" means any non-public information
concerning GEAM's activities or developed by GEAM or received by
GEAM under an express or implied agreement or understanding that
the information will be treated in confidence or used only for a
limited purpose, regardless of whether or not it would be
considered to be important by investors. Examples of confidential
information include stocks recommended for purchase or sale for
client accounts, details of financial transactions, and identity
and terms of customer accounts.
o "ASSOCIATED ACCOUNT" - The provisions of this Policy apply to
transactions in any personal account or "associated account".
"Associated account" means securities and futures accounts of the
employee's (i) spouse, (ii) minor children, (iii) other household
members (iv) any other accounts subject to an employees'
discretion or control (e.g. custodial and trust accounts, etc.),
and (v) any other accounts in which the employee has a beneficial
interest and a substantial ability to influence transactions
(e.g. joint accounts, co-trustee accounts, partnerships,
investment clubs).
PAGE 6 OF 9
<PAGE>
- --------------------------------------------------------------------------------
Code of Ethics: Issued by: Executive Vice President,
General Counsel & Secretary
g INSIDER TRADING AND ----------------------------------------------
SECURITIES TRANSACTIONS EFFECTIVE DATE: MARCH 15, 1999 NUMBER
10.4
- --------------------------------------------------------------------------------
VII OMBUDSPERSON
To report possible violations of laws, regulations, or Company policies,
you may also write to the General Electric Corporate Ombudsperson at 3135
Easton Turnpike, Fairfield, CT 06431 or call 1-800-227-5003.
PAGE 7 OF 9
<PAGE>
- --------------------------------------------------------------------------------
Code of Ethics: Issued by: Executive Vice President,
General Counsel & Secretary
g INSIDER TRADING AND ----------------------------------------------
SECURITIES TRANSACTIONS EFFECTIVE DATE: MARCH 15, 1999 NUMBER
10.4
- --------------------------------------------------------------------------------
GE ASSET MANAGEMENT
PERSONAL TRADING GUIDELINES
WHO NEEDS TO COMPLY:
o All GEAM employees and household members for all accounts they have
discretion over (their own account and accounts they control for
others)
WHAT IS COVERED BY POLICY:
o All STOCK, BOND, & DERIVATIVES Transactions (excluding direct
obligations of the U.S. or Japanese Gov't)
o GE Stock including options (other than GE Savings & Security)
WHAT IS NOT COVERED BY POLICY 10.4:
o Any Mutual Funds (except portfolio manager transactions in the funds
they manage)
o GE Savings & Security (i.e., switching, withdrawal & loans)
o Accounts in your name managed by others, in which you have NO
investment discretion ("Blind" managed accounts)
REQUIREMENTS:
o Do not trade on "inside" information
o Pre-clear all transactions
o Use Centralized Brokers
o No IPO's
o Hold securities for 60 days
SPECIAL REQUIREMENT FOR:
Portfolio Manager (including analysts)
o Do not trade in same security within 7 days of personal & business
portfolio
o Discuss and document personal transactions over $25,000 with your
manager PRIOR to executing in the mutual funds you manage
Private Placement Employees
o ADDITIONAL pre-clearance required by EVP-Private Placements (Don
Torey)
THIS IS MEANT AS A SUMMARY ONLY.
PLEASE REFER TO THE COMPLETE POLICY 10.4 FOR FURTHER EXPLANATION OF THE POLICY.
ANY QUESTIONS CALL
NORA MACHATA (X-2080) OR ALAN LEWIS (X-2313)
PAGE 8 OF 9
<PAGE>
- --------------------------------------------------------------------------------
Code of Ethics: Issued by: Executive Vice President,
General Counsel & Secretary
g INSIDER TRADING AND ----------------------------------------------
SECURITIES TRANSACTIONS EFFECTIVE DATE: MARCH 15, 1999 NUMBER
10.4
- --------------------------------------------------------------------------------
PERSONAL TRADING CHECKLIST
<TABLE>
<CAPTION>
EQUITY TRADES TAXABLE BOND TRADES
------------- -------------------
<S> <C> <C> <C>
o Call or e-mail the equity trading room (203 o Call Bob MacDougal (203-326-2387) to
-326-2420) and ask for pre-clearance. If they request pre-clearance. If Bob is not
do not grant pre-clearance, proceed no further. available call Kathy Brooks (203-326-2388).
If pre-clearance is not granted, proceed no
o If pre-clearance is granted, they will issue further.
a log number.
o If pre-clearance is granted, he/she will
o Execute the trade. issue a log number.
o Hold the security for a minimum of 60 days. o Execute the trade.
o Do not trade the security in your GEAM o Hold the security for a minimum of 60 days.
portfolio within 7 days of your personal trade.*
o Do not trade the security in your GEAM
portfolio within 7 days of your personal
trade.*
</TABLE>
PRIVATE PLACEMENTS PERSONNEL
----------------------------
o Call Don Torey (203-326-4060) to request
pre-clearance. If Don is not available call
Mike Pastore (203-326-2312). If pre-clearance
is not granted, proceed no further.
o If pre-clearance is granted, he will issue a log number.
o Call or e-mail the trading room for an equity trade.
MUTUAL FUNDS, GE SAVINGS & SECURITY AND "BLIND" MANAGED ACCOUNTS DO NOT
REQUIRE PRECLEARANCE
* Consult department head if changed circumstances make trade for GEAM
portfolio appropriate in less than 7 days.
PAGE 9 OF 9
<PAGE>
GOLDMAN SACHS TRUST
(on behalf of Fixed Income and Equity Funds)
GOLDMAN SACHS VARIABLE INSURANCE TRUST
CODE OF ETHICS
April 23, 1997
as amended October 21, 1997
While affirming its confidence in the integrity and good faith of all of
its officers and Trustees, each of Goldman Sachs Trust ("GST") and Goldman Sachs
Variable Insurance Trust ("VIT" -- each of GST and VIT are referred to herein as
the "Trust") recognizes that the knowledge of present or future portfolio
transactions and, in certain instances, the power to influence portfolio
transactions which may be possessed by certain of its officers and Trustees
could place such individuals, if they engage in personal securities
transactions, in a position where their personal interest may conflict with that
of the Trust. In view of the foregoing and of the provisions of Rule 17j-1(b)(1)
under the Investment Company Act of 1940, as amended (the "Investment Company
Act"), the Trust has adopted this Code of Ethics to specify and prohibit certain
types of personal securities transactions deemed to create conflicts of interest
and to establish reporting requirements and enforcement procedures.
This Code is divided into five parts. The first part contains provisions
applicable to access persons of the Trust who are also access persons of Goldman
Sachs Asset Management ("GSAM"), Goldman Sachs Funds Management, L.P. ("GSFM")
or Goldman Sachs Asset Management International ("GSAMI") (collectively referred
to herein as the "Advisers"); the second contains certain general provisions;
the third pertains to trustees who are not "interested persons" of the Advisers
or the Trust; the fourth pertains to "interested trustees" who are access
persons of the Trust but not access persons of the Advisers; and the fifth
contains record-keeping and other provisions. Each Adviser imposes stringent
reporting requirements and restrictions on the personal securities transactions
of its access persons. The Trust has determined that the high standards of
ethics in the area of personal investing which have been established by each
Adviser may without change, be appropriately applied by the Trust to those
access persons of the Trust who are also access persons of the Advisers. Such
persons may have frequent opportunities for knowledge of and, in some cases,
influence over, Trust portfolio transactions. In the experience of the Trust,
interested trustees who are not access persons of the Advisers and trustees who
are not "interested persons" have comparatively less current knowledge and
considerably less influence over specific purchases and sales of securities by
the Trust. Therefore, this Code contains separate provisions applicable to such
trustees.
DEFINITIONS.
- -----------
As used herein, the following terms shall have the following meanings:
(1) "Access person" with respect to the Trust shall mean any Trustee,
officer or advisory person of the Trust. "Access person" with
respect to GSAM shall mean (because GSAM is a separate operating
division of Goldman, Sachs & Co. and Goldman Sachs & Co. is
primarily engaged in a business other than advising registered
investment companies or other advisory clients) only those
general partners, officers or advisory persons of GSAM who make
recommendations or participate in the determination of which
recommendations shall be made to the Trust, or whose principal
function or duties relate to the determination of which
recommendations shall be made to the Trust, or who, in connection
with their duties, obtain any information concerning such
recommendations which are being made to the Trust. "Access
person" with respect to GSAMI and GSFM shall mean any director,
officer, general partner or advisory person of GSAMI or GSFM, as
<PAGE>
the case may be.
(2) "Advisory person" shall mean (i) any officer or employee of the
Trust or the Adviser (or any company in a control relationship to
the Trust or the Adviser), as the case may be, who, in connection
with his or her regular functions or duties, makes, participates
in, or obtains information regarding, the purchase or sale of a
security by the Trust, or whose functions relate to the making of
any recommendations with respect to such purchases or sales and
(ii) every natural person in a control relationship to the Trust
or the Adviser, as the case may be, who obtains information
concerning recommendations made on behalf of the Trust with
regard to the purchase or sale of a security.
(3) "Beneficial ownership" of a security shall be interpreted to
include any person who, directly or indirectly, through any
contract, arrangement, understanding, relationship, or otherwise
has or shares a direct or indirect pecuniary interest in the
security. The term "pecuniary interest" with respect to any
security shall mean the opportunity, directly or indirectly, to
profit or share in any profit derived from a transaction in the
subject securities.
(4) A security is being "considered" for purchase or sale by the
Trust when a recommendation to purchase or sell a security has
been made and communicated and, with respect to the person making
the recommendation, when such person seriously considers making
such a recommendation.
(5) "Control" shall have the same meaning as that set forth in
Section 2(a)(9) of the Investment Company Act. Section 2(a)(9)
generally provides that "control" means the power to exercise a
controlling influence over the management or policies of a
company, unless such power is solely the result of an official
position with such company.
(6) "Disinterested trustee" means a trustee of the Trust who is not
an "interested person" of the Trust within the meaning of Section
2(a)(19) of the Investment Company Act.
(7) "Review Officer" shall mean the officer of the Trust or an
Adviser designated from time to time to receive and review
reports of purchases and sales by access persons. The term
"Alternative Review Officer" shall mean the officer of the Trust
or an Adviser designated from time to time to receive and review
reports of purchases and sales by the Review Officer, and who
shall act in all respects in the manner prescribed herein for the
Review Officer. It is recognized that a different Review Officer
and Alternative Review Officer may be designated with respect to
GST, VIT and each of the Advisers.
(8) "Purchase or sale of a security" includes, among other things,
the writing of an option to purchase or sell a security.
(9) "Security" shall have the same meaning as that set forth in
Section 2(a)(36)
2
<PAGE>
of the Investment Company Act (in effect, all securities), except
that it shall not include securities issued by the Government of
the United States or an agency thereof within the meaning of
Section 2(a)(16) of the Investment Company Act, bankers'
acceptances, bank certificates of deposit, commercial paper,
shares of registered open-end investment companies (including the
Trust) and options on broad based market indices.
I. RULES APPLICABLE TO ACCESS PERSONS OF THE TRUST WHO ARE ALSO ACCESS PERSONS
OF THE ADVISERS
A. INCORPORATION OF ADVISERS' CODES OF ETHICS.
(1) The provisions of the Advisers' Code of Ethics, which is attached
as Appendix A hereto, are hereby incorporated herein by reference
as the Trust's Code of Ethics applicable to access persons of the
Trust who are also access persons of an Adviser, except as
provided in Section I-B hereof.
(2) A violation of the Advisers' Code of Ethics shall constitute a
violation of this Code.
B. REPORTS.
(1) Access persons of the Advisers shall file the confidential
quarterly reports required under the Advisers' Code of Ethics
with the Review Officer and the Review Officer shall submit
confidential quarterly reports with respect to his/her personal
securities transactions to the Alternative Review Officer.
(2) With respect to access persons of an Adviser, reports shall be
deemed made with respect to any account where that person has
made provision for transmittal of all daily trading information
regarding the account to be delivered to the designated Review
Officer for his or her review.
(3) A report filed with the Review Officer (or, in the case of a
report of the Review Officer, with the Alternative Review
Officer) shall be deemed to be filed with the Trust.
II. GENERAL
A. LEGAL REQUIREMENTS. Section 17(j) of the Investment Company Act
provides, among other things, that it is unlawful for any access
person of the Trust, including interested and disinterested trustees,
among others, to engage in any act, practice or course of business in
connection with the purchase or sale, directly or indirectly, by such
access person of any security held or to be acquired by the Trust in
contravention of such rules and regulations as the Securities and
Exchange Commission (the "Commission") may adopt to define and
prescribe means reasonably necessary to prevent such acts, practices
or courses of business as are fraudulent, deceptive or manipulative.
Pursuant to Section 17(j), the Commission has adopted Rule 17j-1 which
provides, among other things, that it is unlawful for any access
person of the Trust in connection with the purchase or sale, directly
or indirectly, by such person of a security held or to be acquired by
the Trust:
3
<PAGE>
(1) To employ any device, scheme or artifice to defraud the Trust;
(2) To make to the Trust any untrue statement of a material fact or
omit to state to the Trust a material fact necessary in order to
make the statement made, in light of the circumstances under
which they were made, not misleading;
(3) To engage in any act, practice or course of business which
operates or would operate as a fraud or deceit upon the Trust; or
(4) To engage in any manipulative practice with respect to the Trust.
B. STATEMENT OF POLICY. It is the policy of the Trust that no access
person shall engage in any act, practice or course of conduct that
would violate the provisions of Rule 17j-1. The fundamental position
of the Trust is, and has been, that each access person shall place at
all times the interests of the Trust and its shareholders first in
conducting private securities transactions. Accordingly, private
securities transactions by access persons of the Trust must be
conducted in a manner consistent with this Code and so as to avoid any
actual or potential conflict of interest or any abuse of a access
person's position of trust and responsibility. Further, access persons
should not take inappropriate advantage of their positions with or
relationship to the Trust.
Without limiting in any manner the fiduciary duty owed by access
persons to the Trust or the provisions of this Code, it should be
noted that the Trust considers it proper that purchases and sales be
made by its access persons in the marketplace of securities owned by
the Trust; provided, however, that such personal securities
transactions comply with the spirit of, and the specific restrictions
and limitations set forth in, this Code. In making personal investment
decisions with respect to any security, extreme care must be exercised
by access persons to ensure that the prohibitions of this Code are not
violated. It bears emphasis that technical compliance with the
procedures, prohibitions and limitations of this Code will not
automatically insulate from scrutiny personal securities transactions
by an access person which show a pattern of abuse of his or her
fiduciary duty to the Trust.
C. EXEMPTED TRANSACTIONS.
The Statement of Policy set forth above shall be deemed not to be
violated by and the prohibitions of Section III-A or IV-A of this Code
shall not apply to:
(1) purchases or sales of securities effected in any account over
which the access person has no direct or indirect influence or
control;
(2) purchases or sales of securities which are non-volitional on the
part of either the access person or the Trust;
(3) purchases or sales of securities which are part of an automatic
dividend reinvestment, cash purchase or withdrawal plan provided
that no adjustment is made by the access person to the rate at
which securities are purchased or sold, as the case may be, under
such a plan during any period in which the security, to the
actual knowledge of the access person, is being considered for
purchase or sale by the Trust;
4
<PAGE>
(4) purchases of securities effected upon the exercise of rights
issued by an issuer PRO RATA to all holders of a class of its
securities, to the extent such rights were acquired from such
issuer, and sales of such rights so acquired;
(5) purchases or sales of securities other than those exempted in (1)
through (4) above which do not cause the access person to gain
improperly a personal benefit through his relationship with the
Trust and are only remotely potentially harmful to the Trust
because the securities transaction involves a small number of
shares of an issuer with a very large market capitalization and
high average daily trading volume or would otherwise be very
unlikely to affect a highly institutional market;
(6) tenders of securities pursuant to tender offers which are
expressly conditioned on the tender offer's acquisition of all of
the securities of the same class;
(7) purchases or sales of securities previously approved by an
individual appointed from time to time by the President for this
purpose, which approval shall be confirmed in writing and shall
be based upon a determination that such transaction did not
violate the purpose or spirit of this Code; and
(8) Purchases or sales of securities which are not eligible for
purchase or sale by an investment company.
III. RULES APPLICABLE TO DISINTERESTED TRUSTEES
A. PROHIBITED PURCHASES AND SALES. While the scope of actions which may
violate the Statement of Policy set forth in Section II-B cannot be
exactly defined, such actions would always include at least the
following prohibited activities. No disinterested trustee shall
purchase or sell, directly or indirectly, any security in which he has
or by reason of such transaction acquires, any direct or indirect
beneficial ownership if such trustee, at the time of the transaction,
knows or, in the ordinary course of fulfilling his official duties as
a trustee of the Trust, should known that, during the 15-day period
immediately preceding or after the date of the contemplated
transaction by the trustee:
(1) the security is being considered for purchase or sale by the
Trust;
(2) the security is being purchased or sold by the Trust; or
(3) the security was purchased or sold by the Trust.
5
<PAGE>
B. REPORTING
(1) Every disinterested trustee shall file with the Review Officer or
its designee a report containing the information described below
in Section III-B(2) of this Code with respect to transactions in
any security in which such disinterested trustee has, or by
reason of such transaction acquires or disposes of, any direct or
indirect beneficial ownership, whether or not one of the
exemptions listed in Section II-C applies; PROVIDED, HOWEVER,
that a disinterested trustee shall not be required to file a
report: (i) unless such trustee, at the time of the transaction,
knew or, in the ordinary course of fulfilling his official duties
as a trustee of the Trust, should have known that, during the
15-day period immediately preceding or after the date of the
transaction by the trustee: (a) such security is or was purchased
or sold by the Trust; or (b) such security was being considered
for purchase or sale by the Trust or an Adviser for a portfolio
of the Trust; or (ii) with respect to transactions effected for
any account over which such person does not have any direct or
indirect influence or control. Notwithstanding the preceding
sentence, any disinterested trustee may, at his option, report
the information described in Section III-B(2) with respect to any
one or more transactions in any security in which such person
has, or by reason of the transaction acquires or disposes of, any
direct or indirect beneficial ownership.
(2) Every report shall be made not later than 10 days after the end
of the calendar quarter in which the transaction to which the
report related was effected, and shall contain the following
information:
(a) The date of the transaction, the title, class and the number
of shares, and the principal amount of each security
involved;
(b) The nature of the transaction (I.E., purchase, sale or any
other type of acquisition or disposition);
(c) The price at which the transaction was effected; and
(d) The name of the broker, dealer or bank with or through whom
the transaction was effected.
(3) If no transactions in any securities required to be reported
under Section III-B(1) were effected during a quarterly period by
a disinterested trustee, such disinterested trustee shall submit
to the Review Officer a report not later than ten (10) days after
the end of such quarterly period stating that no reportable
securities transactions were effected.
(4) Every report concerning a purchase or sale prohibited under
Section III-A hereof with respect to which the reporting person
relies upon one of the exemptions provided in Section II-C shall
contain a brief statement of the exemption relief upon and the
circumstances of the transaction.
(5) Any such report may contain a statement that the report shall not
be construed as an admission by the person making such report
that (a) he
6
<PAGE>
has any direct or indirect beneficial ownership in the security
to which the report relates (a "Subject Security") or (b) the
person knew or should have known that, within the 15-day time
period described in Section III-B(1) above, a Subject Security
was being purchased or sold, or considered for purchase or sale,
by the Trust.
(6) In addition to the reports required under Sections III-B(1) or
III-B(3) hereof, every disinterested trustee shall report at the
frequency provided in Section III-B(2), the name of any publicly
owned company (or any company anticipating a public offering of
an equity security) and the total number of its shares
beneficially owned by him if such total ownership is more than
1/2 of 1% of the company's outstanding shares.
IV. RULES APPLICABLE TO INTERESTED TRUSTEES WHO ARE NOT ACCESS PERSONS OF THE
ADVISERS
A. PROHIBITED PURCHASES AND SALES.
While the scope of actions which may violate the Statement of Policy set
forth in Section II-B cannot be exactly defined, such actions would always
include at least the following prohibited activities.
1. No interested trustee who is not an access person of the Adviser
("Section IV Reporting Person") shall purchase or sell, directly or
indirectly, any security in which he or she has, or by reason of such
transaction acquires, any direct or indirect beneficial ownership and
which to his or her actual knowledge at the time of such purchase or
sale the security:
(a) is being considered for purchase or sale by an investment
company; or
(b) is being purchased or sold by an investment company.
2. No Section IV Reporting Person shall reveal to any other person
(except in the normal course of his or her duties on behalf of an
investment company) any information regarding securities transactions
by an investment company or consideration by an investment company or
the Adviser of any such securities transaction.
3. No Section IV Reporting Person shall recommend any securities
transaction for an investment company without having disclosed his or
her interest, if any, in such securities or the issuer thereof,
including without limitation (i) his or her direct or indirect
beneficial ownership of any securities or such issuer, (ii) any
contemplated transaction by such person in such securities, (iii) any
position with such issuer or its affiliates and (iv) any present or
proposed business relationship between such issuer or its affiliates,
on the one hand, and such person or any party in which such person has
a significant interest, on the other; provided, however, that in the
event the interest of such Section IV Reporting Person in such
securities or issuer is not material to his or her personal net worth
(as determined by the Review Officer) and any contemplated transaction
by such person in such securities cannot reasonably be expected to
have a material adverse effect on any such transaction by the company
or on the market for the securities generally, such Section IV
Reporting Person shall not be required to disclose his or her interest
in the securities or issuer
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thereof in connection with any such recommendation.
4. No Section IV Reporting Person shall engage in, or permit anyone
within his or her control to engage in, any act, practice or course of
conduct which would operate as a fraud or deceit upon, or constitute a
manipulative practice with respect to, an investment company or any
issuer of any security owned by an investment company.
B. REPORTING.
1. Every Section IV Reporting Person shall report to the Review Officer
the information described in Section IV-B(3) of this Code with respect
to transactions in any security in which such Section IV Reporting
Person has, or by reason of such transaction acquires or disposes of,
any direct or indirect beneficial ownership in the security.
2. Notwithstanding Section IV-B(1) of this Code, Section IV Reporting
Person need not make a report where the report would duplicate
information recorded pursuant to Rules 204-2(a)(12) or 204-2(a)(13)
under the Investment Advisers Act of 1940.
3. Unless reports are deemed to have been made under Section IV-B(6) of
this Code, every report shall be made not later than 10 days after the
end of the calendar quarter in which the transaction to which the
report relates was effected, and shall contain the following
information:
(a) The date of the transaction, the title, class and the number of
shares, and the principal amount of each security involved;
(b) The nature of the transaction (i.e., purchase, sale or any other
type of acquisition or disposition);
(c) The price at which the transaction was effected; and
(d) The name of the broker, dealer or bank with or through whom the
transaction was effected.
4. If no transactions in any securities required to be reported under
Section IV-B(1) were effected during a quarterly period by an Section
IV Reporting Person, such Section IV Reporting Person shall report to
the Review Officer not later than ten (10) days after the end of such
quarterly period stating that no reportable securities transactions
were effected.
5. These reporting requirements shall apply whether or not one of the
exemptions listed in Section II-C applies except that an Section IV
Reporting Person shall not be required to make a report with respect
to securities transactions effected for any account over which such
Section IV Reporting Person does not have any direct or indirect
influence or control. Every report concerning a securities transaction
with respect to which the reporting person relies upon one of the
exemptions provided in Section II-C shall contain a brief statement of
the exemption relied upon and the circumstances of the transaction.
6. Reports shall be deemed made with respect to any account where the
Section IV
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Reporting Person has made provisions for transmittal of all daily
trading information regarding the account to be delivered to the
designated Review Officer for his or her review.
7. Any such report may contain a statement that the report shall not be
construed as an admission by the person making such report that (a) he
or she has or had any direct or indirect beneficial ownership in the
security to which the report relates (a "Subject Security") or (b) he
or she knew or should have known that the Subject Security was being
purchased or sold, or considered for purchase or sale, by an
investment company on the same day.
V. MISCELLANEOUS
A. Annual Certification of Compliance. Each access person shall certify
to the Review Officer annually on the form annexed hereto as Form A
that he or she (i) has read and understands this Code of Ethics and
recognizes that he or she is subject thereto, (ii) has complied with
the requirements of this Code of Ethics and (iii) has disclosed or
reported all personal securities transactions required to be disclosed
or reported pursuant to the requirements of this Code of Ethics.
B. REVIEW OF REPORTS.
(1) The Review Officer or its designee shall compare the reported
personal securities transactions of each access person with
completed and contemplated portfolio transactions of the Trust to
determine whether any transactions that violate this Code may
have occurred (a "Reviewable Transaction"). In the case of
reports of personal securities transactions of the Review
Officer, the Alternative Review Officer shall perform such
comparison. Before making any determination that a violation has
been committed by any access person, the Review Officer (or
Alternative Review Officer, as the case may be) shall provide
such access person an opportunity to supply additional
explanatory material for the purposes of demonstrating that such
transactions did not violate this Code.
(2) With respect to disinterested trustees, if the Review Officer
determines that a Reviewable Transaction may have occurred, he
shall submit the report and pertinent information concerning
completed or contemplated portfolio transactions of the Trust to
counsel for the disinterested trustees. Such counsel shall
determine whether a violation of this Code may have occurred,
taking into account all the exemptions provided under Section
II-C. Before making any determination that a violation has been
committed by a disinterested trustee, such counsel shall give the
disinterested trustee an opportunity to supply additional
information regarding the transaction in question.
(3) With respect to access persons who are not disinterested
trustees, if the Review Officer determines that a Reviewable
Transaction may have occurred, he shall submit his written
determination, together with the confidential quarterly report
and any additional explanatory material provided by the access
person to the President of the Trust (or any Vice President of
the Trust if the actions of the President are at issue), who
shall
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make an independent determination of whether a violation of this
Code has occurred.
(4) On an annual basis, the Review Officer shall prepare for the
Board of Trustees a summary of the level of compliance by all
access persons with this Code during the previous year, including
without limitation the percentage of reports timely filed and the
number and nature of all material violations. Also on an annual
basis, the Review Officer shall prepare a report identifying any
recommended changes to existing restrictions or procedures based
upon the Trust's experience under this Code, evolving industry
practices and developments in applicable laws or regulations. The
Alternative Review Officer shall prepare reports with respect to
compliance by the Review Officer.
C. SANCTIONS.
(1) With respect to disinterested trustees, if 15 counsel for the
disinterested trustees determines that a violation of this Code
has occurred, they shall so advise the President of the Trust and
a committee consisting of the disinterested trustees, other than
the disinterested trustee whose transaction is under
consideration, and shall provide the committee with the report,
the record of pertinent actual or contemplated portfolio
transactions of the Trust and any additional material supplied by
such disinterested trustee. The committee, at its option, shall
either impose such sanction(s) as it deems appropriate or refer
the matter to the Board of Trustees, which shall impose such
sanction(s) as are deemed appropriate.
(2) With respect to access persons who are not disinterested
trustees, if the President (or a Vice President, as the case may
be) finds that a violation of this Code has occurred, he shall
impose such sanctions as he deems appropriate and shall report
the violation and the sanction(s) imposed to the Board of
Trustees of the Trust.
(3) Sanctions for violation of this Code include, but are not limited
to, one or more of the following: removal or suspension from
office, termination of employment, a letter of censure and/or
restitution to the Trust of an amount equal to the advantage that
the offending person gained by reason of such violation. In
addition, as part of any sanction, the access person may be
required to reverse the trade(s) at issue and forfeit any profit
or absorb any loss from the trade. It is noted that violations of
this Code by an access person may also result in criminal
prosecution or civil action.
D. AMENDMENTS TO ADVISERS' CODES OF ETHICS.
Any amendment to the Code of Ethics of any of the Advisers shall be
deemed an amendment to Section I-A of this Code effective immediately
after written notice of such amendment shall have been received by the
secretary of the Trust, unless the Board of Trustees of the Trust
expressly determines that such amendment shall not be adopted.
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E. RECORDS.
The Trust shall maintain records in the manner and to the extent set
forth below, which records may be maintained on microfilm under the
conditions described in Rule 31a-2(f)(1) under the Investment Company
Act and shall be available for examination by representatives of the
Commission.
(1) A copy of this Code and any other code which is, or at any time
within the past five years has been, in effect shall be preserved
for a period of not less than five years in an easily accessible
place;
(2) A record of any violation of this Code and of any action taken as
a result of such violation shall be preserved in an easily
accessible place for a period of not less than five years
following the end of the fiscal year in which the violation
occurs;
(3) A copy of each report made by an access person pursuant to this
Code shall be preserved for a period of not less than five years
from the end of the fiscal year in which it is made, the first
two years in an easily accessible place; and
(4) A list of all persons who are, or within the past five years have
been, required to make reports pursuant to this Code shall be
maintained in an easily accessible place.
F. CONFIDENTIALITY.
All reports of securities transactions and any other information filed
with the Trust pursuant to this Code shall be treated as confidential,
except that reports of securities transactions hereunder will be made
available to the Commission or any other regulatory or self-regulatory
organization to the extent required by law or regulation or to the
extent the Trust considers necessary or advisable in cooperating with
an investigation or inquiry by the Commission or any other regulatory
or self-regulatory organization.
G. INTERPRETATION OF PROVISIONS.
The Board of Trustees may from time to time adopt such interpretations
of this Code as it deems appropriate.
H. EXCEPTIONS TO THE CODE.
Although exceptions to the Code will rarely, if ever, be granted, the
President of the Trust, after consultation with the Review Officer,
may make exceptions on a case by case basis, from any of the
provisions of this Code upon a determination that the conduct at issue
involves a negligible opportunity for abuse or otherwise merits an
exemption from the Code. All such exemptions must be received in
writing by the person requesting the exemption before becoming
effective. The Review Officer shall report any exception to the Board
of Trustees of the Trust at the next regularly scheduled Board
meeting.
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APPENDIX A
GOLDMAN SACHS ASSET MANAGEMENT
GOLDMAN SACHS FUNDS MANAGEMENT, L.P.
GOLDMAN SACHS ASSET MANAGEMENT INTERNATIONAL
CODE OF ETHICS
Effective January 23,
1991
(as revised October 1,
1995)
I. DEFINITIONS
A. "Access person" with respect to Goldman Sachs Asset Management
("GSAM") means (because GSAM is primarily engaged in a business other
than advising registered investment companies or other advisory
clients) only those officers, general partners or advisory persons of
GSAM who, with respect to any investment company, make recommendations
or participate in the determination of which recommendation shall be
made to any investment company, or whose principal function or duties
relate to the determination of which recommendation shall be made to
any investment company, or who, in connection with their duties,
obtain any information concerning such recommendations which are being
made to the investment company. "Access person" with respect to
Goldman Sachs Asset Management International ("GSAMI") and Goldman
Sachs Funds Management, L.P. ("GSFM") shall mean any director,
officer, general partner or advisory person of GSAMI or GSFM, as the
case may be.
B. "Adviser" means each of GSAM, GSAMI and GSFM.
C. "Advisory person" means (i) any officer or employee of the Adviser or
any company in a control relationship to the Adviser, who in
connection with his or her regular functions or duties, makes,
participates in, or obtains information regarding the purchase or sale
of a security by an investment company, or whose functions relate to
the making of any recommendations with respect to such purchases or
sales; and (ii) any natural person in a control relationship to the
Adviser who obtains information concerning the recommendations made to
an investment company with regard to the purchase or sale of a
security.
D. A security is "being considered for purchase or sale" when a
recommendation to purchase or sell a security has been made and
communicated and, with respect to the person making the
recommendation, when such person seriously considers making such a
recommendation. With respect to an analyst of the Adviser, the
foregoing period shall commence on the day that he or she decides to
recommend the purchase or sale of the security to the Adviser for an
investment company.
E. "Beneficial ownership" of a security shall be interpreted to include
any person who, directly or indirectly, through any contract,
arrangement, understanding, relationship, or otherwise has or shares a
direct or indirect pecuniary interest in the security. The
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term "pecuniary interest" with respect to any security shall mean the
opportunity, directly or indirectly, to profit or share in any profit
derived from a transaction in the subject securities.
F. "Control" shall have the same meaning as that set forth in Section
2(a)(9) of the Investment Company Act. Section 2(a)(9) generally
provides that "control" means the power to exercise a controlling
influence over the management or policies of a company, unless such
power is solely the result of an official position with such company.
G. "Investment company" means a company registered as such under the
Investment Company Act of 1940, as amended (the "Investment Company
Act"), or any series thereof for which the Adviser is the investment
adviser.
H. "Portfolio manager" means every person who is responsible for the
day-to-day management of an investment company, or who shares such
responsibility with another portfolio manager.
I. "Purchase or sale of a security" includes, among other things, the
writing of an option to purchase or sell a security.
J. "Review Officer" means the officer of the Adviser designated from time
to time by the Adviser to receive and review reports of purchases and
sales by access persons. The term "Alternative Review Officer" shall
mean the officer of the Adviser designated from time to time by the
Adviser to receive and review reports of purchases and sales by the
Review Officer, and who shall act in all respects in the manner
prescribed herein for the Review Officer. It is recognized that a
different Review Officer and Alternative Review Officer may be
designated with respect to each Adviser.
K. "Security" shall have the meaning set forth in Section 2(a)(36) of the
Investment Company Act, except that it shall not include shares of
registered open-end investment companies (including those for which
the Adviser serves as investment adviser), securities issued by the
Government of the United States or an agency thereof within the
meaning of Section 2(a)(16), bankers' acceptances, bank certificates
of deposit, commercial paper and, for other than Quantitative
Equity/Trading Personnel of the Adviser, options on broad based market
indices.
II. LEGAL REQUIREMENTS
Section 17(j) of the Investment Company Act provides, among other things,
that it is unlawful for any access person of the Adviser to engage in any act,
practice or course of business in connection with the purchase or sale, directly
or indirectly, by such access person of any security held or to be acquired by
an investment company in contravention of such rules and regulations as the
Securities and Exchange Commission (the "Commission") may adopt to define and
prescribe means reasonably necessary to prevent such acts, practices or courses
of business as are fraudulent, deceptive or manipulative. Pursuant to Section
17(j), the Commission has adopted Rule 17j-1 which provides, among other things,
that it is unlawful for any access person of the Adviser in connection with the
purchase or sale, directly or indirectly, by such person of a security held or
to be acquired by an investment company:
(1) To employ any device, scheme or artifice to defraud such
registered investment company;
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(2) To make to such registered investment company any untrue
statement of a material fact or omit to state to such registered
investment company a material fact necessary in order to make the
statements made, in light of the circumstances under which they
are made, not misleading;
(3) To engage in any act, practice, or course of business which
operates or would operate as a fraud or deceit upon any such
registered investment company; or
(4) To engage in any manipulative practice with respect to such
registered investment company.
III. STATEMENT OF POLICY
It is the policy of the Adviser that no access person shall engage in any
act, practice or course of conduct that would violate the provisions of Rule
17j-1. The fundamental position of the Adviser is, and has been, that each
access person shall place at all times the interests of each investment company
and its shareholders first in conducting personal securities transactions.
Accordingly, private securities transactions by access persons of the Adviser
must be conducted in a manner consistent with this Code and so as to avoid any
actual or potential conflict of interest or any abuse of an access person's
position of trust and responsibility. Further, access persons should not take
inappropriate advantage of their positions with, or relationship to, any
investment company, the Adviser or any affiliated company.
Without limiting in any manner the fiduciary duty owed by access persons to
the investment companies or the provisions of this Code, it should be noted that
the Adviser and the investment companies consider it proper that purchases and
sales be made by its access persons in the marketplace of securities owned by
the investment companies; provided, however, that such securities transactions
comply with the spirit of, and the specific restrictions and limitations set
forth in, this Code. Such personal securities transactions should also be made
in amounts consistent with the normal investment practice of the person involved
and with an investment, rather than a trading, outlook. Not only does this
policy encourage investment freedom and result in investment experience, but it
also fosters a continuing personal interest in such investments by those
responsible for the continuous supervision of the investment companies'
portfolios. It is also evidence of confidence in the investments made. In making
personal investment decisions with respect to any security, however, extreme
care must be exercised by access persons to ensure that the prohibitions of this
Code are not violated. Further, personal investing by an access person should be
conducted in such a manner so as to eliminate the possibility that the access
person's time and attention is being devoted to his or her personal investments
at the expense of time and attention that should be devoted to management of an
investment company's portfolio. It bears emphasis that technical compliance with
the procedures, prohibitions and limitations of this Code will not automatically
insulate from scrutiny personal securities transactions which show a pattern of
abuse by an access person of his or her fiduciary duty to any investment
company.
IV. EXEMPTED TRANSACTIONS
The Statement of Policy set forth above shall be deemed not to be violated
by and the prohibitions of Section V of this Code shall not apply to:
A. Purchases or sales of securities effected in any account over which
the access
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person has no direct or indirect influence or control;
B. Purchases or sales of securities which are not eligible for purchase
or sale by an investment company;
C. Purchases or sales of securities which are non-volitional on the part
of either the access person or an investment company;
D. Purchases or sales of securities which are part of an automatic
dividend reinvestment, cash purchase or withdrawal plan provided that
no adjustment is made by the access person to the rate at which
securities are purchased or sold, as the case may be, under such a
plan during any period in which the security is being considered for
purchase or sale by an investment company;
E. Purchases of securities effected upon the exercise of rights issued by
an issuer PRO RATA to all holders of a --- ---- class of its
securities, to the extent such rights were acquired from such issuer,
and sales of such rights so acquired;
F. Tenders of securities pursuant to tender offers which are expressly
conditioned on the tender offer's acquisition of all of the securities
of the same class; and
G. Purchases or sales which receive the prior approval of the Review
Officer because they are only remotely potentially harmful to an
investment company because the securities transaction involves a small
number of shares of an issuer with a very large market capitalization
and high average daily trading volume or would otherwise be very
unlikely to affect a highly institutional market.
V. PROHIBITED PURCHASES AND SALES
While the scope of actions which may violate the Statement of Policy set
forth above cannot be exactly defined, such actions would always include at
least the following prohibited activities.
A. No access person shall purchase or sell, directly or indirectly, any
security in which he or she has, or by reason of such transaction
acquires, any direct or indirect beneficial ownership and which to his
or her actual knowledge at the time of such purchase or sale the
security:
(1) is being considered for purchase or sale by an investment
company; or
(2) is being purchased or sold by an investment company.
B. No access person shall reveal to any other person (except in the
normal course of his or her duties on behalf of an investment company)
any information regarding securities transactions by an investment
company or consideration by an investment company or the Adviser of
any such securities transaction.
C. No access person shall recommend any securities transaction for an
investment company without having disclosed his or her interest, if
any, in such securities or the issuer thereof, including without
limitation (i) his or her direct or indirect beneficial ownership of
any securities or such issuer, (ii) any contemplated transaction by
such person in such securities, (iii) any position with such issuer or
its affiliates and (iv) any
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present or proposed business relationship between such issuer or its
affiliates, on the one hand, and such person or any party in which
such person has a significant interest, on the other; provided,
however, that in the event the interest of such access person in such
securities or issuer is not material to his or her personal net worth
(as determined by the Review Officer) and any contemplated transaction
by such person in such securities cannot reasonably be expected to
have a material adverse effect on any such transaction by the company
or on the market for the securities generally, such access person
shall not be required to disclose his or her interest in the
securities or issuer thereof in connection with any such
recommendation.
D. No access person shall engage in, or permit anyone within his or her
control to engage in, any act, practice or course of conduct which
would operate as a fraud or deceit upon, or constitute a manipulative
practice with respect to, an investment company or any issuer of any
security owned by an investment company.
E. No advisory person shall accept any gift or personal benefit valued in
excess of $100 annually from any single person or entity that does
business with or on behalf of an investment company. Gifts of a DE
MINIMIS value (i.e., gifts whose reasonable value is no more than $100
annually from any single person or entity), and customary business
lunches, dinners and entertainment at which both the advisory person
and the giver are present, and promotional items of DE MINIMIS value
may be accepted. Any solicitation of gifts or gratuities is
unprofessional and is strictly prohibited.
F. No access person shall enter an order for the purchase or sale of a
security which an investment company is purchasing or selling or
considering for purchase or sale until the later of (i) the day after
the investment company's transaction in that security is completed or
(ii) after the investment company is no longer considering the
security for purchase or sale, unless the Review Officer determines
that it is clear that, in view of the nature of the security and the
market for such security, the order of the access person will not
adversely affect the price paid or received by the investment company.
Any securities transactions by an access person in violation of this
Subsection F must be unwound, if possible, and the profits, if any,
must be disgorged to the affected investment company or to charity.
G. No advisory person shall, directly or indirectly, purchase any
security sold in an initial or secondary public offering of an issuer,
regardless of whether the issue is a "hot issue."
H. No advisory person shall, directly or indirectly, purchase any
security issued pursuant to a private placement without obtaining
prior written approval from the Review Officer. Any approval will take
into account whether the investment opportunity should be reserved for
an investment company and whether the opportunity is being offered to
the advisory person by virtue of his or her position with or
relationship to an investment company.
I. No advisory person shall serve on the board of directors of any
publicly traded company, absent prior written authorization and
determination by the Review Officer that the board service would be
consistent with the interests of the investment companies and their
shareholders. Such interested advisory person may not participate in
the decision for any investment company to purchase and sell
securities of such company.
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J. No portfolio manager shall, directly or indirectly, purchase or sell
any security in which he or she has, or by reason of such purchase
acquires, any beneficial ownership interest within a period of seven
(7) calendar days before and after any investment company advised by
the portfolio manager has purchased or sold such security. Any
securities transaction by a portfolio manager in violation of this
Subsection J must be unwound, if possible, and the profits, if any,
must be disgorged to the applicable investment company or to charity.
K. No access person shall, in the absence of prior written approval by
the Review Officer, sell any security (including any option) that was
purchased, or purchase a security (including any option) that was
sold, within the prior 60 calendar days (measured on a last-in
first-out basis).
VI. BROKERAGE ACCOUNTS
Access persons are required to direct their brokers to supply to the Review
Officer on a timely basis duplicate copies of confirmations of all securities
transactions in which the access person has a beneficial ownership interest and
related periodic statements, whether or not one of the exemptions listed in
Section IV applies. If an access person is unable to arrange for duplicate
copies of confirmations and periodic account statements to be sent to the Review
Officer, he or she must immediately notify the Review Officer.
VII. PRECLEARANCE PROCEDURE
Prior to effecting any securities transactions in which an access person
has a beneficial ownership interest, the access person must receive approval by
the Adviser. Any approval is valid only for the number of day(s) as may be
determined from time to time by the Adviser. If an access person is unable to
effect the securities transaction during such period, he or she must reobtain
approval prior to effecting the securities transaction.
The Adviser will decide whether to approve a personal securities
transaction for an access person after considering the specific restrictions and
limitations set forth in, and the spirit of, this Code, including whether the
security at issue is being considered for purchase or sale for an investment
company. The Adviser is not required to give any explanation for refusing to
approve a securities transaction.
VIII. REPORTING
A. Every access person shall report to the Review Officer the information
described in Section VIII-C of this Code with respect to transactions
in any security in which such access person has, or by reason of such
transaction acquires or disposes of, any direct or indirect beneficial
ownership in the security.
B. Notwithstanding Section VIII-A of this Code, an access person need not
make a report where the report would duplicate information recorded
pursuant to Rules 204-2(a)(12) or 204-2(a)(13) under the Investment
Advisers Act of 1940.
C. Unless reports are deemed to have been made under Section VIII-F of
this Code, every report shall be made not later than 10 days after the
end of the calendar quarter in which the transaction to which the
report relates was effected, and shall contain
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the following information:
(1) The date of the transaction, the title, class and the number of
shares, and the principal amount of each security involved;
(2) The nature of the transaction (i.e., purchase, sale or any other
type of acquisition or disposition);
(3) The price at which the transaction was effected; and
(4) The name of the broker, dealer or bank with or through whom the
transaction was effected.
D. If no transactions in any securities required to be reported under
Section VIII-A were effected during a quarterly period by an access
person, such access person shall report to the Review Officer not
later than ten (10) days after the end of such quarterly period
stating that no reportable securities transactions were effected.
E. These reporting requirements shall apply whether or not one of the
exemptions listed in Section IV applies except that an access person
shall not be required to make a report with respect to securities
transactions effected for any account over which such access person
does not have any direct or indirect influence or control. Every
report concerning a securities transaction with respect to which the
reporting person relies upon one of the exemptions provided in Section
IV shall contain a brief statement of the exemption relied upon and
the circumstances of the transaction.
F. Reports shall be deemed made with respect to any account where the
access person has made provisions for transmittal of all daily trading
information regarding the account to be delivered to the designated
Review Officer for his or her review. With respect to investment
companies for which the Adviser does not act as investment adviser,
reports required to be furnished by officers and trustees of such
investment companies who are access persons of the Adviser must be
made under Section VIII-C of this Code and furnished to the designated
review officer of the relevant investment adviser.
G. Any such report may contain a statement that the report shall not be
construed as an admission by the person making such report that (a) he
or she has or had any direct or indirect beneficial ownership in the
security to which the report relates (a "Subject Security") or (b) he
or she knew or should have known that the Subject Security was being
purchased or sold, or considered for purchase or sale, by an
investment company on the same day.
IX DISCLOSURE OF PERSONAL HOLDINGS.
All advisory persons shall submit to the Review Officer initially upon
becoming an advisory person, and annually thereafter in January, a report, in a
form acceptable to the Adviser, disclosing all securities in which such person
has a beneficial ownership interest.
X. ANNUAL CERTIFICATION OF COMPLIANCE
Each access person shall certify to the Review Officer annually on the form
annexed hereto as
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Form A that he or she (i) has read and understands this Code of Ethics and
recognizes that he or she is subject thereto, (ii) has complied with the
requirements of this Code of Ethics and (iii) has disclosed or reported all
personal securities transactions required to be disclosed or reported pursuant
to the requirements of this Code of Ethics.
XI. CONFIDENTIALITY
All reports of securities transactions and any other information filed with
the Adviser pursuant to this Code shall be treated as confidential, except that
reports of securities transactions hereunder will be made available to the
investment companies and to the Commission or any other regulatory or
self-regulatory organization to the extent required by law or regulation or to
the extent the Adviser considers necessary or advisable in cooperating with an
investigation or inquiry by the Commission or any other regulatory or
self-regulatory organization.
XII. REVIEW OF REPORTS
A. The Review Officer shall compare the reported personal securities
transactions of each access person with completed and contemplated
portfolio transactions of the investment companies to determine whether
any transactions that violate the Statement of Policy set forth above may
have occurred (a "Reviewable Transaction"). In the case of reports of
personal securities transactions of the Review Officer, the Alternative
Review Officer shall perform such comparison. Before making any
determination that a violation has been committed by any access person,
the Review Officer (or Alternative Review Officer, as the case may be)
shall provide such person an opportunity to supply additional explanatory
material.
B. If the Review Officer determines that a Reviewable Transaction may have
occurred, he shall submit his written determination, together with the
confidential quarterly report and any additional explanatory material
provided by the access person to the President of the Adviser (or any Vice
President of the Adviser if the actions of the President are at issue),
who shall make an independent determination of whether a violation of this
Code has occurred.
C. On an annual basis, the Review Officer shall prepare for the Board of
Trustees a summary of the level of compliance by all access persons with
this Code of Ethic during the previous year, including without limitation
the percentage of reports timely filed and the number and nature of all
material violations. Also on an annual basis, the Review Officer shall
prepare a report identifying any recommended changes to existing
restrictions or procedures based upon the Adviser's experience under this
Code of Ethics, evolving industry practices and developments in applicable
laws or regulations. The Alternative Review Officer shall prepare reports
with respect to compliance by the Review Officer.
XIII. SANCTIONS
Upon discovering a violation of this Code, the Adviser may impose such
sanction(s) as it deems appropriate, including, among other things, a
letter of censure, suspension or termination of the employment of the
violator and/or restitution to the affected investment company of an
amount equal to the advantage that the offending person gained by reason
of such violation. In addition, as part of any sanction, the Adviser may
require the access person to reverse the trade(s) at issue and forfeit any
profit or absorb any loss from the trade. It is noted that violations of
this Code by an access person may also result in criminal prosecution or
civil action. All material violations of this Code and any sanctions
imposed with respect thereto shall be reported periodically to the board
of trustees of the investment company with respect to
A-8
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whose securities the violation occurred.
XIV. INTERPRETATION OF PROVISIONS
The Adviser may from time to time adopt such interpretations of this Code
as it deems appropriate.
XV. IDENTIFICATION OF ACCESS PERSONS
The Adviser shall identify all persons who are considered to be "access
persons," "advisory persons" and "portfolio managers," inform such persons
of their respective duties and provide such persons with copies of this
Code.
XVI. EXCEPTIONS TO THE CODE
Although exceptions to the Code will rarely, if ever, be granted, the
President of the Adviser, after consultation with the Review Officer, may
make exceptions on a case by case basis, from any of the provisions of
this Code upon a determination that the conduct at issue involves a
negligible opportunity for abuse or otherwise merits an exemption from the
Code. All such exemptions must be received in writing by the person
requesting the exemption before becoming effective. The Review Officer
shall report any exception to the Board of Trustees of the investment
companies at their next regularly scheduled Board meetings.
XVII. RECORDS
The Adviser shall maintain records in the manner and to the extent set
forth below, which records may be maintained on microfilm under the
conditions described in Rule 31a-2(f)(1) under the Investment Company Act
and shall be available for examination by representatives of the
Commission.
A. A copy of this Code and any other code which is, or at any time within
the past five years has been, in effect shall be preserved for a
period of not less than five years in an easily accessible place;
B. A record of any violation of this Code and of any action taken as a
result of such violation shall be preserved in an easily accessible
place for a period of not less than five years following the end of
the fiscal year in which the violation occurs;
C. A copy of each report made by an access person pursuant to this Code
shall be preserved for a period of not less than five years from the
end of the fiscal year in which it is made, the first two years in an
easily accessible place; and
D. A list of all persons who are, or within the past five years have
been, required to make reports pursuant to this Code shall be
maintained in an easily accessible place.
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[GRAPHIC OMITTED]
JANUS ETHICS RULES
"ACT IN THE BEST INTEREST OF OUR INVESTORS - EARN THEIR CONFIDENCE
WITH EVERY ACTION"
- --------------------------------------------------------------------------------
CODE OF ETHICS
INSIDER TRADING POLICY
GIFT POLICY
OUTSIDE EMPLOYMENT POLICY
- --------------------------------------------------------------------------------
LAST REVISED MARCH 3, 1999
- --------------------------------------------------------------------------------
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DEFINITIONS___________________________________________________________________ 4
INTRODUCTION__________________________________________________________________ 6
CAUTION REGARDING PERSONAL TRADING ACTIVITIES______________________________ 6
COMMUNICATIONS WITH OUTSIDE TRUSTEES/DIRECTORS_____________________________ 6
CODE OF ETHICS________________________________________________________________ 7
OVERVIEW___________________________________________________________________ 7
GENERAL PROHIBITIONS_______________________________________________________ 7
TRADING
RESTRICTIONS____________________________________________________________ 8
Excluded
Transactions____________________________________________________________ 9
Preclearance____________________________________________________________ 9
Trading Ban on Portfolio Managers and Assistant Portfolio Managers______10
60 Day Rule_____________________________________________________________10
Blackout Period_________________________________________________________10
Fifteen Day Rule________________________________________________________10
Seven Day Rule__________________________________________________________10
Short Sales_____________________________________________________________10
Hedge Funds, Investment Clubs, and Other Investments____________________11
PRECLEARANCE PROCEDURES____________________________________________________11
General Preclearance____________________________________________________11
Preclearance Requirements For Investment Personnel______________________11
Preclearance of Company Stock___________________________________________12
Preclearance of Tender Offers and Stock Purchase Plans__________________12
Four Day Effective Period_______________________________________________12
REPORTING TRANSACTIONS AND ACCOUNTS________________________________________12
Monthly Transaction Reports_____________________________________________13
Non-Influence and Non-Control Accounts__________________________________14
OTHER REQUIRED FORMS_______________________________________________________14
Acknowledgement Forms___________________________________________________14
Investment Personnel Representation Form________________________________14
Outside Director/Trustee Representation Form____________________________14
INSIDER TRADING POLICY________________________________________________________15
BACKGROUND INFORMATION_____________________________________________________15
Who is an Insider?______________________________________________________15
When is Information Nonpublic?__________________________________________16
What is Material Information?___________________________________________16
When is Information Misappropriated?____________________________________16
Penalties for Insider Trading___________________________________________16
Who is a Controlling Person?____________________________________________17
PROCEDURES TO IMPLEMENT POLICY_____________________________________________17
Identifying Material Inside Information_________________________________17
Reporting Inside Information____________________________________________17
Watch and Restricted Lists______________________________________________18
Protecting Information__________________________________________________18
Responsibility to Monitor Transactions__________________________________19
Record Retention________________________________________________________19
Tender Offers___________________________________________________________19
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GIFT POLICY___________________________________________________________________20
GIFT GIVING________________________________________________________________20
GIFT RECEIVING_____________________________________________________________20
CUSTOMARY BUSINESS AMENITIES_______________________________________________20
OUTSIDE EMPLOYMENT POLICY_____________________________________________________21
PENALTY GUIDELINES____________________________________________________________22
OVERVIEW___________________________________________________________________22
PENALTY GUIDELINES_________________________________________________________22
SUPERVISORY AND COMPLIANCE PROCEDURES_________________________________________23
SUPERVISORY PROCEDURES_____________________________________________________23
Prevention of Violations________________________________________________23
Detection of Violations_________________________________________________23
COMPLIANCE PROCEDURES______________________________________________________24
Reports of Potential Deviations or Violations___________________________24
Annual Reports__________________________________________________________24
Records_________________________________________________________________24
Inspection______________________________________________________________24
Confidentiality_________________________________________________________24
THE ETHICS COMMITTEE_______________________________________________________25
Membership of the Committee_____________________________________________25
Committee Meetings______________________________________________________25
Special Discretion______________________________________________________25
GENERAL INFORMATION ABOUT THE ETHICS RULES____________________________________26
Designees_______________________________________________________________26
Enforcement_____________________________________________________________26
Internal Use____________________________________________________________26
FORMS_________________________________________________________________________26
3
<PAGE>
JANUS ETHICS RULES
"ACT IN THE BEST INTEREST OF OUR INVESTORS - EARN THEIR CONFIDENCE
WITH EVERY ACTION"
- --------------------------------------------------------------------------------
DEFINITIONS
- --------------------------------------------------------------------------------
The following definitions are used throughout this document. You are
responsible for reading and being familiar with each definition.
1) "Access Persons" are Investment Personnel, Directors, Trustees, and
officers of JCC and other designated persons deemed by the Ethics
Committee to have access to current trading information. Access
Persons are subject to additional scrutiny and more restrictions
because of their access or potential access to information about
current portfolio holdings and transactions.
2) "Beneficial Ownership" shall be interpreted in the same manner as it
would be in determining whether a person is subject to the provisions
of Section 16 of the Securities Exchange Act of 1934 and the rules and
regulations thereunder. For example, in addition to a person's own
accounts the term "Beneficial Ownership" encompasses securities held
in the name of a spouse or equivalent domestic partnership, minor
children, a relative sharing your home, or certain trusts under which
you or a related party is a beneficiary, or held under other
arrangements indicating a sharing of financial interest.
3) "Company Stock" is any stock or option issued by Janus or Kansas City
Southern Industries, Inc. ("KCSI").
4) "Covered Securities" generally include all securities, whether
publicly or privately traded (including securities issued by KCSI or
JCC) and any option, future, forward contract or other obligation
involving a security or index thereof, including an instrument whose
value is derived or based on any of the above (a "derivative"). The
following investments are not Covered Securities:
o shares of open-end investment companies (e.g. mutual funds);
o direct obligations of the U.S. government (e.g., Treasury
securities), or any derivative thereof;
o obligations of agencies and instrumentalities of the U.S.
government with a remaining term to maturity of one year or less,
or any derivative thereof;
o securities representing a limited partnership interest in a real
estate limited partnership;
o money market instruments, such as certificates of deposit,
bankers' acceptances, repurchase agreements, and commercial
paper;
o insurance contracts, including life insurance or annuity
contracts;
o direct investments in real estate, business franchises or similar
ventures; and
o physical commodities (including foreign currencies), or any
derivatives thereof.
5) "Designated Compliance Representatives" are Ernie Overholt, Ted Dryden
and/or his designee(s), and Stephen Stieneker and/or his designee(s).
6) "Designated Legal Representatives" are Debby Bielicke-Eades, Stephen
Stieneker, or their designee(s).
7) "Designated Trading Operations Representatives" are Lesa Finney, John
Porro, and Mark Farrell.
8) "Directors" are directors of JCC.
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9) "Ethics Committee" is comprised of Ted Dryden, Thomas Early, Steve
Goodbarn, and Stephen Stieneker.
10) "Inside Trustees and Directors" are Trustees and Directors that are
also employed by Janus.
11) "Investment Personnel" are portfolio managers, assistant portfolio
managers, research analysts, trading department personnel and any
other employees deemed by the Compliance Department to be comparable.
12) "Janus" is Janus Investment Fund, Janus Aspen Series, Janus Capital
Corporation, Janus Service Corporation, Janus Distributors, Inc.,
Janus Capital International Ltd, and Janus International (UK) Ltd.
13) "Janus Funds" are Janus Investment Fund and Janus Aspen Series.
14) "JCC" is Janus Capital Corporation.
15) "JDI" is Janus Distributors, Inc.
16) "JDI's Operations Manager" is Dana Wagener and/or her designee(s).
17) "NASD" is the National Association of Securities Dealers, Inc.
18) "Non-Access Person" is any person that is not an Access Person.
19) "Outside Directors" are Directors who are not employed by Janus.
20) "Outside Trustees" are Trustees who are not identified as an
"interested person" in the registration statement of the Janus Funds.
21) "Registered Persons" are persons registered with the NASD by JDI.
22) "SEC" is Securities and Exchange Commission.
23) "Trustees" are trustees of Janus Investment Fund and Janus Aspen
Series.
These definitions may be updated from time to time to reflect changes in
personnel.
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- --------------------------------------------------------------------------------
INTRODUCTION
- --------------------------------------------------------------------------------
These Ethics Rules ("Rules") apply to all Directors, Trustees, officers,
and employees of Janus ("Covered Persons"). The Rules apply to transactions for
your personal accounts and any other accounts you Beneficially Own. You may be
deemed the beneficial owner of any account in which you have a direct or
indirect financial interest. Such accounts include, among others, accounts held
in the name of your spouse or equivalent domestic partnership, your minor
children, a relative sharing your home, or certain trusts under which you or
such persons are a beneficiary.
The Rules are intended to ensure that you (i) at all times place first the
interests of Janus' mutual funds and other clients ("Clients"), (ii) conduct all
personal trading consistent with the Rules and in such a manner as to avoid any
actual or potential conflict of interest or any abuse of your position of trust
and responsibility, and (iii) not use any material nonpublic information in
securities trading. The Rules also establish policies regarding other matters,
such as outside employment and the giving or receiving of gifts.
You are required to read and retain these Rules and to sign and return the
attached Acknowledgment Form to the Compliance Department ("Compliance") upon
commencement of employment or other services, and on an annual basis thereafter.
The Acknowledgment confirms that (i) you have received, read and asked any
questions necessary to understand the Rules, (ii) you agree to conduct yourself
in accordance with the Rules, and (iii) you have complied with the Rules during
such time as you have been associated with Janus. Depending on your status, you
may be required to submit additional reports and/or obtain clearances as
discussed more fully below.
Unless otherwise defined, all capitalized terms shall have the same meaning
as set forth in the Definitions section.
CAUTION REGARDING PERSONAL TRADING ACTIVITIES
Certain personal trading activities may be risky not only because of the
nature of the transactions, but also because action necessary to close out a
position may, for some Covered Persons, become prohibited while the position
remains open. For example, closing out short sales and transactions in
derivatives. Furthermore, if JCC becomes aware of material nonpublic
information, or if a Client is active in a given security, some Covered Persons
may find themselves "frozen" in a position. JCC will not bear any losses in
personal accounts resulting from the application of these Rules.
COMMUNICATIONS WITH OUTSIDE TRUSTEES/DIRECTORS
As a regular business practice, JCC attempts to keep the Directors and
Trustees informed with respect to its investment activities through reports and
other information provided to them in connection with board meetings and other
events. In addition, Janus personnel are encouraged to respond to inquiries from
Directors and Trustees, particularly as they relate to general strategy
considerations or economic or market conditions affecting Janus. However, it is
JCC's policy not to communicate specific trading information and/or advice on
specific issues to the Outside Directors and Outside Trustees (i.e., no
information should be given on securities for which current activity is being
considered for Clients). Any pattern of repeated requests by such Directors or
Trustees should be reported to the Chief Compliance Officer or the Director of
Compliance.
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- --------------------------------------------------------------------------------
CODE OF ETHICS
- --------------------------------------------------------------------------------
OVERVIEW
In general, it is unlawful for persons affiliated with investment
companies, their principal underwriters or their investment advisers to engage
in personal transactions in securities which are held or are to be acquired by a
registered investment company, if such personal transactions are made in
contravention of rules which the SEC has adopted to prevent fraudulent,
deceptive and manipulative practices. Such rules require each registered
investment company, investment adviser and principal underwriter to adopt its
own written code of ethics containing provisions reasonably necessary to prevent
its access persons from engaging in such conduct, and to maintain records, use
reasonable diligence, and institute such procedures as are reasonably necessary
to prevent violations of such code. This Code of Ethics ("Code") and information
reported hereunder will enable Janus to fulfill these requirements.
GENERAL PROHIBITIONS
The following are prohibited for Covered Persons (remember, if you work at
Janus or you're a Trustee or Director, you're a Covered Person). Persons who
violate any prohibition shall disgorge any profits realized in connection with
such violation to a charitable organization selected by the Ethics Committee,
and may be subject to sanctions imposed by the Ethics Committee, as outlined in
the Penalty Guidelines.
1. Purchasing, in an initial public offering, Covered Securities (see
Definitions section) for which no public market in the same or similar
securities of that issuer has previously existed. No securities may be
purchased in an offering that constitutes a "hot issue" as defined in
NASD rules. Such securities may be purchased, however, where the
individual has an existing right to purchase the security based on his
or her status as an investor, policyholder or depositor of the issuer.
In addition, securities issued in reorganizations are also outside the
scope of this prohibition if the transaction involves no investment
decision on the part of the employee except in connection with a
shareholder vote.*
2. Causing a Client to take action, or to fail to take action, for
personal benefit, rather than to benefit such Client. For example, an
employee would violate this Code by causing a Client to purchase a
security owned by the employee for the purpose of supporting or
increasing the price of that security or by causing a Client to
refrain from selling a security in an attempt to protect a personal
investment, such as an option on that security.
3. Using knowledge of portfolio transactions made or contemplated for
Clients to profit, or cause others to profit, by the market effect of
such transactions.
4. Disclosing current portfolio transactions made or contemplated for
Clients as well as any other nonpublic information to anyone outside
of Janus.
5. Engaging in fraudulent conduct in connection with the purchase or sale
of a security held or to be acquired by a Client, including without
limitation:
a) employing any device, scheme or artifice to defraud any Client;
- -------------
* Item 1 is not applicable to Outside Directors and Outside Trustees.
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b) making to any Client any untrue statement of material fact or
omitting to state to any Client a material fact necessary in
order to make the statements made, in light of the circumstances
under which they are made, not misleading;
c) engaging in any act, practice or course of business which
operates or would operate as a fraud or deceit upon any Client;
d) engaging in any manipulative practice with respect to any Client;
or
e) investing in derivatives to evade the restrictions of this Code.
Accordingly, individuals may not use derivatives to take
positions in securities which the Code would prohibit if the
positions were taken directly.
6. No Investment Personnel may serve on the board of directors of a
publicly traded company without prior written authorization by the
Ethics Committee. No such service shall be approved without a finding
by the Committee that the board service would not be inconsistent with
the interests of Clients. If board service is authorized by the
Committee, the Investment Personnel serving as director normally should
be isolated from those making investment decisions with respect to the
company involved through "Chinese Walls" or other procedures.**
7. If an Investment Person is planning to invest or make a recommendation
to invest in a security for a Client, and such person has a material
interest in the security, such person must first disclose such interest
to their manager or the Chief Investment Officer and obtain their
consent. The manager or Chief Investment Officer may only grant consent
if they have no material interest in the security. A material interest
is Beneficial Ownership of any securities (including derivatives,
options, warrants or rights), offices, directorships, significant
contracts, or interests or relationships that are likely to affect such
person's judgment.**
TRADING RESTRICTIONS
The trading restrictions of the Code apply to all direct or indirect
acquisitions or dispositions of Covered Securities, whether by purchase, sale,
tender, stock purchase plan, gift, inheritance, or otherwise. Unless otherwise
noted, the following Trading Restrictions are applicable to any transaction in a
Covered Security Beneficially Owned by a Covered Person. Outside Directors and
Outside Trustees are exempt from certain Trading Restrictions because of their
limited access to current information regarding Client investments.
Any disgorgement of profits required under any of the following provisions
shall be donated to a charitable organization selected by the Ethics Committee,
as outlined in the Penalty Guidelines. However, if disgorgement is required as a
result of trades by a portfolio manager that conflicted with that manager's own
Clients,
- --------
** Items 6 and 7 are applicable to Investment Personnel only.
8
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disgorgement proceeds shall be paid directly to such Clients. If disgorgement is
required under more than one provision, the Committee shall determine in its
sole discretion the provision that shall control. (1)
EXCLUDED TRANSACTIONS
Some or all of the Trading Restrictions listed below do not apply to the
following transactions; however, these transactions must still be reported to
Compliance (see Reporting Transactions and Accounts):
o Tender offer transactions are exempt from all Trading Restrictions
except Preclearance.
o The acquisition of securities through stock purchase plans are exempt
from all Trading Restrictions except Preclearance, the Trading Ban On
Portfolio Managers and Assistant Portfolio Managers, and the Seven Day
Rule (note, sales of such securities are subject to the Trading
Restrictions of the Code).
o The acquisition of securities through stock dividends, dividend
reinvestments, stock splits, reverse stock splits, mergers,
consolidations, spin-offs, or other similar corporate reorganizations
or distributions generally applicable to all holders of the same class
of such securities are exempt from all Trading Restrictions.
o The acquisition of securities through the exercise of rights issued by
an issuer PRO RATA to all holders of a class of securities, to the
extent the rights were acquired in the issue are exempt from all
Trading Restrictions.
o Nondiscretionary transactions in Company Stock (e.g., the acquisition
of securities through KCSI's Employee Stock Purchase Plan ("ESPP") or
the receipt of options in Company Stock as part of a compensation or
benefit plan) are exempt from all Trading Restrictions. Discretionary
transactions in Company Stock issued by JCC are exempt from all
Trading Restrictions. Discretionary transactions in Company Stock
issued by KCSI (e.g., exercising options or selling ESPP Stock) are
exempt from all Trading Restrictions except Preclearance (See
procedures for Preclearance of Company Stock).
o The acquisition of securities by gift or inheritance are exempt from
all Trading Restrictions.
PRECLEARANCE
Access Persons (except Outside Directors and Outside Trustees) must obtain
preclearance prior to engaging in any personal transaction in applicable Covered
Securities. Preclearance procedures, as well as special procedures for
preclearing transactions in KCSI securities, tender offer transactions and stock
purchase plans are set forth below.
- -------------
(1) Unless otherwise noted, restrictions on personal transactions apply to
transactions involving Covered Securities, including any derivative thereof.
When determining the amount of disgorgement required with respect to a
derivative, consideration will be given to price differences in both the
derivative and the underlying securities, with the lesser amount being used for
purposes of computing disgorgement. For example, in determining whether a
reimbursement is required when the applicable personal trade is in a derivative
and the Client transaction is in the underlying security, the amount shall be
calculated using the lesser of (a) the difference between the price paid or
received for the derivative and the closing bid or ask price (as appropriate)
for the derivative on the date of the Client transaction, or (b) the difference
between the last sale price, or the last bid or ask price (as appropriate) of
the underlying security on the date of the derivative transaction, and the price
received or paid by the Client for the underlying security. Neither preclearance
nor disgorgement shall be required if such person's transaction is to close,
sell or exercise a derivative within five days of its expiration.
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TRADING BAN ON PORTFOLIO MANAGERS AND ASSISTANT PORTFOLIO MANAGERS
Portfolio managers and their assistants are prohibited from trading
personally in Covered Securities. However, the following types of transactions
are exempt from this policy, but are subject to all applicable provisions of the
Rules, including preclearance:
o Purchases or sales of securities issued by JCC or KCSI;
o The sale of any security that is not held by any Client; and
o The sale of any security in order to raise cash to meet personal financial
needs (e.g., to purchase a home, automobile, etc.).
60 DAY RULE
Access Persons (except Outside Directors and Outside Trustees) shall
disgorge any profits realized in the purchase and sale, or sale and purchase, of
the same or equivalent Covered Securities within 60 calendar days if a Client
held or traded the security during the 60 day period.
BLACKOUT PERIOD
No Access Person may engage in a transaction in a Covered Security when
such person knows there to be pending, on behalf of any Client, a "buy" or
"sell" order in that same security. The existence of pending orders will be
checked as part of the preclearance process referenced above. Preclearance may
be given when any pending Client order is executed or withdrawn.
FIFTEEN DAY RULE
Any Access Person (except Outside Directors and Outside Trustees) who buys
or sells an applicable Covered Security within fifteen calendar days before such
security is bought or sold on behalf of any Client must disgorge any price
advantage realized. The price advantage shall be the favorable spread, if any,
between the price paid or received by such person and the least favorable price
paid or received by a Client during such period.(2)
SEVEN DAY RULE
Any portfolio manager or assistant portfolio manager who buys or sells an
applicable Covered Security within seven calendar days before or after he or she
trades in that security on behalf of a Client shall disgorge any profits
realized on such transaction.
SHORT SALES
Any Access Person who sells short a Covered Security that such person knows
is held long by any Client shall disgorge any profit realized on such
transaction. This prohibition shall not apply, however, to securities indices or
derivatives thereof (such as futures contracts on the S&P 500 index). Client
ownership of Covered Securities will be checked as part of the Preclearance
process referenced above.
- ------------
(2) Personal purchases are matched only against subsequent Client purchases, and
personal sales are ONLY matched against subsequent Client sales for purposes of
this restriction.
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HEDGE FUNDS, INVESTMENT CLUBS, AND OTHER INVESTMENTS
No Access Person (except Outside Directors and Outside Trustees) may
participate in hedge funds, partnerships, investment clubs, or similar
investment vehicles, unless such person does not have any direct or indirect
influence or control over the trading. Covered Persons relying upon this
provision will be required to file a Certification of Non-Influence and
Non-Control Form with the Director of Compliance.
PRECLEARANCE PROCEDURES
Preclearance must be obtained by Access Persons for all applicable
transactions in Covered Securities in which such person has a Beneficial
Interest. A Preclearance Form must be completed and forwarded to Compliance.
Compliance will notify the person when preclearance has been approved and the
trade then has four days to be executed.
GENERAL PRECLEARANCE
General preclearance shall be obtained from an authorized person from each
of the following three groups:
o A DESIGNATED LEGAL OR COMPLIANCE REPRESENTATIVE, who will present the
personal investment to the attendees of the weekly investment meeting,
whereupon an opportunity will be given to orally object. An attendee
of the weekly investment meeting shall object to such clearance if
such person knows of a conflict with a pending Client transaction or a
transaction known by such attendee to be under consideration for a
Client. Objections to such clearance should also take into account,
among other factors, whether the investment opportunity should be
reserved for a Client. If no objections are raised, the Designated
Legal or Compliance Representative shall so indicate by signing the
Preclearance Form. Such approval shall not be required for sales of
securities not held by any Clients.
In place of this authorization, Investment Personnel are required to
obtain portfolio manager approvals as noted in the section below
entitled Preclearance Requirements for Investment Personnel.
o A DESIGNATED TRADING OPERATIONS REPRESENTATIVE, who may provide
clearance if such Representative knows of no pending "buy" or "sell"
order in the security on behalf of a Client and no such trades are
known by such person to be under consideration.
o The DIRECTOR OF COMPLIANCE, OR A DESIGNATED LEGAL OR COMPLIANCE
REPRESENTATIVE IF THE DIRECTOR OF COMPLIANCE IS NOT AVAILABLE, who may
provide clearance if no legal prohibitions are known by such person to
exist with respect to the proposed trade. Approvals for such clearance
should take into account, among other factors, the existence of any
Watch List or Restricted List and, to the extent reasonably
practicable, recent trading activity and holdings of Clients.
Except for transactions in KCSI, no authorized person may preclear a
transaction in which such person has a beneficial interest.
PRECLEARANCE REQUIREMENTS FOR INVESTMENT PERSONNEL
Trades by Investment Personnel may NOT be precleared by presentation at the
weekly investment meeting. Instead, Investment Personnel must obtain the
following portfolio management approvals. However, such approval shall not be
required for sales of securities not held by any Clients:
O TRADES IN EQUITY SECURITIES require prior written approval from all
senior equity portfolio managers and either Ron Speaker or Sandy
Rufenacht;
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O TRADES IN DEBT SECURITIES require prior written approval from all
senior fixed income portfolio managers plus either Jim Craig or two
other senior equity portfolio managers.
A portfolio manager may not preclear his/her own transaction.
PRECLEARANCE OF COMPANY STOCK
Officers of Janus and certain persons designated by Compliance who wish to
make discretionary transactions in KCSI securities, or derivatives thereon, must
preclear such transactions only with the Director of Compliance or other
Designated Legal or Compliance Representative. If such persons are subject to
the provisions of Section 16 (b) of the Securities Exchange Act of 1934, trading
will generally be allowed only in the 10 business day period beginning 72 hours
after KCSI files its quarterly results with the SEC (e.g., 10Q or 10K filing,
NOT earnings release). To preclear the trade, the Director of Compliance or such
other Representative shall discuss the transaction with Janus' General Counsel
or Chief Financial Officer.
PRECLEARANCE OF TENDER OFFERS AND STOCK PURCHASE PLANS
Access Persons (other than Outside Directors and Outside Trustees) who wish
to participate in a tender offer or stock purchase plan must preclear such
trades only with the Director of Compliance prior to submitting notice to
participate in such tender offer or notice of participation in such stock
purchase plan to the applicable company. To preclear the trade, the Director of
Compliance shall consider all material factors relevant to a potential conflict
of interest between the Access Person and Clients. In addition, any increase of
$100 or more to a pre-existing stock purchase plan must be precleared.
FOUR DAY EFFECTIVE PERIOD
Clearances to trade will be in effect for only four trading days from and
including the date of the last Authorized Person's signature (which may not be
provided more than one day after the first Authorized Person's signature). For
tender offers, stock purchase plans, exercise of Company Stock and similar
transactions, the date the request is submitted to the company processing the
transaction will be considered the trade date for purposes of this requirement.
Open orders, including stop loss orders, will generally not be allowed unless
such order is expected to be completed within the four day effective period. It
will be necessary to re-preclear transactions not executed within the four day
effective period.
REPORTING TRANSACTIONS AND ACCOUNTS
Access Persons (other than Outside Trustees) must arrange for their brokers
or financial institutions to provide to Compliance, on a timely basis, duplicate
account statements and confirmations showing all transactions in brokerage or
commodities accounts in which they have a Beneficial Interest. PLEASE NOTE THAT,
EVEN IF SUCH PERSON DOES NOT TRADE COVERED SECURITIES IN A PARTICULAR BROKERAGE
OR COMMODITIES ACCOUNT (E.G., TRADING MUTUAL FUNDS IN A SCHWAB ACCOUNT), THE
REPORTING OF DUPLICATE ACCOUNT STATEMENTS AND CONFIRMATIONS IS STILL REQUIRED.
HOWEVER, IF SUCH PERSON ONLY USES A PARTICULAR BROKERAGE ACCOUNT FOR CHECKING
ACCOUNT PURPOSES, AND NOT INVESTMENT PURPOSES, THEY MAY IN-LIEU OF REPORTING
DUPLICATE ACCOUNT STATEMENTS, REPORT DUPLICATE CONFIRMATIONS AND MAKE A
QUARTERLY REPRESENTATION TO COMPLIANCE INDICATING THAT NO INVESTMENT
TRANSACTIONS OCCURRED IN THE ACCOUNT DURING THE CALENDAR QUARTER. Reporting of
accounts that do not allow any trading in Covered Securities (e.g., a mutual
fund account held directly with the fund sponsor) is not required.
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Access Persons must notify Compliance of each reportable account at the
time it is opened, and annually thereafter, including the name of the firm and
the name under which the account is carried. An Account Information Form should
be completed for this purpose.
Certain transactions, such as private placements, inheritances or gifts,
might not be reported through a securities account. In these instances, Access
Persons must report these transactions using a Monthly Transaction Report as
noted below.
Any REGISTERED PERSON, whether or not an Access Person, must notify
Compliance of each brokerage account in which they have a beneficial interest,
including the name of the firm and the name under which the account is carried.
An Account Information Form should be completed for this purpose. Such persons
are also required to authorize Janus to request and receive directly, duplicate
trade confirmations and duplicate account statements for each account.
Compliance may, from time to time, request and spot check such information for
all or a portion of such transactions or accounts.
REGISTERED PERSONS ARE REMINDED THAT THEY MUST ALSO INFORM ANY
BROKERAGE FIRM WITH WHICH THEY OPEN AN ACCOUNT, AT THE TIME THE ACCOUNT
IS OPENED, THAT THEY ARE REGISTERED WITH JDI. REGISTERED PERSONS,
UNLESS THEY ARE ALSO ACCESS PERSONS, SHOULD NOT ARRANGE TO SEND
DUPLICATE CONFIRMS - COMPLIANCE WILL ARRANGE THIS IF DESIRED.
NON-ACCESS PERSONS who engage in an aggregate of $25,000 or more of
transactions in Covered Securities within a calendar year, must provide
Compliance an Annual Transaction Report listing all such transactions in all
accounts in which such person has a Beneficial Interest. Compliance will request
this information annually and will spot check such reports.
OUTSIDE TRUSTEES need only report a transaction in a Covered Security if
such person, at the time of that transaction, knew or, in the ordinary course of
fulfilling his or her official duties as a Trustee should have known, that,
during the fifteen-day period immediately preceding the date of his or her
personal transaction, such security was purchased or sold by, or was being
considered for purchase or sale on behalf of, any Janus Fund for which such
person acts as Trustee.
MONTHLY TRANSACTION REPORTS
ACCESS PERSONS (other than Outside Trustees) must provide a Monthly
Transaction Report within 10 days after any month end showing all transactions
in Covered Securities for which confirmations are known by such person to not
have been timely provided to Janus, and all such transactions that are not
effected in securities or commodities accounts, including without limitation
nonbrokered private placements, gifts, inheritances, and other transactions in
Covered Securities.
Such persons must promptly comply with any request of the Director of
Compliance to provide monthly reports regardless of whether their broker has
been instructed to provide duplicate confirmations. Such reports may be
requested, for example, to check that all applicable confirmations are being
received or to supplement the requested confirmations where a broker is
difficult to work with or otherwise fails to provide duplicate confirmations on
a timely basis.
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NON-INFLUENCE AND NON-CONTROL ACCOUNTS
The Rules shall not apply to any account, partnership, or similar
investment vehicle over which a Covered Person has no direct or indirect
influence or control. Covered Persons relying upon this provision will be
required to file a Certification of Non-Influence and Non-Control Form with the
Director of Compliance.
Any Account beneficially owned by a Covered Person that is managed by JCC
in a discretionary capacity is not covered by these Rules so long as such person
has no direct or indirect influence or control over the account. The employment
relationship between the account-holder and the individual managing the account,
in the absence of other facts indicating control, will not be deemed to give
such account-holder influence or control over the account.
OTHER REQUIRED FORMS
In addition to the Account Information Form, Monthly and Annual Transaction
Reports, and Certification of Non-Influence and Non-Control Form discussed
above, the following forms must be completed if applicable to you:
ACKNOWLEDGEMENT FORMS
Each Covered Person must, upon commencement of services and annually
thereafter, provide Compliance with an Acknowledgment Form stating that he or
she has reviewed and complied with the Rules and has reported all applicable
securities transactions.
INVESTMENT PERSONNEL REPRESENTATION FORM
Investment Personnel must, upon commencement of services and annually
thereafter, provide Compliance with an Investment Personnel Representation Form
which lists all Covered Securities beneficially held. In addition, such persons
must provide a brief description of any positions held (e.g., director, officer,
other) with for-profit entities other than Janus.
OUTSIDE DIRECTOR/TRUSTEE REPRESENTATION FORM
All Outside Directors and Outside Trustees must, upon commencement of
services and annually thereafter, provide Compliance with an Outside
Director/Trustee Representation Form. The Form declares that such persons agree
to refrain from trading in any securities when they are in possession of any
information regarding trading recommendations made or proposed to be made to any
Client by Janus or its officers or employees.
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INSIDER TRADING POLICY
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BACKGROUND INFORMATION
The term "insider trading" is not defined in the federal securities
statutes, but generally is used to refer to the use of material nonpublic
information to trade in securities (whether or not one is an "insider") or to
communications of material nonpublic information to others.
While the law concerning insider trading can be complex and unclear, you
should assume that the law prohibits:
o trading by an insider, while in possession of material nonpublic
information,
o trading by a non-insider, while in possession of material nonpublic
information, where the information was disclosed to the non-insider
(either directly or through one or more intermediaries) in violation
of an insider's duty to keep it confidential,
o communicating material nonpublic information to others in breach of a
duty not to disclose such information, and
o misappropriating confidential information for securities trading
purposes, in breach of a duty owed to the source of the information to
keep the information confidential.
Trading based on material nonpublic information about an issuer does not
violate this policy unless the trader (i) is an "insider" with respect to an
issuer; (ii) receives the information from an insider or from someone that the
trader knows received the information from an insider, either directly or
indirectly, or (iii) misappropriates the nonpublic information or obtains or
misuses it in breach of a duty of trust and confidence owed to the source of the
information. Accordingly, trading based on material nonpublic information about
an issuer can be, but is not necessarily, a violation of this Policy. Trading
while in possession of material nonpublic information relating to a tender offer
is prohibited under this Policy regardless of how such information was obtained.
Application of the law of insider trading to particular transactions can be
difficult, particularly if it involves a determination about trading based on
material nonpublic information. You legitimately may be uncertain about the
application of this Policy in particular circumstances. If you have any
questions regarding the application of the Policy or you have any reason to
believe that a violation of the Policy has occurred or is about to occur, you
should contact the Chief Compliance Officer or the Director of Compliance.
The following discussion is intended to help you understand the principal
concepts involved in insider trading.
WHO IS AN INSIDER?
The concept of "insider" is broad. It includes officers, directors and
employees of a company. In addition, a person can be a "temporary insider" if he
or she enters into a special confidential relationship in the conduct of a
company's affairs and as a result is given access to information solely for the
company's purposes. A temporary insider can include, among others, a company's
attorneys, accountants, consultants, bank lending officers, and the employees of
such organizations. In addition, one or more of the Janus entities may become a
temporary insider of a company it advises or for which it performs other
services. To be considered an insider, the company must expect the outsider to
keep the disclosed nonpublic information confidential and/or the relationship
must at least imply such a duty.
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WHEN IS INFORMATION NONPUBLIC?
Information remains nonpublic until it has been made public. Information
becomes public when it has been effectively communicated to the marketplace,
such as by a public filing with the SEC or other governmental agency, inclusion
in the Dow Jones "tape" or publication in THE WALL STREET JOURNAL or another
publication of general circulation. Moreover, sufficient time must have passed
so that the information has been disseminated widely.
WHAT IS MATERIAL INFORMATION?
Trading on inside information is not a basis for liability unless the
information is material. "Material information" generally means information for
which there is a substantial likelihood that a reasonable investor would
consider it important in making his or her investment decisions, or information
that is reasonably certain to have a substantial effect on the price of a
company's securities. Information that should be considered material includes,
but is not limited to: dividend changes, earnings estimates, changes in
previously released earnings estimates, significant merger or acquisition
proposals or agreements, major litigation, liquidation problems, and
extraordinary management developments.
Material information may also relate to the MARKET for a company's
securities. Information about a significant order to purchase or sell securities
may, in some contexts, be deemed material. Similarly, prepublication information
regarding reports in the financial press also may be deemed material. For
example, the Supreme Court upheld the criminal convictions of insider trading
defendants who capitalized on prepublication information about THE WALL STREET
JOURNAL'S "Heard on the Street" column.
WHEN IS INFORMATION MISAPPROPRIATED?
The misappropriation theory prohibits trading on the basis of non-public
information by a corporate "outsider" in breach of a duty owed not to a trading
party, but to the source of confidential information. Misappropriation of
information occurs when a person obtains the non-public information through
deception or in breach of a duty of trust and loyalty to the source of the
information.
PENALTIES FOR INSIDER TRADING
Penalties for trading on or communicating material nonpublic information
are severe, both for individuals involved in such unlawful conduct and their
employers or other controlling persons. A person can be subject to some or all
of the penalties below even if he or she does not personally benefit from the
violation. Penalties include:
o civil injunctions
o treble damages
o disgorgement of profits
o jail sentences for up to 10 years
o fines up to $1,000,000 (or $2,500,000 for corporations and other
entities)
o civil penalties for the person who committed the violation of up to
three times the profit gained or loss avoided, whether or not the
person actually benefited, and
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o civil penalties for the employer or other controlling person of up to
the greater of $1,000,000 or three times the amount of the profit
gained or loss avoided.
In addition, any violation of the law may result in serious sanctions by
Janus, including termination of employment.
WHO IS A CONTROLLING PERSON?
Included as controlling persons are Janus and its Directors, Trustees and
officers. If you are a Director, Trustee or officer, you have a duty to act to
prevent insider trading. Failure to fulfill such a duty may result in penalties
as described above.
PROCEDURES TO IMPLEMENT POLICY
The following procedures have been established to aid the Directors,
Trustees, officers and employees of Janus in avoiding insider trading, and to
aid Janus in preventing, detecting and imposing sanctions against insider
trading.
IDENTIFYING MATERIAL INSIDE INFORMATION
Before trading for yourself or others, including the Janus Funds or other
Clients, in the securities of a company about which you may have potential
inside information, ask yourself the following questions:
o To whom has this information been provided? Has the information been
effectively communicated to the marketplace?
o Has this information been obtained from either the issuer or from
another source in breach of a duty to that source to keep the
information confidential?
o Is the information material? Is this information that an investor
would consider important in making his or her investment decisions? Is
this information that would affect the market price of the securities
if generally disclosed?
Special caution should be taken with respect to potential inside
information regarding JCC. Although JCC's shares are not publicly traded, JCC's
parent, KCSI, is a publicly traded company. KCSI owns 82% of the stock of JCC.
As a result, potential inside information regarding JCC may affect trading in
KCSI stock and should be reported pursuant to the procedures set forth below.
REPORTING INSIDE INFORMATION
If, after consideration of the above, you believe that the information is
material and nonpublic, or if you have questions as to whether the information
is material and nonpublic, you should take the following steps:
o Do not purchase or sell the securities on behalf of yourself or
others, including Clients.
o Do not communicate the information inside or outside of Janus, other
than to the Chief Compliance Officer or the Director of Compliance.
o Immediately advise the Chief Compliance Officer or Director of
Compliance of the nature and source of
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such information. The Chief Compliance Officer or Director of
Compliance will review the information with the Ethics Committee.
o Depending upon the determination made by the Ethics Committee, or by
the Chief Compliance Officer until the Committee can be convened, you
may be instructed to continue the prohibition against trading and
communication and the Director of Compliance will place the security
on a Restricted List or Watch List, as described below. Alternatively,
if it is determined that the information obtained is not material
nonpublic information, you may be allowed to trade and communicate the
information.
WATCH AND RESTRICTED LISTS
Whenever the Ethics Committee or the Chief Compliance Officer determines
that a Director, Trustee, officer or employee of Janus is in possession of
material nonpublic information with respect to a company (regardless of whether
it is currently owned by any Client) such company will either be placed on a
Watch List or on a Restricted List.
WATCH LIST. If the security is placed on a Watch List, the flow of the
information to other Janus personnel will be restricted in order to allow such
persons to continue their ordinary investment activities. This procedure is
commonly referred to as a "Chinese Wall."
RESTRICTED LIST. If the Ethics Committee or the Chief Compliance Officer
determines that material nonpublic information is in the possession of a
Director, Trustee, officer, or employee of Janus and cannot be adequately
isolated through the use of a Chinese Wall, the company will be placed on the
Restricted List. While a company is on the Restricted List, no Investment Person
shall initiate or recommend any transaction in any Client account, and no Access
Person shall be precleared to transact in any account in which he or she has a
beneficial interest, with respect to the securities of such company. The Ethics
Committee or the Chief Compliance Officer will also have the discretion of
placing a company on the Restricted List even though no "break in the Chinese
Wall" has or is expected to occur with respect to the material nonpublic
information about the company. Such action may be taken by such persons for the
purpose of avoiding any appearance of the misuse of material nonpublic
information.
The Ethics Committee or the Chief Compliance Officer will be responsible
for determining whether to remove a particular company from the Watch List or
Restricted List. The only persons who will have access to the Watch List or
Restricted List are members of the Ethics Committee, Designated Legal or
Compliance Representatives and such persons who are affected by the information.
The Watch List and Restricted List are highly confidential and should, under no
circumstances, be discussed with or disseminated to anyone other than the
persons noted above.
PROTECTING INFORMATION
Directors, Trustees, officers and employees of Janus shall not disclose any
nonpublic information (whether or not it is material) relating to Janus or its
securities transactions to any person outside Janus (unless such disclosure has
been authorized by the Chief Compliance Officer). Material nonpublic information
may not be communicated to anyone, including any Director, Trustee, officer or
employee of Janus, except as provided in this Policy. Access to such information
must be restricted. For example, access to files containing material nonpublic
information and computer files containing such information should be restricted,
and conversations containing such information, if appropriate at all, should be
conducted in private.
To insure the integrity of the Chinese Wall and to avoid unintended
disclosures, it is important that all employees take the following steps with
respect to confidential or nonpublic information:
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o Do not discuss confidential information in public places such as
elevators, hallways or social gatherings.
o To the extent practical, limit access to the areas of the firm where
confidential information could be observed or overheard to employees
with a business need for being in the area.
o Avoid use of speakerphones in areas where unauthorized persons may
overhear conversations.
o Avoid use of wireless and cellular phones, or other means of
communication which may be intercepted.
o Where appropriate, maintain the confidentiality of Client identities
by using code names or numbers for confidential projects.
o Exercise care to avoid placing documents containing confidential
information in areas where they may be read by unauthorized persons
and to store such documents in secure locations when they are not in
use.
o Destroy copies of confidential documents no longer needed for a
project unless required to be saved pursuant to applicable
recordkeeping policies or requirements.
RESPONSIBILITY TO MONITOR TRANSACTIONS
Compliance will monitor transactions of Clients and employees for which
reports are received to detect the existence of any unusual trading activities
with respect to companies on the Watch and Restricted Lists. Compliance will
immediately report any unusual trading activity directly to the Director of
Compliance, and in his or her absence, the Chief Compliance Officer, who will be
responsible for determining what, if any, action should be taken.
RECORD RETENTION
Copies of the Watch List and Restricted List shall be maintained by the
Director of Compliance for a minimum of six years.
TENDER OFFERS
Tender offers represent a particular concern in the law of insider trading
for two reasons. First, tender offer activity often produces extraordinary
fluctuations in the price of the target company's securities. Trading during
this time period is more likely to attract regulatory attention (and produces a
disproportionate percentage of insider trading cases). Second, the SEC has
adopted a rule which expressly forbids trading and "tipping" while in possession
of material nonpublic information regarding a tender offer received from the
tender offeror, the target company or anyone acting on behalf of either. Janus
employees and others subject to this Policy should exercise particular caution
any time they become aware of nonpublic information relating to a tender offer.
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GIFT POLICY
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Gifts may only be given (OR ACCEPTED) if they are in accordance with
normally accepted business practices and do not raise any question of
impropriety. A question of impropriety may be raised if a gift influences or
gives the appearance of influencing the recipient. The following outlines Janus'
policy on giving and receiving gifts to help us maintain those standards and is
applicable to all Inside Directors and Inside Trustees, officers and employees
of Janus.
GIFT GIVING
Neither you nor members of your immediate family may give any gift, series
of gifts, or other thing of value, including cash, loans, personal services, or
special discounts ("Gifts") in excess of $100 per year to any Client or any one
person or entity that does or seeks to do business with or on behalf of Janus or
any Client (collectively referred to herein as "Business Relationships").
GIFT RECEIVING
Neither you nor members of your immediate family may receive any Gift of
material value from any single Business Relationship. A Gift will be considered
material in value if it influences or gives the appearance of influencing the
recipient.
In the event the aggregate fair market value of all Gifts received by you
from any single Business Relationship is estimated to exceed $250 in any
12-month period, you must immediately notify your manager. Managers that receive
such notification must report this information to the Director of Compliance if
it appears that such Gifts may have improperly influenced the receiver. If the
Gift is made in connection with the sale or distribution of registered
investment company or variable contract securities, the aggregate fair market
value of all such Gifts received by you from any single Business Relationship
may never exceed $100 in any 12-month period.
Occasionally, Janus employees are invited to attend or participate in
conferences, tour a company's facilities, or meet with representatives of a
company. Such invitations may involve traveling and may require overnight
lodging. Generally, all travel and lodging expenses provided in connection with
such activities must be paid for by Janus. However, if appropriate, and with
prior approval from your manager, you may accept travel related amenities if the
costs are considered insubstantial and are not readily ascertainable.
The solicitation of a Gift is prohibited (I.E., YOU MAY NOT REQUEST A GIFT,
SUCH AS TICKETS TO A SPORTING EVENT, BE GIVEN TO you).
CUSTOMARY BUSINESS AMENITIES
Customary business amenities are not considered Gifts so long as such
amenities are BUSINESS RELATED (E.G., IF YOU ARE ACCEPTING TICKETS TO A SPORTING
EVENT, THE OFFERER MUST GO WITH YOU), reasonable in cost, appropriate as to time
and place, and neither so frequent nor so costly as to raise any question of
impropriety. Customary business amenities which you and, if appropriate, your
guests, may accept (OR GIVE) include an occasional meal, a ticket to a sporting
event or the theater, green fees, an invitation to a reception or cocktail
party, or comparable entertainment.
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OUTSIDE EMPLOYMENT POLICY
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No Inside Director, Inside Trustee, officer or employee of Janus shall
accept employment or compensation as a result of any business activity (other
than a passive investment), outside the scope of his relationship with Janus
unless such person has provided prompt written notice of such employment or
compensation to the Chief Compliance Officer (or, for Registered Persons, to
JDI's Operations Manager), and, in the case of securities-related employment or
compensation, has received the prior written approval of the Ethics Committee.
Registered Persons are reminded to update and submit their Outside Business
Activity Disclosure forms as appropriate pursuant to JDI's Written Supervisory
Procedures and applicable NASD rules.
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PENALTY GUIDELINES
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OVERVIEW
Covered Persons who violate any of the requirements, restrictions, or
prohibitions of the Rules may be subject to sanctions imposed by the Ethics
Committee. The following guidelines shall be used by the Director of Compliance
for recommending remedial actions for Covered Persons who violate prohibitions
or disregard requirements of the Rules. Deviations from the Fifteen Day Rule are
not considered to be violations under the Rules and, therefore, are not subject
to the penalty guidelines.
Upon learning of a potential deviation or violation from the Rules, the
Director of Compliance will provide a written recommendation of remedial action
to the Ethics Committee. The Ethics Committee has full discretion to approve
such recommendations or impose other sanctions it deems appropriate. The Ethics
Committee will take into consideration, among other things, whether the
violation was a technical violation of the Rules or inadvertent oversight (i.e.,
ill-gotten profits versus general oversight). The guidelines are designed to
promote consistency and uniformity in the imposition of sanctions and
disciplinary matters.
PENALTY GUIDELINES
Outlined below are the guidelines for the sanctions that may be imposed on
Covered Persons who fail to comply with the Rules:
o 1st violation - Compliance will send a memorandum of reprimand to the
person, copying his/her supervisor. The memorandum will generally
reinforce the person's responsibilities under the Rules, educate the
person on the severity of personal trading violations and inform the
person of the possible penalties for future failure to comply with the
Rules;
o 2nd violation - Janus' Chief Investment Officer, James P. Craig, will
meet with the person to discuss the violations in detail and will
reinforce the importance of complying with the Rules;
o 3rd violation - Janus' Chairman of the Board, Thomas H. Bailey, will
meet the person to discuss the violations in detail and will reinforce
the importance of complying with the Rules;
o 4th violation - The Executive Committee will impose such sanctions as
it deems appropriate, including without limitation, a letter of
censure, fines, withholding of bonus payments, or suspension or
termination of employment or personal trading privileges.
In addition to the above disciplinary sanctions, such persons may be
required to disgorge any profits realized in connection with such violation. All
disgorgement proceeds collected will be donated to a charitable organization
selected by the Ethics Committee. All sanctions imposed will be documented in
such person's personal trading file maintained by Janus, and will be reported to
the Executive Committee.
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SUPERVISORY AND COMPLIANCE PROCEDURES
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Supervisory procedures can be divided into two classifications: prevention
of violations and detection of violations. Compliance review procedures include
preparation of special and annual reports, record maintenance and review, and
confidentiality preservation.
SUPERVISORY PROCEDURES
PREVENTION OF VIOLATIONS
To prevent violations of the Rules, the Director of Compliance should, in
addition to enforcing the procedures outlined in the Rules:
1. review and update the Rules as necessary, at least once annually, including
but not limited to a review of the Code by the Chief Compliance Officer,
the Ethics Committee and/or counsel;
2. answer questions regarding the Rules, or refer the same to the Chief
Compliance Officer;
3. request from all persons upon commencement of services, and annually
thereafter, any applicable forms and reports as required by the Rules;
4. write letters to the securities firms requesting duplicate confirmations
and account statements where necessary; and
5. with such assistance from the Human Resources Department as may be
appropriate, maintain a continuing education program consisting of the
following:
a) orienting Directors, Trustees, officers, and employees who are new to
Janus to the Rules, and
b) further educating Directors, Trustees, officers, and employees by
distributing memos or other materials that may be issued by outside
organizations such as the Investment Company Institute discussing the
issue of insider trading and other issues raised by the Rules.
DETECTION OF VIOLATIONS
To detect violations of these Rules, the Director of Compliance should, in
addition to enforcing the procedures outlined in the Rules:
o Review reports, confirmations, and statements relative to applicable
restrictions, as provided under the Code;
o Review the Restricted and Watch Lists relative to applicable personal
and Client trading activity, as provided under the Policy;
Spot checks of certain information are permitted as noted under the Code.
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COMPLIANCE PROCEDURES
REPORTS OF POTENTIAL DEVIATIONS OR VIOLATIONS
Upon learning of a potential deviation or violation of the Rules, the
Director of Compliance should prepare a written report providing full details
and a recommendation of remedial action to the Ethics Committee. The Ethics
Committee shall thereafter take such action as it deems appropriate (see Penalty
Guidelines).
ANNUAL REPORTS
The Director of Compliance should prepare at least annually a written
report for the Ethics Committee. This report shall set forth the following
information, and shall be confidential.
o Copies of the Rules, as revised, including a summary of any changes
made during the past year;
o Identification of any violations requiring significant remedial action
during the past year; and
o Recommendations, if any, regarding changes in existing restrictions or
procedures based upon Janus' experience under these Rules, evolving
industry practices, or developments in applicable laws or regulations.
The Ethics Committee will annually report to the Trustees with respect to
any of the above items to the extent that the Janus Funds are materially
affected thereby.
RECORDS
Compliance should maintain the following records:
o Files for personal securities transaction confirmations and account
statements, all reports and other forms submitted by Covered Persons
pursuant to these Rules and any other pertinent information. Such
files shall be stored in a secure location;
o A copy of each preclearance;
o A list of all persons who are, or have been, required to make reports
pursuant to these Rules.
INSPECTION
The records and reports maintained by Compliance pursuant to the Rules
shall at all times be available for inspection, without prior notice, by any
member of the Ethics Committee.
CONFIDENTIALITY
All procedures, reports and records monitored, prepared or maintained
pursuant to these Rules shall be considered confidential and proprietary to
Janus and shall be maintained and protected accordingly. Except as otherwise
required by law or this Policy, such matters shall not be disclosed to anyone
other than to members of the Ethics Committee, as requested.
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THE ETHICS COMMITTEE
The purpose of this Section is to describe the Ethics Committee. The Ethics
Committee is created to provide an effective mechanism for monitoring compliance
with the standards and procedures contained in the Rules and to take appropriate
action at such times as violations or potential violations are discovered.
MEMBERSHIP OF THE COMMITTEE
The Committee consists of Steven R. Goodbarn, Vice President of Finance,
Treasurer and Chief Financial Officer; Thomas A. Early, Vice President and
General Counsel; Stephen L. Stieneker, Vice President of Compliance, Chief
Compliance Officer and Assistant General Counsel; and Ted S. Dryden, Director of
Compliance. The Director of Compliance currently serves as the Chairman of the
Committee. The composition of the Committee may be changed from time to time.
COMMITTEE MEETINGS
The Committee shall generally meet every four months or as often as
necessary to review operation of the compliance program and to consider
technical deviations from operational procedures, inadvertent oversights, or any
other potential violation of the Rules. At such time as the Director of
Compliance learns of a potential violation, he or she shall report such
violation to the Chief Compliance Officer, together with all documents relating
to the matter. The Chief Compliance Officer shall either present the information
at the next regular meeting of the Committee, or convene a special meeting.
Deviations alternatively may be addressed by including them in the
employee's personnel records maintained by Janus. Committee meetings are
primarily intended for consideration of the general operation of the compliance
program and substantive or serious departures from standards and procedures in
the Rules.
A Committee meeting may be attended, at the discretion of the Committee, by
such other persons as the Committee shall deem appropriate. Any individual whose
conduct has given rise to the meeting may also be called upon, but shall not
have the right, to appear before the Committee.
It is not required that minutes of Committee meetings be maintained; in
lieu of minutes the Committee may issue a report describing any action taken.
The report shall be included in the confidential file maintained by the Director
of Compliance with respect to the particular employee or employees whose conduct
has been the subject of the meeting.
SPECIAL DISCRETION
The Committee shall have the authority by unanimous action to exempt any
person or class of persons from all or a portion of the Rules, provided that:
o the Committee determines, on advice of counsel, that the particular
application of all or a portion of the Rules is not legally required;
o the Committee determines that the likelihood of any abuse of the Rules
by such exempted person(s) is remote;
o the terms or conditions upon which any such exemption is granted is
evidenced in a written instrument; and
25
<PAGE>
o the exempted person(s) agrees to execute and deliver to the Director
of Compliance, at least annually, a signed Acknowledgment Form, which
Acknowledgment shall, by operation of this provision, include such
exemptions and the terms and conditions upon which it was granted.
The Committee shall also have the authority by unanimous action to impose
such additional requirements or restrictions as it, in its sole discretion,
determines appropriate or necessary, as outlined in the Penalty Guidelines.
Any exemption, and any additional requirement or restriction, may be
withdrawn by the Committee at any time (such withdrawal action is not required
to be unanimous).
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GENERAL INFORMATION ABOUT THE ETHICS RULES
- --------------------------------------------------------------------------------
DESIGNEES
The Director of Compliance and the Chief Compliance Officer may appoint
designees to carry out their functions pursuant to these Rules.
ENFORCEMENT
In addition to the penalties described in the Penalty Guidelines and
elsewhere in the Rules, upon discovering a violation of the Rules, the Janus
entity with which you are associated may impose such sanctions as it deems
appropriate, including without limitation, a letter of censure or suspension or
termination of employment or personal trading privileges of the violator. All
material violations of the Rules and any sanctions imposed with respect thereto
shall be reported periodically to the Directors and Trustees and the directors
of any other Janus entity which has been directly affected by the violation.
INTERNAL USE
The Rules are intended solely for internal use by Janus and do not
constitute an admission, by or on behalf of such companies, their controlling
persons or persons they control, as to any fact, circumstance or legal
conclusion. The Rules are not intended to evidence, describe or define any
relationship of control between or among any persons. Further, the Rules are not
intended to form the basis for describing or defining any conduct by a person
that should result in such person being liable to any other person, except
insofar as the conduct of such person in violation of the Rules may constitute
sufficient cause for Janus to terminate or otherwise adversely affect such
person's relationship with Janus.
- --------------------------------------------------------------------------------
FORMS
- --------------------------------------------------------------------------------
Attached are blank forms for use in complying with the Rules. These forms
may be revised from time to time, as the Ethics Committee shall determine.
Please contact Compliance if you need additional forms or if you have any
questions.
26
<PAGE>
LUTHER KING CAPITAL MANAGEMENT
CODE OF ETHICS
JANUARY 1, 1998
<PAGE>
STATEMENT OF GENERAL PRINCIPLES
This statement of policy deals with codes of ethics under Rule 17j-1 of the
Investment Company Act of 1940. It applies to Luther King Capital Management as
a registered investment advisor but does not supplant other obligations or
prohibitions to which Luther King Capital Management may be subjected under the
Investment Adviser Act of 1940.
The Code of Ethics is based on the principle that the officers, directors and
employees of Luther King Capital Management owe a fiduciary duty to clients to
conduct their personal securities transactions in a manner which does not
interfere with client portfolio transactions or otherwise take unfair advantage
of their relationship with clients. In all cases, the best interest of clients
must come first. All personal security transactions must be conducted consistent
with the Code of Ethics and in such a manner as to avoid any actual or potential
conflict of interest. Persons covered by the Code of Ethics must adhere to this
general principle as well as comply with the specific provisions of the Code of
Ethics.
SECTION I - DEFINITIONS
A. DEFINITIONS
1. "Adviser" means Luther King Capital Management.
2. "Access person" means any director, officer, shareholder or
adviser person of the Adviser who makes any recommendation
regarding the purchase or sale of a security by the Adviser,
participates in the determination of which recommendation shall be
made to clients of the Adviser, or who, in connection with his
duties, obtains any information concerning securities
recommendations being made by the Adviser.
SECTION II - APPLICABILITY OF CODE OF ETHICS
This Code of Ethics shall apply to any employee of the firm who meets the
definition of "access person." This definition includes portfolio managers,
analysts and traders employed by the Adviser who provides service to any client
to which the Adviser acts as investment adviser. There may be additional
employees who fall within the definition of "access person" who, because of the
nature of their position, possess information regarding the securities that the
Adviser will purchase or sell on behalf of its clients. A comprehensive list of
all "access people" will be compiled and maintained by Luther King Capital
Management.
SECTION III - TEXT OF RULE 17J-1 OF THE INVESTMENT COMPANY ACT
The actual text of Rule 17j-1(a) pursuant to which this Code of Ethics is
adopted is attached as Exhibit A. All "access persons" are required to
familiarize themselves with
<PAGE>
this rule and execute the attached Acknowledgement Form. This form should be
forwarded to Jacqui Brownfield.
SECTION IV - RESTRICTIONS ON PERSONAL INVESTING ACTIVITIES
Personal investment activities of all "access persons" employed by the Adviser
must remain within the parameters set forth below. There may be limited
circumstances where exceptions to these restrictions will be allowed. Any such
requests will be reviewed on an individual basis by Scot Hollmann.
(a) Prohibition on acquiring securities in an initial public offering
within 30 days of the initial offering.
(b) Prior approval for participation in private placements.
Acquisitions of securities in a private placement will be subject to a process
of prior review. Prior approval shall be obtained from Jacqui Brownfield prior
to any participation in a private placement by an "access person".
(c) Duplicate copies of broker's confirmations to employer.
All "access persons" are required to have their broker(s) supply duplicate
copies of confirmations of all personal securities transactions directly to
Jacqui Brownfield. The quarterly Report of Security Transactions (attached)
should be completed and forwarded to Jacqui Brownfield by the 10th day following
the end of a calendar quarter. The transactions reported on the confirmations
will be reviewed for compliance each quarter. If these reports are not turned in
by the 10th, paychecks will be withheld until that time when the reports are
completed in proper form.
(d) Pre-clearance of personal securities transactions.
"Access Persons" will be required to pre-clear personal securities transactions
through the trading department. All "access persons" must submit the attached
Personal Transaction Pre-Clearance Form to a trader before executing any
personal securities transaction. The security will be checked against current
trades to determine whether the purchase or sale would violate the Code of
Ethics. All "access persons" are allowed to buy or sell a security for their own
account under the condition that no client trade in the security is currently
being worked on the trading desk. The intent of this restriction is to insure
that "access persons" do not benefit from knowledge of client transactions and
that access person trades do not interfere with client transactions.
(e) Disclosure of personal holdings.
Upon commencement of employment, all "access persons" are required to submit the
attached Disclosure of Personal Holding Form listing all securities that they
hold. The form should be forwarded to Jacqui Brownfield.
<PAGE>
(f) Gifts
All "access persons" are prohibited from accepting gifts of more than de minimus
value from any individual doing business with or on behalf of a client to which
Luther King Capital Management acts as an adviser. Business meals and
entertainment are excluded from the definition of "gift".
(g) Service as a director.
All "access persons" are prohibited from serving on the boards of directors of
any publicly traded company absent prior authorization from Luther King.
Authorization will be based upon a determination that the board service would be
consistent with the interests of any client that the "access person" services.
This restriction does not apply to service on the board of any not-for-profit
corporation or organization.
SECTION V - EXEMPTED TRANSACTIONS
The following transactions are specifically exempted from coverage by this Code
of Ethics:
(a) Transactions in Securities issued by the Government of the United
States.
(b) Transactions in shares of open-ended investment companies.
(c) Transactions involving bank certificates of deposit.
(d) Transactions effected in any account over which the "access person"
has no direct influence or control (e.g. blind trust,
discretionary account or Trust managed by a third party).
(e) Transactions which are part of an automatic dividend reinvestment plan.
SECTION VI - OVERSIGHT OF CODE OF ETHICS
The reports filed by "access persons" pursuant to this Code of Ethics will be
reviewed on a quarterly basis and compared to transactions entered into by the
Adviser on behalf of the clients to which it acts as investment adviser. Any
transactions that are believed to be a violation of this Code of Ethics will be
reported promptly to Luther King.
Luther King shall consider reports made to him and upon determining that a
violation of this Code of Ethics has occurred, may impose such sanctions or
remedial action as he deems appropriate. These sanctions may include, among
other things, suspension or termination of employment with the Firm.
<PAGE>
APPENDIX VII
FULL TEXT OF INVESTMENT COMPANY ACT
RULE 17J-1
17 C.F.R. 270.17J-1
CERTAIN UNLAWFUL ACTS, PRACTICES OR COURSES OF BUSINESS AND REQUIREMENTS
RELATING TO CODES OF ETHICS WITH RESPECT TO REGISTERED INVESTMENT COMPANIES
Reg. ss. 270.17j-1. (a) It shall be unlawful for any affiliated person
of or principal underwriter for a registered company, or any affiliated person
of an investment adviser of or principal underwriter for a registered investment
company in connection with the purchase or sale, directly or indirectly, by such
person of a security held or to be acquired, as defined in this section, by such
registered investment company -
(1) To employ any device, scheme or artifice to defraud such
registered investment company;
(2) To make to such registered investment company any untrue
statement of a material fact or omit to state to such registered investment
company a material fact necessary in order to make the statements made, in light
of the circumstances under which they are made, not misleading;
(3) To engage in any act, practice, or course of business which
operates or would operate as a fraud or deceit upon such registered investment
company; or
(4) To engage in any manipulative practice with respect to such
registered investment company.
(b)(1) Every registered investment company, and each investment adviser
of or principal underwriter for such investment company, shall adopt a written
code of ethics containing provisions reasonably necessary to prevent its access
persons from engaging in any act, practice, or course of business prohibited by
paragraph (a) of this section and shall use reasonable diligence, and institute
procedures reasonably necessary, to prevent violations of such code.
(2) The requirements of paragraph (b)(1) shall not apply to any
underwriter (i) which is not an affiliate person of the registered investment
company or its investment adviser, and (ii) none of whose officers,
directors or general partners serves as an officer, director or general
partner of such registered investment company or investment adviser.
(c)(1) Every access person of a registered investment company or of an
investment adviser of or principal underwriter for such investment company shall
report to such investment company, investment adviser or principal underwriter
of which he or she is an access person the information described in paragraph
(c)(2) with respect to
<PAGE>
APPENDIX VII
FULL TEXT OF RULE 17J-1
PAGE 2
transactions in any security in which such access persons has, or by reason of
such transactions in any security in which such access person has, or by reason
of such transaction acquires, any direct or indirect beneficial ownership in the
security: PROVIDED, HOWEVER, that any such report may contain a statement that
the report shall not be construed as an admission by the person making such
report that he or she has any direct or indirect beneficial ownership in the
security to which the report relates. For purposes of this section, beneficial
ownership shall be interpreted in the same manner as it would be in determining
whether a person is subject to the provisions of section 16 of the Securities
Exchange Act of 1934 [15 U.S.C. 78p] and the rules and regulations thereunder,
except that the determination of direct or indirect beneficial ownership shall
apply to all securities which the access person has or acquires.
(2) Every report required to be made pursuant to paragraph (c)(1) shall
be made no later than 10 days after the end of the calendar quarter in which the
transaction to which the report relates was effected, and shall contain the
following information:
(i) The date of the transaction, the title and the number
of shares, and the principal amount of each security involved;
(ii) The nature of the transaction (i.e. purchase, sale or
any other type of acquisition or disposition);
(iii) The price at which the transaction was effected; and
(iv) The name of the broker, dealer or bank with or through
whom the transaction was effected.
(3) Notwithstanding the provision of paragraph (c)(1), no person
shall be required to make a report:
(i) With respect to transactions effected for any account
over which such person does not have any direct or indirect influence or
control;
(ii) If such person is not an "interested person" of a
registered investment company within the meaning of section 2(a)(19) of the Act
[15 U.S.C. 80a2(a)(19)], and would be required to make such a report solely by
reason of being a director of such investment company, except where such
director knew or, in the ordinary course of fulfilling his official duties as a
director of the registered investment company, should have known that during the
15 day period immediately preceding or after the date of the transaction in a
security by the director such security is or was purchased or sold by such
investment company or such purchase or sale by such investment company is or was
considered by the investment company or its investment adviser;
(iii) Where the principal underwriter, as to which such person
is an access person, (A) is not an affiliated person of the registered
investment company or any
<PAGE>
APPENDIX VII
FULL TEXT OF RULE 17J-1
PAGE 3
investment adviser of such investment company, and (B) has no officers,
directors, or general partners who serve as officers, directors or general
partners of such investment company or any such investment adviser; or
(iv) Where a report made to an investment adviser would
duplicate information recorded pursuant to Rules 204-2(a)(12) or
204-2(a)(13) [17 C.F.R. 275.204-2(a)(12) and 275.204-2(a)(13)] under the
Investment Advisers Act of 1940 [15 U.S.C. 80b-1, ET SEQ.].
(4) Each registered investment company, investment adviser and principal
underwriter to which reports are required to be made pursuant to this section
shall identify all access persons who are under a duty to make such reports to
it and shall inform such persons of such duty.
(d) Each registered investment company, investment adviser and
principal underwriter which is required to adopt a code of ethics or to which
reports are required to be made by access persons shall, at its principal place
of business, maintain records in the manner and to the extent set forth below,
and make such records available to the Commission of any representative thereof
at any time and from time to time for reasonable periodic, special or other
examination.
(1) A copy of each such code of ethics which is, or at any time within
the past five years has been, in effect shall be preserved in an easily
accessible place;
(2) A record of any violation of such code of ethics, and of any action
taken as a result of such violation, shall be preserved in an easily accessible
place for a period of not less than five years following the end of the fiscal
year in which the violation occurs;
(3) A copy of each report made by an access person pursuant to this
rule shall be preserved for a period not less than five years from the end of
the fiscal year in which it is made, the first two years in an easily accessible
place; and
(4) A list of all persons who are, or within five years have been,
required to make reports pursuant to this section shall be maintained in an
easily accessible place.
(e) As used in this rule
(1) "Access person" means:
(i) With respect to a registered investment company or an
investment adviser thereof, any director, officer, general partner, or advisory
person, as defined in this section, of such investment company or investment
adviser;
(ii) With respect to a principal underwriter, any director,
officer, or general partner of such principal underwriter who in the ordinary
course of his business
<PAGE>
APPENDIX VII
FULL TEXT OF RULE 17J-1
PAGE 4
makes, participates in or obtains information regarding the purchase or sale
of securities for the registered investment companies for which the principal
underwriter so acts or whose functions or duties as part of the ordinary course
of his business relate to the making of any recommendation to such investment
company regarding the purchase or sale of securities.
(iii) Notwithstanding the provisions of paragraph (e)(1)(i),
where the investment adviser is primarily engaged in a business or businesses
other than advising registered investment companies or other advisory clients,
the term "access person" shall mean: any director, officer, general partner, or
advisory person of the investment adviser who, with respect to any registered
investment company, makes any recommendation, participates in the determination
of which recommendation shall be made, or whose principal function or duties
relate to the determination of which recommendation shall be made to any
registered investment company; or who, in connection with his duties, obtains
any information concerning securities recommendations being made by such
investment adviser to any registered investment company; or who, in connection
with his duties, obtains any information concerning securities recommendations
being made by such investment adviser to any registered investment company.
(iv) An investment adviser is "primarily engaged in a business
or businesses other than advising registered investment companies or other
advisory clients" when, for each of its most recent three fiscal years or for
the period of time since its organization, whichever is lesser, the investment
adviser derived, on an unconsolidated basis, more than 50 percent of (A) its
total sales and revenues, and (B), its income (or loss) before income taxes and
extraordinary items from such other business or businesses.
(2) "Advisory person" of a registered investment company or an
investment adviser thereof means;
(i) Any employee of such company or investment adviser (or of
any company in control relationship to such investment company or investment
adviser) who, in connection with his regular functions or duties, makes,
participates in, or obtains information, regarding the purchase or sale of a
security by a registered investment company, or whose functions relate to the
making of any recommendations with respect to such purchases or sales; and
(ii) Any natural person in a control relationship to such
company or investment advisor who obtains information concerning recommendations
made to such company with regard to the purchase or sale of a security.
(3) "Control" shall have the same meaning as that set forth in section
2(a)(9) of the Act [15 U.S.C. 80a-2(a)(9)].
(4) "Purchase or sale of a security" includes, INTER ALIA, the writing
of an option to purchase or sell a security.
<PAGE>
APPENDIX VII
FULL TEXT OF RULE 17J-1
PAGE 5
(5) "Security" shall have the meaning set forth in section 2(a)(36) of the
Act [15 U.S.C. 80a-2(a)(36)], except that it shall not include securities issued
by the Government of the United States, bankers' acceptances, bank certificates
of deposit, commercial paper and shares of registered open-end investment
companies.
(6) "Security held or to be acquired" by a registered investment company
means any security as defined in this rule which, within the most recent 15
days, (i) is or has been held by such company, or (ii) is being or has been
considered by such company or its investment adviser for purchase by such
company.
<PAGE>
CODE OF ETHICS
OF
UAM FUNDS, INC. AND NWQ INVESTMENT MANAGEMENT COMPANY, INC.
PREAMBLE
This Code of Ethics includes all of the provisions of the Code of Ethics
adopted by the Board of Directors of the UAM Funds, Inc. (the "Fund") as last
revised on September 23, 1998. This Code of Ethics is being adopted in
compliance with the requirements of Sections 204A and 206of the Investment
Advisers Act of 1940 ( the "Advisers Act") and Rule 204-2 thereunder and Rule
17j-1 thereunder (the "Rule") adopted by the United States Securities and
Exchange Commission under the Investment Company Act of 1940 (the "Act") to
effectuate the purposes and objectives of those provisions. Section 204A of the
Advisers Act requires the establishment and enforcement of policies and
procedures reasonably designed to prevent the misuse of material, nonpublic
information by investment advisers. Rule 204-2 imposes recordkeeping
requirements with respect to personal securities transactions of access persons
(defined below). Section 206 of the Advisers Act and the Rule make it unlawful
for certain persons, including any officer or director of UAM Funds, Inc. (the
"Fund") and NWQ Investment Management Company, Inc. (the "Firm") in connection
with the purchase or sale by such person of a security held or to be acquired by
the Fund or the Firm for its clients(1):
(1) To employ a device, scheme or artifice to defraud the
Fund or any client or prospective client of the Firm;
(2) To make to the Fund any untrue statement of a
material fact or omit to state to the Fund a material
fact necessary in order to make the statements made,
in light of the circumstances in which they are made,
not misleading;
(3) To engage in any act, practice or course of business
which operates or would operate as a fraud or deceit
upon the Fund or any client or prospective client of
the Firm; or
(4) To engage in a manipulative practice with respect to
the Fund or any client or prospective client of the
Firm;
(5) Acting as principal for his own account, knowingly to
sell any security to, or purchase any security from a
client, or acting as broker for a person other than
such client, knowingly to effect any sale or purchase
of any security for the account of such client,
without disclosing to such client in writing before
the completion of such transaction the capacity in
which he is acting and obtaining the consent of the
client to such transaction. The prohibitions of this
paragraph (5) shall not apply to any transaction with
a customer of a broker or dealer if such broker or
dealer is not acting as an investment adviser in
relation to such transaction;
Rule 17j-1 also requires that the Fund and each adviser to the Fund adopt a
written code of ethics containing provisions reasonably necessary to prevent
persons from engaging in acts in violation of the above standard and use
reasonable diligence and institute procedures reasonably necessary, to prevent
violations of the Code. This Code contains provisions reasonably necessary to
prevent persons from engaging in acts in violation of the above standard and
procedures reasonably necessary to prevent violations of the Code.
- --------
(1) A security is deemed to be "held or to be acquired" if within the most
recent fifteen (15) days it (i) is or has been held by the Firm for clients or
by the Fund, or (ii) is being or has been considered by the Firm for purchase by
the Firm's clients or the Fund.
1
<PAGE>
This Code of Ethics is adopted by the Board of Directors of the Firm in
compliance with the Rule. This Code of Ethics is based upon the principle that
the directors and officers of the Firm, and certain affiliated persons of the
Firm, and its investment advisers, owe a fiduciary duty to, among others, the
clients of the Firm and the shareholders of the Fund to conduct their affairs,
including their personal securities transactions, in such manner to avoid (i)
serving their own personal interests ahead of clients or shareholders; (ii)
taking inappropriate advantage of their position with the Firm or the Fund; and
(iii) any actual or potential conflicts of interest or any abuse of their
position of trust and responsibility. This fiduciary duty includes the duty of
the compliance Officer of the Firm to report violations of this Code of Ethics
to the Firm's Board of Directors and to the Fund's Compliance Officer.
POLICY STATEMENT ON INSIDER TRADING
The Firm forbids any officer, director or employee from trading, either
personally or on behalf of others, including accounts managed by the Firm, on
material nonpublic information or communicating material nonpublic information
to others in violation of the law. This conduct is frequently referred to as
"insider trading." The Firm's policy applies to every officer, director and
employee and extends to activities within and outside their duties at the Firm.
Any questions regarding the Firm's policy and procedures should be referred to
the Compliance Officer.
The term "insider trading" is not defined in the federal securities laws,
but generally is used to refer to the use of material nonpublic information to
trade in securities (whether or not one is an "insider") or to communications of
material nonpublic information to others.
While the law concerning insider trading is not static, it is generally
understood that the law prohibits:
1) trading by an insider, while in possession of
material nonpublic information, or
2) trading by a non-insider, while in possession of
material nonpublic information, where the information
either was disclosed to the non-insider in violation
of an insider's duty to keep it confidential or was
misappropriated, or
3) communicating material nonpublic information to
others.
The concept of "insider" is broad. It includes officers, directors and
employees of a company. In addition, a person can be a "temporary insider" if he
or she enters into a special confidential relationship in the conduct of a
company's affairs and as a result is given access to information solely for the
company's purposes. A temporary insider can include, among others, a company's
attorneys, accountants, consultants, bank lending officers, and the employees of
such organizations. In addition, the Firm may become a temporary insider of a
company it advises or for which it performs other services. For that to occur,
the company must expect the Firm to keep the disclosed nonpublic information
confidential and the relationship must at least imply such a duty before the
Firm will be considered an insider.
Trading on inside information is not a basis for liability unless the
information is material. "Material information" generally is defined as
information for which there is a substantial likelihood that a reasonable
investor would consider it important in making his or her investment decisions,
or information that is reasonably certain to have a substantial effect on the
price of a company's securities. Information that officers, directors and
employees should consider material includes, but is not limited to: dividend
changes, earnings estimates, changes in previously released earnings estimates,
significant merger or acquisition proposals or agreements, major litigation,
liquidation problems, and extraordinary management developments.
Information is nonpublic until it has been effectively communicated to
the market place. One must be able to point to some fact to show that the
information is generally public. For example,
2
<PAGE>
information found in a report filed with the SEC, or appearing in DOW
JONES, REUTERS ECONOMIC SERVICES, THE WALL STREET JOURNAL or other
publications of general circulation would be considered public.
Before trading for yourself or others in the securities of a company about which
you may have potential inside information, ask yourself the following questions:
i. Is the information material? Is this information that
an investor would consider important in making his or
her investment decisions? Is this information that
would substantially effect the market price of the
securities if generally disclosed?
ii. Is the information nonpublic? To whom has this
information been provided? Has the information been
effectively communicated to the marketplace?
If, after consideration of the above, you believe that the information is
material and nonpublic, or if you have questions as to whether the information
is material and nonpublic, you should take the following steps.
i. Report the matter immediately to the Firm's
Compliance Officer.
ii. Do not purchase or sell the securities on behalf of
yourself or others.
iii. Do not communicate the information inside or outside
the Firm, other than to the Firm's Compliance
Officer.
iv. After the Firm's Compliance Officer has reviewed the
issue, you will be instructed to continue the
prohibitions against trading and communication, or
you will be allowed to trade and communicate the
information.
Information in your possession that you identify as material and nonpublic
may not be communicated to anyone, including persons within the Firm, except as
provided above. In addition, care should be taken so that such information is
secure. For example, files containing material nonpublic information should be
sealed; access to computer files containing material nonpublic information
should be restricted.
The role of the Firm's Compliance Officer is critical to the implementation
and maintenance of the Firm's policy and procedures against insider trading. The
Firm's Supervisory Procedures can be divided into two classifications -
prevention of insider trading and detection of insider trading.
To prevent insider trading, the Firm will:
i. provide, on a regular basis, an educational program
to familiarize officers, directors and employees with
the Firm's policy and procedures, and
ii. when it has been determined that an officer, director
or employee of the Firm has material nonpublic
information,
1. implement measures to prevent dissemination
of such information, and
2. if necessary, restrict officers, directors
and employees from trading the securities.
To detect insider trading, the Firm's Compliance Officer will:
3
<PAGE>
i. review the trading activity reports filed by each
officer, director and employee, and
ii. review the trading activity of accounts managed by
the Firm.
PERSONAL TRADING POLICIES
A. DEFINITIONS
(1) "ACCESS PERSON" means any director, officer, general partner or
advisory person of the Firm.
(2) "ADVISORY PERSON" means (a) any employee of the Firm who, in
connection with his regular functions or duties, normally makes, participates
in, or obtains current information regarding the purchase or sale of a security
by the Firm or by the Fund, or whose functions relate to the making of any
recommendations with respect to such purchases or sales; and (b) any natural
person in a control relationship to the Firm who obtains information concerning
recommendations made to the Firm or the Fund with regard to the purchase or sale
of a security by the Firm or the Fund.
(3) "AFFILIATED COMPANY" means a company which is an affiliated person.
(4) "AFFILIATED PERSON" of another person means (a) any person directly
or indirectly owning, controlling, or holding with power to vote, 5 per centum
or more of the outstanding voting securities or such other person; (b) any
person 5 per centum or more of whose outstanding voting securities are directly
or indirectly owned, controlled, or held with power to vote, by such other
person; (c) any person directly or indirectly controlling, controlled by, or
under common control with, such other person; (d) any officer, director,
partner, copartner, or employee of such other person; (e) if such other person
is an investment company, any investment adviser thereof or any member of an
advisory board thereof; and (f) if such other person is an unincorporated
investment company not having a board of directors, the depositor thereof.
(5) A security is "BEING CONSIDERED FOR PURCHASE OR SALE" or is "BEING
PURCHASED OR SOLD" when a recommendation to purchase or sell the security has
been made and communicated, which includes when the Firm or the Fund has a
pending "buy" or "sell" order with respect to a security, and, with respect to
the person making the recommendation, when such person seriously considers
making such a recommendation. "PURCHASE OR SALE OF A SECURITY" includes the
writing of an option to purchase or sell a security.
(6) "BENEFICIAL OWNERSHIP" shall be as defined in, and interpreted in
the same manner as it would be in determining whether a person is subject to the
provisions of, Section 16 of the Securities Exchange Act of 1934 and the rules
and regulations thereunder which, generally speaking, encompasses those
situations where the beneficial owner has the right to enjoy some economic
benefit from the ownership of the security. A person is normally regarded as the
beneficial owner of securities held in the name of his or her spouse or minor
children living in his or her household.
(7) "CONTROL" means the power to exercise a controlling influence over
the management or policies of a company, unless such power is solely the result
of an official position with such company. Any person who owns beneficially,
either directly or through one or more controlled companies, more than 25 per
centum of the voting securities of a company shall be presumed to control such
company. Any person who does not so own more than 25 per centum of the voting
securities of any company shall be presumed not to control such company. A
natural person shall be presumed not to be a controlled person.
(8) "DISINTERESTED DIRECTOR" means a director who is not: an affiliated
person (as defined above) of the Fund; a member of the immediate family of any
natural person who is an affiliated person of the Fund; an interested person (as
defined below) of the Fund, any investment adviser of the Fund or any principal
underwriter for the Fund.
4
<PAGE>
(9) "INTERESTED PERSON" of another person means--
(a) when used with respect to an investment company--
(i) any affiliated person of such company,
(ii) any member of the immediate family
of any natural person who is an
affiliated person of such company,
(iii) any interested person of any
investment adviser of or principal
underwriter for such company,
(iv) any person or partner or employee of
any person who at any time since the
beginning of the last two completed
fiscal years of such company has
acted as legal counsel for such
company,
(v) any broker or dealer registered
under the Securities Exchange Act of
1934 or any affiliated person of
such a broker or dealer, and
(vi) any natural person whom the
Commission by order shall have
determined to be an interested
person by reason of having had, at
any time since the beginning of the
last two completed fiscal years of
such company, a material business or
professional relationship with such
company or with the principal
executive officer of such company or
with any other investment company
having the same investment adviser
or principal underwriter or with the
principal executive officer of such
other investment company:
Provided, That no person shall be deemed to be an interested person of an
investment company solely by reason of (aa) his being a member of its board of
directors or advisory board or an owner of its securities, or (bb) his
membership in the immediate family of any person specified in clause (aa) of
this proviso.
(10) "INVESTMENT PERSONNEL" means (a) any portfolio manager of the Firm
or the Fund as defined in (12) below; and (b) securities analysts, traders and
other personnel who provide information and advice to the portfolio manager or
who help execute the portfolio manager's decisions.
(11) "PERSON" means a natural person or a company.
(12) "PORTFOLIO MANAGER" means an employee of the Firm entrusted with
the direct responsibility and authority to make investment decisions affecting a
Firm client or an investment company.
(13) "SECURITY" means any note, stock, treasury stock, bond, debenture,
evidence of indebtedness, certificate of interest or participation in any
profit-sharing agreement, collateral-trust certificate, pre-organization
certificate or subscription, transferable share, investment contract,
voting-trust certificate, certificate of deposit for a security, fractional
undivided interest in oil, gas, or other mineral rights, any put, call,
straddle, option, or privilege on any security (including a certificate of
deposit) or on any group or index of securities (including any interest therein
or based on the value thereof), or any put, call, straddle, option, or privilege
entered into on a national securities exchange relating to foreign currency, or,
in general, any interest or instrument commonly known as a "security," or any
certificate of interest or participation in, temporary or interim certificate
for, receipt for, guarantee of, or warrant or right to subscribe to or purchase,
any of the foregoing. Security shall not include securities issued by the
government of the United States or by federal agencies and which are direct
obligations of the United States, bankers' acceptances, bank certificates of
deposit, commercial paper and shares of unaffiliated registered open-end
investment companies (mutual funds).
5
<PAGE>
B. PROHIBITED TRANSACTIONS
(1) ACCESS PERSONS
(a) No access person shall engage in any act, practice or course
of conduct, which would violate the provisions of Section 206 and Rule 17j-1 set
forth above.
UAM Funds, Inc. portfolios are managed by subsidiaries of or
organizations otherwise affiliated with United Asset Management Corporation (the
"Management Companies"). Under the organizational structure of the Management
Companies, the entities maintain separate offices, independent operations and
autonomy when making investment decisions. In view of these circumstances,
advisory personnel of the Management Companies who are defined as "access
persons" under the Act, under normal circumstances would have no knowledge of
proposed securities transactions, pending "buy" or "sell" orders in a security,
or the execution or withdrawal of an order for any other portfolio in the UAM
Family of Funds for which a different Management Company serves as investment
adviser. To restrict the flow of investment information related to the
portfolios of the Fund, the Fund prohibits access persons at a Management
Company from disclosing pending "buy" or "sell" orders for a portfolio of the
Fund to any employees of any other Management Company until the order is
executed or withdrawn. The Management Companies shall implement procedures
designed to achieve employee awareness of this prohibition.
(b) No access person shall:
(i) purchase or sell, directly or
indirectly, any security in which he
has or by reason of such transaction
acquires, any direct or indirect
beneficial ownership and which to
his or her actual knowledge at the
time of such purchase or sale:
(A) is being considered for purchase or
sale by the Firm or the Fund, or
(B) is being purchased or sold by any
portfolio of the Firm or the Fund;
or
(ii) disclose to other persons the
securities activities engaged in or
contemplated for the various
portfolios of the Firm or the Fund.
(2) INVESTMENT PERSONNEL
No investment personnel shall:
(a) accept any gift or other thing of more than
de minimis value from any person or entity
that does business with or on behalf of the
Firm or the Fund; for the purpose of this
Code de minimis shall be considered to be
the annual receipt of gifts from the same
source valued at $250 or less per individual
recipient, when the gifts are in relation to
the conduct of the Firm's or the Fund's
business;
(b) acquire securities, other than fixed income
securities, in an initial public offering,
in order to preclude any possibility of such
person profiting from their positions with
the Firm or the Fund;
(c) purchase any securities in a private
placement, without prior approval of the
Firm's Compliance Officer or other officer
designated by the Firm's Board of Directors.
Any person authorized to purchase securities
in a private placement shall disclose that
investment when they play a part in any
subsequent consideration by the Firm or the
Fund of an investment
6
<PAGE>
in the issuer. In such circumstances, the
Firm's or the Fund's decision to purchase
securities of the issuer shall be subject to
independent review by investment personnel
with no personal interest in the issuer;
(d) profit in the purchase and sale, or sale and
purchase, of the same (or equivalent)
securities within sixty (60) calendar days.
Trades made in violation of this prohibition
should be unwound, if possible. Otherwise,
any profits realized on such short-term
trades shall be subject to disgorgement to
the appropriate portfolio of the Firm or the
Fund.
EXCEPTIONS: The Firm's Compliance Officer may allow
exceptions to this policy on a case-by-case
basis when the abusive practices that the
policy is designed to prevent, such as
frontrunning or conflicts of interest, are
not present and --- the equity of the
situation strongly supports an exemption. An
example is the involuntary sale of
securities due to unforeseen corporate
activity such as a merger. [Seess.C below].
The ban on short-term trading profits is
specifically designed to deter potential
conflicts of interest and frontrunning
transactions, which typically involve a
quick trading pattern to capitalize on a
short-lived market impact of a trade by one
of the Firm's portfolios. The Firm's
management shall consider the policy reasons
for the ban on short-term trades, as stated
herein, in determining when an exception to
the prohibition is permissible. The granting
of an exception to this prohibition shall be
permissible if the securities involved in
the transaction are not (i) being considered
for purchase or sale by the portfolio of the
Firm that serves as the basis of the
individual's "investment personnel" status
or (ii) being purchased or sold by the
portfolio of the Firm that serves as the
basis of the individual's "investment
personnel" status and, are not economically
related to such securities; exceptions
granted under this provision are conditioned
upon receipt by a duly authorized officer of
the Firm of a report (Exhibit D) of the
transaction and certification by the
respective investment personnel that the
transaction is in compliance with this Code
of Ethics (see Exhibit D).
(e) serve on the board of directors of any
publicly traded company without prior
authorization of the President or other duly
authorized officer of the Fund and the
President or other duly authorized officer
of the Firm. Any such authorization shall be
based upon a determination that the board
service would be consistent with the
interests of the Firm and the Fund and its
shareholders. Authorization of board service
shall be subject to the implementation by
the Firm of "Chinese Wall" or other
procedures to isolate such investment
personnel from the investment personnel
making decisions about trading in that
company's securities.
(3) PORTFOLIO MANAGERS
(a) No portfolio manager shall:
(i) buy or sell a security within seven (7)
calendar days before and within two (2)
calendar days after any portfolio of the
Firm that he or she manages trades in that
security. Any trades made within the
proscribed period shall be unwound, if
possible. Otherwise, any profits realized on
trades within the proscribed period shall be
disgorged to the appropriate client
portfolio or the appropriate portfolio of
the Fund.
C. EXEMPTED TRANSACTIONS
7
<PAGE>
The prohibitions of Sections B (1)(b), B (2)(d) and B (3)(a) shall not
apply to:
(1) purchases or sales effected in any account over which the
access person has no direct or indirect influence or control;
(2) purchases or sales which are non-volitional on the part of
either the access person or the Firm;
(3) purchases which are part of an automatic dividend
reinvestment plan;
(4) purchases effected upon the exercise of rights issued by an
issuer pro rata to all holders of a class of its securities,
to the extent such rights were acquired from such issuer, and
sales of such rights so acquired;
(5) purchases or sales of securities which are not eligible for
purchase by the Firm or the Fund and which are not related
economically to securities purchased, sold or held by the
Firm or the Fund;
(6) transactions which appear upon reasonable inquiry and
investigation to present no reasonable likelihood of harm to
the Firm's clients or to the Fund and which are otherwise in
accordance with this Code, Section 206 of the Advisers Act
and Rule 17j-1; for example, such transactions would normally
include purchases or sales of:
(a) SECURITIES OF COMPANIES WITH A MARKET CAPITALIZATION IN
EXCESS OF $1 BILLION, IF THE FIRM IS NOT CONSIDERING FOR
PURCHASE OR SALE, OR CURRENTLY PURCHASING OR SELLING,
THE SECURITY(IES) FOR THE FUND OR OTHER INVESTMENT
COMPANY WHICH THE FIRM ADVISES;
(b) up to $25,000 principal amount of a fixed income
security or 100 shares of an equity security within any
three-consecutive month period (all trades within a
three-consecutive month period shall be integrated to
determine the availability of this exemption);
(c) up to 1,000 shares of a security which is being
considered for purchase or sale by the Fund OR OTHER
INVESTMENT COMPANY WHICH THE FIRM ADVISES (but not then
being purchased or sold) if the issuer has a market
capitalization of over $1 billion and if the proposed
acquisition or disposition by the Firm or the Fund is
less than one percent of the class outstanding as shown
by the most recent report or statement published by the
issuer, or less than one percent of the average weekly
reported volume of trading in such securities on all
national securities exchanges and/or reported through
the automated quotation system of a registered
securities association, during the four calendar weeks
prior to the individual's personal securities
transaction; or
(d) any amount of securities if the proposed acquisition or
disposition by the Firm or the Fund is in the amount of
1,000 or less shares and the security is listed on a
national securities exchange or the National Association
of Securities Dealers Automated Quotation System.
D. COMPLIANCE PROCEDURES
(1) PRE-CLEARANCE
All access persons shall receive prior written approval (Exhibit E)
from the Firm's Compliance Officer, or other officer designated by the Fund's
Board of Directors before purchasing or selling securities.
8
<PAGE>
Procedures implemented herein to pre-clear the securities transactions
of access persons shall not apply to a director of the Fund who is not an
"interested person" of the Fund as defined in this Code, except where such
director knew or, in the ordinary course of fulfilling his official duties as a
director of the Fund, should have known that during the 15-day period
immediately preceding or after the date of the transaction in a security by the
director, such security is or was purchased or sold by the Fund or such purchase
or sale by the Fund is or was considered by the Fund.
Purchases or sales of securities which are not eligible for purchase or
sale by the Firm or the Fund or any portfolio of the Firm or the Fund that
serves as the basis of the individual's "access person" status shall be entitled
to clearance automatically from the Firm's Compliance Officer. This provision
shall not relieve any access person from compliance with pre-clearance
procedures.
(2) DISCLOSURE OF PERSONAL HOLDINGS
All investment personnel shall disclose to the Firm's Compliance
Officer all personal securities holdings upon the later of commencement of
employment or adoption of this Code of Ethics and thereafter on an annual basis
as of December 31. This initial report shall be made on the form attached as
Exhibit A and shall be delivered to the Firm's Compliance Officer and, upon
request, to the Compliance Officer of the Fund.
(3) CERTIFICATION OF COMPLIANCE WITH CODE OF ETHICS
(a) Every access person shall certify annually that:
(i) they have read and understand the Code of
Ethics and recognize that they are subject
thereto;
(ii) they have complied with the requirements of
the Code of Ethics; and
(iii) they have reported all personal securities
transactions required to be reported pursuant
to the requirements of the Code of Ethics.
The annual report shall be made on the form attached as Exhibit B and
delivered to the Firm's Compliance Officer, and upon request to the Compliance
Officer of the Fund.
(4) REPORTING REQUIREMENTS
(a) Every access person shall report to the Firm's
Compliance Officer, and upon request to the Compliance
Officer of the Fund, the information described in,
Sub-paragraph (4)(b) of this Section with respect to
transactions in any security in which such person has,
or by reason of such transaction acquires, any direct or
indirect beneficial ownership in the security; provided,
however, that an access person shall not be required to
make a report with respect to transactions effected for
any account over which such person does not have any
direct or indirect influence.
(b) Reports required to be made under this Paragraph (4)
shall be made not later than 10 days after the end of
the calendar quarter in which the transaction to which
the report relates was effected. Every access person
shall be required to submit a report for all periods,
including those periods in which no securities
transactions were effected. A report shall be made on
the form attached hereto as Exhibit C or on any other
form containing the following information:
9
<PAGE>
(i) the date of the transaction, the title and the
number of shares, and the principal amount of
each security involved;
(ii) the nature of the transaction (i.e., purchase,
sale or any other type of acquisition or
disposition);
(iii) the price at which the transaction was effected; and
(iv) the name of the broker, dealer or bank with or
through whom the transaction was effected.
Duplicate copies of the broker confirmation of all
personal transactions and copies of periodic statements
for all securities accounts may be appended to Exhibit C
to fulfill the reporting requirement.
(c) Any such report may contain a statement that the report
shall not be construed as an admission by the person
making such report that he or she has any direct or
indirect beneficial ownership in the security to which
the report relates.
(d) The Firm's Compliance Officer shall notify each access
person (for whom such Compliance Officer is responsible)
that he or she is subject to these reporting
requirements, and shall deliver a copy of this Code of
Ethics to each such person upon request.
(e) The Firm's Compliance Officer shall submit a
certification to the Compliance Officer of the Fund
within fifteen days after the end of each calendar
quarter indicating that the appropriate procedures were
followed and further indicating whether any compliance
violations were noted with respect to this Code of
Ethics. If any violation was noted, the Firm's
Compliance Officer must provide supporting documentation
explaining the violation and what steps have or will be
taken to avoid its recurrence.
(f) With respect to the reports required pursuant to
Sub-paragraph (4)(b) of this Section for the Firm's
Compliance Officer, such reports must be reviewed by a
principal of the Firm, other than said Compliance
Officer.
(g) Reports submitted to the Firm or the Fund pursuant to
this Code of Ethics shall be confidential and shall be
provided only to the officers and directors of the Firm
or the Fund, Firm/Fund counsel or regulatory authorities
upon appropriate request.
(h) Each director who is not an "interested person" of the
Fund as defined in the Act need only report a
transaction in a security if such director, at the time
of that transaction knew, or, in the ordinary course of
fulfilling his official duties as a director, should
have known that, during the 15-day period immediately
preceding or after the date of the transaction by the
director, such security was purchased or sold by the
Fund or was being considered for purchase by the Fund or
by its investment adviser or sub-investment adviser.
Such reports will include the information described in
Sub-paragraph (4)(b) of this Section.
10
<PAGE>
(5) CONFLICT OF INTEREST
Every access person shall notify the Firm's Compliance Officer of any
personal conflict of interest relationship which may involve the Firm's clients
or the Fund, such as the existence of any economic relationship between their
transactions and securities held or to be acquired by any portfolio of the Firm.
Such notification shall occur in the pre-clearance process.
E. REPORTING OF VIOLATIONS TO THE BOARD OF DIRECTORS
(1) The Firm's Compliance Officer shall promptly report to the Firm's
Board of Directors and the Fund's Compliance Officer any and all apparent
violations of this Code of Ethics and the reporting requirements thereunder.
(2) The Board of Directors, or a Committee of Directors created by the
Board of Directors for that purpose, shall consider reports made to the Board of
Directors hereunder and shall determine whether or not this Code of Ethics has
been violated and what sanctions, if any, should be imposed.
F. ANNUAL REPORTING TO THE BOARD OF DIRECTORS
(1) The Firm's Compliance Officer shall prepare an annual report
relating to this Code of Ethics to the Fund's Compliance Officer. Such annual
report shall:
(a) summarize existing procedures concerning
personal investing and any changes in the
procedures made during the past year;
(b) identify any violations requiring significant
remedial action during the past year; and
(c) identify any recommended changes in the
existing restrictions or procedures based upon
the Fund's experience under its Code of
Ethics, evolving industry practices or
developments in applicable laws or
regulations.
The Fund's Compliance Officer will prepare a similar report to the Fund's Board
of Directors.
G. SANCTIONS
Upon discovering a violation of this Code, the Board of Directors may
impose such sanctions as they deem appropriate, including, among other things, a
letter of censure or suspension or termination of the employment of the
violator.
H. RETENTION OF RECORDS
The Firm shall maintain the following records as required
under Rule 17j-l
(a) a copy of any Code of Ethics in effect within
the most recent five years;
(b) a list of all persons required to make reports
hereunder within the most recent five years,
as shall be updated by the Firm's Compliance
Officer;
(c) a copy of each report made by an access person
hereunder for a period of five years from the
end of the fiscal year in which it was made;
(d) each memorandum made by the Firm's Compliance
Officer hereunder, for a period of five years
from the end of the fiscal year in which it
was made; and
11
<PAGE>
(e) a record of any violation hereof and any
action taken as a result of such violation,
for a period of five years following the end
of the fiscal year in which the violation
occurred.
Dated: November 22, 1998
12
<PAGE>
Exhibit A
UAM FUNDS, INC. AND NWQ INVESTMENT MANAGEMENT COMPANY, INC.
CODE OF ETHICS
INITIAL REPORT OF INVESTMENT PERSONNEL
To the Compliance Officer of NWQ Investment Management Company, Inc.
1. I hereby acknowledge receipt of a copy of the Code of Ethics for NWQ
Investment Management Company, Inc. (the "Firm"). I understand the Code
incorporates the provisions of the Code of Ethics of UAM Funds, Inc. (the
"Fund").
2. I have read and understand the Code and recognize that I am subject
thereto in the capacity of "Investment Personnel."
3. Except as noted below, I hereby certify that I have no knowledge of
the existence of any personal conflict of interest relationship which may
involve the Firm's clients or the Fund, such as any economic relationship
between my transactions and securities held or to be acquired by the Firm's
clients or the Fund or any of its portfolios.
4. As of the date below I had a direct or indirect beneficial ownership
in the following securities:
============================== ======================= =========================
Type of Interest
Name of Securities Number of Shares (Direct or Indirect)
- ------------------ ---------------- --------------------
- --------------------------- ----------------------- ----------------------------
- --------------------------- ----------------------- ----------------------------
- --------------------------- ----------------------- ----------------------------
- --------------------------- ----------------------- ----------------------------
- --------------------------- ----------------------- ----------------------------
- --------------------------- ----------------------- ----------------------------
- --------------------------- ----------------------- ----------------------------
- --------------------------- ----------------------- ----------------------------
- --------------------------- ----------------------- ----------------------------
============================ ======================= ===========================
NOTE: Do NOT report transactions in U.S. Government securities, bankers'
acceptances, bank certificates of deposit, commercial paper and registered
open-end investment companies (mutual funds).
<TABLE>
<CAPTION>
<S> <C>
Date: Signature:
------------------------------- -----------------------------------------------------
(First date of investment
personnel status) Print Name:
-------------------------------------------
Title:
------------------------------------------------
Employer's Name:
--------------------------------------
Date: Signature:
------------------------------- -----------------------------------------------------
Compliance Officer
</TABLE>
13
<PAGE>
Exhibit B
UAM FUNDS, INC. AND NWQ INVESTMENT MANAGEMENT COMPANY, INC
CODE OF ETHICS
ANNUAL REPORT OF ACCESS PERSONS
To the Compliance Officer of NWQ Investment Management Company, Inc.:
1. I have read and understand the Code and recognize that I am subject
thereto in the capacity of an "Access Person."
2. I hereby certify that, during the year ended December 31, 19__, I
have complied with the requirements of the Code and I have reported all
securities transactions required to be reported pursuant to the Code.
3. I hereby certify that I have not disclosed pending "buy" or "sell"
orders for a portfolio of the Fund to any employees of any other Management
Company (as defined in the Code), except where the disclosure occurred
subsequent to the execution or withdrawal of an order.
4. Except as noted below, I hereby certify that I have no knowledge of
the existence of any personal conflict of interest relationship which may
involve the Firm's clients or the Fund, such as any economic relationship
between my transactions and securities held or to be acquired by the Firm's
clients or the Fund or any of its portfolios.
5. Only access persons who are also investment personnel complete this
item. As of December 31, 19__, I had a direct or indirect beneficial ownership
in the following securities:
=========================== ======================= ============================
Type of Interest
Name of Securities Number of Shares (Direct or Indirect)
------------------ ---------------- --------------------
- --------------------------- ----------------------- ----------------------------
- --------------------------- ----------------------- ----------------------------
- --------------------------- ----------------------- ----------------------------
- --------------------------- ----------------------- ----------------------------
- --------------------------- ----------------------- ----------------------------
- --------------------------- ----------------------- ----------------------------
- --------------------------- ----------------------- ----------------------------
- --------------------------- ----------------------- ----------------------------
- --------------------------- ----------------------- ----------------------------
============================ ======================= ===========================
NOTE: Do NOT report transactions in U.S. Government securities, bankers'
acceptances, bank certificates of deposit, commercial paper and registered
open-end investment companies (mutual funds).
<TABLE>
<CAPTION>
<S> <C>
Date: Signature:
------------------------------- -----------------------------------------------------
Print Name:
-------------------------------------------
Title:
------------------------------------------------
Employer's Name:
--------------------------------------
Date: Signature:
------------------------------- -----------------------------------------------------
Compliance Officer
</TABLE>
14
<PAGE>
Exhibit C
UAM FUNDS, INC. AND NWQ INVESTMENT MANAGEMENT COMPANY, INC
ACCESS PERSONS
Securities Transactions Report For the Calendar Quarter Ended:_________
To the Compliance Officer of NWQ Investment Management Company, Inc.
(the "Firm") with a copy to the Compliance Officer of UAM Funds, Inc.
(the "Fund") upon request:
During the quarter referred to above, the following transactions were
effected in securities of which I had, or by reason of such transaction
acquired, direct or indirect beneficial ownership, and which are
required to be reported pursuant to the Code of Ethics adopted by the
Firm.
<TABLE>
<CAPTION>
================== =================== ============= =================== ====================== ============ ======================
<S> <C> <C> <C> <C> <C> <C>
SECURITY DATE OF NO. OF DOLLAR NATURE OF PRICE BROKER/DEALER
TRANSACTION SHARES AMOUNT OF TRANSACTION OR BANK THROUGH
TRANSACTION (PURCHASE, SALE, WHOM EFFECTED
OTHER)
- ------------------ ------------------- ------------- ------------------- ---------------------- ------------ ----------------------
- ------------------ ------------------- ------------- ------------------- ---------------------- ------------ ----------------------
- ------------------ ------------------- ------------- ------------------- ---------------------- ------------ ----------------------
- ------------------ ------------------- ------------- ------------------- ---------------------- ------------ ----------------------
- ------------------ ------------------- ------------- ------------------- ---------------------- ------------ ----------------------
- ------------------ ------------------- ------------- ------------------- ---------------------- ------------ ----------------------
- ------------------ ------------------- ------------- ------------------- ---------------------- ------------ ----------------------
- ------------------ ------------------- ------------- ------------------- ---------------------- ------------ ----------------------
================== =================== ============= =================== ====================== ============ ======================
</TABLE>
This report (i) excludes transactions with respect to which I had no
direct or indirect influence or control, (ii) excludes other transactions not
required to be reported, and (iii) is not an admission that I have or had any
direct or indirect beneficial ownership in the securities listed above.
Except as noted on the reverse side of this report, I hereby certify
that I have no knowledge of the existence of any personal conflict of interest
relationship which may involve the Firm's clients or the Fund, such as the
existence of any economic relationship between my transactions and securities
held or to be acquired by the Firm's clients or the Fund or any of its Series.
NOTE: Do NOT report transactions in U.S. Government securities,
bankers' acceptances, bank certificates of deposit, commercial paper and
registered open-end investment companies (mutual funds).
<TABLE>
<CAPTION>
<S> <C>
Date: Signature:
------------------------------- -----------------------------------------------------
Print Name:
-------------------------------------------
Title:
------------------------------------------------
Employer's Name:
--------------------------------------
Date: Signature:
------------------------------- -----------------------------------------------------
Compliance Officer
</TABLE>
15
<PAGE>
Exhibit D
UAM FUNDS, INC. AND NWQ INVESTMENT MANAGEMENT COMPANY, INC
Securities Transactions Report Relating to Short-Term Trading
(see Section B(2)(d), Code of Ethics)
For the Sixty-Day Period from to :
--------------------- ---------------------
To the Compliance Officer of NWQ Investment Management Company, Inc. on
behalf of UAM Funds, Inc. ("the Fund"):
During the 60 calendar day period referred to above, the following
purchases and sales, or sales and purchases, of the same (or equivalent)
securities were effected or are proposed to be effected in securities of which I
have, or by reason of such transaction acquired, direct or indirect beneficial
ownership.
<TABLE>
<CAPTION>
================== ===================== ============ =================== ==================== ============= ======================
<S> <C> <C> <C> <C> <C> <C>
SECURITY DATE OF NO. OF DOLLAR NATURE OF PRICE BROKER/DEALER
TRANSACTION SHARES AMOUNT OF TRANSACTION (OR OR BANK THROUGH
(OR PROPOSED TRANSACTION (PURCHASE, SALE, PROPOSED WHOM EFFECTED
TRANSACTION) OTHER) PRICE)
- ------------------ --------------------- ------------ ------------------- -------------------- ------------- ----------------------
- ------------------ --------------------- ------------ ------------------- -------------------- ------------- ----------------------
- ------------------ --------------------- ------------ ------------------- -------------------- ------------- ----------------------
- ------------------ --------------------- ------------ ------------------- -------------------- ------------- ----------------------
- ------------------ --------------------- ------------ ------------------- -------------------- ------------- ----------------------
- ------------------ --------------------- ------------ ------------------- -------------------- ------------- ----------------------
- ------------------ --------------------- ------------ ------------------- -------------------- ------------- ----------------------
- ------------------ --------------------- ------------ ------------------- -------------------- ------------- ----------------------
================== ===================== ============ =================== ==================== ============= ======================
</TABLE>
This report (i) excludes transactions with respect to which I have or
had no direct or indirect influence or control, (ii) excludes other transactions
not required to be reported, and (iii) is not an admission that I have or had
any direct or indirect beneficial ownership in the securities listed above.
With respect to the (1) portfolio(s) of the Firm's clients and/or the
Fund that serves as the basis for my "investment personnel" status with the Firm
and/or the Fund (the "Portfolios"); and (2) transactions in the securities set
forth in the table above, I hereby certify that:
(a) I have no knowledge of the existence of any personal conflict
of interest relationship which may involve the Portfolios,
such as frontrunning transactions or the existence of any
economic relationship between my transactions and securities
held or to be acquired by the Portfolios;
16
<PAGE>
(b) such securities, including securities that are economically
related to such securities, involved in the transaction are
not (i) being considered for purchase or sale by the
Portfolios, or (ii) being purchased or sold by the Portfolios;
and
(c) are in compliance with the Code of Ethics of the Firm.
<TABLE>
<CAPTION>
<S> <C>
Date: Signature:
------------------------------ ------------------------------
Print Name:
------------------------------
Title:
------------------------------
Employer's Name:
------------------------------
- --------------------------------------------------------------------------------
In accordance with the provisions of Section B(2)(d) of the Code of Ethics
of the Firm, the transaction proposed to be effected as set forth in this Report
is:
- --------------------------------------------------------------------------------
Authorized: [ ]
Unauthorized: [ ]
Date: Signature:
--------------------------------------- --------------------------
Compliance Officer
- --------------------------------------------------------------------------------
</TABLE>
17
<PAGE>
EXHIBIT E
UAM FUNDS, INC. AND NWQ INVESTMENT MANAGEMENT COMPANY
PRE-CLEARANCE TRADING AUTHORIZATION FORM
Date: ________________________ Employee Name:______________________________
Security:____________________________ Number of Shares: ________
Buy, Sell or Other (Circle One; if other explain)_____________________________
Date of Last Fund Trade (no trading allowed +7 or - 2 days): ________________
Proposed Price Per Share: _________ Dollar Amount of Proposed Transaction _____
Name of Broker to be Used for Proposed Transaction: ___________________________
Is transaction within 60 days of prior transaction in same or equivalent
security? No ___ Yes ____ (If yes, please attach Exhibit D which also must be
approved)
Employee Signature: __________________________________
- -------------------------------------------------------------------------------
Authorization: (Any ONE below)
Yes ____ No ____ _________________________________ __________ ________
Tom Laird Date Security active
Yes ____ No ____ _________________________________ __________ ________
E.C. "Ted" Friedel Date Security active
Yes ____ No ____ _________________________________ __________ ________
David Polak Date Security active
Revised 11/23/98
18
<PAGE>
EXHIBIT E -OPTION TRADE
UAM FUNDS, INC. AND NWQ INVESTMENT MANAGEMENT COMPANY
PRE-CLEARANCE TRADING AUTHORIZATION FORM
Date: ________________________ Employee Name:_____________________________
(circle) Buy Sell Short
Option: ________________________ # of Calls____# of Puts_____Strike: $________
Expiration: JAN FEB MAR APR MAY JUN JLY AUG SEP OCT NOV DEC
(circle)
Proposed Price Per Option: _________ Total of Proposed Transaction $_________
Name of Broker to be Used for Proposed Transaction: ___________________________
Is transaction within 60 days of prior transaction in same or equivalent
security? No ___ Yes ____ (If yes, please attach Exhibit D which also must be
approved)
Employee Signature: __________________________________
- --------------------------------------------------------------------------------
Authorization: (Any ONE below)
Yes ____ No ____ _____________________________________ _____ ________
Tom Laird Date On Active List?
Yes ____ No ____ _____________________________________ _____________
E.C. "Ted" Friedel Date On Active List?
Yes ____ No ____ __________________________________ _____ ________
David Polak Date On Active List?
<PAGE>
PILGRIM BAXTER & ASSOCIATES
CODE OF ETHICS
PILGRIM BAXTER & ASSOCIATES, LTD.
CODE OF ETHICS
This Code of Ethics has been adopted by the Board of Directors of Pilgrim Baxter
& Associates, Ltd. ("Pilgrim Baxter") in accordance with Rule 17j-1(b) under the
Investment Company Act of 1940, as amended (the "Act"), and the Recommendations
of the Investment Company Institute Advisory Group on Personal Investing. Rule
17j-1 under the Act generally proscribes fraudulent or manipulative practices
with respect to purchases or sales of securities held or to be acquired by
investment companies, if effected by associated persons of such investment
companies.
While affirming its confidence in the integrity and good faith of all of its
employees, officers, and directors, Pilgrim Baxter recognizes that certain of
its personnel have or may have knowledge of present or future portfolio
transactions and, in certain instances, the power to influence portfolio
transactions made by or for Pilgrim Baxter's Clients, and that if such
individuals engage in personal transactions in securities that are eligible for
investment by Clients, these individuals could be in a position where their
personal interests may conflict with the interests of Clients.
In view of the foregoing and of the provisions of Rule 17j-1(b)(1) under the
Act, Pilgrim Baxter has determined to adopt this Code of Ethics to specify and
prohibit certain types of transactions deemed to create actual conflicts of
interest, the potential for conflicts, or the appearance of conflicts, and to
establish reporting requirements and enforcement procedures.
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PILGRIM BAXTER & ASSOCIATES
CODE OF ETHICS
I. STATEMENT OF GENERAL PRINCIPLES
In recognition of the trust and confidence placed in Pilgrim Baxter by its
Clients and to give effect to Pilgrim Baxter's belief that its operations should
be directed to benefit its Clients, Pilgrim Baxter hereby adopts the following
general principles to guide the actions of its employees, officers, and
directors:
1. The interests of Clients are paramount. All Pilgrim Baxter personnel
must conduct themselves and their operations to give maximum effect to
this tenet by assiduously placing the interests of Clients before their
own.
2. All personal transactions in securities by Pilgrim Baxter personnel must
be accomplished so as to avoid even the appearance of a conflict of
interest on the part of such personnel with the interests of a Client.
3. All Pilgrim Baxter personnel must avoid actions or activities that allow
(or appear to allow) a person to profit or benefit from his or her
position with respect to a Client, or that otherwise bring into question
the person's independence or judgment.
II. DEFINITIONS
1. "Access Person" means (i) every director or officer of Pilgrim Baxter,
(ii) every employee of Pilgrim Baxter who, in connection with his or her
regular functions or duties, makes, participates in, or obtains
information regarding the Purchase or Sale of a Security by a Client, or
whose functions relate to the making of any recommendations with respect
to such purchases or sales, and (iii) any natural person in a Control
relationship to Pilgrim Baxter who obtains information
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PILGRIM BAXTER & ASSOCIATES
CODE OF ETHICS
concerning recommendations made by Pilgrim Baxter with respect to the
Purchase or Sale of a Security by a Client.
2. "Beneficial Ownership" of a Security is to be determined in the same
manner as it is for purposes of Section 16 of the Securities Exchange
Act of 1934. This means that a person should generally consider himself
of herself the beneficial owner of any securities in which he or she has
a direct or indirect pecuniary interest. In addition, a person should
consider himself or herself the beneficial owner of securities held by
(i) his or her spouse or partner, (ii) minor children, (iii) a relative
who shares his or her home, or (iv) other persons by reason of any
contract, arrangement, understanding, or relationship that provides him
or her with sole or shared voting or investment power over the
securities held by such person.
3. "Control" shall have the same meaning as that set forth in Section
2(a)(9) of the Act. Section 2(a)(9) provides that "control" means the
power to exercise a controlling influence over the management or
policies of a company, unless such power is solely the result of an
official position with such company. Ownership of 25% or more of a
company's outstanding voting securities is presumed to give the holder
of those securities control over the company. This is a rebuttable
presumption, and it may be countered by the facts and circumstances of
the given situation. A natural person shall not be presumed to be a
controlled person.
4. "Client" means any investment company registered under the Act, a series
of an investment company registered under the Act, or a separately
managed investment management account for which Pilgrim Baxter acts as
investment adviser or sub-adviser.
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PILGRIM BAXTER & ASSOCIATES
CODE OF ETHICS
5. "Initial Public Offering" means an offering of securities registered
under the Securities Act of 1933, the issuer of which, immediately
before the registration, was not subject to the reporting requirements
of Section 13 or 15(d) of the Securities Exchange Act of 1934.
6. "Investment Personnel" means (a) any portfolio manager and (b) Security
analysts, traders and other personnel, who provide information and/or
advice to any portfolio manager, or who execute or help execute any
portfolio manager's decisions.
7. "Limited Offering" means an offering that is exempt from registration
under the Securities Act of 1933 pursuant to Section 4(2) or Section
4(6) or pursuant to Rules 504, 505, or 506 under the Securities Act of
1933. The term includes so-called private placements such as any
investment limited partnership that is exempt from registration.
8. An Access Person's "Personal Account" means any Securities account in
which such Access Person has direct or indirect Beneficial Ownership.
9. "Purchase or Sale of a Security" includes, among other things, the
writing of an option to purchase or sell a Security.
10. The designated "Review Officer" is the Chief Compliance Officer of
Pilgrim Baxter. The "Alternate Review Officers" are (i) the Chief
Investment Officer of Pilgrim Baxter, (ii) the General Counsel and
Secretary of Pilgrim Baxter, and (iii) the Senior Compliance Officer of
the Investment Adviser. In the absence of the Review Officer, an
Alternate Review Officer shall act in all respect in the manner
prescribed herein for the Review Officer. A "Code of Ethics Officer," as
designated by the Review Officer, shall act under the direction and
supervision of the Review Officer.
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PILGRIM BAXTER & ASSOCIATES
CODE OF ETHICS
11. A "Related Security" is any Security whose value directly fluctuates as
a result of a change in the value of a Security or Limited Offering in
the Securities Universe.
12. "Security" shall have the same meaning as that set forth in Section
2(a)(36) of the Act, except that it shall not include securities issued
by the Government of the United States or an agency thereof, bankers'
acceptances, bank certificates of deposit, commercial paper, and shares
of registered open-end mutual funds. The term includes any investment
limited partnership that is registered under the Securities Act of 1933
and any Initial Public Offering.
13. A "Limited Offering or Security Held or to be Acquired" by a Client
means any Limited Offering or Security which, within the most recent 15
days, (i) is or has been held by a Client or (ii) is being or has been
considered by Pilgrim Baxter for purchase for a Client.
14. A Limited Offering or Security is "Being Purchased or Sold" by a Client
from the time when a recommendation has been communicated to the persons
who place the buy and sell orders for a Client until the time when such
program has been fully completed or terminated.
15. "Security Universe" means only the Securities or Limited Offerings held
or to be acquired by Pilgrim Baxter, or a subsidiary of Pilgrim Baxter
located on the same premises as Pilgrim Baxter or using Pilgrim Baxter's
security transaction facilities for a Client.
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<PAGE>
PILGRIM BAXTER & ASSOCIATES
CODE OF ETHICS
III. PROHIBITED PURCHASES AND SALES OF SECURITIES AND LIMITED OFFERINGS.
1. No Access Person shall, in connection with the purchase or sale,
directly or indirectly, by such person of a Limited Offering or Security
Held or to be Acquired by any Client:
a) employ any device, scheme, or artifice to defraud such Client;
b) make to such Client any untrue statement of a material fact or
omit to state to such Client a material fact necessary in order
to make the statements made, in light of the circumstances under
which they are made, not misleading;
c) engage in any act, practice, or course of business that would
operate as a fraud or deceit upon such Client; or
d) engage in any manipulative practice with respect to such Client.
2. Subject to Section IV of this Code, no Access Person may purchase or
sell, directly or indirectly, a Security or Limited Offering for a
Personal Account at the same time that the same Security, Limited
Offering or a Related Security is in the Security Universe.
3. No Access Person shall reveal to any other person (except in the normal
course of his or her duties on behalf of any Client) any information
regarding transactions in Securities or Limited Offerings by any Client
or the Security Universe.
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<PAGE>
PILGRIM BAXTER & ASSOCIATES
CODE OF ETHICS
4. No Access Person shall recommend any transaction in Securities or
Limited Offering by any Client without having disclosed his or her
interest, if any, in such Securities or Limited Offering or the issuer
thereof, including without limitation:
a) the Access Person's direct or indirect Beneficial Ownership of
any Securities or Limited Offerings of such issuer;
b) any contemplated transaction by the Access Person in such
Securities or Limited Offering;
c) any position the Access Person has with such issuer or its
affiliates (for example, a directorship); and
d) any present or proposed business relationship between such issuer
or its affiliates, on the one hand, and the Access Person or any
party in which the Access Person has a significant interest, on
the other; provided, however, that in the event the interest of
such Access Person in such Securities, Limited Offering or issuer
is not material to his or her personal net worth and any
contemplated transaction by the Access Person in such Securities
or Limited Offering cannot reasonably be expected to have a
material adverse effect on any such transaction by any Client or
on the market for the Securities or Limited Offering generally,
that Access Person shall not be required to disclose his or her
interest in the Securities, Limited Offering or the issuer in
connection with any such recommendation.
5. Every Access Person is prohibited from directly or indirectly acquiring
beneficial ownership in any securities in an Initial Public Offering.
7
<PAGE>
PILGRIM BAXTER & ASSOCIATES
CODE OF ETHICS
6. Every Access Person must obtain prior written approval from the Limited
Offering Review Committee before directly or indirectly acquiring or
selling any beneficial ownership in a Limited Offering.
7. No Investment Personnel shall profit from the purchase and sale, or sale
and purchase, of the same (or an equivalent) Security within a 60-day
calendar day period. This 60-day period will not include any purchase or
sale made pursuant to the exercise or expiration of an option on a
Security; provided that such exercise or expiration is not at the
discretion of the Investment Personnel. Other exceptions to this policy
are permitted only with the approval of the Review Officer.
8. Subject to Section IV of this Code, new employees who at the date of
their employment own, directly or indirectly, any Security included in
the Security Universe or a Limited Offering and current employees with a
Security holding that subsequently is included in the Security Universe
are prohibited from engaging in any transaction which might be deemed to
violate Section III (1) of this Code.
IV. PRE-CLEARANCE OF TRANSACTIONS.
A. Limited Offerings
1. As provided in Section III(3) of this Code, every person must obtain
prior written approval from the Limited Offering Review Committee
before directly or indirectly acquiring or selling any beneficial
ownership in a Limited Offering. This pre-clearance approval process
is governed by the Pre-Clearance Procedures and Conditions for Limited
Offerings which are attached to and made part of this Code. The Review
Officer shall report
8
<PAGE>
PILGRIM BAXTER & ASSOCIATES
CODE OF ETHICS
all such transactions to the Board of Directors of the PBHG Family of
Funds.
B. Securities
1. Except as provided in Section IV(3) of this Code, every Access Person
must pre-clear each proposed transaction in Securities with the Review
Officer prior to proceeding with the transaction. No transaction in
Securities shall be effected without the prior written approval of the
Review Officer. In determining whether to grant such clearance, the
Review Officer shall refer to Section IV(4) below. Pre-clearance of a
Securities transaction is valid for two (2) business days.
2. In determining whether to grant approval for the purchase of a
Security offered in a private placement, the Review Officer shall take
into account, among other factors, whether the investment opportunity
should be reserved for a Client, and whether the opportunity is being
offered to the Access Person by virtue of his or her position with
Pilgrim Baxter.
3. The pre-clearance requirements of Section IV(1) shall not apply to the
following transactions:
a) Purchases or sales over which the Access Person has no direct or
indirect influence or Control.
b) Purchases or sales that are non-volitional on the part of the
Access Person, including purchases or sales upon exercise of puts
or calls written by the Access Person and sales from a margin
account pursuant to a BONA FIDE margin call.
9
<PAGE>
PILGRIM BAXTER & ASSOCIATES
CODE OF ETHICS
c) Purchases that are part of an automatic dividend reinvestment
plan.
d) Purchases effected upon the exercise of rights issued by an
issuer PRO RATA to all holders of a class of its Securities, to
the extent such rights were acquired from such issuer, and sales
of such rights so acquired.
e) Purchases or sales of Securities that are not eligible for
inclusion in the Securities Universe.
4. Transactions that may be entitled to clearance from the Review Officer
include transactions, which appear upon reasonable inquiry and
investigation to present no reasonable likelihood of harm to any Client
and with respect to registered investment companies, which are otherwise
in accordance with Rule 17j-1. Such transactions would normally include
purchases or sales of up to 1,000 shares of a Security that is in the
Security Universe (but not then Being Purchased or Sold) if the issuer
has a market capitalization of over $1 billion. The Review Officer shall
report all such transactions to the Board of Directors of The PBHG
Family of Funds.
V. ADDITIONAL RESTRICTIONS AND REQUIREMENTS.
1. The receipt of any gift, favor, gratuity or other thing ("Gift") by an
Access Person from any person or entity that does business with Pilgrim
Baxter with a fair market value in excess of $100 requires pre-approval
by the Review Officer prior to its acceptance. Gifts do not include
occasional participation in lunches, dinners, cocktail parties, sporting
activities or similar gatherings conducted for
10
<PAGE>
PILGRIM BAXTER & ASSOCIATES
CODE OF ETHICS
business purposes. No Access Person or member of his or her family may
accept a Gift or consider the prior receipt of a Gift when exercising
his or her fiduciary responsibilities.
2. No Investment Personnel shall accept a position as a director, trustee,
or general partner of a publicly traded company or partnership unless
the acceptance of such position has been approved by the Review Officer
as consistent with the interests of the Clients.
3. Every Access Person must direct each brokerage firm or bank at which the
Access Person maintains a securities account to send duplicate copies of
confirmations of all personal securities transactions and copies of
periodic statements for all securities accounts promptly to Pilgrim
Baxter's Compliance Department. Compliance with this provision can be
effected by the Access Person providing duplicate copies of all such
statements directly to the Compliance Department.
VI. REPORTING OBLIGATIONS
1. Every Access Person shall report all transactions in which such Access
Person has, or by reason of such transaction acquires, any direct or
indirect Beneficial Ownership in Securities and Limited Offerings
provided: however, that an Access Person shall not be required to make a
report with respect to transactions effected for any account over which
such person does not have any direct or indirect influence. Reports
shall be filed with the Compliance Department each quarter. The Review
Officer shall submit confidential quarterly reports with respect to his
or her own personal securities transactions to the Alternate Review
Officer, who shall act in all respects in the manner prescribed herein
for the Review Officer.
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<PAGE>
PILGRIM BAXTER & ASSOCIATES
CODE OF ETHICS
2. Every report shall be made not later than 10 days after the end of the
calendar quarter in which the transaction to which the report relates
was effected, and shall contain the following information:
a) the date of the transaction, the title and the number of shares,
and the principal amount of each Security and Limited Offering
involved;
b) the nature of the transaction (I.E., purchase, sale or any other
type of acquisition or disposition);
c) the price at which the transaction was effected;
d) the name of the broker, dealer, bank or other entity with or
through whom the transaction was effected; and
e) the date the report was signed.
3. Any such report may refer to the information contained in the statements
required by Section V (3) of this Code.
4. Any such report may contain a statement that the report shall not be
construed as an admission by the person making such report that he or
she has any direct or indirect Beneficial Ownership in the Security or
Limited Offering to which the report relates.
5. Every Access Person shall report the name of any publicly-traded company
(or any company anticipating a public offering of its equity securities)
and the total
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<PAGE>
PILGRIM BAXTER & ASSOCIATES
CODE OF ETHICS
number of its shares beneficially owned by him or her if such total
ownership is more than 1/2 of 1% of the company's outstanding shares.
6. In the event that no reportable transactions occurred during the
quarter, the report should be so noted and returned signed and dated.
7. No later than 10 days after the end of a calendar quarter, each access
person must report to the Compliance Department all accounts opened
during the quarter in which Securities or Limited Offerings were held
for the direct or indirect benefit of the Access Person. Specifically,
the Access Person must report:
a) the name of the broker, dealer, bank or other entity with whom
the account was opened;
b) the date the account was opened; and
c) the date the Access Person signed the report.
8. Reports maintained pursuant to Rule 204-2(a)(12) under the Advisers Act
shall meet the requirements for reports required to be made under this
section.
9. Within 10 days of becoming an Access Person, every Access Person must
provide to the Review Officer a complete listing of all Securities and
Limited Offerings owned by such person and thereafter must submit a
revised list of such holdings as of December 31 of each subsequent year
to the Compliance Department.
10. Every Access Person shall certify annually that he or she:
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<PAGE>
PILGRIM BAXTER & ASSOCIATES
CODE OF ETHICS
a) has read and understands this Code and recognized that he/she is
subject to it;
b) has complied with the Code during the past year;
c) will comply with the Code during the upcoming year; and
d) has disclosed and reported all personal Securities and Limited
Offering transactions required to be disclosed or reported.
VII. REVIEW AND ENFORCEMENT
1. The Code of Ethics Officer shall review all reports submitted pursuant
to Section VI.
2. The Code of Ethics Officer shall provide a comparison of all reported
personal transactions with completed portfolio transactions of the
Access Persons and a list of Securities and Limited Offerings being
considered for purchase or sale by Pilgrim Baxter to the Review Officer.
Determination of whether a violation of this Code may have occurred will
be made by the Review Officer. Before making any determination that a
violation has been committed by any person, the Review Officer shall
give such person an opportunity to supply additional explanatory
material.
3. If the Review Officer determines that a violation of this Code may have
occurred, he or she shall submit his or her determination and any
additional explanatory material provided by the individual, to an
Alternate Review Officer, who shall make an independent determination as
to whether a violation has occurred.
4. If the Alternate Review Officer finds that a violation has occurred, the
Alternate Review Officer shall impose upon the individual such sanctions
as he or she deems
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<PAGE>
PILGRIM BAXTER & ASSOCIATES
CODE OF ETHICS
appropriate, including, but not limited to, a letter of censure,
suspension or termination of the employment of the violator, or
disgorgement of profits. There shall be no mandatory sanction for
inadvertent non-compliance with the blackout trading restrictions set
forth in Section III (2).
5. No Person shall participate in a determination of whether he or she has
committed a violation of this Code or of the imposition of any sanction
against himself. If a personal transaction of the Alternate Review
Officer is under consideration, the other Alternate Review Officer or
the Chief Executive Officer shall act in all respects in the manner
prescribed herein for an Alternate Review Officer.
VIII. RECORDS.
Pilgrim Baxter shall maintain records in the manner and to the extent set forth
below, which records shall be available for examination by representatives of
the Securities and Exchange Commission.
1. A copy of this Code and any other code which is, or at any time within
the past six years has been, in effect shall be preserved;
2. A record of any violation of this Code, and of any action taken as a
result of such violation, shall be preserved for a period of not less
than six years;
3. A copy of each report made by an Access Person pursuant to this Code
shall be preserved for a period of not less than six years; and
4. A list of all persons who are, or within the past six years have been,
required to make reports pursuant to this Code shall be maintained.
15
<PAGE>
PILGRIM BAXTER & ASSOCIATES
CODE OF ETHICS
5. A list of personnel who are, or within the past six years have been
Review Officers, Code of Ethics Officers and members of the Limited
Offering Review Committee shall be maintained.
6. Effective January 2000, a record of any decision by the Limited Offering
Review Committee, and the reasons supporting the decision, to approve
the acquisition or sale of a Limited Offering by an Access Person. This
record will be kept for five years after the end of the fiscal year in
which the approval is granted.
IX. MISCELLANEOUS
1. All reports of Securities and Limited Offering transactions and any
other information filed with Pilgrim Baxter pursuant to this Code shall
be treated as confidential.
2. Pilgrim Baxter may from time to time adopt such interpretations of this
Code as it deems appropriate.
3. The Review Officer shall prepare a report to Pilgrim Baxter's Board of
Directors, upon request, as to the operation of this Code and shall
address in any such report the need (if any) for further changes or
modifications to this Code.
Adopted this 1st day of February 2000.
POLICES AND PROCEDURES OF
PILGRIM BAXTER & ASSOCIATES, LTD.
DESIGNED TO DETECT AND PREVENT INSIDER TRADING
SECTION I. POLICY STATEMENT ON INSIDER TRADING
A. INTRODUCTION
Pilgrim Baxter & Associates, Ltd. ("Pilgrim Baxter") seeks to foster a
reputation for integrity and professionalism. That reputation is a vital
business asset. The confidence and trust placed in us by investors in
mutual funds and advisory accounts advised by Pilgrim Baxter is
something we value and endeavor to protect. To further that goal, this
16
<PAGE>
PILGRIM BAXTER & ASSOCIATES
STATEMENT ON INSIDER TRADING
Policy Statement proscribes procedures to deter the misuse of material,
nonpublic information in securities transactions.
Trading securities while in possession of material, nonpublic
information or improperly communicating that information to others may
expose you to severe penalties. Criminal sanctions may include a fine of
up to $ 1,000,000 and/or ten years imprisonment. The Securities and
Exchange Commission can recover the profits gained or losses avoided
through the violative trading, impose a penalty of up to three times the
illicit windfall and an order permanently barring you from the
securities industry. Finally, you may be sued by investors seeking to
recover damages for insider trading violations.
Regardless of whether a government inquiry occurs, Pilgrim Baxter views
seriously any violation of this Policy Statement. Such violations
constitute grounds for disciplinary sanctions, including immediate
dismissal.
B. SCOPE OF THE POLICY STATEMENT
This Policy Statement is drafted broadly and will be applied and
interpreted in a similar manner. This Policy Statement applies to
securities trading and information handling by directors, officers and
employees of Pilgrim Baxter (including spouses, minor children and adult
members of their households).
The law of insider trading is continuously evolving and an individual
legitimately may be uncertain about the application of the Policy
Statement in a particular circumstance. Often, your asking a single
question can help avoid disciplinary action or complex legal problems.
You should direct any questions relating to the Policy Statement to the
General Counsel or the Chief Compliance Officer. You also must notify
the General Counsel or Chief Compliance Officer(1) immediately if you
have any reason to believe that a violation of the Policy Statement has
occurred or is about to occur.
C. POLICY STATEMENT ON INSIDER TRADING
No person to whom this Policy Statement applies, including you, may
trade, either personally or on behalf of others (such as for mutual
funds and private accounts managed by Pilgrim Baxter), while in
possession of material, nonpublic information; nor may such Pilgrim
Baxter personnel communicate material, nonpublic information to others
in violation of the law. This section reviews principles important to
the Policy Statement.
1. MATERIAL INFORMATION
Information is "material" when there is a substantial likelihood that a
reasonable investor would consider it important in making his or her
investment decisions. Generally, this is information whose disclosure
will have a substantial effect on the price of a company's securities.
No simple "bright line" test exists to determine when information is
material; assessment of materiality involve a highly fact-specific
inquiry. For this reason, you should direct any questions about whether
information is material to the General Counsel and Chief Compliance
Officer.
- -------------------
(1) The General Counsel and Chief Compliance Officer must notify or clear
his/her own proposed transactions with the other.
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PILGRIM BAXTER & ASSOCIATES
STATEMENT ON INSIDER TRADING
Material information often relates to a company's results and operations
including, for example, dividend changes, earnings results, changes in
previously released earnings estimates, significant merger or
acquisition proposals or agreements, major litigation, liquidation
problems, and extraordinary management developments.
Material information also may relate to the market for a company's
securities. Information about a significant order to purchase or sell
securities may, in some contexts, be deemed material. Similarly,
prepublication information regarding reports in the financial press also
may be deemed material. For example, the Supreme Court upheld the
criminal convictions of insider trading defendants who capitalized on
prepublication information about the Wall Street Journal's "Heard on the
Street" column.
2. NONPUBLIC INFORMATION
Information is "public" when it has been disseminated broadly to
investors in the marketplace. Tangible evidence of such dissemination is
the best indication that the information is public. For example,
information is public after it has become available to the general
public through a public filing with the SEC or some other governmental
agency, the Dow Jones "tape" or the Wall Street Journal or some other
publication of general circulation, and after sufficient time has passed
so that the information has been disseminated widely.
3. IDENTIFYING INSIDE INFORMATION
Before executing any trade for yourself or others, including investment
companies or private accounts managed by Pilgrim Baxter, you must
determine whether you have access to material, nonpublic information. If
you THINK that you might have access to material, nonpublic information,
you should take the following steps:
(i.) Report the information and proposed trade immediately to
the General Counsel and Chief Compliance Officer.
(ii.) Do not purchase or sell the securities on behalf of
yourself or others, including investment companies or private accounts
managed by Pilgrim Baxter.
(iii.) Do not communicate the information inside or outside
Pilgrim Baxter, other than to the General Counsel and Chief Compliance
Officer.
(iv.) After the General Counsel and Chief Compliance Officer
have reviewed the issue, the firm will determine whether the information
is material and nonpublic and, if so, what action the firm should take,
if any.
You should consult with the General Counsel and Chief Compliance Officer
before taking any action. This degree of caution will protect you, your
clients and the firm.
4. CONTACTS WITH PUBLIC COMPANIES
For Pilgrim Baxter, contacts with public companies represent an
important part of our research efforts. Pilgrim Baxter may make
investment decisions on the basis of the firm's conclusions formed
through such contacts and analysis of publicly-available information.
Difficult legal issues arise, however, when, in the course of these
contacts, a Pilgrim Baxter employee or other person subject to this
Policy Statement becomes aware of material, nonpublic information.
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PILGRIM BAXTER & ASSOCIATES
STATEMENT ON INSIDER TRADING
5. TENDER OFFERS
Tender offers represent a particular concern in the law of insider
trading for two reasons. First, tender offer activity often produces
extraordinary gyrations in the price of the target company's securities.
Trading during this time period is more likely to attract regulatory
attention (and produces a disproportionate percentage of insider trading
cases). Second, the SEC has adopted a rule that expressly forbids
trading and "tipping" while in possession of material, nonpublic
information regarding a tender offer received from the tender offer or,
the target company or anyone acting on behalf of either. Pilgrim Baxter
employees and others subject to this Policy Statement should exercise
particular caution any time they become aware of nonpublic information
relating to a tender offer.
SECTION II. PROCEDURES TO IMPLEMENT THE POLICY STATEMENT ON INSIDER
TRADING
A. PROCEDURES TO IMPLEMENT PILGRIM BAXTER'S POLICY AGAINST INSIDER
TRADING
The following procedures have been established to aid the officers,
directors and employees of Pilgrim Baxter in avoiding insider trading,
and to aid Pilgrim Baxter in preventing and detecting against insider
trading and imposing appropriate sanctions against violations of the
Firm's policies. Every officer, director and employee of Pilgrim Baxter
must follow these procedures or risk serious sanctions, including
dismissal, substantial personal liability and criminal penalties. If you
have any questions about these procedures, you should consult the
General Counsel and Chief Compliance Officer.
1. PERSONAL SECURITIES TRADING
All officers, directors and employees of Pilgrim Baxter shall submit to
the Compliance Department a report of every securities transaction (as
defined by Pilgrim Baxter's Code of Ethics) in which they, their
families (including spouses, minor children and adults living in the
same household), and trusts of which they are trustees or in which they
have a beneficial interest have participated within ten days after such
transaction. The report shall include the name of the security, date of
the transaction, quantity, price, and broker-dealer through which the
transaction was effected. The requirement may be satisfied by sending
duplicate confirmations of such trades to the Compliance Department.
All officers, directors and employees of Pilgrim Baxter shall obtain
clearance from the General Counsel and Chief Compliance Officer prior to
effecting any relevant securities transaction (as defined by Pilgrim
Baxter's Code of Ethics) in which they, their families (including the
spouse, minor children and adults living in the same household) as the
officer, director or employee or trusts of which they are trustees or in
which they have a beneficial interest are parties. The General Counsel
and Chief Compliance Officer, as appropriate, shall promptly notify the
officer, director or employee of clearance or denial of clearance to
trade. Notification of approval or denial to trade may be given orally;
however, it shall be confirmed in writing within 24 hours of the oral
notification. Such notification must be kept strictly confidential.
2. HIGH-RISK TRADING ACTIVITIES
Certain high-risk trading activities, if used in the management of a
Pilgrim Baxter officer, director of employee's personal trading
portfolio, are risky not only because of the nature of the securities
transactions themselves, but also because of the potential that
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PILGRIM BAXTER & ASSOCIATES
STATEMENT ON INSIDER TRADING
an action necessary to close out the transactions may become prohibited
during the pendency of the transactions. Examples of such activities
include short sales of common stock and trading in derivative
instruments such as option contracts to purchase ("call") or sell
("put") securities at certain predetermined prices. Pilgrim Baxter
officers, directors and employees should understand that short sales and
trading in derivative instruments involve special risks - derivative
instruments, for example, ordinarily have greater price volatility than
the underlying security. The fulfillment of the obligations owed by each
officer, director and employee to Pilgrim Baxter may heighten those
risks. For example, if Pilgrim Baxter becomes aware of material,
nonpublic information about the issuer of the underlying securities,
Pilgrim Baxter personnel may find themselves "frozen" in a position in a
derivative security. Pilgrim Baxter will not bear any losses resulting
in any personal account because of this Policy Statement and its
procedures.
3. RESTRICTIONS ON DISCLOSURES
Pilgrim Baxter officers, directors and employees shall not disclose any
nonpublic information (whether or not it is material) relating to
Pilgrim Baxter or its securities transactions to any person outside
Pilgrim Baxter (unless such disclosure has been authorized by Pilgrim
Baxter). Material, nonpublic information may not be communicated to
anyone, including persons within Pilgrim Baxter, except as provided in
Section I above. Such information must be secured. For example, access
to files containing material, nonpublic information and computer files
containing such information should be restricted and conversations
containing such information, if appropriate at all, should be conducted
in private (for example, not by cellular telephone, to avoid potential
interception).
SECTION III. SUPERVISORY PROCEDURES
A. SUPERVISORY PROCEDURES
Pilgrim Baxter has assigned the Chief Compliance Officer the primary
responsibility for the implementation and maintenance of Pilgrim
Baxter's policy and procedures against insider trading. Supervisory
Procedures can be divided into two classifications - prevention of
insider trading and detection of insider trading.
1. PREVENTION OF INSIDER TRADING
To prevent insider trading, the Chief Compliance Officer will:
(i.) provide, on a regular basis, an educational program to
familiarize officers, directors and employees with Pilgrim Baxter's
policy and procedures;
(ii.) together with the General Counsel, answer questions
regarding Pilgrim Baxter's policy and procedures;
(iii.) together with the General Counsel, resolve issues of
whether information received by an officer, director or employee of
Pilgrim Baxter is material and nonpublic and determine what action, if
any, should be taken;
(iv.) review on a regular basis and update as necessary
Pilgrim Baxter's policy and procedures; and
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PILGRIM BAXTER & ASSOCIATES
STATEMENT ON INSIDER TRADING
(v.) when it has been determined that an officer, director or
employee of Pilgrim Baxter has material, nonpublic information:
1. implement measures to prevent dissemination of such
information, and
2. if necessary, restrict officers, directors and
employees from trading the implicated securities, and
(vi.) together with the Chief Investment Officer or General
Counsel, promptly review, and either approve or disapprove, in writing,
each request of an officer, director or employee for clearance to trade
in specified securities.
2. DETECTION OF INSIDER TRADING
To detect insider trading, the Chief Compliance Officer will:
(i.) review the trading activity reports filed by each
officer, director, and employee (provided, however, that reports filed
by the Chief Compliance Officer should be reviewed by the General
Counsel);
(ii.) review the trading activity of mutual funds and private
accounts managed by Pilgrim Baxter;
(iii.) promptly investigate all reports of any possible
violations of Pilgrim Baxter's Policy and Procedures to Detect and
Prevent Insider Trading (provided, however, that any reports relating to
actions taken by the Chief Compliance Officer should be investigated by
the General Counsel); and
(iv.) coordinate the review of such reports with other
appropriate officers, directors or employees of Pilgrim Baxter.
3. SPECIAL REPORTS TO MANAGEMENT
Promptly upon learning of a potential violation of Pilgrim Baxter's
Policy and Procedures to detect and Prevent Insider Trading, the Chief
Compliance Officer, or the General Counsel, as appropriate, should
prepare a written report to management providing full details, which may
include (1) the name of particular securities involved, if any; (2) the
date(s) the Chief Compliance Officer or General Counsel, as appropriate,
learned of the potential violation and began investigating; (3) the
accounts and individuals involved; (4) actions taken as a result of the
investigation, if any; and (5) recommendations for further action.
4. GENERAL REPORTS TO MANAGEMENT AND/OR THE BOARD OF DIRECTORS
On an as-needed or periodic basis, Pilgrim Baxter may find it useful for
the Chief Compliance Officer to prepare a written report to the
management and/or the Board of Directors of Pilgrim Baxter setting forth
some or all of the following:
(i.) a summary of existing procedures to detect and prevent
insider trading;
(ii.) a summary of changes in procedures made in the last
year;
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PILGRIM BAXTER & ASSOCIATES
STATEMENT ON INSIDER TRADING
(iii.) full details of any investigation since the last
report ( either internal or by a regulatory agency) of any suspected
insider trading, the results of the investigation and a description of
any changes in procedures prompted by such investigation;
(iv.) an evaluation of the current procedures and a
description of anticipated changes in procedures; and a description of
Pilgrim Baxter's continuing educational program regarding insider
trading, including the dates of such programs since the last report to
management.
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PERSONAL INVESTMENT POLICY
FOR
SSB CITI ASSET MANAGEMENT GROUP - NORTH AMERICA
AND CERTAIN REGISTERED INVESTMENT COMPANIES
SSB Citi Asset Management Group ("SSB Citi")(1), and those U.S.-registered
investment companies advised or managed by SSB Citi that have adopted this
policy ("Funds"), have adopted this policy on securities transactions in order
to accomplish two goals: first, to minimize conflicts and potential conflicts of
interest between employees of SSB Citi and SSB Citi's clients (including the
Funds), and between Fund directors or trustees and their Funds, and SECOND, to
provide policies and procedures consistent with applicable law, including Rule
17j-1 under the Investment Company Act of 1940, to prevent fraudulent or
manipulative practices with respect to purchases or sales of securities held or
to be acquired by client accounts. ALL U.S. EMPLOYEES OF SSB CITI, INCLUDING
EMPLOYEES WHO SERVE AS FUND OFFICERS OR DIRECTORS, AND ALL DIRECTORS OR TRUSTEES
("DIRECTORS") OF EACH FUND, ARE COVERED PERSONS UNDER THIS POLICY. OTHER COVERED
PERSONS ARE DESCRIBED IN SECTION II BELOW.
I. STATEMENT OF PRINCIPLES - All SSB Citi employees owe a fiduciary duty to
SSB Citi's clients when conducting their personal investment transactions.
Employees must place the interests of clients first and avoid activities,
interests and relationships that might interfere with the duty to make
decisions in the best interests of the clients. All Fund directors owe a
fiduciary duty to each Fund of which they are a director and to that
Fund's shareholders when conducting their personal investment
transactions. At all times and in all matters Fund directors shall place
the interests of their Funds before their personal interests. The
fundamental standard to be followed in personal securities transactions is
that Covered Persons may not take inappropriate advantage of their
positions.
All personal securities transactions by Covered Persons shall adhere to
the requirements of this policy and shall be conducted in such a manner as
to avoid any actual or potential conflict of interest, the appearance of
such a conflict, or the abuse of the person's position of trust and
responsibility. While this policy is designed to address both identified
conflicts and potential conflicts, it cannot possibly be written broadly
enough to cover all potential situations. In this regard, Covered Persons
are expected to adhere not only to the letter, but also the spirit of the
policies contained herein.
Employees are reminded that they also are subject to other Citigroup
policies, including policies on insider trading, the purchase and sale of
securities listed on any applicable SSB Citi restricted list, the receipt
of gifts and service as a director of a publicly traded company. EMPLOYEES
MUST NEVER TRADE IN A SECURITY OR COMMODITY WHILE IN POSSESSION OF
MATERIAL, NON-PUBLIC INFORMATION ABOUT THE ISSUER OR THE MARKET FOR THOSE
SECURITIES OR COMMODITIES, EVEN IF THE EMPLOYEE HAS SATISFIED ALL OTHER
REQUIREMENTS OF THIS POLICY.
The reputation of SSB Citi and its employees for straightforward practices
and integrity is a priceless asset, and all employees have the duty and
obligation to support and maintain it when conducting their personal
securities transactions.
(1) The investment advisory entities of SSB Citi covered by this policy include:
Salomon Brothers Asset Management Inc.; SSB Citi Fund Management LLC; Smith
Barney Asset Management Division of Salomon Smith Barney Inc.; Travelers
Investment Management Company; and the Citibank Global Asset Management Division
of Citibank, N.A. and Citicorp Trust, N.A.-California.
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II. APPLICABILITY - SSB CITI EMPLOYEES - This policy applies to all U.S.
employees of SSB Citi, including part-time employees. Each employee,
including employees who serve as Fund officers or directors, must comply
with all of the provisions of the policy applicable to SSB Citi employees
unless otherwise indicated. Certain employees are considered to be
"investment personnel" (i.e., portfolio managers, traders and research
analysts (and each of their assistants)), and as such, are subject to
certain additional restrictions outlined in the policy. All other
employees of SSB Citi are considered to be "advisory personnel."
Generally, temporary personnel and consultants working in any SSB Citi
business are subject to the same provisions of the policy as full-time
employees, and their adherence to specific requirements will be addressed
on a case-by-case basis.
The personal investment policies, procedures and restrictions referred to
herein also apply to an employee's spouse and minor children. The policies
also apply to any other account over which the employee is deemed to have
BENEFICIAL OWNERSHIP. This includes: accounts of any immediate family
members sharing the same household as the employee; accounts of persons or
other third parties for whom the employee exercises investment discretion
or gives investment advice; a legal vehicle in which the employee has a
direct or indirect beneficial interest and has power over investment
decisions; accounts for the benefit of a third party (e.g., a charity)
which may be directed by the employee (other than in the capacity of an
employee); and any account over which the employee may be deemed to have
control. For a more detailed description of beneficial ownership, see
Exhibit A attached hereto.
These policies place certain restrictions on the ability of an employee to
purchase or sell securities that are being or have been purchased or sold
by an SSB Citi managed fund or client account. The restrictions also apply
to securities that are "related" to a security being purchased or sold by
an SSB Citi managed fund or client account. A "related security" is one
whose value is derived from the value of another security (e.g., a
warrant, option or an indexed instrument).
FUND DIRECTORS - This policy applies to all directors of Funds that have
adopted this policy. The personal investment policies, procedures and
restrictions that specifically apply to Fund directors apply to all
accounts and securities in which the director has direct or indirect
beneficial ownership. See Exhibit A attached hereto for a more detailed
description of beneficial ownership.
SECURITIES are defined as stocks, notes, bonds, closed-end mutual funds,
debentures, and other evidences of indebtedness, including senior debt,
subordinated debt, investment contracts, commodity contracts, futures and
all derivative instruments such as options, warrants and indexed
instruments, or, in general, any interest or instrument commonly known as
a "security."
III. ENFORCEMENT - It is the responsibility of each Covered Person to act in
accordance with a high standard of conduct and to comply with the policies
and procedures set forth in this document. SSB Citi takes seriously its
obligation to monitor the personal investment activities of its employees.
Any violation of this policy by employees will be considered serious, and
may result in disciplinary action, which may include the unwinding of
trades, disgorgement of profits, monetary fine or censure, and suspension
or termination of employment. Any violation of this policy by a Fund
director will be reported to the Board of Directors of the applicable
Fund, which may impose such sanctions as it deems appropriate.
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IV. OPENING AND MAINTAINING EMPLOYEE ACCOUNTS - All employee brokerage
accounts, including spouse accounts, accounts for which the employee is
deemed to have beneficial ownership, and any other accounts over which the
employee and/or spouse exercise control, must be maintained either at
Salomon Smith Barney ("SSB") or at Citicorp Investment Services
("CIS").(2) For spouses or other persons who, by reason of their
employment, are required to conduct their securities, commodities or other
financial transactions in a manner inconsistent with this policy, or in
other exceptional circumstances, employees may submit a written request
for an exemption to the Compliance Department. If approval is granted,
copies of trade confirmations and monthly statements must be sent to the
Compliance Department. In addition, all other provisions of this policy
will apply.
V. EXCLUDED ACCOUNTS AND TRANSACTIONS - The following types of
accounts/transactions need not be maintained at SSB or CIS, nor are they
subject to the other restrictions of this policy:
1. Accounts at outside mutual funds that hold only shares of open-end
funds purchased directly from that fund company. NOTE: TRANSACTIONS
RELATING TO CLOSED-END FUNDS ARE SUBJECT TO THE PRE-CLEARANCE,
BLACKOUT PERIOD AND OTHER RESTRICTIONS OF THIS POLICY;
2. Estate or trust accounts in which an employee or related person has a
beneficial interest, but no power to affect investment decisions.
There must be no communication between the account(s) and the employee
with regard to investment decisions prior to execution. THE EMPLOYEE
MUST DIRECT THE TRUSTEE/BANK TO FURNISH COPIES OF CONFIRMATIONS AND
STATEMENTS TO THE COMPLIANCE DEPARTMENT;
3. Fully discretionary accounts managed by either an internal or external
registered investment adviser are permitted and may be custodied away
from SSB and CIS if (i) the employee receives permission from the
Regional Director of Compliance and the unit's Chief Investment
Officer, and (ii) there is no communication between the manager and
the employee with regard to investment decisions prior to execution.
The employee must designate that copies of trade confirmations and
monthly statements be sent to the Compliance Department;
4. Employees may participate in direct investment programs which allow
the purchase of securities directly from the issuer without the
intermediation of a broker/dealer provided that the timing and size of
the purchases are established by a pre-arranged, regularized schedule
(e.g., dividend reinvestment plans). Employees must pre-clear the
transaction at the time that the dividend reinvestment plan is being
set up. Employees also must provide documentation of these
arrangements and direct periodic (monthly or quarterly) statements to
the Compliance Department; and
5. In addition to the foregoing, the following types of securities are
exempted from pre-clearance, blackout periods, reporting and
short-term trading requirements: open-ended mutual funds; open-end
unit investment trusts; U.S. Treasury bills, bonds and notes; mortgage
pass-throughs (e.g. Ginnie Maes) that are direct obligations of the
U.S. government; bankers acceptances; bank
(2) This requirement will become effective as to all employees on a date to be
determined by the Compliance Department and may be subject to a phase-in
implementation process.
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certificates of deposit; commercial paper; and high quality short-term
debt instruments (meaning any instrument that has a maturity at
issuance of less than 366 days and that is rated in one of the two
highest rating categories by a nationally recognized statistical
rating organization, such as S&P or Moody's), including repurchase
agreements.
VI. SECURITIES HOLDING PERIOD/SHORT-TERM TRADING - Securities transactions
must be for investment purposes rather than for speculation. Consequently,
employees may not profit from the purchase and sale, or sale and purchase,
of the same or equivalent securities within sixty (60) calendar days,
calculated on a First In, First Out (FIFO) basis (i.e., the security may
be sold on the 61st day). Citigroup securities received as part of an
employee's compensation are not subject to the 60-day holding period. All
profits from short-term trades are subject to disgorgement. However, with
the prior written approval of both a Chief Investment Officer and the
Regional Director of Compliance, and only in rare and/or unusual
circumstances, an employee may execute a short-term trade that results in
a significant loss or in break-even status.
VII. PRE-CLEARANCE - All SSB Citi employees must pre-clear all personal
securities transactions (see Section V for a listing of accounts,
transactions and securities that do not require pre-clearance). A copy of
the pre-clearance form is attached as Exhibit B. IN ADDITION, EMPLOYEES
ARE PROHIBITED FROM ENGAGING IN MORE THAN TWENTY (20) TRANSACTIONS IN ANY
CALENDAR MONTH, EXCEPT WITH PRIOR WRITTEN APPROVAL FROM THEIR CHIEF
INVESTMENT OFFICER, OR DESIGNEE. A transaction must not be executed until
the employee has received the necessary approval. Pre-clearance is valid
only on the day it is given. If a transaction is not executed on the day
pre-clearance is granted, it is required that pre-clearance be sought
again on a subsequent day (i.e., open orders, such as limit orders, good
until cancelled orders and stop-loss orders, must be pre-cleared each day
until the transaction is effected). In connection with obtaining approval
for any personal securities transaction, employees must describe in detail
any factors which might be relevant to an analysis of the possibility of a
conflict of interest. Any trade that violates the pre-clearance process
may be unwound at the employee's expense, and the employee will be
required to absorb any resulting loss and to disgorge any resulting
profit.
In addition to the foregoing, the CGAM NA Director of Global Equity
Research, or his designate, must approve all personal securities
transactions for members of the CGAM Research Department prior to
pre-clearance from the Compliance Department as set forth in this section.
Pre-approval by the Director of Research, or his designate, is in addition
to and does not replace the requirement for the pre-clearance of all
personal securities transactions.
VIII. BLACKOUT PERIODS - No Covered Person shall purchase or sell, directly or
indirectly, any security in which he/she has, or by reason of the
transaction acquires, any direct or indirect beneficial ownership if
he/she has knowledge at the time of such transaction that the security is
being purchased or sold, or is being considered for purchase or sale, by a
managed fund or client account or in the case of a Fund director, by the
director's Fund. In addition, the following Blackout Periods apply to the
categories of SSB Citi employees listed below:
1. PORTFOLIO MANAGERS AND PORTFOLIO MANAGER ASSISTANTS - may not buy or
sell any securities for personal accounts seven (7) calendar days
before or after managed funds or client accounts he/she manages
trade in that security.
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2. TRADERS AND TRADER ASSISTANTS - may not buy or sell any securities
for personal accounts three (3) calendar days before or seven (7)
calendar days after managed funds or client accounts he/she executes
trades for trade in that security.
3. RESEARCH ANALYSTS AND RESEARCH ASSISTANTS - may not buy or sell any
securities for personal accounts: seven (7) calendar days before or
after the issuance of or a change in any recommendation; or seven
(7) calendar days before or after any managed fund or client account
about which the employee is likely to have trading or portfolio
information (as determined by the Compliance Department) trades in
that security.
4. ADVISORY PERSONNEL (see Section II for details) - may not buy or
sell any securities for personal accounts on the same day that a
managed fund or client account about which the employee is likely to
have trading or portfolio information (as determined by the
Compliance Department) trades in that security.
5. UNIT TRUST PERSONNEL - all employees assigned to the Unit Trust
Department are prohibited from transacting in any security when a
SSB Citi-sponsored Unit Trust portfolio is buying the same (or a
related) security, until seven business days after the later of the
completion of the accumulation period or the public announcement of
the trust portfolio. Similarly, all UIT employees are prohibited
from transacting in any security held in a UIT (or a related
security) seven business days prior to the liquidation period of the
trust.
Employees in categories 1, 2 and 5 above may also be considered
Advisory Personnel for other accounts about which the employee is
likely to have trading or portfolio information (as determined by the
Compliance Department).
Any violation of the foregoing provisions will require the employee's
trade to be unwound, with the employee absorbing any resulting loss and
disgorging any resulting profit. Advisory personnel are subject to the
unwinding of the trade provision; however, they may not be required to
absorb any resulting loss (at the discretion of the Compliance
Department and the employee's supervisor). Please be reminded that,
regardless of the provisions set forth above, all employees are always
prohibited from effecting personal securities transactions based on
material, non-public information.
Blackout period requirements shall not apply to any purchase or sale,
or series of related transactions involving the same or related
securities, involving 500 or fewer shares in the aggregate if the
issuer has a market capitalization (outstanding shares multiplied by
the current price per share) greater than $10 billion and is listed on
a U.S. Stock Exchange or NASDAQ. NOTE: PRE-CLEARANCE IS STILL REQUIRED.
Under certain circumstances, the Compliance Department may determine
that an employee may not rely upon this "Large Cap/De Minimis"
exemption. In such a case, the employee will be notified prior to or at
the time the pre-clearance request is made.
IX. PROHIBITED TRANSACTIONS - The following transactions by SSB Citi employees
are prohibited without the prior written approval from the Chief
Investment Officer, or designee, and the Regional Compliance Director:
1. The purchase of private placements; and
2. The acquisition of any securities in an initial public offering (new
issues of municipal debt securities may be acquired subject to the
other requirements of this policy (e.g., pre-clearance).)
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X. TRANSACTIONS IN OPTIONS AND FUTURES - SSB Citi employees may buy or sell
derivative instruments such as individual stock options, options and
futures on indexes and options and futures on fixed-income securities, and
may buy or sell physical commodities and futures and forwards on such
commodities. These transactions must comply with all of the policies and
restrictions described in this policy, including pre-clearance, blackout
periods, transactions in Citigroup securities and the 60-day holding
period. However, the 60-day holding period does not apply to individual
stock options that are part of a hedged position where the underlying
stock has been held for more than 60 days and the entire position
(including the underlying security) is closed out.
XI. PROHIBITED RECOMMENDATIONS - No Covered Person shall recommend or execute
any securities transaction by any managed fund or client account, or, in
the case of a Fund director, by the director's Fund, without having
disclosed, in writing, to the Chief Investment Officer, or designee, any
direct or indirect interest in such securities or issuers, except for
those securities purchased pursuant to the "Large Cap/De Minimis"
exemption described in Section VIII above. Prior written approval of such
recommendation or execution also must be received from the Chief
Investment Officer, or designee. The interest in personal accounts could
be in the form of:
1. Any direct or indirect beneficial ownership of any securities of
such issuer;
2. Any contemplated transaction by the person in such securities;
3. Any position with such issuer or its affiliates; or
4. Any present or proposed business relationship between such issuer or
its affiliates and the person or any party in which such person has
a significant interest.
XII. TRANSACTIONS IN CITIGROUP SECURITIES - Unless an SSB Citi employee is a
member of a designated group subject to more restrictive provisions, or is
otherwise notified to the contrary, the employee may trade in Citigroup
securities without restriction (other than the pre-clearance and other
requirements of this policy), subject to the limitations set forth below.
Employees whose jobs are such that they know about Citigroup's
quarterly earnings prior to release may not engage in any
transactions in Citigroup securities during the "blackout periods"
beginning on the first day of a calendar quarter and ending on the
second business day following the release of earnings for the prior
quarter. Members of the SSB Citi Executive Committee and certain
other senior SSB Citi employees are subject to these blackout
periods.
Stock option exercises are permitted during a blackout period (but
the simultaneous exercise of an option and sale of the underlying
stock is prohibited). With regard to exchange traded options, no
transactions in Citigroup options are permitted except to close or
roll an option position that expires during a blackout period.
Charitable contributions of Citigroup securities may be made during
the blackout period, but an individual's private foundation may not
sell donated Citigroup common stock during the blackout period.
"Good `til cancelled" orders on Citigroup stock must be cancelled
before entering a blackout period and no such orders may be entered
during a blackout period.
No employee may engage at any time in any personal transactions in
Citigroup securities while in possession of material non-public
information. Investments in Citigroup securities must be made with a
long-term orientation rather than for
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speculation or for the generation of short-term trading profits. In
addition, please note that employees may not engage in the following
transactions:
/diamond/ Short sales of Citigroup securities;
/diamond/ Purchasesor sales of options ("puts" or "calls") on Citigroup
securities, except writing a covered call at a time when the
securities could have been sold under this policy;
/diamond/ Purchases or sales of futures on Citigroup securities; or
/diamond/ Any transactions relating to Citigroup securities that might
reasonably appear speculative.
The number of Citigroup shares an employee is entitled to in the
Citigroup Stock Purchase Plan is not treated as a long stock
position until such time as the employee has given instructions to
purchase the shares of Citigroup. Thus, employees are not permitted
to use options to hedge their financial interest in the Citigroup
Stock Purchase Plan.
Contributions into the firm's 401(k) Plan are not subject to the
restrictions and prohibitions described in this policy.
XIII. ACKNOWLEDGEMENT AND REPORTING REQUIREMENTS - SSB CITI EMPLOYEES - All new
SSB Citi employees must certify that they have received a copy of this
policy, and have read and understood its provisions. In addition, all SSB
Citi employees must:
1. Acknowledge receipt of the policy and any modifications thereof, in
writing (see Exhibit C for the form of Acknowledgement);
2. Within 10 days of becoming an SSB Citi employee, disclose in writing
all information with respect to all securities beneficially owned
and any existing personal brokerage relationships (employees must
also disclose any new brokerage relationships whenever established).
Such information should be provided on the form attached as Exhibit
D;
3. Direct their brokers to supply, on a timely basis, duplicate copies
of confirmations of all personal securities transactions (NOTE: THIS
---- REQUIREMENT MAY BE SATISFIED THROUGH THE TRANSMISSION OF
AUTOMATED FEEDS);
4. Within 10 days after the end of each calendar quarter, provide
information relating to securities transactions executed during the
previous quarter for all securities accounts (NOTE: THIS REQUIREMENT
MAY BE SATISFIED THROUGH THE ---- TRANSMISSION OF AUTOMATED FEEDS);
5. Submit an annual holdings report containing similar information that
must be current as of a date no more than 30 days before the report
is submitted, and confirm at least annually all brokerage
relationships and any and all outside business affiliations (NOTE:
THIS REQUIREMENT MAY BE SATISFIED THROUGH THE TRANSMISSION OF
AUTOMATED FEEDS OR THE REGULAR RECEIPT OF MONTHLY BROKERAGE
STATEMENTS); and
6. Certify on an annual basis that he/she has read and understood the
policy, complied with the requirements of the policy and that he/she
has pre-cleared and disclosed or reported all personal securities
transactions and securities accounts required to be disclosed or
reported pursuant to the requirements of the policy.
7
<PAGE>
FUND DIRECTORS - Fund Directors shall deliver the information required by
Items 1 through 4 of the immediately preceding paragraph, except that a
Fund director who is not an "interested person" of the Fund within the
meaning of Section 2(a)(19) of the Investment Company Act of 1940, and who
would be required to make reports solely by reason of being a Fund
Director, is not required to make the initial and annual holdings reports
required by Item 2. Also, a "non-interested" Fund Director need not supply
duplicate copies of confirmations of personal securities transactions
required by Item 3, and need only make the quarterly transactions reports
required by Item 3 as to any security if at the time of a transaction by
the Director in that security, he/she knew or in the ordinary course of
fulfilling his/her official duties as a Fund Director should have known
that, during the 15-day period immediately preceding or following the date
of that transaction, that security is or was purchased or sold by that
Director's Fund or was being considered for purchase or sale by that
Director's Fund.
DISCLAIMER OF BENEFICIAL OWNERSHIP - The reports described in Items 2 and
3 above may contain a statement that the reports shall not be construed as
an admission by the person making the reports that he/she has any direct
or indirect beneficial ownership in the securities to which the reports
relate.
XIV. HANDLING OF DISGORGED PROFITS - Any amounts that are paid/disgorged by an
employee under this policy shall be donated by SSB Citi to one or more
charities. Amounts donated may be aggregated by SSB Citi and paid to such
charity or charities at the end of each year.
XV. CONFIDENTIALITY - All information obtained from any Covered Person
pursuant to this policy shall be kept in strict confidence, except that
such information will be made available to the Securities and Exchange
Commission or any other regulatory or self-regulatory organization or to
the Fund Boards of Directors to the extent required by law, regulation or
this policy.
XVI. OTHER LAWS, RULES AND STATEMENTS OF POLICY - Nothing contained in this
policy shall be interpreted as relieving any person subject to the policy
from acting in accordance with the provision of any applicable law, rule
or regulation or, in the case of SSB Citi employees, any statement of
policy or procedure governing the conduct of such person adopted by
Citigroup, its affiliates and subsidiaries.
XVII. RETENTION OF RECORDS - All records relating to personal securities
transactions hereunder and other records meeting the requirements of
applicable law, including a copy of this policy and any other policies
covering the subject matter hereof, shall be maintained in the manner and
to the extent required by applicable law, including Rule 17j-1 under the
1940 Act. The Compliance Department shall have the responsibility for
maintaining records created under this policy.
XVIII.MONITORING - SSB Citi takes seriously its obligation to monitor the
personal investment activities of its employees and to review the periodic
reports of all Covered Persons. Employee personal investment transaction
activity will be monitored by the Compliance Department. All noted
deviations from the policy requirements will be referred back to the
employee for follow-up and resolution (with a copy to be supplied to the
employee's supervisor). Any noted deviations by Fund directors will be
reported to the Board of Directors of the applicable Fund for
consideration and follow-up as contemplated by Section III hereof.
8
<PAGE>
XIX. EXCEPTIONS TO THE POLICY - Any exceptions to this policy must have the
prior written approval of both the Chief Investment Officer and the
Regional Director of Compliance. Any questions about this policy should be
directed to the Compliance Department.
XX. BOARD REVIEW - Fund management and SSB Citi shall provide to the Board of
Directors of each Fund, on a quarterly basis, a written report of all
material violations of this policy, and at least annually, a written
report and certification meeting the requirements of Rule 17j-1 under the
1940 Act.
XXI. OTHER CODES OF ETHICS - To the extent that any officer of any Fund is not
a Covered Person hereunder, or an investment subadviser of or principal
underwriter for any Fund and their respective access persons (as defined
in Rule 17j-1) are not Covered Persons hereunder, those persons must be
covered by separate codes of ethics which are approved in accordance with
applicable law.
XXII. AMENDMENTS - SSB CITI EMPLOYEES - Unless otherwise noted herein, this
policy shall become effective as to all SSB Citi employees on March 30,
2000. This policy may be amended as to SSB Citi employees from time to
time by the Compliance Department. Any material amendment of this policy
shall be submitted to the Board of Directors of each Fund for approval in
accordance with Rule 17j-1 under the 1940 Act.
FUND DIRECTORS - This policy shall become effective as to a Fund upon the
approval and adoption of this policy by the Board of Directors of that
Fund in accordance with Rule 17j-1 under the 1940 Act or at such earlier
date as determined by the Secretary of the Fund. Any material amendment of
this policy that applies to the directors of a Fund shall become effective
as to the directors of that Fund only when the Board of Directors of that
Fund has approved the amendment in accordance with Rule 17j-1 or at such
earlier date as determined by the Secretary of the Fund.
March 15, 2000
9
<PAGE>
EXHIBIT A
EXPLANATION OF BENEFICIAL OWNERSHIP
You are considered to have "Beneficial Ownership" of Securities if you have or
share a direct or indirect "PECUNIARY INTEREST" in the Securities.
You have a "Pecuniary Interest" in Securities if you have the opportunity,
directly or indirectly, to profit or share in any profit derived from a
transaction in the Securities.
The following are examples of an indirect Pecuniary Interest in Securities:
1. Securities held by members of your IMMEDIATE FAMILY sharing the same
household; however, this presumption may be rebutted by convincing
evidence that profits derived from transactions in these Securities
will not provide you with any economic benefit.
"Immediate family" means any child, stepchild, grandchild, parent,
stepparent, grandparent, spouse, sibling, mother-in-law,
father-in-law, son-in-law, daughter-in-law, brother-in-law, or
sister-in-law, and includes any adoptive relationship.
2. Your interest as a general partner in Securities held by a general
or limited partnership.
3. Your interest as a manager-member in the Securities held by a
limited liability company.
You do NOT have an indirect Pecuniary Interest in Securities held by a
corporation, partnership, limited liability company or other entity in which you
hold an equity interest, UNLESS you are a controlling equityholder or you have
or share investment control over the Securities held by the entity.
The following circumstances constitute Beneficial Ownership by you of Securities
held by a trust:
1. Your ownership of Securities as a trustee where either you or
members of your immediate family have a vested interest in the
principal or income of the trust.
2. Your ownership of a vested interest in a trust.
3. Your status as a settlor of a trust, unless the consent of all of
the beneficiaries is required in order for you to revoke the trust.
THE FOREGOING IS A SUMMARY OF THE MEANING OF "BENEFICIAL OWNERSHIP". FOR
PURPOSES OF THE ATTACHED POLICY, "BENEFICIAL OWNERSHIP" SHALL BE INTERPRETED IN
THE SAME MANNER AS IT WOULD BE IN DETERMINING WHETHER A PERSON IS SUBJECT TO THE
PROVISIONS OF SECTION 16 OF THE SECURITIES EXCHANGE ACT OF 1934 AND THE RULES
AND REGULATIONS THEREUNDER
10
<PAGE>
EXHIBIT B
SSB CITI ASSET MANAGEMENT GROUP ("SSB CITI")
EMPLOYEE TRADE PRE-APPROVAL FORM
(PAGE 1)
INSTRUCTIONS:
ALL EMPLOYEES ARE REQUIRED TO SUBMIT THIS FORM TO THE COMPLIANCE DEPARTMENT
PRIOR TO PLACING A TRADE. THE COMPLIANCE DEPARTMENT WILL NOTIFY THE EMPLOYEE AS
TO WHETHER OR NOT PRE-APPROVAL IS GRANTED. PRE-APPROVAL IS EFFECTIVE ONLY ON THE
DATE GRANTED.
I. EMPLOYEE INFORMATION
- --------------------------------------------------------------------------------
Employee Name: Phone Number:
- --------------------------------------------------------------------------------
Account Title:
- --------------------------------------------------------------------------------
Account Number:
- --------------------------------------------------------------------------------
Managed Account(s)/Mutual Fund(s) for which employee is a Covered Person:
- --------------------------------------------------------------------------------
II. SECURITY INFORMATION
<TABLE>
<CAPTION>
IPO [ ] Yes [ ] No PRIVATE PLACEMENT [ ] Yes [ ] No
- -----------------------------------------------------------------------------------------------
SECURITY NAME SECURITY TICKER BUY/SELL IF SALE, DATE NO. LARGE CAP
TYPE-E.G., FIRST ACQUIRED(1) SHARES/UNITS STOCK?(2_
COMMON STOCK,
ETC.
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------
</TABLE>
III. YOUR POSITION WITH THE FIRM:
(PLEASE CHECK ONE OF THE [ ] Portfolio Manager / Portfolio
FOLLOWING) Manager Assistant
[ ] Research Analyst / Research Analyst
Assistant
[ ] Trader / Trader Assistant
[ ] Unit Trust Personnel
[ ] Other (Advisory Personnel)
NOTE: o All Portfolio Managers must complete the reverse side of this form.
o All RESEARCH ANALYSTS and RESEARCH ANALYST ASSISTANTS located
in CONNECTICUT MUST provide an additional form signed by RAMA
KRISHNA or one of his designees.
IV. CERTIFICATION
I CERTIFY THAT I WILL NOT EFFECT THE TRANSACTION(S) DESCRIBED ABOVE UNLESS AND
UNTIL PRE-CLEARANCE APPROVAL IS OBTAINED FROM THE COMPLIANCE DEPARTMENT. I
FURTHER CERTIFY THAT, EXCEPT AS DESCRIBED ON AN ATTACHED PAGE, TO THE BEST OF MY
KNOWLEDGE, THE PROPOSED TRANSACTION(S) WILL NOT RESULT IN A CONFLICT OF INTEREST
WITH ANY ACCOUNT MANAGED BY SSB CITI (INCLUDING MUTUAL FUNDS MANAGED BY SSB
CITI). I FURTHER CERTIFY THAT, TO THE BEST OF MY KNOWLEDGE, THERE ARE NO PENDING
ORDERS FOR ANY SECURITY LISTED ABOVE OR ANY RELATED SECURITY FOR ANY MANAGED
ACCOUNTS AND/OR MUTUAL FUNDS FOR WHICH I AM CONSIDERED A COVERED PERSON. THE
PROPOSED TRANSACTION(S) ARE CONSISTENT WITH ALL FIRM POLICIES REGARDING EMPLOYEE
PERSONAL SECURITIES TRANSACTIONS.
SIGNATURE _______________________ DATE__________________________
<TABLE>
<CAPTION>
FOR USE BY THE COMPLIANCE DEPARTMENT
===================================================================================
[ ] Yes [ ] No [ ] Yes [ ] No Reason not
ARE SECURITIES PRE-APPROVAL granted:
RESTRICTED? GRANTED?
- ---------------------------------------------------------------------------------------
<S> <C> <C>
COMPLIANCE DEPARTMENT SIGNATURE: Date: Time:
- ---------------------------------------------------------------------------------------
</TABLE>
1. All securities sold must have been held for at least 60 days.
2. For purposes of SSB Citi's personal trading policies, a Large Cap
Exemption applies to transactions involving 500 or fewer shares in
aggregate and the stock is one that is listed on a U.S. stock exchange or
NASDAQ and whose issuer has a market capitalization (outstanding shares
multiplied by current price) of more than $10 billion.
11
<PAGE>
SSB CITI ASSET MANAGEMENT GROUP ("SSB CITI")
PAGE 2 - PORTFOLIO MANAGER CERTIFICATION
All portfolio managers must answer the following questions in order to obtain
pre-approval. All questions must be answered or the form will be returned. If a
question is not applicable, please indicate "N/A".
1. Have your client accounts purchased or sold the securities (or related
securities) in the past seven calendar days?
Yes [ ] No [ ]
2. Do you intend to purchase or sell the securities (or related securities)
for any client accounts in the next seven calendar days?
Yes [ ] No [ ]
3. Do any of your client accounts currently own the securities (or related
securities)?
Yes [ ] No [ ]
3a. If yes, and you are selling the securities for your personal account,
please explain why the sale of the securities was rejected for client
accounts but is appropriate for your personal account:
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
4. Have you, in the past 7 calendar days, CONSIDERED purchasing the
securities (or related securities) for your client accounts?
Yes [ ] No [ ]
4a. If yes, and you are purchasing securities for your personal account,
please explain why the purchase of the securities is appropriate for
your account but has been rejected for your client accounts:
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
4b. If no, and you are purchasing securities for your personal account,
please explain why the purchase of the securities has not been
considered for your client accounts:
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
CERTIFICATION
I certify that I will not effect the transaction(s) described above unless and
until pre-clearance approval is obtained from the Compliance Department. I
further certify that, except as described on an attached page, to the best of my
knowledge, the proposed transaction(s) will not result in a conflict of interest
with any account managed by SSB Citi (including mutual funds managed by SSB
Citi). I further certify that, to the best of my knowledge, there are no pending
orders for any security listed above or any related securities for any Managed
Accounts and/or Mutual Funds for which I am considered a Covered Person. The
proposed transaction(s) are consistent with all firm policies regarding employee
personal securities transactions.
_______________________________ ______________________________
SIGNATURE DATE
<TABLE>
<CAPTION>
FOR USE BY THE COMPLIANCE DEPARTMENT
=================================================================================
<S> <C> <C> <C> <C> <C> <C>
[ ] Yes [ ] No [ ] Yes [ ] No Reason not granted:
ARE SECURITIES PRE-APPROVAL
RESTRICTED? GRANTED?
- --------------------------------------------------------------------------------------
COMPLIANCE DEPARTMENT SIGNATURE: Date: Time:
- --------------------------------------------------------------------------------------
</TABLE>
12
<PAGE>
PERSONAL INVESTMENT POLICY EXHIBIT C
FOR
SSB CITI ASSET MANAGEMENT GROUP - NORTH AMERICA
AND CERTAIN REGISTERED INVESTMENT COMPANIES
ACKNOWLEDGMENT
I ACKNOWLEDGE THAT I HAVE RECEIVED AND READ THE PERSONAL INVESTMENT POLICY
FOR SSB CITI ASSET MANAGEMENT GROUP - NORTH AMERICA AND CERTAIN REGISTERED
INVESTMENT COMPANIES DATED MARCH 15, 2000. I UNDERSTAND THE PROVISIONS OF THE
PERSONAL INVESTMENT POLICY AS DESCRIBED THEREIN AND AGREE TO ABIDE BY THEM.
EMPLOYEE NAME (PRINT): __________________
SIGNATURE: __________________
DATE: __________________
------------------------------------------------------------------------------
SOCIAL SECURITY DATE OF HIRE:
NUMBER:
==============================================================================
JOB FUNCTION & SUPERVISOR:
TITLE:
------------------------------------------------------------------------------
LOCATION:
------------------------------------------------------------------------------
FLOOR AND/OR ZONE: TELEPHONE
NUMBER:
------------------------------------------------------------------------------
NASD REGISTERED EMPLOYEE (PLEASE CHECK ONE) [ ] Yes [ ] No
------------------------------------------------------------------------------
If REGISTERED, list Registration \ License:
------------------------------------------------------------------------------
THIS ACKNOWLEDGMENT FORM MUST BE COMPLETED AND RETURNED NO LATER THAN MARCH
30, 2000 TO THE COMPLIANCE DEPARTMENT - ATTENTION: VERA SANDUCCI-DENDY, 388
GREENWICH STREET, 23RD FLOOR, NEW YORK, NY 10013.
13
<PAGE>
EXHIBIT D
SSB CITI ASSET MANAGEMENT GROUP - NORTH AMERICA PERSONAL INVESTMENT POLICY
FINANCIAL SERVICES FIRM DISCLOSURE AND INITIAL REPORT OF SECURITIES HOLDINGS
THIS REPORT MUST BE SIGNED, DATED AND RETURNED WITHIN 10 DAYS OF EMPLOYMENT TO
THE COMPLIANCE DEPARTMENT - ATTENTION: VERA SANDUCCI-DENDY, 388 GREENWICH
STREET, 23RD FLOOR
- --------------------------------------------------------------------------------
EMPLOYEE NAME: ____________________________ DATE OF EMPLOYMENT:_____________
- --------------------------------------------------------------------------------
BROKERAGE ACCOUNTS:
[ ] I do not have a BENEFICIAL INTEREST in any account(s) with any financial
services firm.
[ ] I maintain the following account(s) with the financial services firm(s)
listed below (attach additional information if necessary-e.g., a brokerage
statement). Please include the information required below for any broker,
dealer or bank where an account is maintained which holds securities for
your direct or indirect benefit as of the date you began your employment.
Name of Financial Service(s) Firm and Address Account Title Account Number
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
SECURITIES HOLDINGS:
Complete the following (or attach a copy of your most recent statement(s))
listing all of your securities holdings, with the exception of open-ended mutual
funds and U.S Government securities if:
o You own securities which are held by financial services firm(s) as
described above. If you submit a copy of a statement, it must include all
of the information set forth below. Please be sure to include any
additional securities purchased since the date of the brokerage statement
which is attached. Use additional sheets if necessary.
o Your securities are not held with a financial service(s) firm (e.g.,
dividend reinvestment programs).
- --------------------------------------------------------------------------------
TITLE OF TICKER # OF PRINCIPAL HELD FINANCIAL
SECURITY SYMBOL SHARES AMT. SINCE SERVICES FIRM
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
[ ] I have no securities holdings to report.
I CERTIFY THAT I HAVE RECEIVED THE SSB CITI - NORTH AMERICA PERSONAL INVESTMENT
POLICY AND HAVE READ IT AND UNDERSTOOD ITS CONTENTS. I FURTHER CERTIFY THAT THE
ABOVE REPRESENTS A COMPLETE AND ACCURATE DESCRIPTION OF MY BROKERAGE ACCOUNT(S)
AND SECURITIES HOLDINGS AS OF MY DATE OF EMPLOYMENT.
Signature: _________________________________________ Date of Signature:
14
<PAGE>
EFFECTIVE MARCH 1, 2000
CODE OF ETHICS
T. ROWE PRICE ASSOCIATES, INC.
AND ITS AFFILIATES
<PAGE>
CODE OF ETHICS
OF
T. ROWE PRICE ASSOCIATES, INC.
AND ITS AFFILIATES
TABLE OF CONTENTS
PAGE
----
GENERAL POLICY STATEMENT...................................................1-1
Purpose and Scope of Code of Ethics...................................1-1
Who is Subject to the Code............................................1-1
Price Associates' Status as a Fiduciary...............................1-2
What the Code Does Not Cover..........................................1-2
Compliance with the Code..............................................1-2
Questions Regarding the Code..........................................1-2
STANDARDS OF CONDUCT OF PRICE ASSOCIATES AND ITS EMPLOYEES.................2-1
Allocation of Client Brokerage........................................2-1
Antitrust........................................................2-1; 8-1
Compliance with Copyright Laws........................................2-1
Computer Security................................................2-1; 7-1
Conflicts of Interest.................................................2-1
Relationships with Profitmaking Enterprises.......................2-1
Service with Nonprofitmaking Enterprises..........................2-2
Relationships with Financial Service Firms........................2-2
Investment Clubs..................................................2-2
Confidentiality.......................................................2-3
Internal Operating Procedures and Planning........................2-3
Clients, Fund Shareholders, and TRP Brokerage Customers...........2-3
Investment Advice.................................................2-3
Investment Research...............................................2-4
Understanding as to Clients' Accounts and Company Records
at time of Employee Termination.................................2-4
Corporate Responsibility.........................................2-4; 5-1
Employment of Former Government Employees.............................2-5
Employment Practices..................................................2-5
<PAGE>
Equal Opportunity.................................................2-5
Harassment........................................................2-5
Drug and Alcohol Abuse............................................2-5
Past and Current Litigation...........................................2-6
Financial Reporting...................................................2-6
Health and Safety in the Workplace....................................2-6
Illegal Payments......................................................2-6
Marketing and Sales Activities........................................2-6
Policy Regarding Acceptance and Giving of Gifts and Gratuities........2-6
Receipt of Gifts..................................................2-7
Giving of Gifts...................................................2-7
Additional Requirements for the Giving of Gifts in Connection
with the Broker/Dealer..........................................2-7
Entertainment.....................................................2-8
Research Trips....................................................2-9
Political Activities..................................................2-9
Protection of Corporate Assets.......................................2-10
Quality of Services..................................................2-10
Record Retention.....................................................2-10
Referral Fees........................................................2-10
Release of Information to the Press..................................2-10
Responsibility to Report Violations..................................2-10
Service as Trustee, Executor or Personal Representative..............2-11
Speaking Engagements and Publications................................2-11
Trading in Securities with Inside Information...................2-11; 3-1
STATEMENT OF POLICY ON MATERIAL, INSIDE (NON-PUBLIC) INFORMATION...........3-1
STATEMENT OF POLICY ON SECURITIES TRANSACTIONS.............................4-1
STATEMENT OF POLICY ON CORPORATE RESPONSIBILITY............................5-1
STATEMENT OF POLICY WITH RESPECT TO COMPLIANCE
WITH COPYRIGHT LAWS.....................................................6-1
STATEMENT OF POLICY WITH RESPECT TO COMPUTER SECURITY
AND RELATED ISSUES......................................................7-1
STATEMENT OF POLICY ON COMPLIANCE WITH
ANTITRUST LAWS..........................................................8-1
March, 2000
<PAGE>
CODE OF ETHICS
OF
T. ROWE PRICE ASSOCIATES, INC.
AND ITS AFFILIATES
INDEX
PAGE
----
Access Persons.............................................................4-3
Activities, Political......................................................2-9
Alcohol Abuse..............................................................2-5
Allocation of Client Brokerage.............................................2-1
Antitrust.............................................................2-1; 8-1
Approved Company Rating Changes...........................................4-11
Assets, Protection of Corporate...........................................2-10
Association of Investment Management and Research ("AIMR").................2-6
Brokerage Accounts..................................................4-11; 4-12
Chinese Wall...............................................................3-6
Client Brokerage, Allocation of............................................2-1
Client Limit Orders.......................................................4-16
Code of Ethics, Compliance with............................................1-2
Code of Ethics, Purpose and Scope of.......................................1-1
Code of Ethics, Questions Regarding........................................1-2
Code of Ethics, Who is Subject to..........................................1-1
Co-Investment by Employees with Client Investment Partnerships............4-14
Computer Security.....................................................2-1; 7-1
Conduct, Standards of, Price Associates and its Employees..................2-1
Confidentiality............................................................2-3
Confidentiality of Computer Systems Activities and Information.............7-1
Conflicts of Interest......................................................2-1
Copyright Laws, Compliance with.......................................2-1; 6-1
Corporate Assets, Protection of...........................................2-10
<PAGE>
Corporate Responsibility..............................................2-4; 5-1
Drug Abuse.................................................................2-5
Employee Co-Investment with Client Investment Partnerships................4-14
Employees, Standards of Conduct............................................2-1
Employment of Former Government Employees..................................2-5
Employment Practices.......................................................2-5
Entertainment..............................................................2-8
Equal Opportunity..........................................................2-5
Exchange - Traded Index Options...........................................4-16
Executor, Service as......................................................2-11
Fees, Referral............................................................2-10
Fiduciary, Price Associates' Status as a ..................................1-2
Financial Reporting........................................................2-6
Financial Service Firms, Relationships with................................2-2
Front Running..............................................................4-1
General Policy Statement...................................................1-1
Gifts, Giving..............................................................2-7
Gifts, Receipt of..........................................................2-7
Government Employees, Employment of Former.................................2-5
Harassment.................................................................2-5
Health and Safety in the Workplace.........................................2-6
Illegal Payments...........................................................2-6
Information, Release to the Press.........................................2-10
Initial Public Offerings...................................................4-9
Inside Information, Trading in Securities with............................2-11
Interest, Conflicts of.....................................................2-1
Internet, Access to........................................................7-2
Investment Clubs.....................................................2-2; 4-14
Investment Personnel.......................................................4-3
Large Company Exemption for Securities Transactions.......................4-15
Margin Accounts...........................................................4-15
Marketing and Sales Activities.............................................2-6
Non-Access Persons.........................................................4-4
Nonprofitmaking Enterprises, Service with..................................2-2
Options and Futures.......................................................4-16
<PAGE>
Payments, Illegal..........................................................2-6
Personal Securities Holdings, Disclosure of by Access Persons.............4-18
Personal Representative, Service as.......................................2-11
Political Activities.......................................................2-9
Press, Release of Information to the......................................2-10
Price Associates, Standards of Conduct.....................................2-1
Price Associates' Stock, Transactions in...................................4-5
Prior Clearance of Securities Transactions (other than Price Associates'
stock)...................................................................4-8
Private Placement, Investment In..........................................4-10
Private Placement Memoranda................................................3-7
Profitmaking Enterprises, Relationships with...............................2-1
Protection of Corporate Assets............................................2-10
Publications..............................................................2-11
Quality of Services.......................................................2-10
Questions Regarding the Code...............................................1-2
Rating Changes, Approved Company..........................................4-11
Record Retention..........................................................2-10
Referral Fees.............................................................2-10
Release of Information to the Press.......................................2-10
Reporting, Financial.......................................................2-6
Reporting, Price Associates' Stock Transactions............................4-6
Reporting, Securities Transactions (other than Price Associates' stock)...4-12
Research Trips.............................................................2-9
Responsibility, Corporate.............................................2-4; 5-1
Restricted List............................................................3-7
Retention, Record.........................................................2-10
Safety and Health in the Workplace.........................................2-6
Securities Transactions, Reporting of (other than Price Associates'
stock)..................................................................4-12
Services, Quality of......................................................2-10
Short Sales...............................................................4-17
Sixty (60) Day Rule.......................................................4-17
Software Programs, Application of Copyright Law............................7-5
Speaking Engagements......................................................2-11
Standards of Conduct of Price Associates and its Employees.................2-1
Statement, General Policy..................................................1-1
<PAGE>
Temporary Workers, Application of Code to.............................1-1; 4-2
Termination of Employment..................................................2-4
Trading Activity..........................................................4-15
Trips, Research............................................................2-9
Trustee, Service as.......................................................2-11
Violations, Responsibility to Report......................................2-10
Watch List.................................................................3-6
March, 2000
<PAGE>
CODE OF ETHICS
OF
T. ROWE PRICE ASSOCIATES, INC.
AND ITS AFFILIATES
GENERAL POLICY STATEMENT
PURPOSE AND SCOPE OF CODE OF ETHICS. In recognition of T. Rowe Price Associates,
Inc.'s ("PRICE ASSOCIATES") commitment to maintain the highest standards of
professional conduct and ethics, the firm's Board of Directors has adopted this
Code of Ethics ("CODE") composed of Standards of Conduct and the following
Statements of Policy ("STATEMENTS"):
1. Statement of Policy on Material, Inside (Non-Public) Information
2. Statement of Policy on Securities Transactions
3. Statement of Policy on Corporate Responsibility
4. Statement of Policy with Respect to Compliance with Copyright Laws
5. Statement of Policy with Respect to Computer Security and Related Issues
6. Statement of Policy on Compliance with Antitrust Laws
The purpose of this Code is to help preserve our most valuable asset - the
reputation of Price Associates and its employees.
WHO IS SUBJECT TO THE CODE. Price Associates, its subsidiaries and their
officers, directors and employees are all subject to the Code, as are all Rowe
Price-Fleming International, Inc. ("RPFI") and T. Rowe Fleming Asset Management
Limited ("TRFAM") personnel (officers, directors, and employees) who are
stationed in Baltimore. In addition, the following persons are also subject to
the Code:
1. All temporary workers hired on the Price Associates payroll ("TRPA
TEMPORARIES");
2. All agency temporaries, whose assignments at Price Associates exceed four
weeks or whose cumulative assignments exceed eight weeks over a
twelve-month period;
3. All independent or agency-provided consultants whose assignments exceed
four weeks or whose cumulative assignments exceed eight weeks over a
twelve-month period AND whose work is closely related to the ongoing work
of Price Associates' employees (versus project work that stands apart from
ongoing work); and
4. Any contingent worker whose assignment is more than casual in nature or
who will be exposed to the kinds of information and situations that would
create conflicts on matters covered in the Code.
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PRICE ASSOCIATES' STATUS AS A FIDUCIARY. The primary responsibility of Price
Associates as an investment adviser is to render to its clients on a
professional basis unbiased and continuous advice regarding their investments.
As an investment adviser, Price Associates has a fiduciary relationship with all
of its clients, which means that it has an absolute duty of undivided loyalty,
fairness and good faith toward its clients and mutual fund shareholders and a
corresponding obligation to refrain from taking any action or seeking any
benefit for itself which would, or which would appear to, prejudice the rights
of any client or shareholder or conflict with his or her best interests.
WHAT THE CODE DOES NOT COVER. The Code was not written for the purpose of
covering all policies, rules and regulations to which employees may be subject.
As an example, T. Rowe Price Investment Services, Inc. ("INVESTMENT SERVICES")
is a member of the National Association of Securities Dealers, Inc. ("NASD")
and, as such, is required to maintain written supervisory procedures to enable
it to supervise the activities of its registered representatives and associated
persons to ensure compliance with applicable securities laws and regulations,
and with the applicable rules of the NASD and its regulatory subsidiary, NASD
Regulation, Inc. ("NASDR").
COMPLIANCE WITH THE CODE. Strict compliance with the provisions of this Code is
considered a basic condition of employment with the firm. An employee may be
required to surrender any profit realized from a transaction which is deemed to
be in violation of the Code. In addition, any breach of the Code may constitute
grounds for disciplinary action, including dismissal from employment. Employees
may appeal to the Management Committee any ruling or decision rendered with
respect to the Code.
QUESTIONS REGARDING THE CODE. Questions regarding the Code should be
referred as follows:
1. Standards of Conduct of Price Associates and its Employees: the
Chairperson of the Ethics Committee or the Director of Human Resources.
2. Statement of Policy on Material, Inside (Non-Public) Information: Legal
Department.
3. Statement of Policy on Securities Transactions: The Chairperson of the
Ethics Committee or his or her designee.
4. Statement of Policy on Corporate Responsibility: Corporate Responsibility
Committee.
5. Statement of Policy with Respect to Compliance with Copyright Laws: Legal
Department.
6. Statement of Policy with Respect to Computer Security and Related Issues:
Legal Department.
7. Statement of Policy on Compliance with Antitrust Laws: Legal Department.
March, 2000
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STANDARDS OF CONDUCT OF PRICE ASSOCIATES AND ITS EMPLOYEES
ALLOCATION OF CLIENT BROKERAGE. The firm's policies with respect to the
allocation of client brokerage are set forth in Part II of Form ADV, Price
Associates' registration statement filed with the Securities and Exchange
Commission ("SEC"). It is imperative that all employees -- especially those who
are in a position to make recommendations regarding brokerage allocation, or who
are authorized to select brokers who will execute securities transactions on
behalf of our clients -- read and become fully knowledgeable concerning our
policies in this regard. Any questions regarding our firm's allocation of client
brokerage should be addressed to the Chairperson of the Brokerage Control
Committee.
ANTITRUST. The U.S. antitrust laws are designed to ensure fair competition and
preserve the free enterprise system. Some of the most common antitrust issues
with which an employee may be confronted are in the areas of pricing (adviser
fees) and trade association activity. To ensure its employees' understanding of
these laws, Price Associates has adopted a Statement of Policy on Compliance
with Antitrust Laws. All employees should read and understand this Statement.
(SEE page 8-1).
COMPLIANCE WITH COPYRIGHT LAWS. To protect Price Associates and its employees,
Price Associates has adopted a Statement of Policy with Respect to Compliance
with Copyright Laws. All employees should read and understand this Statement
(SEE page 6-1).
COMPUTER SECURITY. Computer systems and programs play a central role in Price
Associates' operations. To establish appropriate computer security to minimize
potential for loss or disruptions to our computer operations, Price Associates
has adopted a Statement of Policy with Respect to Computer Security and Related
Issues. All employees should read and understand this Statement (SEE page 7-1).
CONFLICTS OF INTEREST. A direct or indirect interest in a supplier, creditor,
debtor or competitor may conflict with the interests of Price Associates. All
employees must avoid placing themselves in a "compromising position" where their
interests may be in conflict with those of Price Associates or its clients.
RELATIONSHIPS WITH PROFITMAKING ENTERPRISES. A conflict may occur when an
employee of Price Associates is also employed by another firm, directly or
as a consultant or independent contractor; has a direct financial interest
in another firm; has an immediate family financial interest in another
firm; or is a director, officer or partner of another firm.
Employees of our firm sometimes serve as directors, officers, partners, or
in other capacities with profitmaking enterprises not related to Price
Associates or its mutual funds. Employees are generally prohibited from
serving as officers or directors of corporations which are approved or are
likely to be approved for purchase in our firm's client accounts.
An employee may not accept outside employment that would require him or
her to become registered (or dually registered) as a representative of an
unaffiliated broker/dealer, investment adviser, or an insurance broker or
company. An employee may also not become independently registered as an
investment adviser.
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An employee who is contemplating obtaining another interest or
relationship that might conflict or appear to conflict with the interests
of Price Associates, such as accepting employment with or an appointment
as a director, officer or partner of an outside profitmaking enterprise
must receive the prior approval of the Ethics Committee. Upon review by
the Ethics Committee, the employee will be advised in writing of the
Committee's decision. Decisions by the Ethics Committee regarding outside
directorships in profitmaking enterprises will be reviewed by the
Management Committee before becoming final. Outside business interests
that will not conflict or appear to conflict with the interests of the
firm need not be reviewed by the Ethics Committee, but must be approved by
the Employee's supervisor.
Certain employees may serve as directors or as members of Creditors
Committees or in similar positions for non-public, for-profit entities in
connection with their professional activities at Price Associates. An
employee must obtain the permission of the Management Committee before
accepting such a position and must relinquish the position if the entity
becomes publicly held, unless otherwise determined by the Management
Committee.
SERVICE WITH NONPROFITMAKING ENTERPRISES. Price Associates encourages its
employees to become involved in community programs and civic affairs.
However, employees should not permit such activities to affect the
performance of their job responsibilities. Approval by the Chairperson of
the Ethics Committee must be obtained before an employee accepts a
position as a trustee or member of the Board of Directors of any
non-profit organization.
RELATIONSHIPS WITH FINANCIAL SERVICE FIRMS. In order to avoid any actual
or apparent conflicts of interest, employees are prohibited from investing
in or entering into any relationship, either directly or indirectly, with
corporations, partnerships, or other entities which are engaged in
business as a broker, a dealer, an underwriter, and/or an investment
adviser. As described above, this prohibition extends to registration
and/or licensure with an unaffiliated firm. This prohibition, however, is
not meant to prevent employees from purchasing publicly traded securities
of broker/dealers, investment advisers or other companies engaged in the
mutual fund industry. Of course, all such purchases are subject to prior
clearance and reporting procedures, as applicable. This policy does not
preclude an employee from engaging an outside investment adviser to manage
his or her assets.
If any member of an employee's immediate family is employed by, has a
partnership interest in, or has an equity interest of .5% or more in a
broker/dealer, investment adviser or other company engaged in the mutual
fund industry, the relationship must be reported to the Ethics Committee.
INVESTMENT CLUBS. Access Persons (defined on p. 4-3 of the Code) must
receive the prior approval of the Chairperson of the Ethics Committee
before forming or participating in a stock or investment club.
Transactions in which Access Persons have beneficial ownership or control
(SEE p. 4-4) through investment clubs are subject to the firm's Statement
of Policy on Securities Transactions. Non-Access Persons (defined on p.
4-4) do not have to receive prior approval to form or participate in a
stock or investment club and need only obtain prior clearance of
transactions in Price Associates' stock. As described on p. 4-16, an
exemption from prior clearance for an Access Person (except for
transactions in Price Associates' stock) is generally available if the
Access Person has beneficial ownership solely by virtue of his
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or her spouse's participation in the club and has no investment control or
input into decisions regarding the club's securities transactions.
CONFIDENTIALITY. The exercise of confidentiality extends to four major areas of
our operations: internal operating procedures and planning; clients, fund
shareholders and TRP Brokerage customers; investment advice; and investment
research. The duty to exercise confidentiality applies not only when an employee
is with the firm, but also after he or she terminates employment with the firm.
INTERNAL OPERATING PROCEDURES AND PLANNING. During the years we have been
in business, a great deal of creative talent has been used to develop
specialized and unique methods of operations and portfolio management. In
many cases, we feel these methods give us an advantage over our
competitors, and we do not want these ideas disseminated outside our firm.
Accordingly, employees should be guarded in discussing our business
practices with outsiders. Any requests from outsiders for specific
information of this type should be cleared with your supervisor before it
is released.
Also, from time to time management holds meetings with employees in which
material, non-public information concerning the firm's future plans is
disclosed. Employees should never discuss confidential information with,
or provide copies of written material concerning the firm's internal
operating procedures or projections for the future to, unauthorized
persons outside the firm.
CLIENTS, FUND SHAREHOLDERS, AND TRP BROKERAGE CUSTOMERS. In many
instances, when clients subscribe to our services, we ask them to disclose
fully their financial status and needs. This is done only after we have
assured them that every member of our organization will hold this
information in strict confidence. It is essential that we respect their
trust. A simple rule for employees to follow is that the names of our
clients, fund shareholders, or TRP Brokerage customers or any information
pertaining to their investments must never be divulged to anyone outside
the firm, not even to members of their immediate families, and must never
be used as a basis for personal trades over which the employee has
beneficial interest or control.
INVESTMENT ADVICE. Because of the fine reputation our firm enjoys, there
is a great deal of public interest in what we are doing in the market.
There are two major considerations that dictate why we must not provide
investment "tips":
o From the point of view of our clients, it is not fair to give other
people information which clients must purchase.
o From the point of view of the firm, it is not desirable to create an
outside demand for a stock when we are trying to buy it for our
clients, as this will only serve to push the price up. The reverse
is true if we are selling.
In light of these considerations, employees must never disclose to
outsiders our buy and sell recommendations, securities we are considering
for future investment, or the portfolio holdings of our clients or mutual
funds.
<PAGE>
The practice of giving investment advice informally to members of your
immediate family should be restricted to very close relatives. Any
transactions resulting from such advice are subject to the prior approval
(Access Persons only) and reporting requirements (Access Persons AND
Non-Access Persons) of the Statement of Policy on Securities Transactions.
Under no circumstances should an employee receive compensation directly or
indirectly (other than from Price Associates or an affiliate) for
rendering advice to either clients or non-clients.
INVESTMENT RESEARCH. Any report circulated by a research analyst is
confidential in its entirety and should not be reproduced or shown to
anyone outside of our organization, except our clients where appropriate.
UNDERSTANDING AS TO CLIENTS' ACCOUNTS AND COMPANY RECORDS AT TIME OF
EMPLOYEE TERMINATION. The accounts of clients, mutual fund shareholders,
and TRP Brokerage customers are the sole property of Price Associates.
This applies to all clients for whom Price Associates acts as investment
adviser, regardless of how or through whom the client relationship
originated and regardless of who may be the counselor for a particular
client. At the time of termination of employment with Price Associates, an
employee must: (1) surrender to Price Associates in good condition any and
all materials, reports or records (including all copies in his or her
possession or subject to his or her control) developed by him or her or
any other person which are considered confidential information of Price
Associates (except copies of any research material in the production of
which the employee participated to a material extent); and (2) refrain
from communicating, transmitting or making known to any person or firm any
information relating to any materials or matters whatsoever which are
considered by Price Associates to be confidential.
Employees must use care in disposing of any confidential records or
correspondence. Confidential material that is to be discarded should be torn up
or, if a quantity of material is involved, you should contact Document
Management for instructions regarding proper disposal.
CORPORATE RESPONSIBILITY. As a major institutional investor with a fiduciary
duty to its clients, including its mutual fund shareholders, Price Associates
has adopted a Statement of Policy on Corporate Responsibility (SEE page 5-1).
The purpose of this Statement is to establish formal standards and procedures to
guide Price Associates with respect to its responsibilities to deal with matters
of corporate and social responsibilities which may affect the companies in which
client assets are invested.
EMPLOYMENT OF FORMER GOVERNMENT EMPLOYEES. Federal laws and regulations govern
the employment of former employees of the U.S. Government and its agencies,
including the SEC. In addition, certain states have adopted similar statutory
restrictions. Finally, certain states and municipalities which are clients of
Price Associates have imposed contractual restrictions in this regard. Before
any action is taken to discuss employment by Price Associates of a former
government employee, guidance must be obtained from the Legal Department.
EMPLOYMENT PRACTICES
EQUAL OPPORTUNITY. Price Associates is committed to the principles of
Equal Employment. We believe our continued success depends on talented
people, without regard to race, color,
<PAGE>
religion, national origin, gender, age, disability, sexual orientation,
Vietnam era military service or any other classification protected by
federal, state or local laws.
This commitment to Equal Opportunity covers all aspects of the employment
relationship including recruitment, application and initial employment,
promotion and transfer, selection for training opportunities, wage and
salary administration, and the application of service, retirement, and
employee benefit plan policies.
All members of T. Rowe Price staff are expected to comply with the spirit
and intent of our Equal Employment Opportunity Policy.
If you feel you have not been treated in accordance with this policy,
contact your immediate supervisor, your manager or a Human Resources
Representative. No retaliation will be taken against any employee who
reports an incident of alleged discrimination.
HARASSMENT. Price Associates intends to provide employees a workplace free
from any form of harassment. This includes sexual harassment which, banned
by and punishable under the Civil Rights Act of 1964, may result from
unwelcome advances, requests for favors or any verbal or physical conduct
of a sexual nature. Such actions or statements may or may not be
accompanied by explicit or implied promises of preferential treatment or
negative consequences in connection with one's employment. Harassment
might include uninvited sex-oriented conversations, touching, comments,
jokes, suggestions or innuendos. This type of behavior can create a
stressful, intimidating and offensive atmosphere; it may adversely affect
morale and work performance.
Any employee who feels offended by the action or comments of another, or
any employee who has observed such behavior, should report the matter, in
confidence, to his or her immediate supervisor. If that presents a
problem, report the matter to the Director of Human Resources or another
person in the Human Resources Department. All complaints will be
investigated immediately and confidentially. Any employee who has behaved
in a reprehensible manner will be subject to disciplinary action in
keeping with the gravity of the offense.
DRUG AND ALCOHOL ABUSE. Price Associates has adopted a Statement of
Policy, available from Human Resources, to maintain a drug-free workplace
and prevent alcohol abuse. This policy fosters a safe, healthful and
productive environment for its employees and customers and protects Price
Associates' property, equipment, operations and reputation in the
community and the industry.
PAST AND CURRENT LITIGATION. As a condition of employment, each new employee is
required to answer a questionnaire regarding past and current civil and criminal
actions and certain regulatory matters. Price Associates uses the information
obtained through these questionnaires to answer questions asked on federal and
state registration forms and for insurance and bonding purposes. Each employee
is responsible for keeping answers on the questionnaire current. If an employee
becomes party to any proceeding that could lead to his or her conviction for any
felony or misdemeanor (other than traffic or other minor offenses) or becomes
the subject of a regulatory action by the SEC, a state, a foreign government or
any domestic or foreign self-regulatory organization relating to securities or
investment activities, he or she should notify the Legal Department promptly.
<PAGE>
FINANCIAL REPORTING. Price Associates' records are maintained in a manner that
provides for an accurate record of all financial transactions in conformity with
generally accepted accounting principles. No false or deceptive entries may be
made and all entries must contain an appropriate description of the underlying
transaction. All reports, vouchers, bills, invoice, payroll and service records
and other essential data must be accurate, honest and timely and should provide
an accurate and complete representation of the facts.
HEALTH AND SAFETY IN THE WORKPLACE. Price Associates recognizes its
responsibility to provide employees a safe and healthful workplace and proper
facilities to help them do their jobs effectively.
ILLEGAL PAYMENTS. State, federal and foreign laws prohibit the payment of
bribes, kickbacks, inducements or other illegal gratuities or payments by or on
behalf of Price Associates. Price Associates, through its policies and
practices, is committed to comply fully with these laws. The Foreign Corrupt
Practices Act makes it a crime to corruptly give, promise or authorize payment,
in cash or in kind, for any service to a foreign official or political party in
connection with obtaining or retaining business. If an employee is solicited to
make or receive an illegal payment, he or she should contact the Legal
Department.
MARKETING AND SALES ACTIVITIES. All written and oral marketing materials and
presentations (including performance data) must be in compliance with applicable
SEC, NASD, and Association of Investment Management and Research ("AIMR")
requirements. All advertisements, sales literature and other written marketing
materials (whether they be for the Price Funds, non-Price funds, or various
advisory or brokerage services) must be reviewed and approved by the advertising
section of the Legal Department prior to use. All performance data distributed
outside the firm, including total return and yield information, must be obtained
from the Performance Group before distribution.
POLICY REGARDING ACCEPTANCE AND GIVING OF GIFTS AND GRATUITIES. The firm, as
well as its employees and members of their families, should not accept or give
gifts that might in any way create or appear to create a conflict of interest or
interfere with the impartial discharge of our responsibilities to clients or
place our firm in a difficult or embarrassing position. Such gifts would include
gratuities or other accommodations from or to business contacts, brokers,
securities salespersons, approved companies, suppliers, clients, or any other
individual or organization with whom our firm has a business relationship, but
would not include certain types of business entertainment as described later in
this section.
RECEIPT OF GIFTS. Personal contacts may lead to gifts which are offered on
a friendship basis and may be perfectly proper. It must be remembered,
however, that business relationships cannot always be separated from
personal relationships and that the integrity of a business relationship
is always susceptible to criticism in hindsight where gifts are received.
Under no circumstances may employees accept gifts from any business or
business contact in the form of cash or cash equivalents. Gift
certificates may only be accepted if used; they may not be converted to
cash except for nominal amounts not consumed when the gift certificate is
used.
There may be an occasion where it might be awkward to refuse a token
non-cash expression of appreciation given in the spirit of friendship. In
such cases, the value of all gifts received
<PAGE>
from a business contact should not exceed $100 in any twelve-month period.
The value of a gift directed to the members of a department as a group may
be divided by the number of the employees in that Department. Gifts
received which are unacceptable according to this policy must be returned
to the givers.
GIVING OF GIFTS. An employee may never give a gift to a business contact
in the form of cash or cash equivalents, including gift certificates.
Token gifts may be given to business contacts, but the aggregate value of
all such gifts given to the business contact may not exceed $100 in any
twelve-month period without the permission of the Chairperson of the
Ethics Committee. If an employee believes that it would be appropriate to
give a gift with a value exceeding $100 to a business contact in a
specific situation, he or she must submit a written request to the
Chairperson of the Ethics Committee. The request should specify:
[ ] the name of the giver;
[ ] the name of the intended recipient and his or her employer;
[ ] the nature of the gift and its monetary value;
[ ] the nature of the business relationship; and
[ ] the reason the gift is being given.
NASD regulations prohibit exceptions to the $100 limit for gifts given in
connection with Investment Services' business. Baltimore/Legal Compliance
will retain a record of all such gifts.
ADDITIONAL REQUIREMENTS FOR THE GIVING OF GIFTS IN CONNECTION WITH THE
BROKER/DEALER. NASD Conduct Rule 3060 imposes stringent reporting
requirements for gifts given to any principal, employee, agent or
similarly situated person where the gift is in connection with Investment
Services' business with the person's employer. Examples of gifts that fall
under this rule would include any gift given to an employee of a company
to which our firm provides investment products such as mutual funds (E.G.,
many 401(k) plans) or to which we are marketing investment products. Under
this NASD rule, gifts may not exceed $100 (without exception) and persons
associated with Investment Services, including its registered
representatives, must report EACH such gift.
The NASD reporting requirement is normally met when an item is ordered
electronically from the Corporate Gift website. If a gift is obtained from
another source, it must be reported to Baltimore/Legal Compliance. The
report to Baltimore Legal/Compliance must include:
[ ] the name of the giver;
[ ] the name of the recipient and his or her employer;
[ ] the nature of the gift and its monetary value;
[ ] the nature of the business relationship; and
[ ] the date the gift was given.
<PAGE>
ENTERTAINMENT. Our firm's $100 limit on the acceptance and giving of gifts
not only applies to gifts of merchandise, but also covers the enjoyment or
use of property or facilities for weekends, vacations, trips, dinners, and
the like. However, this limitation does not apply to dinners, sporting
events and other activities which are a normal part of a business
relationship. To illustrate this principle, the following examples are
provided:
First Example: The head of institutional research at brokerage firm
"X" (whom you have known and done business with for a number of
years) invites you and your wife to join her and her husband for
dinner and afterwards a theatrical production.
Second Example: You are going to New York for a weekend with your
wife. You wish to see a recent Broadway hit, but are told it is sold
out. You call a broker friend who works at company "X" to see if he
can get tickets for you. The broker says yes and offers you two
tickets free of charge.
Third Example: You have been invited by a vendor to a multi-day
excursion to a resort where the primary focus is entertainment as
opposed to business. The vendor has offered to pay your travel and
lodging for this trip.
In the first example, it would be proper for you to accept the invitation.
With respect to the second example, it would not be proper to solicit a
person doing business with the firm for free tickets to any event. You
could, however, accept the tickets if you pay for them at their fair value
or, if greater, at the cost to the broker.
With respect to the third example, trips of substantial value, such as
multi-day excursions to resorts, hunting locations or sports events, where
the primary focus is entertainment as opposed to business activities,
would not be considered a normal part of a business relationship.
Generally, such invitations may not be accepted unless our firm or the
employee pays for the cost of the excursion and the employee has obtained
approval from his or her Division Head.
The same principles apply if an employee wishes to entertain a business contact.
Inviting business contacts and, if appropriate, their guests, to an occasional
meal, sporting event, the theater, or comparable entertainment is acceptable as
long as it is neither so frequent nor so extensive as to raise any question of
propriety. If an employee wishes to pay for a business guest's transportation
(E.G., airfare) and/or accommodations as part of business entertainment, he or
she must first receive the permission of the Chairperson of the Ethics
Committee.
RESEARCH TRIPS. Occasionally, brokers or portfolio companies invite employees of
our firm to attend or participate in research conferences, tours of portfolio
companies' facilities, or meetings with the management of such companies. These
invitations may involve traveling extensive distances to and from the sites of
the specified activities and may require overnight lodging. Employees may not
accept any such invitations until approval has been secured from their Division
heads. As a general rule, such invitations should only be accepted after a
determination has been made that the proposed activity constitutes a valuable
research opportunity which will be of primary benefit to our clients. All travel
expenses to and from the sites of the activities, and the expenses of any
overnight
<PAGE>
lodging, meals or other accommodations provided in connection with such
activities, should be paid for by our firm except in situations where the costs
are considered to be insubstantial and are not readily ascertainable. Employees
may not accept reimbursement from brokers or portfolio companies for: travel and
hotel expenses; speaker fees or honoraria for addresses or papers given before
audiences; or consulting services or advice they may render. Likewise, employees
may neither request nor accept loans or personal services from brokers or
portfolio companies.
POLITICAL ACTIVITIES. Employees are encouraged to participate and vote in all
federal, state and local elections. All officers and directors of Price
Associates are required to disclose certain Maryland local and state political
contributions on a semi-annual basis (a Political Contribution Questionnaire is
sent to officers and directors each January and July).
No political contribution of corporate funds, direct or indirect, to any
political candidate or party, or to any other organization that might use the
contribution for a political candidate or party, or use of corporate property,
services or other assets may be made without the written approval of the Legal
Department. These prohibitions cover not only direct contributions but also
indirect assistance or support of candidates or political parties through
purchase of tickets to special dinners or other fund raising events, or the
furnishing of any other goods, services or equipment to political parties or
committees.
PROTECTION OF CORPORATE ASSETS. All employees are responsible for taking
measures to ensure that Price Associates' assets are properly protected. This
responsibility not only applies to our business facilities, equipment and
supplies, but also to intangible assets such as proprietary, research or
marketing information, corporate trademarks and servicemarks, and copyrights.
QUALITY OF SERVICES. It is a continuing policy of Price Associates to provide
investment products and services which: (1) meet applicable laws, regulations
and industry standards; (2) are offered to the public in a manner which ensures
that each client/shareholder understands the objectives of each investment
product selected; and (3) are properly advertised and sold in accordance with
all applicable SEC, state and NASD rules and regulations.
The quality of Price Associates' investment products and services and operations
affects our reputation, productivity, profitability and market position. Price
Associates' goal is to be a quality leader and to create conditions that allow
and encourage all employees to perform their duties in an efficient, effective
manner.
RECORD RETENTION. Under various federal and state laws and regulations, Price
Associates is required to produce, maintain and retain various records,
documents and other written (including electronic) communications. Each employee
is responsible for adhering to Price Associates' record maintenance and
retention policies.
REFERRAL FEES. Federal securities laws strictly prohibit the payment of any type
of referral fee unless certain conditions are met. This would include any
compensation to persons who refer clients or shareholders to us (E.G., brokers,
registered representatives or any other persons) either directly in cash, by fee
splitting, or indirectly by the providing of gifts or services (including the
allocation of brokerage). No arrangements should be entered into obligating
Price Associates or any employee to pay a referral fee unless approved by the
Legal Department.
<PAGE>
RELEASE OF INFORMATION TO THE PRESS. All requests for information from the media
concerning T. Rowe Price Associates' corporate affairs, mutual funds, investment
services, investment philosophy and policies, and related subjects should be
referred to the Public Relations Department for reply. Investment professionals
who are contacted directly by the press concerning a particular fund's
investment strategy or market outlook may use their own discretion, but are
advised to check with the Public Relations Department if they do not know the
reporter or feel it may be inappropriate to comment on a particular matter.
RESPONSIBILITY TO REPORT VIOLATIONS. Every employee who becomes aware of a
violation of this Code is encouraged to report, on a confidential basis, the
violation to his or her supervisor. If the supervisor appears to be involved in
the wrongdoing, the report should be made to the next level of supervisory
authority or to the Director of the Human Resources Department. Upon
notification of the alleged violation, the supervisor is obligated to advise the
Legal Department.
It is Price Associates' policy that no adverse action will be taken against any
employee who reports a violation in good faith.
SERVICE AS TRUSTEE, EXECUTOR OR PERSONAL REPRESENTATIVE. Employees may serve as
trustees, co-trustees, executors or personal representatives for the estates of
or trusts created by close family members. Employees may also serve in such
capacities for estates or trusts created by nonfamily members. However, if an
Access Person expects to be actively involved in an investment capacity in
connection with an estate or trust created by a nonfamily member, he or she must
first be granted permission by the Ethics Committee. If an employee serves in
any of these capacities, securities transactions effected in such accounts will
be subject to the prior approval (Access Persons only) and reporting
requirements (Access Persons AND Non-Access Persons) of our Statement of Policy
on Securities Transactions.
If any employees presently serve in any of these capacities for nonfamily
members, they should report these relationships in writing to the Ethics
Committee.
SPEAKING ENGAGEMENTS AND PUBLICATIONS. Employees are often asked to accept
speaking engagements on the subject of investments, finance, or their own
particular specialty with our organization. This is encouraged by the firm, as
it enhances our public relations, but you should obtain approval from the head
of your Division before you accept such requests. You may also accept an offer
to teach a course or seminar on investments or related topics (for example, at a
local college) in your individual capacity with the approval of the head of your
Division and provided the course is in compliance with the Guidelines found in
Investment Services' Compliance Manual.
Before making any commitment to write or publish any article or book on a
subject related to investments or your work at Price Associates, approval should
be obtained from your Division head.
TRADING IN SECURITIES WITH INSIDE INFORMATION. The purchase or sale of
securities while in possession of material, inside information is prohibited by
state and federal laws. Information is considered inside and material if it has
not been publicly disclosed and is sufficiently important that it would affect
the decision of a reasonable person to buy, sell or hold stock in a company,
including Price Associates' stock. Under no circumstances may an employee
transmit such information to any other person, except to other employees who are
required to be kept informed on the subject. All employees should read and
understand the Statement of Policy on Material, Inside (Non-Public) Information
(SEE page 3-1).
March, 2000
<PAGE>
T. ROWE PRICE ASSOCIATES, INC.
STATEMENT OF POLICY
ON
MATERIAL, INSIDE (NON-PUBLIC) INFORMATION
INTRODUCTION. "Insider trading" is a top enforcement priority of the Securities
and Exchange Commission. In 1988, the Insider Trading and Securities Fraud
Enforcement Act (the "ACT") was signed into law. This Act has had a far reaching
impact on all public companies and especially those engaged in the securities
brokerage or investment advisory industries, including directors, executive
officers and other controlling persons of such companies. While the Act does not
provide a statutory definition of "insider trading," it contained major changes
to the previous law. Specifically, the Act:
WRITTEN PROCEDURES. Requires SEC-registered brokers, dealers and investment
advisers to establish, maintain and enforce written policies and procedures
reasonably designed to prevent the misuse of material, non-public
information by such persons.
CIVIL PENALTIES. Imposes severe civil penalties on brokerage firms,
investment advisers, their management and advisory personnel and other
"controlling persons" who fail to take adequate steps to prevent insider
trading and illegal tipping by employees and other "controlled persons."
Persons who directly or indirectly control violators, including entities
such as Price Associates and their officers and directors, face penalties to
be determined by the court in light of the facts and circumstances, but not
to exceed the greater of $1,000,000 or three times the amount of profit
gained or loss avoided as a result of the violation.
CRIMINAL PENALTIES. Provides as penalties for criminal securities law
violations:
o Maximum jail term -- from five to ten years;
o Maximum criminal fine for individuals -- from $100,000 to $1,000,000;
o Maximum criminal fine for entities -- from $500,000 to $2,500,000.
PRIVATE RIGHT OF ACTION. Establishes a statutory private right of action on
behalf of contemporaneous traders against insider traders and their
controlling persons.
BOUNTY PAYMENTS. Authorizes the SEC to award bounty payments to persons who
provide information leading to the successful prosecution of insider trading
violations. Bounty payments are at the discretion of the SEC, but may not
exceed 10% of the penalty imposed.
PURPOSE OF STATEMENT OF POLICY. The purpose of this Statement of Policy
("STATEMENT") is to comply with the Act's requirement to establish, maintain,
and enforce written procedures designed to prevent insider trading. This
Statement explains: (i) the general legal prohibitions and sanctions regarding
insider trading; (ii) the meaning of the key concepts underlying the
prohibitions; (iii) the obligations of each employee of Price Associates in the
event he or she comes into possession of material, non-public information; and
(iv) the firm's educational program regarding insider trading. Price Associates
has also adopted a Statement of Policy on Securities Transactions (SEE page
4-1), which requires both Access Persons (SEE p. 4-3) and Non-Access Persons
(SEE p. 4-4) to obtain prior clearance with respect to their transactions in
Price Associates' stock and requires Access Persons
<PAGE>
to obtain prior clearance with respect to all pertinent securities transactions.
In addition, both Access Persons and Non-Access Persons are required to report
such transactions on a timely basis to the firm.
THE BASIC INSIDER TRADING PROHIBITION. The "insider trading" doctrine under
federal securities laws generally prohibits any person (including investment
advisers) from:
o trading in a security while in possession of material, non-public
information regarding the issuer of the security;
o tipping such information to others;
o recommending the purchase or sale of securities while in possession of
such information;
o assisting someone who is engaged in any of the above activities.
Thus, "insider trading" is not limited to insiders of the company whose
securities are being traded. It can also apply to non-insiders, such as
investment analysts, portfolio managers and stockbrokers. In addition, it is not
limited to persons who trade. It also covers persons who tip material,
non-public information or recommend transactions in securities while in
possession of such information.
POLICY OF PRICE ASSOCIATES ON INSIDER TRADING. It is the policy of Price
Associates and its affiliates to forbid any of their officers, directors, or
employees, while in possession of material, non-public information, from trading
securities or recommending transactions, either personally or in its proprietary
accounts or on behalf of others (including mutual funds and private accounts),
or communicating material, non-public information to others in violation of
federal securities laws.
"NEED TO KNOW" POLICY. All information regarding planned, prospective or ongoing
securities transactions must be treated as confidential. Such information must
be confined, even within the firm, to only those individuals and departments who
must have such information in order for Price Associates to carry out its
engagement properly and effectively. Ordinarily, these prohibitions will
restrict information to only those persons who are involved in the matter.
TRANSACTIONS INVOLVING PRICE ASSOCIATES' STOCK. Officers, directors and
employees are reminded that they are "insiders" with respect to Price Associates
since Price Associates is a public company and its stock is traded in the
over-the-counter market. It is therefore important that employees not discuss
with family, friends or other persons any matter concerning Price Associates
which might involve material, non-public information, whether favorable or
unfavorable.
SANCTIONS. Penalties for trading on material, non-public information are severe,
both for the individuals involved in such unlawful conduct and their employers.
An employee of Price Associates who violates the insider trading laws can be
subject to some or all of the penalties described below, even if he or she does
not personally benefit from the violation:
o Injunctions;
o Treble damages;
o Disgorgement of profits;
o Criminal fines;
o Jail sentences;
<PAGE>
o Civil penalties for the person who committed the violation (which
would, under normal circumstances, be the employee and not the firm)
of up to three times the profit gained or loss avoided, whether or not
the individual actually benefitted; and
o Civil penalties for Price Associates (and other persons, such as
managers and supervisors, who are deemed to be controlling persons) of
up to the greater of $1,000,000 or three times the amount of the
profit gained or loss avoided.
In addition, any violation of this Statement can be expected to result in
serious sanctions being imposed by Price Associates, including dismissal of the
person(s) involved.
BASIC CONCEPTS OF INSIDER TRADING. The four critical concepts in insider
trading cases are: (1) fiduciary duty/misappropriation, (2) materiality, (3)
non-public, and (4) possession. Each concept is discussed below.
FIDUCIARY DUTY/MISAPPROPRIATION. In two decisions, DIRKS V. SEC and CHIARELLA V.
UNITED STATES, the United States Supreme Court held that insider trading and
tipping violate the federal securities law if the trading or tipping of the
information results in a breach of duty of trust or confidence.
A typical breach of duty arises when an insider, such as a corporate officer,
purchases securities of his or her corporation on the basis of material,
non-public information. Such conduct breaches a duty owed to the corporation's
shareholders. The duty breached, however, need not be to shareholders to support
liability for insider trading; it could also involve a breach of duty to a
client, an employer, employees, or even a personal acquaintance. For example,
courts have held that if the insider receives a personal benefit (either direct
or indirect) from the disclosure, such as a pecuniary gain or reputational
benefit, that would be enough to find a fiduciary breach.
The concept of who constitutes an "insider" is broad. It includes officers,
directors and employees of a company. In addition, a person can be a "temporary
insider" if he or she enters into a confidential relationship in the conduct of
a company's affairs and, as a result, is given access to information solely for
the company's purpose. A temporary insider can include, among others, a
company's attorneys, accountants, consultants, and bank lending officers, as
well as the employees of such organizations. In addition, any person may become
a temporary insider of a company if he or she advises the company or provides
other services, provided the company expects such person to keep any material,
non-public information disclosed confidential.
Court decisions have held that under a "misappropriation" theory, an outsider
(such as an investment analyst) may be liable if he or she breaches a duty to
anyone by: (1) obtaining information improperly, or (2) using information that
was obtained properly for an improper purpose. For example, if information is
given to an analyst on a confidential basis and the analyst uses that
information for trading purposes, liability could arise under the
misappropriation theory. Similarly, an analyst who trades in breach of a duty
owed either to his or her employer or client may be liable under the
misappropriation theory. For example, the Supreme Court upheld the
misappropriation theory when a lawyer received material, non-public information
from a law partner who represented a client contemplating a tender offer, where
that lawyer used the information to trade in the securities of the target
company.
The situations in which a person can trade while in possession of material,
non-public information without breaching a duty are so complex and uncertain
that the only safe course is not to trade, tip
<PAGE>
or recommend securities while in possession of material, non-public information.
MATERIALITY. Insider trading restrictions arise only when the information that
is used for trading, tipping or recommendations is "material." The information
need not be so important that it would have changed an investor's decision to
buy or sell; rather, it is enough that it is the type of information on which
reasonable investors rely in making purchase, sale, or hold decisions.
RESOLVING CLOSE CASES. The Supreme Court has held that, in close cases,
doubts about whether or not information is material should be resolved in
favor of a finding of materiality. You should also be aware that your
judgment regarding materiality may be reviewed by a court or the SEC with
the 20-20 vision of hindsight.
EFFECT ON MARKET PRICE. Any information that, upon disclosure, is likely to
have a significant impact on the market price of a security should be
considered material.
FUTURE EVENTS. The materiality of facts relating to the possible occurrence
of future events depends on the likelihood that the event will occur and the
significance of the event if it does occur.
ILLUSTRATIONS. The following list, though not exhaustive, illustrates the
types of matters that might be considered material: a joint venture, merger
or acquisition; the declaration or omission of dividends; the acquisition or
loss of a significant contract; a change in control or a significant change
in management; a call of securities for redemption; the borrowing of a
significant amount of funds; the purchase or sale of a significant asset; a
significant change in capital investment plans; a significant labor dispute
or disputes with subcontractors or suppliers; an event requiring a company
to file a current report on Form 8-K with the SEC; establishment of a
program to make purchases of the company's own shares; a tender offer for
another company's securities; an event of technical default or default on
interest and/or principal payments; advance knowledge of an upcoming
publication that is expected to affect the market price of the stock.
These illustrations are equally applicable to Price Associates as a public
company and should serve as examples of the types of matters that employees
should not discuss with persons outside the firm. Remember, even though you
may have no intent to violate any federal securities law, an offhand comment
to a friend might be used unbeknownst to you by such friend to effect
purchases or sales of Price Associates' stock. If such transactions were
discovered and your friend were prosecuted, your status as an informant or
"tipper" would directly involve you in the case.
NON-PUBLIC VS. PUBLIC INFORMATION. Any information which is not "public" is
deemed to be "non-public." Just as an investor is permitted to trade on the
basis of information that is not material, he or she may also trade on the basis
of information that is public. Information is considered public if it has been
disseminated in a manner making it available to investors generally. An example
of non-public information would include material information provided to a
select group of analysts but not made available to the investment community at
large. Set forth below are a number of ways in which non-public information may
be made public.
DISCLOSURE TO NEWS SERVICES AND NATIONAL PAPERS. The U.S. stock exchanges
require exchange-traded issuers to disseminate material, non-public
information about their companies to: (1) the national business and
financial newswire services (Dow Jones and Reuters); (2) the
<PAGE>
national service (Associated Press); and (3) The New York Times and The
Wall Street Journal.
LOCAL DISCLOSURE. An announcement by an issuer in a local newspaper might be
sufficient for a company that is only locally traded, but might not be
sufficient for a company that has a national market.
INFORMATION IN SEC REPORTS. Information contained in reports filed with the
SEC will be deemed to be public.
INFORMATION IN BROKERAGE REPORTS. Information published in bulletins and
research reports disseminated by brokerage firms will, as a general matter,
be deemed to be public.
If Price Associates is in possession of material, non-public information with
respect to a security before such information is disseminated to the public
(I.E., such as being disclosed in one of the public media described above),
Price Associates and its employees must wait a sufficient period of time after
the information is first publicly released before trading or initiating
transactions to allow the information to be fully disseminated.
CONCEPT OF POSSESSION. It is important to note that the SEC takes the position
that the law regarding insider trading prohibits any person from trading in a
security in violation of a duty of trust and confidence WHILE in possession of
material, non-public information regarding the security. This is in contrast to
trading ON THE BASIS of the material, non-public information. To illustrate the
problems created by the use of the "possession" standard, as opposed to the
"caused" standard, the following three examples are provided:
FIRST, if the investment committee to a Price mutual fund were to obtain
material, non-public information about one of its portfolio companies from a
Price equity research analyst, that fund would be prohibited from trading in
the securities to which that information relates. The prohibition would last
until the information is no longer material or non-public.
SECOND, if the investment committee to a Price mutual fund obtained
material, non-public information about a particular portfolio security but
continued to trade in that security, then the committee members, Price
Associates, and possibly management personnel might be liable for insider
trading violations.
THIRD, even if the investment committee to the Fund does not come into
possession of the material, non-public information known to the equity
research analyst, if it trades in the security, it may have a difficult
burden of proving to the SEC or to a court that it was not in possession of
such information.
TENDER OFFERS. Tender offers are subject to particularly strict regulation under
the securities laws. Specifically, trading in securities which are the subject
of an actual or impending tender offer by a person who is in possession of
material, non-public information relating to the offer is illegal, regardless of
whether there was a breach of fiduciary duty. Under no circumstances should you
trade in securities while in possession of material, non-public information
regarding a potential tender offer.
PROCEDURES TO BE FOLLOWED WHEN RECEIVING MATERIAL, NON-PUBLIC INFORMATION.
<PAGE>
Whenever an employee comes into possession of material, non-public information,
he or she should immediately contact the Legal Department and refrain from
disclosing the information to anyone else, including persons within Price
Associates, unless specifically advised to the contrary.
Specifically, employees may not:
o Trade in securities to which the material, non-public information
relates;
o Disclose the information to others;
o Recommend purchases or sales of the securities to which the
information relates.
If the Legal Department determines that the information is material and
non-public, it will decide whether to:
o Place the security on a Watch List ("WATCH LIST") and restrict the
flow of the information to others within Price Associates in order to
allow Price Associates' investment personnel to continue their
ordinary investment activities. This procedure is commonly referred to
as a CHINESE WALL; or
o Place the security on a Restricted List ("RESTRICTED LIST") in order
to prohibit trading in the security by both clients and employees.
The Watch List is highly confidential and should, under no circumstances, be
disseminated to anyone except authorized personnel in the Legal Department. The
Restricted List is also highly confidential and should, under no circumstances,
be disseminated to anyone outside Price Associates.
The employee whose possession of or access to inside information has caused the
inclusion of an issuer on the Watch List may never trade or recommend the trade
of the securities of that issuer without the specific prior approval of the
Legal Department.
If an employee receives a private placement memorandum and the existence of the
private offering and/or the contents of the memorandum is material and
non-public, the employee should contact the Legal Department for a determination
of whether the issuer should be placed on the Watch or Restricted List.
SPECIFIC PROCEDURES RELATING TO THE SAFEGUARDING OF INSIDE INFORMATION.
To ensure the integrity of the Chinese Wall, and the confidentiality of the
Restricted List, it is important that ALL EMPLOYEES take the following steps to
safeguard the confidentiality of material, non-public information:
o Do not discuss confidential information in public places such as
elevators, hallways or social gatherings;
o To the extent practical, limit access to the areas of the firm where
confidential information could be observed or overheard to employees
with a business need for being in the area;
<PAGE>
o Avoid using speaker phones in areas where unauthorized persons may
overhear conversations;
o Where appropriate, maintain the confidentiality of client identities
by using code names or numbers for confidential projects;
o Exercise care to avoid placing documents containing confidential
information in areas where they may be read by unauthorized persons
and store such documents in secure locations when they are not in use;
and
o Destroy copies of confidential documents no longer needed for a
project.
Price Associates has adopted specific written procedures, Procedures
Pertaining to the Administration of the Statement of Policy on Material, Inside
(Non-Public) Information ("PROCEDURES") to deal with those situations where
employees of the firm are in possession of material, non-public information with
respect to securities which may be in or are being considered for inclusion in
the portfolios of clients managed by other areas of the firm and when tender
offer financing information is received. These Procedures also describe the
procedures for managing relationship conflicts in the municipal area. These
Procedures have been designed to isolate and keep confidential material,
non-public information known to one investment group or employee from the
remainder of the firm. They are considered a part of this Statement and will be
distributed to all appropriate personnel.
EDUCATION PROGRAM. While the probability of research analysts and portfolio
managers being exposed to material, non-public information with respect to
companies considered for investment by clients is greater than that of other
employees, it is imperative that all employees have a full understanding of this
Statement, particularly since the insider trading restrictions also apply to
transactions in the stock of Price Associates.
To ensure that all employees are properly informed of and understand Price
Associates' policy with respect to insider trading, the following program has
been adopted.
INITIAL REVIEW FOR NEW EMPLOYEES. All new employees will be given a copy of
the Code, which includes this Statement, at the time of their employment and
will be required to certify that they have read it. A representative of the
Legal Department will review the Statement with each new portfolio manager,
research analyst, and trader, as well as with any person who joins the firm
as a vice president of Price Associates, promptly after his or her
employment.
DISTRIBUTION OF STATEMENT. Any time this Statement is materially revised,
copies will be distributed to all employees.
ANNUAL REVIEW WITH RESEARCH ANALYSTS, COUNSELORS AND TRADERS. A
representative of the Legal Department will review this Statement at least
annually with portfolio managers, research analysts, and traders.
<PAGE>
ANNUAL CONFIRMATION OF COMPLIANCE. All employees will be asked to confirm
their understanding of and adherence to this Statement on an annual basis.
QUESTIONS. If you have any questions with respect to the interpretation or
application of this Statement, you are encouraged to discuss them with your
immediate supervisor or the Legal Department.
March, 2000
<PAGE>
T. ROWE PRICE ASSOCIATES, INC.
STATEMENT OF POLICY
ON
SECURITIES TRANSACTIONS
BACKGROUND INFORMATION.
LEGAL REQUIREMENT. In accordance with the requirements of the Securities
Exchange Act of 1934, the Investment Company Act of 1940, the Investment
Advisers Act of 1940 and the Insider Trading and Securities Fraud
Enforcement Act of 1988, T. Rowe Price Associates, Inc. ("PRICE
ASSOCIATES") and the mutual funds ("TRPA FUNDS") which it manages have
adopted this Statement of Policy on Securities Transactions ("Statement").
Both Rowe Price-Fleming International, Inc. ("RPFI") and T. Rowe Fleming
Asset Management Limited ("TRFAM") have also adopted Statements of Policy
on Securities Transactions. Funds sponsored and managed by Price Associates
or RPFI will be referred to as the "PRICE FUNDS."
PRICE ASSOCIATES' FIDUCIARY POSITION. As an investment adviser, Price
Associates is in a fiduciary position which requires it to act with an eye
only to the benefit of its clients, avoiding those situations which might
place, or appear to place, the interests of Price Associates or its
officers, directors and employees in conflict with the interests of
clients.
PURPOSE OF STATEMENT. The Statement was developed to help guide Price
Associates' employees and independent directors and the independent
directors of the Price Funds in the conduct of their personal investments
and to:
o eliminate the possibility of a transaction occurring that the
Securities and Exchange Commission or other regulatory bodies would
view as illegal, such as FRONT RUNNING (see definition below);
o avoid situations where it might appear that Price Associates or the
Price Funds or any of their officers, directors or employees had
personally benefited at the expense of a client or fund shareholder or
taken inappropriate advantage of their fiduciary positions; and
o prevent, as well as detect, the misuse of material, non-public
information.
Employees and the independent directors of Price Associates and the Price
Funds are urged to consider the reasons for the adoption of this Statement.
Price Associates' and the Price Funds' reputations could be adversely
affected as the result of even a single transaction considered questionable
in light of the fiduciary duties of Price Associates and the independent
directors of the Price Funds.
FRONT RUNNING. Front Running is illegal. It is generally defined as the
purchase or sale of a security by an officer, director or employee of an
investment adviser or mutual fund in anticipation of and prior to the
adviser effecting similar transactions for its clients in order to take
advantage of or avoid changes in market prices effected by client
transactions.
<PAGE>
PERSONS SUBJECT TO STATEMENT. The provisions of this Statement apply as
described below to the following persons and entities. Each person and entity is
classified as either an Access Person or a Non-Access Person as described below.
The provisions of this Statement may also apply to an Access Person's or
Non-Access Person's spouse, minor children, and certain other relatives, as
further described on page 4-4 of this Statement. Access Persons are subject to
all provisions of this Statement. Non-Access Persons are subject to the general
principles of the Statement and its reporting requirements, but are exempt from
prior clearance requirements except for transactions in Price Associates' stock.
The persons and entities covered by this Statement are:
PRICE ASSOCIATES. Price Associates, each of its subsidiaries and their
retirement plans, and the Price Associates Employee Partnerships.
PERSONNEL. Each officer, inside director and employee of Price Associates
and its subsidiaries, including T. Rowe Price Investment Services, Inc.,
the principal underwriter of the Price Funds.
CERTAIN TEMPORARY WORKERS. These workers include:
o All temporary workers hired on the Price Associates payroll ("TRPA
TEMPORARIES");
o All agency temporaries whose assignments at Price Associates exceed four
weeks or whose cumulative assignments exceed eight weeks over a
twelve-month period;
o All independent or agency-provided consultants whose assignments exceed
four weeks or whose cumulative assignments exceed eight weeks over a
twelve-month period AND whose work is closely related to the ongoing
work of Price Associates' employees (versus project work that stands
apart from ongoing work); and
o Any contingent worker whose assignment is more than casual in nature or
who will be exposed to the kinds of information and situations that
would create conflicts on matters covered in the Code.
RPFI PERSONNEL. As stated in the first paragraph, a Statement of Policy on
Securities Transactions has been adopted by RPFI. Under that Statement, all
RPFI personnel (officers, directors and employees) stationed in Baltimore
will be subject to this Statement.
TRFAM PERSONNEL. As stated in the first paragraph, a Statement of Policy on
Securities Transactions has been adopted by TRFAM. Under that Statement,
all TRFAM personnel (officers, directors, and employees) stationed in
Baltimore will be subject to this Statement.
RETIRED EMPLOYEES. Retired employees of Price Associates who continue to
receive investment research information from Price Associates.
INDEPENDENT DIRECTORS OF PRICE ASSOCIATES AND THE PRICE FUNDS. The independent
directors of Price Associates include those directors of Price Associates who
are neither officers nor employees of Price Associates. The independent
directors of the Price Funds include those directors of the Price Funds who are
not deemed to be "interested persons" of Price Associates.
<PAGE>
Although subject to the general principles of this Statement, including the
definition of "beneficial ownership," independent directors are subject only to
modified reporting requirements. The independent directors of the Price Funds
are exempt from prior clearance requirements. The independent directors of Price
Associates are exempt from the prior clearance requirements except for Price
Associates' stock.
ACCESS PERSONS. Certain persons and entities are classified as "ACCESS
PERSONS" under the Code. The term "ACCESS PERSON" means:
o Price Associates;
o any officer (vice president or above) or director (excluding independent
directors) of Price Associates or the Price Funds;
o any employee of Price Associates or the Price Funds who, in connection
with his or her regular functions or duties, makes, participates in, or
obtains or has access to information regarding the purchase or sale of
securities by a Price Fund or other advisory client, or whose functions
relate to the making of any recommendations with respect to the
purchases or sales; or
o any person in a control relationship to Price Associates or a Price Fund
who obtains or has access to information concerning recommendations made
to a Price Fund or other advisory client with regard to the purchase or
sale of securities by the Price Fund or advisory client.
All Access Persons are notified of their status under the Code.
INVESTMENT PERSONNEL. An Access Person is further identified as "INVESTMENT
PERSONNEL" if, in connection with his or her regular functions or duties,
he or she "makes or participates in making recommendations regarding the
purchase or sale of securities" by a Price Fund or other advisory client.
The term "Investment Personnel" includes, but is not limited to:
o those employees who are authorized to make investment decisions or to
recommend securities transactions on behalf of the firm's clients
(investment counselors and members of the mutual fund advisory
committees);
o research and credit analysts; and
o traders who assist in the investment process.
All Investment Personnel are deemed Access Persons under the Code. All
Investment Personnel are notified of their status under the Code.
Investment Personnel are prohibited from investing in initial public
offerings.
NON-ACCESS PERSONS. Persons who do not fall within the definition of Access
Persons are deemed "NON-ACCESS PERSONS".
<PAGE>
QUESTIONS ABOUT THE STATEMENT. You are urged to seek the advice of the
Chairperson of the Ethics Committee when you have questions as to the
application of this Statement to individual circumstances.
TRANSACTIONS SUBJECT TO STATEMENT. Except as provided below, the provisions of
this Statement apply to transactions that fall under either one of the following
two conditions:
FIRST, you are a "BENEFICIAL OWNER" of the security under the Rule 16a-1 of the
Securities Exchange Act of 1934 ("EXCHANGE ACT"), as defined below.
SECOND, if you CONTROL or direct securities trading for another person or
entity, those trades are subject to this Statement even if you are not a
beneficial owner of the securities. For example, if you have an exercisable
trading authorization of an unrelated person's or entity's brokerage account, or
are directing another person's or entity's trades, those transactions will be
subject to this Statement to the same extent your personal trades would be,
unless exempted as described below.
DEFINITION OF BENEFICIAL OWNER. A "beneficial owner" is any person who, directly
or indirectly, through any contract, arrangement, understanding, relationship,
or otherwise, has or shares in the opportunity, directly or indirectly, to
profit or share in any profit derived from a transaction in the security.
A person has beneficial ownership in:
o securities held by members of the person's immediate family SHARING THE
SAME HOUSEHOLD, although the presumption of beneficial ownership may be
rebutted;
o a person's interest in securities held by a trust, which may include
both trust beneficiaries or trustees with investment control;
o a person's right to acquire securities through the exercise or
conversion of any derivative security, whether or not presently
exercisable;
o a general partner's proportionate interest in the portfolio securities
held by a general or limited partnership;
o certain performance-related fees other than an asset-based fee, received
by any broker, dealer, bank, insurance company, investment company,
investment adviser, investment manager, trustee or person or entity
performing a similar function; and
o a person's right to dividends that is separated or separable from the
underlying securities. Otherwise, right to dividends alone shall not
represent beneficial ownership in the securities.
A shareholder shall not be deemed to have beneficial ownership in the portfolio
securities held by a corporation or similar entity in which the person owns
securities if the shareholder is not a controlling shareholder of the entity and
does not have or share investment control over the entity's portfolio.
<PAGE>
REQUESTS FOR EXEMPTIONS. If you have beneficial ownership of a security, any
transaction involving that security is presumed to be subject to the relevant
requirements of this Statement, UNLESS you have no control over the transaction.
Such a situation MAY arise, for example, if you have delegated investment
authority to an independent investment adviser, or your spouse has an
independent trading program in which you have no input. Similarly, if your
spouse has investment control over, but no beneficial ownership in, an unrelated
account, an exemption may be appropriate.
If you are involved in an investment account for a family situation, trust,
partnership, corporation, etc., which you feel should not be subject to the
Statement's relevant prior approval and/or reporting requirements, you should
submit a written request for clarification or exemption to Baltimore
Legal/Compliance (Attn. D. Jones). Any such request for clarification or
exemption should name the account, your interest in the account, the persons or
firms responsible for its management, and the basis upon which the exemption is
being claimed. Exemptions are NOT self-executing; any exemption must be granted
through Baltimore Legal/Compliance.
TRANSACTIONS IN STOCK OF PRICE ASSOCIATES. Because Price Associates is a public
company, ownership of its stock subjects its officers, inside and independent
directors, and employees to special legal requirements under the Federal
securities laws. Each officer, director and employee is responsible for his or
her own compliance with these requirements. In connection with these legal
requirements, Price Associates has adopted the following rules and procedures:
INDEPENDENT DIRECTORS OF PRICE FUNDS. The independent directors of the
Price Funds are prohibited from owning the stock of Price Associates.
QUARTERLY EARNINGS REPORT. Generally, all employees and independent
directors of Price Associates must refrain from initiating transactions in
Price Associates' stock in which they have a beneficial interest from the
sixth trading day following the end of the quarter (or such other date as
management shall from time to time determine) until the third trading day
following the public release of earnings. Employees and independent
directors will be notified in writing through the Office of the Secretary
of Price Associates ("SECRETARY") from time to time as to the controlling
dates.
PRIOR CLEARANCE. Employees and independent directors of Price Associates
are required to obtain clearance prior to effecting any proposed
transaction (including gifts and transfers) involving shares of Price
Associates' stock owned beneficially or through the Employee Stock Purchase
Plan. Requests for prior clearance must be in writing on the form entitled,
"Notification of Proposed Transaction" (available from Corporate Records
Department) and be submitted to the Secretary who is responsible for
processing and maintaining the records of all such requests. This would
include sales of stock purchased through Price Associates Employee Stock
Purchase Plan ("ESPP"). Purchases effected through the ESPP are
automatically reported to the Secretary. Receiving prior clearance does not
relieve employees and independent directors of Price Associates from
conducting their personal securities transactions in full compliance with
the Code, including its prohibition on trading while in possession of
material, inside information. Transactions in Price Associates' stock are
subject to the 60-Day Rule except for transactions effected through the
ESPP and certain options exercises. SEE p. 4-18.
<PAGE>
ALL EMPLOYEES AND INDEPENDENT DIRECTORS OF PRICE ASSOCIATES MUST
OBTAIN PRIOR CLEARANCE OF ANY TRANSACTION INVOLVING PRICE ASSOCIATES'
STOCK FROM THE OFFICE OF THE SECRETARY OF PRICE ASSOCIATES.
INITIAL DISCLOSURE OF HOLDINGS. Each new employee must report to the
Secretary any shares of Price Associates' stock of which he or she has
beneficial ownership no later than 10 days after his or her starting date
of employment.
DIVIDEND REINVESTMENT PLANS. Purchases of Price Associates' stock owned
outside of the ESPP and effected through a dividend reinvestment plan need
not receive prior clearance if the Secretary's office has been previously
notified by the employee that he or she will be participating in that plan.
Reporting of transactions effected through that plan need only be made
quarterly, except that employees who are subject to Section 16 of the
Securities Exchange Act of 1934 reporting must report such transactions
monthly.
EFFECTIVENESS OF PRIOR CLEARANCE. Prior clearance of transactions in Price
Associates' stock is effective for five (5) business days from and
including the date the clearance is granted, unless (i) advised to the
contrary by the Secretary prior to the proposed transaction, or (ii) the
person receiving the approval comes into possession of material, non-public
information concerning the firm. If the proposed transaction in Price
Associates' stock is not executed within this time period, a new clearance
must be obtained.
REPORTING OF DISPOSITION OF PROPOSED TRANSACTION. Covered persons must
notify the Secretary of the disposition (whether the proposed transaction
was effected or not) of each transaction involving shares of Price
Associates' stock owned directly within two business days of its execution,
or within seven business days of the date of prior clearance, if not
executed.
INSIDER REPORTING AND LIABILITY. Under current rules, certain officers,
directors and 10% stockholders of a publicly traded company ("INSIDERS")
are subject to the requirements of Section 16. Insiders include the
directors and certain managing directors of Price Associates.
SEC REPORTING. There are three reporting forms which insiders are required
to file with the SEC to report their purchase, sale and transfer
transactions in, and holdings of, Price Associates' stock. Although the
Secretary will provide assistance in complying with these requirements as
an accommodation to insiders, it remains the legal responsibility of each
insider to assure that the applicable reports are filed in a timely manner.
o FORM 3. The initial ownership report by an insider is required to be
filed on Form 3. This report must be filed within ten days after a
person becomes an insider (I.E., is elected as a director or appointed
as managing director) to report all current holdings of Price
Associates' stock. Following the election or appointment of an
insider, the Secretary will deliver to the insider a Form 3 for
appropriate signatures and will file such Form with the SEC.
o FORM 4. Any change in the insider's ownership of Price Associates'
stock must be reported on a Form 4 unless eligible for deferred
reporting on year-end Form 5. The Form 4 is due by the 10th day
following the end of the month in which the
<PAGE>
ownership change occurred. Following receipt of the Notice of
Disposition of the proposed transaction, the Secretary will deliver to
the insider a Form 4, as applicable, for appropriate signatures and
will file such Form with the SEC.
o FORM 5. Any transaction or holding which is exempt from reporting on
Form 4, such as option exercises, small purchases of stock, gifts,
etc. may be reported on a deferred basis on Form 5 within 45 days
after the end of the calendar year in which the transaction occurred.
No Form 5 is necessary if all transactions and holdings were
previously reported on Form 4.
LIABILITY FOR SHORT-SWING PROFITS. Under Federal securities laws, profit
realized by certain officers, as well as directors and 10% stockholders
of a company (including Price Associates) as a result of a purchase and
sale (or sale and purchase) of stock of the company within a period of
less than six months must be returned to the firm upon request.
OFFICE OF THRIFT SUPERVISION ("OTS") REPORTING. Price Associates is the
holding company of T. Rowe Price Savings Bank, which is regulated by the
OTS. OTS regulations require that the Managing Directors of Price
Associates, as well as any vice president in charge of any Price
Associates' affiliate, file reports regarding their personal holdings of
the stock of Price Associates and of the stock of any non-affiliated
savings banks or savings and loan holding companies. Although the Secretary
will provide assistance in complying with these requirements as an
accommodation, it remains the responsibility of each person required to
file such reports to ensure that such reports are filed in a timely manner.
PRIOR CLEARANCE REQUIREMENTS (OTHER THAN PRICE ASSOCIATES' STOCK) FOR ACCESS
PERSONS.
ALL ACCESS PERSONS must obtain prior clearance before directly or indirectly
initiating, recommending, or in any way participating in, the purchase or sale
of a security in which the Access Person has, or by reason of such transaction
may acquire, any beneficial interest or which he or she controls, unless
exempted below. NON-ACCESS PERSONS are NOT required to obtain prior clearance
before engaging in any securities transactions, except for transaction in Price
Associates' stock.
ALL EMPLOYEES AND INDEPENDENT DIRECTORS OF PRICE ASSOCIATES MUST
OBTAIN PRIOR CLEARANCE OF ANY TRANSACTION INVOLVING PRICE ASSOCIATES'
STOCK FROM THE OFFICE OF THE SECRETARY OF PRICE ASSOCIATES.
Where required, prior clearance must be obtained regardless of whether the
transaction is effected through TRP Brokerage or through an unaffiliated
broker/dealer. Receiving prior clearance does not relieve Access Persons from
conducting their personal securities transactions in full compliance with the
Code, including its prohibition on trading while in possession of material,
inside information, and with applicable law, including the prohibition on Front
Running (see page 4-1 for definition of Front Running). Please note that the
prior clearance procedures do NOT check compliance with the 60-Day Rule (p.
4-17).
<PAGE>
TRANSACTIONS (OTHER THAN IN PRICE ASSOCIATES' STOCK) EXEMPT FROM PRIOR
CLEARANCE. The following transactions are exempt from the prior clearance
requirements:
MUTUAL FUNDS AND VARIABLE INSURANCE PRODUCTS. Purchases or redemptions
of shares of any open-end investment companies, including the Price
Funds, and variable insurance products.
UNIT INVESTMENT TRUSTS. Purchases or sales of shares in unit investment
trusts.
U.S. GOVERNMENT OBLIGATIONS. Purchases or sales of direct obligations
of the U.S. Government.
PRO RATA DISTRIBUTIONS. Purchases effected by the exercise of rights
issued pro rata to all holders of a class of securities or the sale of
rights so received.
MANDATORY TENDERS. Purchases and sales of securities pursuant to a
mandatory tender offer.
SPOUSAL PAYROLL DEDUCTION PLANS. Purchases by an Access Person's spouse
pursuant to a payroll deduction plan, provided the Compliance
Department has been previously notified by the Access Person that the
spouse will be participating in the payroll deduction plan.
EXERCISE OF STOCK OPTION OF CORPORATE EMPLOYER BY SPOUSE. Transactions
involving the exercise by an Access Person's spouse of a stock option
issued by the corporation employing the spouse.
DIVIDEND REINVESTMENT PLANS. Purchases effected through an established
Dividend Reinvestment Plan ("DRP"), provided the Compliance Department
is first notified by the Access Person that he or she will be
participating in the DRP. An Access Person's purchase of share(s) of
the issuer to initiate participation in the DRP or an Access Person's
purchase of shares in addition to those purchased with dividends (a
"CONNECTED PURCHASE") AND any sale of shares from the DRP MUST receive
prior clearance.
SYSTEMATIC INVESTMENT PLANS. Purchases effected through a systematic
investment plan involving the automatic investment of a set dollar
amount on predetermined dates, provided the Compliance Department has
been previously notified by the Access Person that he or she will be
participating in the plan. An Access Person's purchase of securities of
the issuer to initiate participation in the plan AND any sale of shares
from such a plan MUST receive prior clearance.
INHERITANCES. The acquisition of securities through inheritance.
GIFTS. The giving of or receipt of a security as a gift.
<PAGE>
PROCEDURES FOR OBTAINING PRIOR CLEARANCE (OTHER THAN PRICE ASSOCIATES' STOCK)
FOR ACCESS PERSONS. ALL Access Persons should follow the procedures set forth
below before engaging in the transactions described.
PROCEDURES FOR OBTAINING PRIOR CLEARANCE FOR INITIAL PUBLIC OFFERINGS
("IPOS"):
NON-INVESTMENT PERSONNEL. Access Persons who are NOT Investment
Personnel ("NON-INVESTMENT PERSONNEL") may purchase securities that are
the subject of an IPO ONLY if prior written approval has been obtained
from the Chairperson of the Ethics Committee or his or her designee
("DESIGNEE"), which may include N. Morris, S. McCafferty or A. Brooks.
An IPO is an offering of securities registered under the Securities Act
of 1933 when the issuer of the securities, immediately before the
registration, was not subject to certain reporting requirements of the
Securities Exchange Act of 1934.
In considering such a request for approval, the Chairperson will
determine whether the proposed transaction presents a conflict of
interest with any of the firm's clients or otherwise violates the Code.
The Chairperson will also determine whether the following conditions
have been met:
1. The purchase is made through the Non-Investment Personnel's regular
broker;
2. The number of shares to be purchased is commensurate with the normal
size and activity of the Non-Investment Personnel's account; and
3. The transaction otherwise meets the requirements of the NASD's rules
on free riding and withholding.
Non-Investment Personnel will not be permitted to purchase shares in an IPO
if any of the firm's clients are prohibited from doing so. Therefore,
Non-Investment Personnel MUST check with the Equity Trading Desk the day
the offering is priced before purchasing in the IPO. This prohibition will
remain in effect until the firm's clients have had the opportunity to
purchase in the secondary market once the underwriting is completed --
commonly referred to as the aftermarket.
INVESTMENT PERSONNEL. Investment Personnel may NOT purchase
securities in an IPO.
NON-ACCESS PERSONS. Although Non-Access Persons are not required to
receive prior clearance before purchasing shares in an IPO, any
Non-Access Person who is a registered representative of Investment
Services should be aware that NASD rules may restrict his or her
ability to buy shares in a "hot issue," which is a new issue that
trades at a premium in the secondary market whenever that trading
commences.
PROCEDURES FOR OBTAINING PRIOR CLEARANCE FOR PRIVATE PLACEMENTS. Access
Persons may not invest in a private placement of securities, including the
purchase of limited partnership interests, unless prior written approval
has been obtained from the Chairperson of the Ethics Committee or a
Designee. In considering such a request for approval, the Chairperson will
determine whether the investment opportunity (private placement) should be
reserved for the firm's clients, and whether the opportunity is being
offered to the Access Person by virtue of his or her position with the
firm. The Chairperson will also secure, if appropriate, the approval
<PAGE>
of the proposed transaction from the chairperson of the applicable
investment steering committee.
CONTINUING OBLIGATION. An Access Person who has received approval to
invest in a private placement of securities and who, at a later date,
anticipates participating in the firm's investment decision process
regarding the purchase or sale of securities of the issuer of that
private placement on behalf of any client, must immediately disclose
his or her prior investment in the private placement to the Chairperson
of the Ethics Committee and to the chairperson of the appropriate
investment steering committee.
PROCEDURES FOR OBTAINING PRIOR CLEARANCE FOR ALL OTHER SECURITIES
TRANSACTIONS. Requests for prior clearance by Access Persons for all other
securities transactions requiring prior clearance may be made orally, in
writing, or by electronic mail (e-mail address "Personal Trades," which
appears under "Trades" in the electronic mail address book) to the Equity
Trading Department of Price Associates, which will be responsible for
processing and maintaining the records of all such requests. All requests
must include the name of the security, the number of shares or amount of
bond involved, whether a foreign security is involved, and the nature of
the transaction, I.E., whether the transaction is a purchase, sale or short
sale. Responses to all requests will be made by the Trading Department
documenting the request and its approval/disapproval.
Requests will normally be processed on the same day; however, additional
time may be required for prior clearance of transactions in foreign
securities.
EFFECTIVENESS OF PRIOR CLEARANCE. Prior clearance of a securities
transaction is effective for three (3) business days FROM AND INCLUDING the
date the clearance is granted, regardless of the time of day when clearance
is granted. If the proposed securities transaction is not executed within
this time, a new clearance must be obtained
REASONS FOR DISALLOWING ANY PROPOSED TRANSACTION. A proposed securities
transaction will be disapproved by the Trading Department and/or the Chairperson
of the Ethics Committee if:
PENDING CLIENT ORDERS. Orders have been placed by Price Associates or
RPFI to purchase or sell the security.
PURCHASES AND SALES WITHIN SEVEN (7) CALENDAR DAYS. The security has
been purchased or sold by any client of Price Associates or, in the
case of a foreign security, for any client of either Price Associates
or RPFI, within seven calendar days immediately prior to the date of
the proposed transaction. For example, if a client transaction occurs
on Monday, an Access Person may not purchase or sell that security
until Tuesday of the following week. If all clients have eliminated
their holdings in a particular security, the seven-day restriction is
not applicable to an Access Person's transactions in that security.
APPROVED COMPANY RATING CHANGES. A change in the rating of an approved
company as reported in the firm's Daily Research News has occurred
within seven (7) calendar days immediately prior to the date of the
proposed transaction. Accordingly, trading would not be permitted until
the eighth (8) calendar day.
<PAGE>
SECURITIES SUBJECT TO INTERNAL TRADING RESTRICTIONS. The security is
limited or restricted by Price Associates or RPFI as to purchase or
sale for client accounts.
REQUESTS FOR WAIVERS OF PRIOR CLEARANCE DENIALS. If an Access Person's request
for prior clearance has been denied, he or she may apply to the Chairperson of
the Ethics Committee for a waiver. All such requests must be in writing and must
fully describe the basis upon which the waiver is being requested. Waivers are
NOT routinely granted.
BROKERAGE CONFIRMATIONS AND PERIODIC ACCOUNT STATEMENTS. ALL ACCESS PERSONS AND
NON-ACCESS PERSONS must request broker-dealers executing their transactions to
send to the attention of Compliance, Legal Department, T. Rowe Price Associates,
Inc., P.O. Box 17218, Baltimore, Maryland 21297-1218 a duplicate confirmation
with respect to each and every reportable transaction, including Price
Associates' stock, and a copy of all periodic statements for all securities
accounts in which the Access Person or Non-Access Person is considered to have
beneficial ownership and/or control (see Page 4-4 for a discussion of beneficial
ownership and control concepts).
NOTIFICATION OF BROKER/DEALER ACCOUNTS. ALL ACCESS PERSONS AND NON-ACCESS
PERSONS must give written notice to Baltimore Legal/Compliance before opening or
trading in a securities account with any broker/dealer, including TRP Brokerage.
NEW EMPLOYEES. New employees must give written notice to Baltimore
Legal/Compliance of any existing securities accounts maintained with any
broker/dealer when joining the firm (no later than 10 days after the
starting date).
OFFICERS, DIRECTORS AND REGISTERED REPRESENTATIVES OF INVESTMENT Services.
The NASD requires each associated person of T. Rowe Price Investment
Services, Inc. to:
o Obtain approval from Investment Services (request should be in writing
and be directed to Baltimore Legal/Compliance) before opening or placing
the initial trade in a securities account with any broker/dealer; and
o Provide the broker/dealer with written notice of his or her association
with Investment Services.
TRANSACTION REPORTING REQUIREMENTS (OTHER THAN PRICE ASSOCIATES' STOCK
TRANSACTIONS). ALL Access Persons AND Non-Access Persons must report all
securities transactions unless the transaction is exempted from reporting below.
TRANSACTIONS EXEMPT FROM REPORTING. The following transactions are exempt
from the reporting requirements:
MUTUAL FUNDS AND VARIABLE INSURANCE PRODUCTS. The purchase or
redemption of shares of any open-end investment companies, including
the Price Funds, and variable insurance products, except that any
employee who serves as the president or executive vice president of a
Price Fund must report his or her beneficial ownership or control of
shares in that Fund to Baltimore Legal/Compliance through electronic
mail to Dottie Jones.
<PAGE>
STOCK SPLITS AND SIMILAR ACQUISITIONS. The acquisition of additional
shares of existing corporate holdings through the reinvestment of
income dividends and capital gains in mutual funds, stock splits,
stock dividends, exercise of rights, exchange or conversion.
U.S. GOVERNMENT OBLIGATIONS. Purchases or redemptions of direct
obligations of the U.S. Government.
DIVIDEND REINVESTMENT PLANS. The purchase of securities with dividends
effected through an established DRP. If, however, a Connected Purchase
or a sale must receive prior clearance (SEE p. 4-9), that transaction
must also be reported.
TRANSACTIONS THAT MUST BE REPORTED. Other than the transactions specified
above as exempt, ALL Access Persons AND Non-Access Persons are required to
file a report of the following securities transactions:
CLEARED TRANSACTIONS. Any transaction that is subject to the prior
clearance requirements, including purchases in initial public
offerings and private placement transactions. Although Non-Access
Persons are not required to receive prior clearance for securities
transactions (other than Price Associates' stock), they MUST report
any transaction that would have been required to be prior cleared by
an Access Person.
UNIT INVESTMENT TRUSTS. The purchase or sale of shares of a Unit
Investment Trust.
PRO RATA DISTRIBUTIONS. Purchase effected by the exercise of rights
issued pro rata to all holders of a class of securities or the sale of
rights so received.
INHERITANCES. Acquisition of securities through inheritance.
GIFTS. Acquisition or disposition of securities by gift.
MANDATORY TENDERS. Purchases and sales of securities pursuant to a
mandatory tender offer.
SPOUSAL PAYROLL DEDUCTION PLANS/SPOUSAL STOCK OPTION. Transactions
involving the purchase or exchange of securities by the spouse of an
Access Person or Non-Access Person pursuant to a payroll deduction
plan or the exercise by the spouse of an Access Person or Non-Access
Person of a stock option issued by the spouse's employer. REPORTING OF
SPOUSAL PAYROLL DEDUCTION PLAN TRANSACTIONS NEED ONLY BE MADE
QUARTERLY; REPORTING OF A SPOUSAL STOCK OPTION EXERCISE MUST BE MADE
WITHIN TEN DAYS OF THE EXERCISE.
SYSTEMATIC INVESTMENT PLANS. Transactions involving the purchase of
securities by an Access Person or Non-Access Person pursuant to a
systematic investment plan. REPORTING OF SYSTEMATIC INVESTMENT PLAN
TRANSACTIONS NEED ONLY BE MADE QUARTERLY.
REPORT FORM. If the executing broker/dealer provides a confirmation or
similar statement directly to Baltimore Legal/Compliance, you do not need
to make a further report. All other transactions must be reported on the
form designated "T. Rowe Price Associates, Inc.
<PAGE>
Employee's Report of Securities Transactions," a supply of which is
available from Baltimore Legal/Compliance.
WHEN REPORTS ARE DUE. You must report a securities transaction within ten
(10) days after the trade date or within (10) days after the date on which
you first gain knowledge of the transaction (for example, a bequest) if
this is later. Reporting of transactions involving either systematic
investment plans or the purchase of securities by a spouse pursuant to a
payroll deduction plan, however, may be reported quarterly.
TRANSACTION REPORTING REQUIREMENTS FOR THE INDEPENDENT DIRECTORS OF PRICE
ASSOCIATES AND THE INDEPENDENT DIRECTORS OF THE PRICE FUNDS. The independent
directors of Price Associates and the independent directors of the Price Funds
are subject to the same reporting requirements as Access Persons and Non-Access
Persons except that reports need only be filed quarterly. Specifically: (1) a
report for each securities transaction must be filed with Baltimore/Legal
Compliance no later than ten (10) days after the end of the calendar quarter in
which the transaction was effected; and (2) a report must be filed for each
quarter, regardless of whether there have been any reportable transactions.
Baltimore/Legal Compliance will send the independent directors of Price
Associates and the Price Funds a reminder letter and reporting form
approximately ten days prior to the end of each calendar quarter.
MISCELLANEOUS RULES REGARDING PERSONAL SECURITIES TRANSACTIONS. These rules
vary in their applicability depending upon whether you are an Access Person.
The following rules apply to ALL Access Persons AND Non-Access Persons and,
where indicated, to the independent directors of Price Associates and the Price
Funds.
DEALING WITH CLIENTS. Access Persons, Non-Access Persons and the
independent directors of Price Associates and the Price Funds may not,
directly or indirectly, sell to or purchase from a client any security.
This prohibition does not preclude the purchase or redemption of shares of
any mutual fund that is a client of Price Associates.
CLIENT INVESTMENT PARTNERSHIPS.
CO-INVESTING. Access Persons and Non-Access Persons, including
employee partnerships, and the independent directors of Price
Associates and the Price Funds are not permitted to co-invest in
client investment partnerships of Price Associates, RPFI, or their
affiliates, such as Strategic Partners, Threshold, and International
Partners.
DIRECT INVESTMENT. The independent directors of the Price Funds are
not permitted to invest as limited partners in client investment
partnerships of Price Associates, RPFI, or their affiliates.
INVESTMENT CLUBS. These restrictions vary depending upon the person's
status, as follows:
NON-ACCESS PERSONS. A Non-Access Person may form or participate in a
stock or investment club without approval of the Chairperson of the
Ethics Committee. Only transactions in Price Associates' stock are
subject to prior clearance requirements. Club transactions must be
reported just as the Non-Access Person's individual trades are
reported.
<PAGE>
ACCESS PERSONS. An Access Person may not form or participate in a
stock or investment club unless prior written approval has been
obtained from the Chairperson of the Ethics Committee. All
transactions by such a stock or investment club in which an Access
Person has beneficial ownership or control are subject to the same
prior clearance and reporting requirements applicable to an individual
Access Person's trades. However, if the Access Person has beneficial
ownership solely by virtue of his or her spouse's participation in the
club and has no investment control or input into decisions regarding
the club's securities transactions, he or she may request the waiver
of prior clearance requirements of the club's transactions (except for
transactions in Price Associates' stock) from the Chairperson of the
Ethics Committee as part of the approval process.
MARGIN ACCOUNTS. While brokerage margin accounts are discouraged, you may
open and maintain margin accounts for the purchase of securities provided
such accounts are with brokerage firms with which you maintain a regular
brokerage account.
TRADING ACTIVITY. You are discouraged from engaging in a pattern of
securities transactions which either:
o Is so excessively frequent as to potentially impact your ability to
carry out your assigned responsibilities, or
o Involves securities positions that are disproportionate to your net
assets.
At the discretion of the Chairperson of the Ethics Committee, written
notification of excessive trading may be sent to your supervisor.
The following rules apply ONLY to ACCESS PERSONS:
LARGE COMPANY EXEMPTION. Although subject to prior clearance, transactions
involving securities in certain large companies, within the parameters set
by the Ethics Committee (the "EXEMPT LIST"), will be approved under normal
circumstances, as follows:
TRANSACTIONS INVOLVING EXEMPT LIST SECURITIES. This exemption applies
to transactions involving no more than $20,000 or the nearest round
lot (even if the amount of the transaction MARGINALLY exceeds $20,000)
per security per week in securities of companies with market
capitalizations of $5 billion or more, unless the rating on the
security as reported in the firm's Daily Research News has been
changed to a 1 or a 5 within the seven (7) calendar days immediately
prior to the date of the proposed transaction. If such a rating change
has occurred, the exemption is not available.
TRANSACTIONS INVOLVING OPTIONS ON EXEMPT LIST SECURITIES. Access
Persons may not purchase uncovered put options or sell uncovered call
options unless otherwise permitted under the "Options and Futures"
discussion on p. 4-16. Otherwise, in the case of options on an
individual security on the Exempt List (if it has not had a prohibited
rating change), an Access Person may trade the GREATER of 5 contracts
or sufficient option contracts to control $20,000 in the underlying
security; thus an Access Person may trade 5 contracts even if this
permits the Access Person to control more than $20,000 in the
underlying security. Similarly, the Access Person may trade more than
<PAGE>
5 contracts as long as the number of contracts does not permit him or
her to control more than $20,000 in the underlying security.
These parameters are subject to change by the Ethics Committee.
EXCHANGE-TRADED INDEX OPTIONS. Although subject to prior clearance, an
Access Person's transactions involving exchange-traded index options,
within the parameters set by the Ethics Committee, will be approved under
normal circumstances. Generally, an Access Person may trade the GREATER of
5 contracts or sufficient contracts to control $20,000 in the underlying
securities; thus an Access Person may trade 5 contracts even if this
permits the Access Person to control more than $20,000 in the underlying
securities. Similarly, the Access Person may trade more than 5 contracts as
long as the number of contracts does not permit him or her to control more
than $20,000 in the underlying security.
These parameters are subject to change by the Ethics Committee.
CLIENT LIMIT ORDERS. The Equity Trading Desk may approve an Access Person's
proposed trade even if a limit order has been entered for a client for the
same security, if:
o The Access Person's trade will be entered as a market order; and
o The client's limit order is 10% or more away from the market at the
time of approval of the Access Person's trade.
OPTIONS AND FUTURES. Please consult the specific section on Exchange-Traded
Index Options (p. 4-16) for transactions in those options.
BEFORE ENGAGING IN OPTIONS AND FUTURE TRANSACTIONS, ACCESS PERSONS SHOULD
UNDERSTAND THE IMPACT THAT THE 60-DAY RULE MAY HAVE UPON THEIR ABILITY TO
CLOSE OUT A POSITION WITH A PROFIT (SEE PAGE 4-17).
OPTIONS AND FUTURES ON SECURITIES AND INDICES NOT HELD BY PRICE
ASSOCIATES' OR RPFI'S CLIENTS. There are no specific restrictions with
respect to the purchase, sale or writing of put or call options or any
other option or futures activity, such as multiple writings, spreads
and straddles, on securities of companies (and options or futures on
such securities) which are not held by any of Price Associates' or
RPFI's clients.
OPTIONS ON SECURITIES OF COMPANIES HELD BY PRICE ASSOCIATES' OR RPFI'S
CLIENTS. With respect to options on securities of companies which are
held by any of Price Associates' or RPFI's clients, it is the firm's
policy that an Access Person should not profit from a price decline of
a security owned by a client (other than an Index account). Therefore,
an Access Person may: (i) purchase call options and sell covered call
options and (ii) purchase covered put options and sell put options. An
Access Person may not purchase uncovered put options or sell uncovered
call options, even if the issuer of the underlying securities is
included on the Exempt List, unless purchased in connection with other
options on the same security as part of a straddle, combination or
spread strategy which is designed to result in a profit to the Access
Person if the underlying security rises in or does not change in
value. The purchase, sale and exercise
<PAGE>
of options are subject to the same restrictions as those set forth with
respect to securities, I.E., the option should be treated as if it were
the common stock itself.
OTHER OPTIONS AND FUTURES HELD BY PRICE ASSOCIATES' OR RPFI'S CLIENTS.
Any other option or futures transaction with respect to domestic or
foreign securities held by any of Price Associates' clients or with
respect to foreign securities held by RPFI's clients will be approved
or disapproved on a case-by-case basis after due consideration is
given as to whether the proposed transaction or series of transactions
might appear to or actually create a conflict with the interests of
any of Price Associates' or RPFI's clients. Such transactions include
transactions in futures and options on futures involving financial
instruments regulated solely by the CFTC.
SHORT SALES. Short sales by Access Persons are subject to prior clearance.
In addition, Access Persons may not sell any security short which is owned
by any client of Price Associates or RPFI, except that short sales may be
made "against the box" for tax purposes. A short sale "against the box" is
one in which the seller owns an amount of securities equivalent to the
number he or she sells short. All short sales, including short sales
against the box, are subject to the 60-Day Rule described below.
THE 60-DAY RULE. Access Persons are prohibited from profiting from the
purchase and sale or sale and purchase of the same (or equivalent)
securities within 60 calendar days. An "equivalent" security means any
option, warrant, convertible security, stock appreciation right, or similar
right with an exercise or conversion privilege at a price related to the
subject security, or similar securities with a value derived from the value
of the subject security. Thus, for example, the rule prohibits options
transactions on or short sales of a security within 60 days of its
purchase. In addition, the rule applies regardless of the Access Person's
other holdings of the same security or whether the Access Person has split
his or her holdings into tax lots. For example, if an Access Person buys
100 shares of XYZ stock on March 1, 1998 and another 100 shares of XYZ
stock on March 1, 2000, he or she may not sell ANY shares of XYZ stock at a
profit for 60 days following March 1, 2000. The 60-Day Rule "clock"
restarts EACH time the Access Person trades in that security.
EXEMPTIONS FROM THE 60-DAY RULE. The 60-Day Rule does not apply to:
o any transaction by a Non-Access Person except for
transactions in Price Associates' stock not exempted below;
o any transaction exempt from prior clearance (SEE p. 4-8);
o the purchase and sale or sale and purchase of exchange traded
index options;
o any transaction in Price Associates' stock effected through
the ESPP; and
o the exercise of "in the money" Price Associates' stock
options and the subsequent sale of the derivative shares.
Prior clearance procedures do NOT check compliance with the 60-Day
Rule when considering a trading request. Access Persons are
responsible for checking their compliance with this rule before
entering a trade.
<PAGE>
Access Persons may request a waiver from the 60-Day Rule. Such
requests should be directed in writing to the Chairperson of the
Ethics Committee. These waivers are NOT routinely granted.
INVESTMENTS IN NON-LISTED SECURITIES FIRMS. Access Persons may not purchase
or sell the shares of a broker/dealer, underwriter or federally registered
investment adviser unless that entity is traded on an exchange or listed as
a NASDAQ stock or permission is given under the Private Placement
Procedures (SEE p. 4-10).
OWNERSHIP REPORTING REQUIREMENTS - ONE-HALF OF ONE PERCENT OWNERSHIP. If an
employee or an independent director of Price Associates or an independent
director of the Price Funds owns more than 1/2 of 1% of the total outstanding
shares of a public or private company, he or she must immediately report in
writing such fact to Baltimore Legal/Compliance, providing the name of the
company and the total number of such company's shares beneficially owned.
DISCLOSURE OF PERSONAL SECURITIES HOLDINGS BY ACCESS PERSONS. Upon commencement
of employment, appointment or promotion (no later than 10 days after the
starting date), each Access Person must disclose in writing all current
securities holdings in which he or she is considered to have beneficial
ownership and control ("Securities Holdings Report") (see page 4-4 for
definition of the term Beneficial Owner). The form to provide the Securities
Holding Report will be provided upon commencement of employment, appointment or
promotion and should be submitted to Baltimore Legal/Compliance.
All Investment Personnel and Managing Directors are also required to file a
Securities Holding Report on an annual basis, in conjunction with the annual
verification process. Effective January 2001, this requirement will be extended
to ALL Access Persons, pursuant to federal law.
CONFIDENTIALITY OF RECORDS. Price Associates makes every effort to protect the
privacy of all persons and entities in connection with their Securities Holdings
Reports and Reports of Securities Transactions.
SANCTIONS. Strict compliance with the provisions of this Statement is considered
a basic provision of association with Price Associates and the Price Funds. The
Ethics Committee and Baltimore Legal/Compliance are primarily responsible for
administering this Statement. In fulfilling this function, the Ethics Committee
will institute such procedures as it deems reasonably necessary to monitor each
person's and entity's compliance with this Statement and to otherwise prevent
and detect violations.
VIOLATIONS BY ACCESS PERSONS, NON-ACCESS PERSONS AND DIRECTORS OF PRICE
ASSOCIATES. Upon discovering a material violation of this Statement by any
person or entity other than an independent director of a Price Fund, the
Ethics Committee will impose such sanctions as it deems appropriate and as
are approved by the Management Committee or the Board of Directors
including, INTER ALIA, a letter of censure or suspension, a fine, a
suspension of trading privileges or termination of employment and/or
officership of the violator. In addition, the violator may be required to
surrender to Price Associates, or to the party or parties it may designate,
any profit realized from any transaction that is in violation of this
Statement. All material violations of this Statement shall be reported to
the Board of Directors of Price
<PAGE>
Associates and to the Board of Directors of any Price Fund with
respect to whose securities such violations may have been involved.
VIOLATIONS BY INDEPENDENT DIRECTORS OF PRICE FUNDS. Upon discovering a
material violation of this Statement by an independent director of a Price
Fund, the Ethics Committee shall report such violation to the Board on
which the director serves. The Price Fund Boards will impose such sanctions
as they deem appropriate.
VIOLATIONS BY BALTIMORE EMPLOYEES OF RPFI OR TRFAM. Upon discovering a
material violation of this Statement by a Baltimore-based employee of RPFI
or TRFAM, the Ethics Committee shall report such violation to the Board of
Directors of RPFI or TRFAM, as appropriate. A material violation by a
Baltimore-based employee of RPFI shall also be reported to the Board of
Directors of any RPFI Fund with respect to whose securities such violations
may have been involved.
March, 2000
<PAGE>
T. ROWE PRICE ASSOCIATES, INC.
STATEMENT OF POLICY
ON
CORPORATE RESPONSIBILITY
PRICE ASSOCIATES' FIDUCIARY POSITION. As an investment adviser, T. Rowe Price
Associates, Inc. ("PRICE ASSOCIATES") is in a fiduciary relationship with each
of its clients. This fiduciary duty obligates Price Associates to act with an
eye only to the benefit of its clients. Accordingly, when managing its client
accounts (whether private counsel clients, mutual funds, limited partnerships,
or otherwise), Price Associates' primary responsibility is to optimize the
financial returns of its clients consistent with their objectives and investment
program.
DEFINITION OF CORPORATE RESPONSIBILITY ISSUES. Concern over the behavior of
corporations has been present since the Industrial Revolution. Each generation
has focused its attention on specific issues. Concern over the abuses of the use
of child labor in the 1800's was primarily addressed by legislative action which
mandated corporate America to adhere to new laws restricting and otherwise
governing the employment of children. In other instances, reform has been
achieved through shareholder action -- namely, the adoption of shareholder
proposals. The corporate responsibility issues most often addressed during the
past decade have involved:
o Ecological issues, including toxic hazards and pollution of the
air and water;
o Employment practices, such as the hiring of women and minority
groups;
o Product quality and safety;
o Advertising practices;
o Animal testing;
o Military and nuclear issues; and
o International politics and operations, including the world debt
crisis, infant formula, and child labor laws.
CORPORATE RESPONSIBILITY ISSUES IN THE INVESTMENT PROCESS. Price Associates
recognizes the legitimacy of public concern over the behavior of business with
respect to issues of corporate responsibility. Price Associates' policy is to
carefully review the merits of such issues that pertain to any issuer which is
held in a client portfolio or which is being considered for investment. Price
Associates believes that a corporate management's record of identifying and
resolving issues of corporate responsibility is a legitimate criteria for
evaluating the investment merits of the issuer. Enlightened corporate
responsibility can enhance a issuer's long term prospects for business success.
The absence of such a policy can have the converse effect.
<PAGE>
CORPORATE RESPONSIBILITY COMMITTEE. Since 1971, Price Associates has had a
Corporate Responsibility Committee, which is responsible for:
o Reviewing and establishing positions with respect to corporate
responsibility issues that are presented in the proxy statements
of portfolio companies; and
o Reviewing questions and inquiries received from clients and mutual
fund shareholders pertaining to issues of corporate
responsibility.
QUESTIONS REGARDING CORPORATE RESPONSIBILITY. Should an employee have any
questions regarding Price Associates' policy with respect to a corporate
responsibility issue or the manner in which Price Associates has voted or
intends to vote on a proxy matter, he or she should contact a member of the
Corporate Responsibility Committee or Price Associates' Proxy Administrator.
March, 2000
<PAGE>
T. ROWE PRICE ASSOCIATES, INC.
STATEMENT OF POLICY
WITH RESPECT TO COMPLIANCE WITH COPYRIGHT LAWS
PURPOSE OF STATEMENT OF POLICY. To protect the interests of Price Associates and
its employees, Price Associates has adopted this Statement of Policy with
Respect to Compliance with Copyright Laws ("STATEMENT" to: (1) inform its
employees regarding the legal principles governing copyrights, trademarks, and
service marks; and (2) ensure that Price Associates' various copyrights,
trademarks, and service marks are protected from infringement.
DEFINITION OF TRADEMARK, SERVICE MARK, AND COPYRIGHT
TRADEMARK. A trademark is normally a word, phrase, or symbol used to
identify and distinguish a product or a company. For example, KLEENEX is a
trademark for a particular brand of facial tissues.
SERVICE MARK. A service mark is normally a word, phrase, or symbol used to
identify and distinguish a service or the provider of a service. For
example, INVEST WITH CONFIDENCE is a registered service mark which
identifies and distinguishes the mutual fund management services offered
by Price Associates. The words "trademark" and "service mark" are often
used interchangeably, but as a general rule a trademark is for a tangible
product, whereas a service mark is for an intangible good or service.
Because most of Price Associates' business activities involve providing
services (E.G., investment management; transaction processing and account
maintenance; information, etc.), most of Price Associates' registered
marks are service marks.
COPYRIGHT. In order to protect the authors and owners of books, articles,
drawings, music, or computer programs and software, the U.S. copyright law
makes it a crime to reproduce, IN ANY MANNER, any copyrighted material
without the express written permission of the author or publisher. Under
current law, all original works are copyrighted at the moment of creation;
it is no longer necessary to register a copyright. Copyright infringements
may result in judgments of actual damages (I.E., the cost of additional
subscriptions), as well as punitive damages, which can be as high as
$100,000 per infringement.
REGISTERED TRADEMARKS AND SERVICE MARKS. Once Price Associates has registered a
trademark or service mark with the U.S. Patent and Trademark Office, it has the
exclusive right to use that mark. In order to preserve rights to a registered
trademark or service mark, Price Associates must (1) use the mark on a
continuous basis and in a manner consistent with the Certificate of
Registration; (2) place an encircled "R" ((R)) next to the mark in the first, or
most prominent, occurrence in all publicly distributed media; and (3) take
action against any party infringing upon the mark.
ESTABLISHING A TRADEMARK OR SERVICE MARK. The Legal Department has the
responsibility to register and maintain all trademarks and service marks and
protect them against any infringement. If Price Associates or a subsidiary
wishes to utilize a particular word, phrase, or symbol as a trademark or service
mark, the Legal Department must be notified as far in advance as possible so
that a search may be conducted to determine if the proposed mark has already
been registered or
<PAGE>
used by another entity. Until clearance is obtained from the Legal Department,
no new mark should be used. This procedure has been adopted to ensure that Price
Associates does not unknowingly infringe upon another company's mark. Once a
proposed mark is cleared for use, it must be accompanied by the abbreviations
"TM" or "SM," as appropriate, until it has been registered. All trademarks and
service marks which have been registered with the U.S. Patent and Trademark
Office must be accompanied by an encircled "R" when used in any public document.
These symbols need only accompany the mark in the first or most prominent place
it is used in each publicly circulated document. Subsequent use of the same
trademark or service mark in such material does not need to be marked. The Legal
Department maintains a written summary of all Price Associates' registered and
pending trademarks and service marks. All registered and pending trademarks and
service marks are also listed in the T. Rowe Price Style Guide. If you have any
questions regarding the status of a trademark or service mark, you should
contact the Legal Department.
INFRINGEMENT OF PRICE ASSOCIATES' REGISTERED MARKS. If an employee notices that
another entity is using a mark similar to one which Price Associates has
registered, the Legal Department should be notified immediately so that
appropriate action can be taken to protect Price Associates' interests in the
mark.
REPRODUCTION OF ARTICLES AND SIMILAR MATERIALS FOR INTERNAL DISTRIBUTION, OR FOR
DISTRIBUTION TO SHAREHOLDERS, CLIENTS AND OTHERS OUTSIDE THE FIRM. In general,
the reproduction of copyrighted material is a federal offense. Exceptions under
the "FAIR USE" doctrine include reproduction for scholarly purposes, criticism,
or commentary, which ordinarily do not apply in a business environment.
OCCASIONAL copying of a relatively small portion of a newsletter or magazine to
keep in a file, circulate to colleagues with commentary, or send to a client
with commentary is generally permissible under the "fair use" doctrine. Written
permission from the author or publisher must be obtained by any employee wishing
to reproduce copyrighted material for INTERNAL OR EXTERNAL distribution,
including distribution via the Internet or the T. Rowe Price Associates'
intranet. It is the responsibility of each employee to obtain permission to
reproduce copyrighted material. Such permission must be in writing and forwarded
to the Legal Department. If the publisher will not grant permission to reproduce
copyrighted material, then the requestor must purchase from the publisher either
additional subscriptions to the periodical or the reprints of specific articles.
The original article or periodical may be circulated as an alternative to
purchasing additional subscriptions or reprints.
PERSONAL COMPUTER SOFTWARE PROGRAMS. Software products and on-line information
services purchased for use on Price Associates' personal computers are generally
copyrighted material and may not be reproduced without proper authorization from
the software vendor. See the T. Rowe Price Associates, Inc. Statement of Policy
With Respect to Computer Security and Related Issues for more information.
March, 2000
<PAGE>
T. ROWE PRICE ASSOCIATES, INC.
STATEMENT OF POLICY WITH RESPECT TO
COMPUTER SECURITY AND RELATED ISSUES
PURPOSE OF STATEMENT OF POLICY. The central and critical role of computer
systems in our firm's operations underscores the importance of ensuring the
integrity of these systems. The data stored on our firm's computers, as well as
the specialized software programs and systems developed for the firm's use, are
extremely valuable assets and very confidential.
This Statement of Policy ("STATEMENT") establishes a comprehensive computer
security program which has been designed to:
o prevent the unauthorized use of or access to our firm's computer
systems (collectively the "SYSTEMS"), including the firm's electronic
mail ("E-MAIL") and voice mail systems;
o prevent breaches in computer security;
o maintain the integrity of confidential information; and
o prevent the introduction of computer viruses into our Systems that
could imperil the firm's operations.
In addition, the Statement describes various issues that arise in connection
with the application of U.S. Copyright Law to computer software.
Any material violation of this Statement may lead to sanctions, which may
include dismissal of the employee or employees involved.
CONFIDENTIALITY OF SYSTEMS ACTIVITIES AND INFORMATION. Systems activities and
information stored on our firm's computers (including e-mail and voice mail) may
be subject to monitoring by firm personnel or others. All such information,
including messages on the firm's e-mail and voice mail systems, are records of
the firm and the sole property of the firm. The firm reserves the right to
monitor, access, and disclose for any purpose all information, including all
messages sent, received, or stored through the Systems. The use of the firm's
computer Systems is for the transaction of firm business and is for authorized
users only. All firm policies apply to the use of the Systems. SEE Employee
Handbook.
By using the firm's Systems, you agree to be bound by this Statement and consent
to the access to and disclosure of all information, including e-mail and voice
mail messages, by the firm. Employees do not have any expectation of privacy in
connection with the use of the Systems, or with the transmission, receipt, or
storage of information in the Systems.
Information entered into our firm's computers but later deleted from the Systems
may continue to be maintained permanently on our firm's back-up tapes. Employees
should take care so that they do not create documents or communications that
might later be embarrassing to them or to our firm. This policy applies to
e-mail and voice mail, as well to any other communication on a System.
<PAGE>
SECURITY ADMINISTRATION. Enterprise Security in T. Rowe Price Investment
Technologies, Inc. ("TRPIT") is responsible for identifying security needs and
overseeing the maintenance of computer security, including Internet-related
security issues.
AUTHORIZED SYSTEMS USERS. In general, access to any type of System is restricted
to authorized users who need access in order to support their business
activities. Access for mainframe, LAN and external Systems must be requested on
a "Systems Access Request" form. A hard copy can be printed from the Enterprise
Security intranet site or obtained from Enterprise Security. Access requests and
changes must be approved by the appropriate supervisor or manager in the user's
department.
AUTHORIZED APPLICATION USERS. Access to specific computer applications (i.e.,
Finance, Retirement Plan Services systems, etc.) can also be requested. Many
application systems have an additional level of security, such as extra
passwords. If a user wants access to an application or data that is outside the
normal scope of his or her business activity, additional approval may be
required from the "Owner" of such application or data. The "Owner" is the
employee who is responsible for making judgments and decisions on behalf of the
firm with regard to the application or data, including the authority to decide
who may have access.
USER-IDS, PASSWORDS, AND OTHER SECURITY ISSUES. Once a request for access is
approved, a unique "User-ID" will be assigned the user. Each User-ID has a
password that must be kept confidential by the user. For most systems, passwords
must be changed on a regular schedule and Enterprise security has the authority
to determine the password policy. User-IDs and passwords may not be shared.
Users can be held accountable for work performed with their User-IDs. Personal
computers must not be left logged on and unattended unless screen savers with
passwords or software-based keyboard locks are utilized. Enterprise Security
recommends that GroupWise e-mail accounts be password protected.
EXTERNAL COMPUTER SYSTEMS. Our data processing environment includes access to
data stored not only on our firm's computers, but also on external systems, such
as DST. Although the security practices governing these outside systems are
established by the providers of these external systems, requests for access to
such systems should be directed to Enterprise Security. User-IDs and passwords
to these systems must be kept confidential by the user.
ACCESS TO THE INTERNET AND OTHER ON-LINE SERVICES. Access to the Internet
(including, but not limited to, e-mail, remote FTP, Telnet, World Wide Web,
Gopher, remote administration, secure shell, and using IP tunneling software to
remotely control Internet servers) presents special security considerations due
to the world-wide nature of the connection and the security weaknesses present
in Internet protocols and services. The firm can provide authorized employees
and other staff with access to Internet e-mail and other Internet services (such
as the World Wide Web) through a direct connection from the firm's network.
Access to the Internet or Internet services from our firm's computers, including
the firm's e-mail system, is permitted only for legitimate business purposes.
Such access must be requested through Enterprise Security, approved by the
employee's supervisor, and provided only through firm approved connections. All
firm policies apply to the use of the Internet or Internet services. SEE
Employee Handbook.
USE OF INTERNET. In accordance with firm policies, employees are
prohibited from accessing inappropriate sites, including, but not limited
to, adult and gambling sites. Firm personnel
<PAGE>
monitor Internet use for visits to inappropriate sites and for
inappropriate use. Should employees have questions regarding what
constitutes an inappropriate site or inappropriate use, they should
discuss it first with their manager who may refer the question to Human
Resources. Inappropriate use of the Internet, or accessing inappropriate
sites, may lead to sanctions, which may include dismissal of the employee
or employees involved.
DIAL-OUT ACCESS. Using a modem or an Internet connection on a firm
computer housed at any of the firm's offices to access an Internet service
provider using one's home or personal account is prohibited, unless this
account is being used by authorized personnel to service Price Associates'
connection to the Internet. When Internet access is granted, the employee
will be asked to reaffirm his or her understanding of this Statement.
Unauthorized modems are not permitted. Dial-out access that circumvents
the Internet firewall or proxy server, except by authorized personnel in
the business of Price Associates, is prohibited.
ON-LINE SERVICES. Access to America OnLine ("AOL"), CompuServe, or other
commercial on-line service providers is not permitted from a firm computer
except for a legitimate business purpose approved by the employee's
supervisor and with software obtained through the Help Desk at x4357
(select menu option 1).
PARTICIPATION ON BULLETIN BOARDS. Because communications by our firm or
any of its employees on on-line service bulletin boards are subject to
federal, state and NASD advertising regulations, unsupervised
participation can result in serious securities violations. Certain
designated employees have been authorized to use AOL to monitor and
respond to inquiries about our firm and its investment services and
products. Any employee other than those assigned to this special group
must first receive the authorization of a member of the Board of T. Rowe
Price Investment Services, Inc. and the Legal Department before initiating
or responding to a message on any computer bulletin board relating to the
firm, a Price Fund or any investment or brokerage option or service. This
policy applies whether or not the employee intends to disclose his or her
relationship to the firm, whether or not our firm sponsors the bulletin
board, and whether or not the firm is the principal focus of the bulletin
board.
E-MAIL USE. Access to the firm's e-mail system is permitted only for
legitimate business purposes. All firm policies apply to the use of
e-mail. Firm personnel may monitor e-mail usage for inappropriate use.
Should employees have questions regarding what constitutes inappropriate
use, they should discuss it first with their manager who may refer the
question to Human Resources. Inappropriate use of e-mail may lead to
sanctions, which may include dismissal of the employee or employees
involved.
E-mail services, other than those provided or approved by Price
Associates, may not be used for business purposes. In addition, accessing
e-mail services not provided or approved by Price Associates from firm
equipment for any reason could allow the introduction of viruses or
malicious code into the network, or lead to the compromise of confidential
data.
Employees should understand that e-mail sent through the Internet is not
secure and could be intercepted by a third party.
<PAGE>
DIAL-IN ACCESS. The ability to access our firm's computer Systems from a remote
location is also limited to authorized users. Phone numbers used to access our
firm's computer Systems are confidential. A security system that uses a one-time
password or other strong authentication method must be employed when accessing
our firm's network from a remote computer. Authorization for remote access can
be requested by completing a "Systems Access Request" form. Any employee who
requires remote access should contact the Help Desk at x4357 (select menu option
1) for desktop setup.
VIRUS PROTECTION. A computer virus is a program designed to damage or impair
software or data on a computer system. Software from any outside source may
contain a computer virus or similar malicious code. Types of carriers and
transmission methods increase daily and currently include diskettes, CDs, file
downloads, executables, and e-mail attachments. A comprehensive malicious code
prevention and control program is in place throughout Price Associates. This
program provides policy and procedures for anti-virus controls on all systems.
More information about the anti-virus program can be found on the TRPIT
Intranet.
Introducing a virus or similar malicious code into the Price Associates Systems
by engaging in prohibited actions, such as downloading non-business related
software, or by failing to implement recommended precautions, such as updating
virus scanning software on remote machines, may lead to sanctions, which may
include dismissal of the employee or employees involved.
VIRUS SCANNING SOFTWARE. As part of the TRPIT's anti-virus program, virus
scanning software is installed on the majority of applicable platforms.
This software is designed to detect and eradicate malicious code and
viruses. All desktop computers have the corporate standard anti-virus
scanning software installed and running. This software is installed and
configured by the Distributed Processing Support Group and runs
constantly. Virus scanning software updates are automatically distributed
to the desktops as they become available. Desktop virus scanning software
can also be used by the employee to scan diskettes, CDs, directories, and
attachments "on demand". Contact the Help Desk at x4357 (select menu
option 3) for assistance.
E-MAIL. An e-mail anti-virus gateway scans the content of inbound and
outbound e-mail for viruses. Infected e-mail and attachments will be
cleaned when possible and quarantined when not cleanable. Updating of the
e-mail gateway anti-virus software and pattern files is done
automatically.
PORTABLE AND REMOTE COMPUTERS. Laptops and other computers that remotely
access the TRPIT network are also required to have the latest anti-virus
software and pattern files. IT IS THE RESPONSIBILITY OF EACH USER TO
ENSURE THAT HIS OR HER PORTABLE COMPUTER'S ANTI-VIRUS SOFTWARE IS
REGULARLY UPDATED. The Help Desk has instructions available. Contact the
Help Desk at x4357 (select menu option 3) to obtain further information.
DOWNLOADING OR COPYING. The user of a PC with a modem or with an Internet
connection has the ability to connect to other computers or on-line
services outside of the firm's network and there may be business reasons
to download or copy software from those sources. Downloading or copying
software, which includes documents, graphics, programs and other
computer-based materials, from any outside source is not permitted unless
it is for a legitimate business purpose because downloads and copies could
introduce viruses and malicious code into the Systems.
<PAGE>
OTHER CONSIDERATIONS. Users must log off the System each night. Unless the
user logs off, virus software on each workstation cannot pick up the most
current virus scanning downloads or the most current software updates for
the user's System. Employees must call the Help Desk at x4357 (select menu
option 3) when viruses are detected so that it can ensure that appropriate
tracking and follow-up take place. Do not forward any "virus warning" mail
received to other staff until you have contacted the Help Desk, since many
of these warnings are hoaxes. When notified that a user has received
"virus warning" mail, the Help Desk will contact Enterprise Security,
whose personnel will check to determine the validity of the virus warning.
APPLICATION OF U.S. COPYRIGHT LAW TO SOFTWARE PROGRAMS. Software products and
on-line information services purchased for use on Price Associates' personal
computers are generally copyrighted material and may not be reproduced without
proper authorization from the software vendor. This includes the software on CDs
or diskettes, any program manuals or documentation, and data or software
retrievable from on-line information systems. Unauthorized reproduction of such
material or information, or downloading or printing such material, is a federal
offense, and the software vendor can sue to protect the developer's rights. In
addition to criminal penalties such as fines and imprisonment, civil damages can
be awarded in excess of $50,000.
GUIDELINES FOR USING PERSONAL COMPUTER SOFTWARE
ACQUISITION AND INSTALLATION OF SOFTWARE. Only Distributed Processing
Support Group approved and installed software is authorized. Any software
program that is to be used by an employee of Price Associates in
connection with the business of the firm must be ordered through the Help
Desk at x4357 (select menu option 1) and installed by the Distributed
Processing Support Group of TRPIT.
LICENSING. Software residing on firm LAN servers will be either: (1)
maintained at an appropriate license level for the number of users, or (2)
made accessible only for those for whom it is licensed.
ORIGINAL CDS, DISKETTES AND COPIES. In most cases, software is installed
by the Distributed Processing Support Group and original software CDs and
diskettes are not provided to the user. In the event that original CDs or
diskettes are provided, they must be stored properly to reduce the
possibility of damage or theft. CDs and diskettes should be protected from
extreme heat, cold, and contact with anything that may act as a magnet or
otherwise damage them. Employees may not make additional copies of
software or software manuals obtained through the firm.
RECOMMENDATIONS, UPGRADES, AND ENHANCEMENTS. All recommendations regarding
computer hardware and software programs are to be forwarded to the Help
Desk at x4357 (select menu option 1), which will coordinate upgrades and
enhancements.
QUESTIONS REGARDING THIS STATEMENT. Any questions regarding this Statement
should be directed to Enterprise Security in TRPIT.
March, 2000
<PAGE>
T. ROWE PRICE ASSOCIATES, INC.
STATEMENT OF POLICY
ON
COMPLIANCE WITH ANTITRUST LAWS
PURPOSE
To protect the interests of the company and its employees, Price
Associates has adopted this Statement of Policy on Compliance with Antitrust
Laws ("STATEMENT") to:
(1) Inform employees about the legal principles governing prohibited
anticompetitive activity in the conduct of Price Associates'
business; and
(2) Establish guidelines for contacts with other members of the
investment management industry to avoid violations of the antitrust
laws.
THE BASIC ANTICOMPETITIVE ACTIVITY PROHIBITION
Section 1 of the Sherman Antitrust Act (the "ACT") prohibits agreements,
understandings, or joint actions between companies that constitute a "RESTRAINT
OF TRADE," I.E., reduce or eliminate competition.
This prohibition is triggered only by an AGREEMENT OR ACTION among two or
more companies; unilateral action never violates the Act. To constitute an
illegal agreement, however, an understanding does not need to be formal or
written. Comments made in conversations, casual comments at meetings, or even as
little as "a knowing wink," as one case says, may be sufficient to establish an
illegal agreement under the Act.
The agreed upon action must be ANTICOMPETITIVE. Some actions are "PER SE"
anticompetitive, while others are judged according to a "RULE OF REASON."
o Some activities have been found to be so inherently anticompetitive
that a court will not even permit the argument that they have a
procompetitive component. Examples of such PER SE illegal activities
are agreements between competitors to fix prices or divide up markets
in any way, such as exclusive territories.
o Other joint agreements or activities will be examined by a court using
the RULE OF REASON approach to see if the procompetitive results of
the arrangement outweigh the anticompetitive effects. Permissible
agreements among competitors may include a buyers' cooperative, or a
syndicate of buyers for an initial public offering of securities. In
rare instances, an association of sellers (such as ASCAP) may be
permissible.
<PAGE>
There is also an exception for joint activity designed to influence
government action. Such activity is protected by the First Amendment to the U.S.
Constitution. For example, members of an industry may agree to lobby Congress
jointly to enact legislation that may be manifestly anticompetitive.
PENALTIES FOR VIOLATING THE SHERMAN ACT
A charge that the Act has been violated can be brought as a civil or a
criminal action. Civil damages can include treble damages, plus attorneys fees.
Criminal penalties for individuals can include fines of up to $350,000 and three
years in jail, and $100 million or more for corporations.
SITUATIONS IN WHICH ANTITRUST ISSUES MAY ARISE
To avoid violating the Act, any agreement with other members of the
investment management industry regarding which securities to buy or sell and
under what circumstances we buy or sell them, or about the manner in which we
market our mutual funds and investment and retirement services, must be made
with the prohibitions of the Act in mind.
TRADE ASSOCIATION MEETINGS AND ACTIVITIES. A trade association is a group
of competitors who join together to share common interests and seek common
solutions to common problems. Such associations are at a high risk for
anticompetitive activity and are closely scrutinized by regulators.
Attorneys for trade associations, such as the Investment Company
Institute, are typically present at meetings of members to assist in
avoiding violations.
Permissible Activities:
o Discussion of how to make the industry more competitive.
o An exchange of information or ideas that have procompetitive or
competitively neutral effects, such as: methods of protecting the
health or safety of workers; methods of educating customers and
preventing abuses; and information regarding how to design and operate
training programs.
o Collective action to petition government entities.
Activities to be Avoided:
o Any discussion or direct exchange of current information about prices,
salaries, fees, or terms and conditions of sales. Even if such
information is publicly available, problems can arise if the
information available to the public is difficult to compile or not as
current as that being exchanged.
EXCEPTION: A third party consultant can, with appropriate safeguards,
collect, aggregate and disseminate some of this information, such as
salary information.
o Discussion of future business plans, strategies, or arrangements
that might be considered to involve competitively sensitive
information.
o Discussion of specific customers, markets, or territories.
<PAGE>
o Negative discussions of service providers that could give rise to an
inference of a joint refusal to deal with the provider (a "BOYCOTT").
INVESTMENT-RELATED DISCUSSIONS
PERMISSIBLE ACTIVITIES: Buyers or sellers with a common economic
interest may join together to facilitate securities transactions
that might otherwise not occur, such as the formation of a syndicate
to buy in a private placement or initial public offering of a
issuer's stock, or negotiations among creditors of an insolvent or
bankrupt company.
Competing investment managers are permitted to serve on creditors
committees together and engage in other similar activities in
connection with bankruptcies and other judicial proceedings.
ACTIVITIES TO BE AVOIDED: It is important to avoid anything that
suggests involvement with any other firm in any threats to "boycott"
or "blackball" new offerings, including making any ambiguous
statement that, taken out of context, might be misunderstood to
imply such joint action. Avoid careless or unguarded comments that a
hostile or suspicious listener might interpret as suggesting
prohibited coordinated behavior between T. Rowe Price and any other
potential buyer.
EXAMPLE: After an Illinois municipal bond default where the
state legislature retroactively abrogated some of the
bondholders' rights, several investment management complexes
organized to protest the state's action. In doing so, there
was arguably an implied threat that members of the group would
boycott future Illinois municipal bond offerings. Such a
boycott would be a violation of the Act. The investment
management firms' action led to an 18-month Department of
Justice investigation. Although the investigation did not lead
to any legal action, it was extremely expensive and time
consuming for the firms and individual managers involved.
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If you are present when anyone outside of T. Rowe Price suggests
that two or more investors with a grievance against an issuer
coordinate future purchasing decisions, you should immediately
reject any such suggestion. As soon as possible thereafter, you
should notify the Legal Department, which will take whatever further
steps are necessary.
BENCHMARKING. Benchmarking is the process of measuring and comparing an
organization's processes, products and services to those of industry
leaders for the purpose of adopting innovative practices for improvement.
o Because benchmarking usually involves the direct exchange of
information with competitors, it is particularly subject to the
risk of violating the antitrust laws.
o The list of issues that may and should not be discussed in the
context of a trade association also applies in the benchmarking
process.
o All proposed benchmarking agreements must be reviewed by the T.
Rowe Price Legal Department before T. Rowe Price agrees to
participate in such a survey.
March, 2000
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TRANSAMERICA INVESTMENT MANAGEMENT, LLC
TRANSAMERICA INVESTMENT SERVICES, INC
CODE OF CONDUCT
INSIDER TRADING POLICY
GIFT POLICY
OUTSIDE EMPLOYMENT POLICY
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LAST REVISED MARCH 24, 2000
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DEFINITIONS_________________________________________________________________3
INTRODUCTION, STATEMENT OF PURPOSE AND APPLICATION__________________________5
CAUTION REGARDING PERSONAL TRADING ACTIVITIES_____________________________6
COMMUNICATIONS WITH OUTSIDE DIRECTORS_____________________________________6
CODE OF CONDUCT_____________________________________________________________7
OVERVIEW__________________________________________________________________7
EXCLUSIONS APPLICABLE TO OUTSIDE DIRECTORS________________________________7
GENERAL PROHIBITIONS______________________________________________________8
TRADING RESTRICTIONS______________________________________________________9
PRE-CLEARANCE___________________________________________________________9
SHORT SALES_____________________________________________________________9
HEDGE FUNDS, INVESTMENT CLUBS, AND OTHER GROUPS_________________________9
EXCLUDED TRANSACTIONS__________________________________________________10
BLACKOUT PERIODS_______________________________________________________10
PENDING ORDERS_________________________________________________________10
SEVEN DAY RULE_________________________________________________________11
FIFTEEN DAY WINDOW_____________________________________________________11
60 DAY RULE____________________________________________________________11
PRE-CLEARANCE PROCEDURES_________________________________________________11
GENERAL PRE-CLEARANCE__________________________________________________11
TRANSACTIONS IN TRANSAMERICA SECURITIES________________________________12
PRE-CLEARANCE REQUIREMENTS FOR INVESTMENT PERSONNEL____________________12
PRE-CLEARANCE OF TENDER OFFERS AND STOCK PURCHASE PLANS________________12
TWO BUSINESS DAY EFFECTIVE PERIOD______________________________________12
REPORTING TRANSACTIONS AND ACCOUNTS______________________________________12
MONTHLY TRANSACTION REPORTS____________________________________________13
PASSIVE ACCOUNTS_______________________________________________________13
OTHER REQUIRED FORMS_____________________________________________________14
ACKNOWLEDGEMENT FORMS__________________________________________________14
INVESTMENT PERSONNEL REPRESENTATION FORM_______________________________14
OUTSIDE DIRECTOR REPRESENTATION FORM___________________________________14
<PAGE>
INSIDER TRADING POLICY_____________________________________________________15
BACKGROUND INFORMATION___________________________________________________15
WHO IS AN INSIDER?_____________________________________________________15
WHEN IS INFORMATION NONPUBLIC?_________________________________________15
WHAT IS MATERIAL INFORMATION?__________________________________________15
WHEN IS INFORMATION MISAPPROPRIATED____________________________________16
PENALTIES FOR INSIDER TRADING__________________________________________16
WHO IS A CONTROLLING PERSON?___________________________________________16
PROCEDURES TO IMPLEMENT POLICY___________________________________________17
IDENTIFYING MATERIAL INSIDE INFORMATION________________________________17
REPORTING INSIDE INFORMATION___________________________________________17
WATCH AND RESTRICTED LISTS_____________________________________________17
PROTECTING INFORMATION_________________________________________________18
TRANSAMERICA CORPORATE DEVELOPMENT DEPARTMENT__________________________19
RESPONSIBILITY TO MONITOR TRANSACTIONS_________________________________19
TENDER OFFERS__________________________________________________________19
GIFT POLICY________________________________________________________________20
GIFT GIVING______________________________________________________________20
GIFT RECEIVING___________________________________________________________20
CUSTOMARY BUSINESS AMENITIES_____________________________________________20
OUTSIDE EMPLOYMENT POLICY__________________________________________________22
SUPERVISORY AND COMPLIANCE PROCEDURES______________________________________23
SUPERVISORY PROCEDURES___________________________________________________23
PREVENTION OF VIOLATIONS_______________________________________________23
DETECTION OF VIOLATIONS________________________________________________23
COMPLIANCE PROCEDURES____________________________________________________24
REPORTS OF POTENTIAL DEVIATIONS OR VIOLATIONS__________________________24
ANNUAL REPORTS_________________________________________________________24
RECORDS________________________________________________________________24
INSPECTION_____________________________________________________________24
CONFIDENTIALITY________________________________________________________24
THE ETHICS COMMITTEE_____________________________________________________25
MEMBERSHIP OF THE COMMITTEE____________________________________________25
COMMITTEE MEETINGS_____________________________________________________25
SPECIAL DISCRETION_____________________________________________________25
GENERAL INFORMATION ABOUT THE CODE OF CONDUCT______________________________26
ENFORCEMENT____________________________________________________________26
INTERNAL USE___________________________________________________________26
FORMS______________________________________________________________________26
2
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DEFINITIONS
- ------------------------------------------------------------------------------
The following definitions are used throughout this document. Unless otherwise
defined, all capitalized terms used in this document shall have the same meaning
as set forth in this section.
1) "Access Persons" are Investment Personnel, Directors and officers of
Transamerica Investment Services, Inc. ("TISI"), Transamerica Investment
Management, LLC ("TIM") (collectively, "TISI/TIM") and other designated
persons deemed by the Ethics Committee to have access to current trading
information.
2) "Beneficial Ownership" shall be interpreted in the same manner as it would
be in determining whether a person is subject to the provisions of Section
16 of the Securities Exchange Act of 1934 and the rules and regulations
thereunder. For example, in addition to a person's own accounts, the term
"Beneficial Ownership" encompasses securities held in the name of a spouse
or equivalent domestic partner, minor children, a relative sharing your
home, or certain trusts under which you or a related party is a
beneficiary, or held under other arrangements indicating a sharing of
financial interest.
3) "Covered Securities" generally includes all securities, whether publicly
or privately traded, and any option, future, forward contract or other
obligation involving a security or index of securities, including an
instrument whose value is derived or based on any of the above (a
"derivative"). The following are not Covered Securities:
o Shares of open-end investment companies (i.e., mutual funds);
o Direct obligations of the U.S. or Canadian government (e.g.,
Treasury securities), any Canadian Provincial government, or any
derivative thereof;
o Obligations of agencies and instrumentalities of the U.S. or
Canadian government with a remaining term to maturity of one year
or less, or any derivative thereof;
o Securities representing a limited partnership interest in a real
estate limited partnership;
o Money market instruments, such as certificates of deposit,
bankers' acceptances, repurchase agreements, and commercial
paper;
o Insurance contracts, including life insurance or annuity
contracts;
o Direct investments in real estate, business franchises or similar
ventures; and
o Physical commodities (including foreign currencies), or any
derivatives thereof.
o Securities issued by Transamerica Corporation or its
subsidiaries. Note, however, that special statutory provisions
regarding these securities apply to directors of investment
companies who are not interested persons, to officers of
Transamerica Corporation and designated key employees, and to
employees who are in possession of material nonpublic information
about Transamerica.
4) "Designated Compliance Representatives" are TISI/TIM's Compliance Manager
and TISI/TIM's Chief Financial Officer and/or such persons' designee(s).
5) "Designated Legal Representative" is Transamerica Corporation's General
Counsel or such person's designee(s).
6) "Directors" are directors of TISI/TIM.
7) "Equity Review Committee" is comprised of TISI/TIM's President and
TISI/TIM's Executive Vice President.
8) "Ethics Committee" is comprised of TISI/TIM's Compliance Manager,
TISI/TIM's Chief Financial Officer and TISI/TIM's President.
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9) "Inside Directors" are Directors who are interested persons, as defined in
the Investment Company Act of 1940, of TISI/TIM or of the Managed
Accounts.
10) "Investment Personnel" refers to portfolio managers, research analysts,
trading department personnel and any other persons who provide information
and advice directly or indirectly to any advisory client of TISI/TIM, or
who assist in executing the portfolio managers' decisions.
11) "NASD" is the National Association of Securities Dealers, Inc.
12) "Outside Directors" are Directors who are not interested persons, as
defined in the Investment Company Act of 1940, of TISI/TIM or of the
Managed Accounts.
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INTRODUCTION, STATEMENT OF PURPOSE AND APPLICATION
- ------------------------------------------------------------------------------
TISI/TIM provides investment advisory services to various clients and
accounts, some of which are investment companies registered under the Investment
Company Act of 1940 (the "Company Act"). Persons designated as Access Persons of
TISI/TIM, and certain persons employed by other Transamerica companies which
provide services to the investment companies and other managed accounts
(collectively the "Managed Accounts") or who have access to information about
their activities, owe an undivided duty of loyalty to such Managed Accounts, and
must therefore adhere to the highest ethical and professional standards of
conduct. It is the objective of all persons subject to this Code of Conduct
("Code") to maintain the highest standards of integrity and conduct in order to
meet their respective duties and obligations to TISI/TIM and the Managed
Accounts. These standards, as contained in this Code, are based on the
requirements of the Company Act, the Investment Advisers Act of 1940 (the
"Advisers Act"), the Insider Trading and Securities Fraud Enforcement Act
("ITSFEA"), and the laws governing the management of investment accounts.
The Code is intended to ensure that you (i) at all times place first the
interests of the Managed Accounts, (ii) conduct all personal trading consistent
with the Code and in such a manner as to avoid any actual or potential conflict
of interest or any abuse of your position of trust and responsibility, and (iii)
not use any material nonpublic information in securities trading. The Code also
establishes policies regarding other matters, such as outside employment and the
giving or receiving of gifts.
The Code is intended to comply with Rule 17j-1 under the Company Act, as
amended, which requires TISI/TIM to adopt a code of ethics containing provisions
reasonably necessary to prevent specified individuals from engaging in certain
conduct. Under Rule 17j-1(a), certain conduct by "access persons" (as defined in
the Rule) of investment companies managed by TISI/TIM, of TISI/TIM itself as
adviser to these companies, and of the principal underwriter of the investment
companies, with respect to purchases or sales of securities held or to be
acquired by the investment companies is prohibited. TISI/TIM understands that
each such investment company has adopted a code of ethics with respect to access
persons of the investment companies themselves. The Code is also intended to
comply with the provisions of Rule 204-2 under the Advisers Act, which requires
TISI/TIM to maintain records of securities transactions in which certain of its
personnel have any Beneficial Ownership.
The Code applies to all Investment Personnel, Directors and officers of
TISI/TIM, and to all other individuals who are Access Persons. The Code applies
to transactions for your personal accounts and any other accounts over which you
have Beneficial Ownership. You may be deemed the Beneficial Owner of any account
in which you have a direct or indirect financial interest. Such accounts
include, among others, accounts held in the name of your spouse or equivalent
domestic partner, your minor children, a relative sharing your home, or certain
trusts under which you or such persons are a beneficiary.
In addition to the other requirements outlined in this Code, Investment
Personnel are expected to comply with the Code of Ethics and Standards of
Professional Conduct of the Institute of Chartered Financial Analysts, a copy of
which is attached.
The requirements of this Code are subject to special provisions regarding the
directors, officers and employees of Transamerica Occidental Life Insurance
Company ("Occidental"), in that Occidental is primarily engaged in business
other than advising registered investment companies and other advisory clients.
Accordingly, only those directors, officers and employees of Occidental who are
defined as "access persons" by paragraph (e)(1)(iii) of Rule 17j-1 under the
Company Act are subject to this Code and its requirements.
You are required to read and retain this Code and to sign and return the
attached Acknowledgment Form to the Compliance Department ("Compliance") upon
commencement of employment or other services, and on an annual basis thereafter.
The Acknowledgment Form confirms that (i) you have received, read and asked any
questions necessary to understand the Code, (ii) you agree to conduct yourself
in accordance with the Code, and (iii) you have complied with
5
<PAGE>
the Code during such time as you have been associated with TISI/TIM. Depending
on your status, you may be required to submit additional reports and/or obtain
clearances as discussed more fully below.
Adherence to this Code is a fundamental condition of service with TISI/TIM,
and Directors, officers and other Access Persons of TISI/TIM bear full
responsibility for ensuring that they and members of their immediate families
and personal households comply with the provisions and intent of this Code. Only
by careful adherence to the requirements outlined in the Code can we protect our
reputation and avoid legal difficulties.
CAUTION REGARDING PERSONAL TRADING ACTIVITIES
Certain personal trading activities may be risky not only because of the
nature of the transactions, but also because action necessary to close out a
position may, for some Access Persons, become prohibited while the position
remains open. For example, closing out short sales and transactions in
derivatives. Furthermore, if TISI/TIM becomes aware of material nonpublic
information, or if a Managed Account is active in a given security, some Access
Persons may find themselves "frozen" in a position. TISI/TIM will not bear any
losses in personal accounts resulting from the application of this Code.
COMMUNICATION WITH OUTSIDE DIRECTORS
As a regular business practice, TISI/TIM attempts to keep the Directors
informed with respect to its investment activities through reports and other
information provided to them in connection with board meetings and other events.
In addition, TISI/TIM personnel are encouraged to respond to inquiries from
Directors, particularly as they relate to general strategy considerations or
economic or market conditions affecting TISI/TIM. However, it is TISI/TIM's
policy not to communicate specific trading information and/or advice on specific
issues to the Outside Directors (i.e., no information should be given on
securities for which current activity is being considered for Managed Accounts).
Any pattern of repeated requests by such Directors should be reported to the
Compliance Manager.
6
<PAGE>
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CODE OF CONDUCT
- ------------------------------------------------------------------------------
OVERVIEW
In general, it is unlawful for persons affiliated with investment companies,
their principal underwriters or their investment advisers to engage in personal
transactions in securities which are held or are to be acquired by a registered
investment company, if such personal transactions are made in contravention of
rules which the Securities and Exchange Commission (the "SEC") has adopted to
prevent fraudulent, deceptive and manipulative practices. Such rules require
each registered investment company, investment adviser and principal underwriter
to adopt its own written code of ethics containing provisions reasonably
necessary to prevent its access persons from engaging in such conduct, and to
maintain records, use reasonable diligence, and institute such procedures as are
reasonably necessary to prevent violations of such code. This Code and
information reported hereunder will enable TISI/TIM to fulfill these
requirements.
EXCLUSIONS APPLICABLE TO OUTSIDE DIRECTORS
Because they have limited access to information regarding trading activity
for the Managed Accounts, certain of the prohibitions discussed in this section
are not made applicable to the Outside Directors. Specifically, Outside
Directors are excluded from the following:
1. The pre-clearance requirements prior to engaging in any personal
transaction in Covered Securities. See Pre-Clearance, on page 9.
2. The prohibition against participation in hedge funds, investment clubs,
or similar investment groups except as a passive investor. See Hedge
Funds, Investment Clubs and Other Groups on page 9.
3. The requirement to disgorge any price advantage realized if a personal
securities transaction in a Covered Security coincides with a
transaction in the same security executed by TISI/TIM on behalf of any
Managed Account within fifteen calendar days after the personal trade.
See Fifteen Day Window on page 11.
4. The requirement to disgorge any profits realized in the purchase and
sale, or sale and purchase, of the same or equivalent Covered
Securities within 60 calendar days if a Managed Account held or traded
the security during the 60 day period. See 60-Day Rule on page 11.
5. The requirement to pre-clear participation in a tender offer or stock
purchase plan prior to submitting notice to participate in such tender
offer or notice of participation in such stock purchase plan to the
applicable company. See Pre-Clearance of Tender Offers and Stock
Purchase Plans on page 12.
6. The requirement to arrange for provision of duplicate account
statements and confirmations showing all transactions in brokerage or
commodities accounts in which the Outside Director has a beneficial
interest. See Reporting Transactions and Accounts on page 12. Note,
however, that Outside Directors must report a transaction in a Covered
Security if such person, at the time of that transaction, knew, or in
the ordinary course of fulfilling his or her official duties as a
director should have known, that, during the fifteen-day period
immediately preceding the date of his or her personal transaction, such
security was purchased or sold by, or was being considered for purchase
or sale on behalf of, any registered investment company for which such
person acts as director.
7. The requirement to provide a Monthly Transaction Report within 10 days
after any month end showing all transactions in Covered Securities for
which confirmations are known by such person to not have been timely
provided, and all such transactions that are not effected in securities
or commodities accounts, including
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without limitation non-brokered private placements, gifts,
inheritances, and other transactions in Covered Securities. See Monthly
Transaction Reports on page 13.
GENERAL PROHIBITIONS
The following are prohibited for Access Persons. Persons who violate any of
the following prohibitions shall disgorge any profits realized in connection
with such violation.
1. Purchasing, in an initial public offering, Covered Securities (see
Definitions section) for which no public market in the same or similar
securities of that issuer has previously existed. No securities may be
purchased in an offering that constitutes a "hot issue" as defined in NASD
rules. Such securities may be purchased, however, where the individual has
an existing right to purchase the security based on his or her status as
an investor, policyholder or depositor of the issuer. In addition,
securities issued in reorganizations are also outside the scope of this
prohibition if the transaction involves no investment decision on the part
of the employee except in connection with a shareholder vote.
2. Causing a Managed Account to take action, or to fail to take action, for
personal benefit, rather than to benefit such Managed Account. For
example, an Access Person would violate this Code by causing a Managed
Account to purchase a security owned by the Access Person for the purpose
of supporting or increasing the price of that security, or by causing a
Managed Account to refrain from selling a security in an attempt to
protect a personal investment, such as an option on that security.
3. Using, for personal profit, knowledge of portfolio transactions made or
contemplated for the Managed Accounts, or causing others to profit by the
market effect of such transactions.
4. Disclosing current portfolio transactions made or contemplated for the
Managed Accounts, as well as any other nonpublic information, to anyone
outside of TISI/TIM.
5. Engaging in fraudulent conduct in connection with the purchase or sale of
a security held or to be acquired by a Managed Account, including without
limitation:
a) Employing any device, scheme or artifice to defraud any Managed
Account;
b) Making to any Managed Account any untrue statement of material fact or
omitting to state to such Managed Account a material fact necessary in
order to make the statements made, in light of the circumstances under
which they are made, not misleading;
c) Engaging in any act, practice or course of business which operates or
would operate as a fraud or deceit upon any Managed Account; or
d) Engaging in any manipulative practice with respect to any Managed
Account.
6. Investing in derivatives to evade the restrictions of this Code.
Accordingly, individuals may not use derivatives to take positions in
securities which the Code would prohibit if the positions were taken
directly.
7. No Investment Personnel may serve on the board of directors of a publicly
traded company without prior written authorization by the Chief Executive
Officer of Transamerica Corporation. No such service shall be approved
without a finding that the board service would not be inconsistent with
the interests of the Managed Accounts. If board service is authorized, the
Investment Personnel serving as director normally should be isolated from
those making investment decisions with respect to the company involved
through "Chinese Walls" or other procedures.
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8. If an Investment Person is planning to invest or make a recommendation to
invest in a security for a Managed Account, and such person has a material
interest in the security, such person must first disclose such interest to
the Chief Investment Officer and obtain his consent. The Chief Investment
Officer may only grant consent if he has no material interest in the
security, and must immediately inform the Ethics Committee in writing of
the granting of such consent. A material interest is Beneficial Ownership
of any securities (including derivatives, options, warrants or rights),
offices, directorships, significant contracts, or interests or
relationships that are likely to affect such person's judgment.
9. No Investment Person may do or cause to be done on behalf of any Managed
Account, any business with a broker-dealer in which that Investment Person
holds any material financial interest, unless such material financial
interest is first disclosed to the Compliance Manager, and trading with
the subject broker-dealer is approved by the Chief Investment Officer in
consultation with the Ethics Committee.
10. Any Investment Person who acquires Beneficial Ownership of securities in a
private placement must disclose that investment when such Investment
Person plays a part in the decision of TISI/TIM to purchase securities of
that issuer for a Managed Account. Such investment decision will be
subject to an independent review by Investment Personnel with no personal
interest in the subject issuer.
TRADING RESTRICTIONS
PRE-CLEARANCE
Access Persons (except Outside Directors) must obtain pre-clearance prior to
engaging in any personal transaction in Covered Securities. Pre-clearance
procedures, as well as special procedures for pre-clearing transactions in
tender offers and stock purchase plans, are set forth below.
Trading activity, although pre-cleared and otherwise permitted under this
Code, must not be excessive in terms of time spent during your normal working
hours. The trading restrictions of the Code apply to all direct or indirect
acquisitions or dispositions of Covered Securities, whether by purchase, sale,
tender, stock purchase plan, gift, inheritance, or otherwise. Unless otherwise
noted, the following trading restrictions are applicable to any transaction in a
Covered Security Beneficially Owned by an Access Person. Outside Directors are
exempt from certain trading restrictions, as noted, because of their limited
access to current information regarding Managed Account investments.
SHORT SALES
Any Access Person (except Outside Directors) who sells short a Covered
Security that such person knows is held long by any Managed Account shall
disgorge any profit realized on such transaction. This prohibition shall not
apply, however, to securities indices or derivatives thereof (such as futures
contracts on the S&P 500 Index). Managed Account ownership of Covered Securities
will be checked as part of the pre-clearance process referenced above.
HEDGE FUNDS, INVESTMENT CLUBS, AND OTHER GROUPS
No Access Person (except Outside Directors) may participate in hedge funds,
investment clubs, or similar investment groups except as a passive investor.
Such passive investments are not subject to these trading restrictions, but must
be reported to Compliance as noted under Reporting Transactions and Accounts,
below.
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EXCLUDED TRANSACTIONS
Some or all of the trading restrictions listed below do not apply to the
following transactions. However, these transactions must still be reported to
Compliance (see Reporting Transactions and Accounts):
1. Tender offer transactions are exempt from all trading restrictions
except pre-clearance.
2. Stock purchase plans are exempt from all trading restrictions except
pre-clearance and the seven-day rule.
3. The acquisition of securities through stock dividends, dividend
reinvestments, stock splits, reverse stock splits, mergers,
consolidations, spin-offs, or other similar corporate reorganizations
or distributions generally applicable to all holders of the same class
of such securities are exempt from all trading restrictions.
4. The acquisition of securities through the exercise of rights issued by
an issuer pro rata to all holders of a class of the issuer's
securities, to the extent such rights were acquired from the issuer,
and sales of such rights so acquired, are exempt from all trading
restrictions.
5. The acquisition of securities by gift or inheritance is exempt from
all trading restrictions.
BLACKOUT PERIODS
If any Access Person engages in a transaction in a Covered Security which
violates any of the restrictions detailed below (the "Blackout Periods"), or is
determined to be in conflict with transactions made on behalf of the Managed
Accounts, such transaction must, upon notice from the Compliance Manager, be
immediately cancelled or reversed, or profits must be disgorged.(1) This applies
to all securities transactions, even those which were made in good faith, were
pre-cleared and the violation is one that was either inadvertent or was
determined after the fact by a review of trading data.
Any disgorgement of profits required under any of the following provisions
shall be donated to a charitable organization, unless otherwise prescribed by
law. The specific charitable organization shall be selected by the Ethics
Committee. However, if disgorgement is required as a result of trades by a
portfolio manager that conflicted with that manager's own Managed Accounts,
disgorgement proceeds shall be paid directly to such Managed Accounts. If
disgorgement is required under more than one provision, the Ethics Committee
shall determine in its sole discretion the provision that shall control.
PENDING ORDERS
No Access Person may engage in a transaction in a Covered Security when there
is a buy or sell order pending, on behalf of any Managed Account, in that same
security. The existence of pending orders will be checked as part of the
pre-clearance process referenced above. Pre-clearance may be given only
consistent with the Blackout Periods detailed in this section, or after any
pending Managed Account order is withdrawn.
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(1) Unless otherwise noted, restrictions on personal transactions apply to
transactions involving Covered Securities, including any derivatives thereof.
When determining the amount of disgorgement required with respect to a
derivative, consideration will be given to price differences in both the
derivative and the underlying securities, with the lesser amount being used for
purposes of computing disgorgement. For example, in determining whether a
reimbursement is required when the applicable personal trade is in a derivative
and the Managed Account transaction is in the underlying security, the amount
shall be calculated using the lesser of (a) the difference between the price
paid or received for the derivative and the closing bid or ask price (as
appropriate) for the derivative on the date of the Managed Account transaction,
or (b) the difference between the last sale price, or the last bid or ask price
(as appropriate) of the underlying security on the date of the derivative
transaction, and the price received or paid by the Managed Account for the
underlying security. Neither pre-clearance nor disgorgement shall be required if
such person's transaction is to close, sell or exercise a derivative within five
days of its expiration.
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SEVEN DAY RULE
Any Portfolio Manager who buys or sells a Covered Security within seven
calendar days before or after he or she trades in that security on behalf of a
Managed Account shall disgorge any profits realized on such transaction.
FIFTEEN DAY WINDOW
No personal securities transaction will be pre-cleared if a transaction was
made by TISI/TIM on behalf of any Managed Account during the fifteen calendar
days immediately preceding the request for pre-clearance.
If a personal securities transaction in a Covered Security is properly
pre-cleared, and within fifteen calendar days after the personal trade, a
transaction in the same security is executed by TISI/TIM on behalf of any
Managed Account, the Access Person (except Outside Directors) must disgorge any
price advantage realized.2 The price advantage shall be the favorable spread, if
any, between the price paid or received by such person and the least favorable
price paid or received by a Managed Account during such period.
60 DAY RULE
Access Persons (except Outside Directors) shall disgorge any profits realized
in the purchase and sale, or sale and purchase, of the same or equivalent
Covered Securities within 60 calendar days if a Managed Account held or traded
the security during the 60 day period.
PRE-CLEARANCE PROCEDURES
Pre-clearance must be obtained by Access Persons for all applicable
transactions in Covered Securities in which such person has a beneficial
interest. Access Persons shall obtain clearance for themselves and members of
their immediate families and households before purchasing, selling or pledging
either the debt or equity securities of any publicly-traded company. If the
transaction is approved, the Access Person has two business days from the date
of notification to execute the trade. The Designated Compliance Representative
is not required (and may not be at liberty) to specify the reasons for the
decision regarding pre-clearance.
GENERAL PRE-CLEARANCE
All requests for pre-clearance shall be made using the Pre-Clearance Form
appended to this Code. Pre-Clearance Forms may be submitted via electronic mail
to TISI/TIM's Compliance Manager. Pre-clearance requests will be processed once
per day. Every request that is received in the Los Angeles office before 10:00
a.m. will receive a response no later than 12:00 noon on the same day. Requests
received after 10:00 a.m. will be processed on the following day.
A Designated Compliance Representative will present the personal investment
request to specified Investment Personnel from each of the major areas of
TISI/TIM, who will be given an opportunity to object. Investment Personnel shall
object to pre-clearance if any such person knows of a conflict with a pending
Managed Account transaction or a transaction known by such person to be under
consideration for a Managed Account. Consideration of pre-clearance should also
take into account, among other factors, whether the investment opportunity
should be reserved for a Managed Account. If no objections are raised, the
Designated Compliance Representative shall notify the requestor and sign the
Pre-clearance Form. Such approval shall not be required for sales of securities
not held by any Managed Account.
No Designated Compliance Representative may pre-clear a transaction in which
such person has a beneficial interest.
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(2) Note that, for the purposes of this restriction, personal purchases are
matched only against subsequent Managed Account purchases, and personal sales
are matched only against subsequent Managed Account sales.
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TRANSACTIONS IN TRANSAMERICA SECURITIES
TISI/TIM officers who are members of the Transamerica Senior Management
Council, including any such person's spouse or equivalent domestic partner,
minor children or other relatives sharing such person's home, must obtain
pre-clearance before purchasing or selling securities issued by a Transamerica
entity. This requirement extends to any purchase (including the exercise of
stock options) or sale of such securities whether the transaction is for any
such person's own account, one over which he or she exercises control or one in
which he or she has a beneficial interest. If, for example, a TISI/TIM officer
and his or her adult child live in the same house, there is a statutory
presumption that they share information. Thus, transactions in securities issued
by a Transamerica entity by the child must be pre-cleared regardless of whether
or not the funds used are the child's own property. This is also the case with
respect to other family members sharing any such person's home (including shares
purchased by a spouse or equivalent domestic partner, with that person's
separate property).
Pre-clearance is not required for investments in mutual funds that may hold
debt or equity securities issued by a Transamerica entity. It is also not
necessary to pre-clear any change in the percentage of an Access Person's income
that is withheld under the Transamerica Corporation Employees Stock Savings Plan
or Stock Savings Plan Plus. However, pre-clearance is required for entry into or
exit from the Transamerica stock funds under such Plans.
PRE-CLEARANCE REQUIREMENTS FOR INVESTMENT PERSONNEL
Trades by Investment Personnel are subject to the following special
requirements:
o Any purchase of an equity security for a personal account, which
equity security is not owned by any Managed Account, must first be
submitted as a potential investment to the President or Chief
Investment Officer of TISI/TIM. The President or Chief Investment
Officer must make a determination that the security in question is not
an appropriate investment for any Managed Account before pre-clearance
for such security may be requested.
o Upon approval by the President or Chief Investment Officer, the
Pre-clearance Form shall be presented to a Designated Compliance
Representative for signature.
o A request for pre-clearance regarding a private placement which is an
investment asset in which the Managed Accounts might invest, or
managed or sponsored by broker-dealers with whom the Managed Accounts
presently do business or may in the future do business, or is being
offered in any way because of an Investment Person's position with
TISI/TIM, will normally be declined.
PRE-CLEARANCE OF TENDER OFFERS AND STOCK PURCHASE PLANS
Access Persons (other than Outside Directors) who wish to participate in a
tender offer or stock purchase plan must pre-clear such trades only with the
Compliance Manager prior to submitting notice to participate in such tender
offer or notice of participation in such stock purchase plan to the applicable
company. To pre-clear the trade, the Compliance Manager shall consider all
material factors relevant to a potential conflict of interest between the Access
Person and Managed Accounts. In addition, any increase of $100 or more to a
pre-existing stock purchase plan must be pre-cleared.
TWO BUSINESS DAY EFFECTIVE PERIOD
Clearance to trade will be effective for two business days from the date of
the last signature on the Pre-clearance Form. Open orders, including stop loss
orders, will generally not be allowed, due to the two day effective period. It
will be necessary to repeat the pre-clearance process for transactions not
executed within the two day effective period.
REPORTING TRANSACTIONS AND ACCOUNTS
Access Persons (other than Outside Directors) must arrange for their brokers
or financial institutions to provide to Compliance, on a timely basis, duplicate
account statements and confirmations showing all transactions in every brokerage
or commodities account in which they have a beneficial interest. PLEASE NOTE
THAT, EVEN IF SUCH PERSON
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DOES NOT TRADE COVERED SECURITIES IN A PARTICULAR BROKERAGE OR COMMODITIES
ACCOUNT (E.G., TRADING MUTUAL FUNDS IN A SCHWAB ACCOUNT), THE PROVISION OF
DUPLICATE ACCOUNT STATEMENTS AND CONFIRMATIONS IS STILL REQUIRED. Reporting of
accounts that do not allow any trading in Covered Securities (e.g., a mutual
fund account held directly with the fund sponsor) is not required.
Access Persons must notify Compliance of each reportable account at the time
it is opened, and annually thereafter, including the name of the firm and the
name under which the account is carried. An Account Information Form should be
completed for this purpose.
Certain transactions, such as private placements, inheritances or gifts,
might not be reported through a securities account. In these instances, Access
Persons must report these transactions using a Monthly Transaction Report as
noted below.
Outside Directors need only report a transaction in a Covered Security if
such person, at the time of the transaction, knew, or in the ordinary course of
fulfilling his or her official duties as a director should have known, that,
during the fifteen-day period immediately preceding the date of his or her
personal transaction, such security was purchased or sold by, or was being
considered for purchase or sale on behalf of, any registered investment company
for which such person acts as director.
MONTHLY TRANSACTION REPORTS
Access Persons (other than Outside Directors) must provide a Monthly
Transaction Report within 10 days after any month end showing all transactions
in Covered Securities for which confirmations are known by such person to not
have been timely provided, and all such transactions that are not effected in
securities or commodities accounts, including without limitation non-brokered
private placements, gifts, inheritances, and other transactions in Covered
Securities.
Access Persons must promptly comply with any request by the Compliance
Manager to provide monthly reports regardless of whether their broker has been
instructed to provide duplicate confirmations. Such reports may be requested,
for example, to check that all applicable confirmations are being received or to
supplement the requested confirmations where a broker is difficult to work with
or otherwise fails to provide duplicate confirmations on a timely basis.
PASSIVE ACCOUNTS
The Code shall not apply to purchases or sales effected in any account over
which there is no direct or indirect influence or control. Access Persons
relying upon this provision will be required to file a Certification of
Non-Influence and Non-Control Form with the Compliance Manager regarding any
such accounts.
Any account beneficially owned by an Access Person that is managed by
TISI/TIM in a discretionary capacity is not covered by this Code so long as such
person has no direct or indirect influence or control over the account. The
employment relationship between the account-holder and the individual managing
the account, in the absence of other facts indicating control, will not be
deemed to give such account-holder influence or control over the account.
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OTHER REQUIRED FORMS
In addition to the Account Information Form, Monthly and Annual Transaction
Reports, and Certification of Non-Influence and Non-Control Form discussed
above, the following forms must be completed if applicable to you:
ACKNOWLEDGEMENT FORMS
Each Access Person must, upon commencement of services and annually
thereafter, provide Compliance with an Acknowledgment Form stating that he or
she has reviewed and complied with the Code and has disclosed or reported all
applicable securities transactions.
INVESTMENT PERSONNEL REPRESENTATION FORM
Investment Personnel must, upon commencement of services, provide Compliance
with an Investment Personnel Representation Form which lists all Covered
Securities beneficially held. In addition, such persons must provide a brief
description of any positions held (e.g., director, officer, other) with
for-profit entities other than TISI/TIM.
OUTSIDE DIRECTOR REPRESENTATION FORM
All Outside Directors must, upon commencement of services and annually
thereafter, provide Compliance with an Outside Director Representation Form. The
Form declares that such persons agree to refrain from trading in any securities
when they are in possession of any information regarding trading recommendations
made or proposed to be made to any Managed Account by TISI/TIM or its officers
or employees.
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INSIDER TRADING POLICY
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BACKGROUND INFORMATION
TISI/TIM seeks to foster a reputation for integrity and professionalism, and
that reputation is a vital business asset. This Insider Trading Policy
("Policy") includes procedures to deter the misuse of material nonpublic
information. By adopting this Policy, TISI/TIM seeks to exceed the stringent
requirements of the federal securities laws. The Policy reinforces TISI/TIM's
commitment to avoiding even the appearance of impropriety.
The term "insider trading" is not defined in the federal securities statutes,
but generally is used to refer to the use of material nonpublic information to
trade in securities (whether or not one is an "insider"), or to communication of
material nonpublic information to others. The law concerning insider trading can
be complex and unclear; an individual legitimately may be uncertain about the
application of this Policy. Often, a simple question may forestall disciplinary
action or complex legal difficulties. If you have any questions regarding the
application of this Policy or you have any reason to believe that a violation of
this Policy has occurred or is about to occur, you should contact the Compliance
Manager. You may assume that the law regarding insider trading operates to
prohibit:
o Trading by an insider, while in possession of material nonpublic
information;
o Trading by a non-insider, while in possession of material nonpublic
information, where the information was disclosed to the non-insider
(directly or through one or more intermediaries) in violation of an
insider's duty to keep such information confidential;
o Communicating material nonpublic information to others in breach of a
duty not to disclose such information; and
o Misappropriating confidential information for securities trading
purposes, in breach of a duty owed to the source of the information to
keep the information confidential.
WHO IS AN INSIDER?
The concept of "insider" is broad. It includes officers, directors and
employees of a company. In addition, a person can be a "temporary insider" if he
or she enters into a special confidential relationship in the conduct of a
company's affairs and as a result is given access to information solely for the
company's purposes. A temporary insider can include, among others, a company's
attorneys, accountants, consultants, bank lending officers, and the employees of
such organizations. In addition, one or more of the Transamerica entities may
become a temporary insider of a company it advises or for which it performs
other services. To be considered an insider, the company must expect the
outsider to keep the disclosed nonpublic information confidential and/or the
relationship must at least imply such a duty.
WHEN IS INFORMATION NONPUBLIC?
Information should be treated as being nonpublic unless a reasonable period
of time has passed since it has been distributed by means likely to result in a
general public awareness of the information. Such awareness would result, for
example, from publication of the information in a daily newspaper. As a general
rule, information may be considered to be public on the third business day after
it has been broadly distributed to the general public.
WHAT IS MATERIAL INFORMATION?
In general, "material information" is information for which there is a
substantial likelihood that a reasonable investor would consider it important in
making his or her investment decisions, or information that is reasonably
certain to have a substantial effect on the price of a company's securities.
Information that should be considered material includes, but is not limited to,
dividend changes, earnings estimates, changes in previously released earnings
estimates, significant
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merger or acquisition proposals or agreements, major litigation, liquidation
problems, and extraordinary management developments.
Material information may also relate to the market for a company's
securities. Information about a significant order to purchase or sell securities
may, in some contexts, be deemed material. Similarly, prepublication information
regarding reports in the financial press also may be deemed material. For
example, the U.S. Supreme Court upheld the criminal convictions of insider
trading defendants who capitalized on prepublication information about The Wall
Street Journal's "Heard on the Street" column.
WHEN IS INFORMATION MISAPPROPRIATED?
The misappropriation theory prohibits trading on the basis of non-public
information by a corporate "outsider" in breach of a duty owed not to a trading
party, but to the source of confidential information. Misappropriation of
information occurs when a person obtains the non-public information through
deception or in breach of a duty of trust and loyalty to the source of the
information.
PENALTIES FOR INSIDER TRADING
Insider trading is a serious legal concern for TISI/TIM and its personnel.
The trading of securities of publicly-traded companies while in possession of
material, nonpublic information relating to those companies may subject TISI/TIM
and its personnel to penalties under federal law. Penalties for trading on or
communicating material nonpublic information are severe, both for individuals
involved in such unlawful conduct and their employers or other controlling
persons. A person can be subject to some or all of the penalties below even if
he or she does not personally benefit from the violation. Penalties may include:
o Civil injunctions;
o Treble damages;
o Disgorgement of profits;
o Jail sentences of up to 10 years;
o Fines up to $1,000,000 (or $2,500,000 for corporations and other
entities);
o Civil penalties for the person who committed the violation of up to
three times the profit gained or loss avoided, whether or not the
person actually benefited; and
o Civil penalties for the employer or other controlling person of up to
the greater of $1,000,000 or three times the amount of the profit
gained or loss avoided.
With separate tiers of penalties for employers and personnel, there may be
situations in which the concerns of these groups diverge. This contrasts with
routine litigation in which an employer typically reinforces the actions of its
senior personnel. Consequently, PERSONNEL WHO TRADE ON MATERIAL, NONPUBLIC
INFORMATION SHOULD BE AWARE THAT TISI/TIM MAY NOT BE ABLE TO PROTECT THEIR
INTERESTS. In addition, any violation of the law may result in serious sanctions
by TISI/TIM, including termination of employment.
WHO IS A CONTROLLING PERSON?
Included as controlling persons are TISI/TIM and its Directors and officers.
If you are a Director or officer, you have a duty to act to prevent insider
trading. Failure to fulfill such a duty may result in penalties as described
above.
PROCEDURES TO IMPLEMENT POLICY
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The following procedures have been implemented to aid the Directors, officers
and other Access Persons of TISI/TIM in avoiding insider trading, and to aid
TISI/TIM in preventing, detecting and imposing sanctions against insider
trading.
IDENTIFYING MATERIAL INSIDE INFORMATION
Before trading for yourself or others, including Managed Accounts, in the
securities of a company about which you may have potential inside information,
ask yourself the following questions:
o To whom has this information been provided? Has the information been
effectively communicated to the marketplace?
o Has this information been obtained from either the issuer or from
another source in breach of a duty to that source to keep the
information confidential?
o Is the information material? Is this information that an investor would
consider important in making his or her investment decisions? Is this
information that would affect the market price of the securities if
generally disclosed?
Special caution should be taken with respect to potential inside information
regarding any Transamerica entity. Potential inside information regarding
Transamerica may affect trading in Transamerica stock and should be reported
pursuant to the procedures set forth below.
REPORTING INSIDE INFORMATION
If, after consideration of the above, you believe that the information you
possess is material and nonpublic, or if you have questions as to whether the
information is material and nonpublic, you should take the following steps:
o Do not purchase or sell the securities on behalf of yourself or others,
including Managed Accounts.
o Do not communicate the information inside or outside of TISI/TIM, other
than to the Compliance Manager.
o Immediately advise the Compliance Manager of the nature and source of
such information. The Compliance Manager will review the information
with the Ethics Committee.
o Depending upon the determination made by the Ethics Committee, or by
the Compliance Manager until the Committee can be convened, you may be
instructed to continue the prohibition against trading and
communication and the Compliance Manager will place the security on a
restricted list or watch list, as described below. Alternatively, if it
is determined that the information obtained is not material nonpublic
information, you may be allowed to trade and communicate the
information.
WATCH AND RESTRICTED LISTS
Whenever the Ethics Committee or the Compliance Manager determines that a
Director, officer or other Access Person of TISI/TIM is in possession of
material nonpublic information with respect to a company (regardless of whether
it is currently owned by any Managed Account), such company will either be
placed on a watch list or on a restricted list.
Watch List. If the security is placed on a watch list, the flow of the
information to other TISI/TIM personnel will be restricted in order to allow
such persons to continue their ordinary investment activities. This procedure is
commonly referred to as a "Chinese Wall."
Restricted List. If the Ethics Committee or the Compliance Manager determines
that material nonpublic information is in the possession of a Director, officer,
or other Access Person of TISI/TIM and cannot be adequately
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isolated through the use of a Chinese Wall, the company will be placed on a
restricted list. While a company is on the restricted list, no Investment Person
shall initiate or recommend any transaction in any Managed Account, and no
Access Person will be pre-cleared to transact in any account in which he or she
has a beneficial interest, with respect to the securities of such company. The
Ethics Committee or the Compliance Manager will also have the discretion of
placing a company on a restricted list even though no "break in the Chinese
Wall" has or is expected to occur with respect to the material nonpublic
information about the company. Such action may be taken by such persons for the
purpose of avoiding any appearance of the misuse of material nonpublic
information.
The Ethics Committee or the Compliance Manager will be responsible for
determining whether to remove a particular company from the watch list or
restricted list. The only persons who will have access to the watch list or
restricted list are members of the Ethics Committee, Designated Legal or
Compliance Representatives and such persons who are affected by the information.
The watch list and restricted list are highly confidential and should under no
circumstances be discussed with or disseminated to anyone other than the persons
noted above.
PROTECTING INFORMATION
Directors, officers and other Access Persons of TISI/TIM shall not disclose
any nonpublic information (whether or not it is material) relating to TISI/TIM,
its securities transactions or securities positions of any Managed Account to
any person outside TISI/TIM (unless such disclosure has been authorized by
TISI/TIM). Material nonpublic information may not be communicated to anyone,
including any Director, officer or other Access Person of TISI/TIM, except as
provided in this Policy. Access to such information must be restricted. For
example, access to files containing material nonpublic information and computer
files containing such information should be restricted, and conversations
containing such information, if appropriate at all, should be conducted in
private.
Directors, officers and other Access Persons of TISI/TIM must refrain from
communicating any information not publicly published about any Managed Account's
investment transactions or financial situation to anyone unless absolutely
necessary and authorized by TISI/TIM as a part of the regular course of
business. Performance information, use of the Managed Accounts as a reference,
and release of other information about the Managed Accounts is permitted only
when a properly authorized representative of the applicable Managed Account
expressly agrees. Equal care and discretion must be used in discussing or
distributing information regarding investment strategies, reports or
recommendations.
To insure the integrity of the Chinese Wall and to avoid unintended
disclosures, it is important that all Access Persons take the following steps
with respect to confidential or nonpublic information:
o Do not discuss confidential information in public places such as
elevators, hallways or social gatherings.
o To the extent practical, limit access to the areas of the firm where
confidential information could be observed or overheard to persons with
a business need for being in the area.
o Avoid use of speaker phones in areas where unauthorized persons may
overhear conversations.
o Avoid use of wireless and cellular phones, or other means of
communication which may be intercepted.
o Where appropriate, maintain the confidentiality of Managed Account
identities by using code names or numbers for confidential projects.
o Exercise care to avoid placing documents containing confidential
information in areas where they may be read by unauthorized persons and
to store such documents in secure locations when they are not in use.
o Destroy copies of confidential documents no longer needed for a project
unless required to be saved pursuant to applicable record keeping
policies or requirements.
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o Refer to the Compliance Manager without comment all inquiries involving
nonpublic information possessed by TISI/TIM from persons outside of
TISI/TIM, including the news media, arbitrageurs, financial analysts
and the general public.
TISI/TIM personnel who become aware of a leak, whether deliberate or
otherwise, of nonpublic information relating to TISI/TIM or any Transamerica
entity, or to any company about which TISI/TIM or its personnel have acquired
such nonpublic information, shall report the leak immediately to the Compliance
Manager. For purposes of this section, a "leak" is defined to include any
unauthorized disclosure of nonpublic information about TISI/TIM or any company
about which TISI/TIM or its personnel have acquired information. A leak exists
when such disclosure has been made to a person or entity outside of TISI/TIM, or
to an unauthorized person within TISI/TIM.
TRANSAMERICA CORPORATE DEVELOPMENT DEPARTMENT
The Corporate Development Department at Transamerica Corporation may have
inside information regarding public companies. It is imperative that this
information neither be learned nor used in any way by TISI/TIM personnel.
If for any reason contact must be made with the Corporate Development
Department, notify the Compliance Manager, so that such contact can be
approached in a manner that prevents your exposure to inside information. In the
event you believe that the separation required by this Policy has been breached,
notify the Compliance Manager so that appropriate compliance procedures can be
implemented.
RESPONSIBILITY TO MONITOR TRANSACTIONS
Compliance will monitor transactions of Managed Accounts and Access Persons
for which reports are received to detect the existence of any unusual trading
activities with respect to companies on the watch and restricted lists.
Compliance will immediately report any unusual trading activity directly to the
Ethics Committee, who will be responsible for determining what, if any, action
should be taken.
TENDER OFFERS
Tender offers represent a particular concern in the law of insider trading
for two reasons. First, tender offer activity often produces extraordinary
fluctuations in the price of the target company's securities. Trading during
this time period is more likely to attract regulatory attention (and produces a
disproportionate percentage of insider trading cases). Second, the SEC has
adopted a rule which expressly forbids trading and "tipping" while in possession
of material nonpublic information regarding a tender offer received from the
tender offeror, the target company or anyone acting on behalf of either. Persons
subject to this Policy should exercise particular caution any time they become
aware of nonpublic information relating to a tender offer.
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GIFT POLICY
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All goods and services purchased by TISI/TIM shall be obtained from suppliers
who offer the best price consistent with required standards of service, quality,
timeliness and reliability. To avoid any actual or perceived conflict with this
policy, the acceptance from any supplier of gifts or other consideration of
significant value by any Director, officer or other Access Person of TISI/TIM is
prohibited. This prohibition includes donations of cash, goods or services for
meetings, picnics or other similar gatherings, costly entertainment or any other
gift which could reasonably cause the donor to expect to be favored as a
supplier or influence TISI/TIM to so favor the donor. The following outlines
TISI/TIM's policy on giving and receiving gifts to help us maintain these
standards. Any person who is subject to the Transamerica Corporation Gift Policy
shall not be subject to any of the following guidelines, to the extent that such
guidelines are in conflict with the Corporation's Gift Policy.
GIFT GIVING
Neither you nor members of your immediate family may give any gift, series of
gifts, or other thing of value, including cash, loans, personal services, or
special discounts ("Gifts") in excess of $100 per year to any Managed Account,
or any one person or entity that does or seeks to do business with or on behalf
of TISI/TIM or any Managed Account (collectively referred to herein as "Business
Relationships").
Gifts of substantial value between employees are also discouraged. Such gifts
are prohibited in those instances in which they might be interpreted as attempts
to influence personnel decisions. TISI/TIM's money may not be spent on gifts
between employees.
GIFT RECEIVING
The solicitation of a Gift is prohibited (I.E., YOU MAY NOT REQUEST THAT A
GIFT, SUCH AS TICKETS TO A SPORTING EVENT, BE GIVEN TO YOU BY A BUSINESS
RELATIONSHIP).
Neither you nor members of your immediate family may receive any Gift of
material value from any single Business Relationship. A Gift will be considered
material in value if it influences or gives the appearance of influencing the
recipient.
In the event the aggregate fair market value of all Gifts received by you
from any single Business Relationship is estimated to exceed $250 in any
12-month period, you must immediately notify your manager. Managers who receive
such notification must report this information to the Compliance Manager if it
appears that such Gifts may have improperly influenced the recipient.
Occasionally, TISI/TIM personnel are invited to attend or participate in
conferences, tour a company's facilities, or meet with representatives of a
company. Such invitations may involve traveling and may require overnight
lodging. Generally, all travel and lodging expenses provided in connection with
such activities must be paid for by TISI/TIM. However, if appropriate, and with
prior approval from your manager, you may accept travel-related amenities if the
costs are considered insubstantial or are not readily ascertainable.
CUSTOMARY BUSINESS AMENITIES
Customary business amenities are not considered Gifts so long as such
amenities are BUSINESS RELATED (E.G., IF YOU ARE ACCEPTING TICKETS TO A SPORTING
EVENT, THE OFFEROR MUST GO WITH YOU), reasonable in cost, appropriate as to time
and place, and neither so frequent nor so costly as to raise any question of
impropriety. Customary business amenities
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which you and, if appropriate, your guests, may accept (or give) include an
occasional meal, a ticket to a sporting event or the theater, green fees, an
invitation to a reception or cocktail party, or comparable entertainment.
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OUTSIDE EMPLOYMENT POLICY
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No Inside Director, officer or other Access Person of TISI/TIM shall accept
employment or compensation as a result of any business activity (other than a
passive investment), outside the scope of his or her relationship with TISI/TIM
unless such person has provided prompt written notice of such employment or
compensation to the Compliance Manager, and, in the case of securities-related
employment or compensation, has received the prior written approval of the
Ethics Committee.
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SUPERVISORY AND COMPLIANCE PROCEDURES
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Supervisory procedures can be divided into two classifications; (i)
prevention of violations and (ii) detection of violations. Compliance review
procedures include preparation of special and annual reports, record maintenance
and review, and confidentiality preservation.
SUPERVISORY PROCEDURES
PREVENTION OF VIOLATIONS
To prevent violations of the Code, the Compliance Manager should, in addition
to enforcing the procedures outlined in the Code:
1. Review and update the Code as necessary, at least once annually, including
but not limited to a review of the Code by the Ethics Committee and/or
counsel;
2. Answer questions regarding the Code;
3. Request from all persons upon commencement of services, and annually
thereafter, any applicable forms and reports as required by the Code; and
4. With such assistance from the Human Resources Department as may be
appropriate, maintain a continuing education program consisting of the
following:
a) Orienting Directors, officers, and other Access Persons who are new to
TISI/TIM to the Code, and
b) Further educating Directors, officers, and employees by distributing
memos or other materials that may be issued by outside organizations
such as the Investment Company Institute discussing the issue of
insider trading and other issues raised by the Code.
DETECTION OF VIOLATIONS
To detect violations of the Code, the Compliance Manager should, in addition
to enforcing the procedures outlined in the Code:
o Review reports, confirmations, and statements relative to applicable
restrictions, as provided under the Code;
o Review the restricted and watch lists relative to applicable personal and
Managed Account trading activity, as provided under the Code;
o Conduct spot checks of certain information as noted under the Code.
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COMPLIANCE PROCEDURES
REPORTS OF POTENTIAL DEVIATIONS OR VIOLATIONS
Upon learning of a potential deviation from, or violation of, the Code, the
Compliance Manager shall prepare a written report to the Ethics Committee
providing full details and recommendations for further action. The Ethics
Committee shall thereafter take such action as it deems appropriate.
ANNUAL REPORTS
The Compliance Manager shall prepare, at least annually, a written report for
the Ethics Committee. This report shall contain the following information, and
shall be confidential.
o Copies of the Code, as revised, including a summary of any changes made
during the past year;
o A summary of any violations requiring significant remedial action during
the past year; and
o Recommendations, if any, regarding changes in existing restrictions or
procedures based upon TISI/TIM's experience under the Code, evolving
industry practices, or developments in applicable laws or regulations.
The Compliance Manager will report to the TISI/TIM Board of Directors with
respect to any of the above items to the extent that any Managed Account is
materially affected thereby.
RECORDS
Compliance shall maintain the following records:
o Files for personal securities transaction confirmations and account
statements, all reports and other forms submitted by Access Persons
pursuant to the Code and any other pertinent information. Such files shall
be stored in a secure location;
o A copy of each pre-clearance;
o A list of all persons who are, or have been, required to make reports
pursuant to the Code.
INSPECTION
The records and reports maintained by Compliance pursuant to the Code shall
at all times be available for inspection, without prior notice, by any member of
the Ethics Committee.
CONFIDENTIALITY
All procedures, reports and records monitored, prepared or maintained
pursuant to the Code shall be considered confidential and proprietary to
TISI/TIM and shall be maintained and protected accordingly. Except as otherwise
required by law or the Code, such matters shall not be disclosed to anyone other
than to members of the Ethics Committee, as requested.
24
<PAGE>
THE ETHICS COMMITTEE
The Ethics Committee ("Committee") was formed to provide an effective
mechanism for monitoring compliance with the standards and procedures contained
in the Code and to take appropriate action at such times as violations or
potential violations are discovered.
MEMBERSHIP OF THE COMMITTEE
The Ethics Committee currently consists of senior compliance, administration
and investment staff. The composition of the Committee may be changed from time
to time.
COMMITTEE MEETINGS
The Committee shall generally meet quarterly or as often as necessary to
review operation of the compliance program and to consider technical deviations
from operational procedures, inadvertent oversights, or any other potential
violation of the Code. At such time as the Compliance Manager learns of a
potential violation, he shall either present the information at the next regular
meeting of the Committee, or convene a special meeting.
Deviations alternatively may be addressed by including them in the Access
Person's personnel records maintained by TISI/TIM. Committee meetings are
primarily intended for consideration of the general operation of the compliance
program and substantive or serious departures from standards and procedures in
the Code.
A Committee meeting may be attended, at the discretion of the Committee, by
such other persons as the Committee shall deem appropriate. Any individual whose
conduct has given rise to the meeting may also be called upon, but shall not
have the right to appear before the Committee.
It is not required that minutes of Committee meetings be maintained; in lieu
of minutes the Committee may issue a report describing issues reviewed and any
action taken. Any such report shall be included in the confidential file
maintained by the Compliance Manager with respect to the particular person or
persons whose conduct has been the subject of the meeting.
SPECIAL DISCRETION
The Committee shall have the authority by unanimous action to exempt any
person or class of persons from all or a portion of the Code, provided that:
o The Committee determines, on advice of counsel, that the particular
application of all or a portion of the Code is not legally required;
o The Committee determines that the likelihood of any abuse of the Code by
such exempted person(s) is remote;
o The terms or conditions upon which any such exemption is granted is
evidenced in a written instrument; and
o The exempted person(s) agrees to execute and deliver to the Compliance
Manager, at least annually, a signed Acknowledgment Form, which shall, by
operation of this provision, include a discussion of such exemption and
the terms and conditions upon which it was granted.
The Committee shall also have the authority by unanimous action to impose
such additional requirements or restrictions as it, in its sole discretion,
determines appropriate or necessary.
25
<PAGE>
- ------------------------------------------------------------------------------
GENERAL INFORMATION ABOUT THE CODE OF CONDUCT
- ------------------------------------------------------------------------------
ENFORCEMENT
In addition to the penalties described elsewhere in the Code, upon
discovering a violation of the Code, the Transamerica entity with which you are
associated may impose such sanctions as it deems appropriate, including without
limitation, a letter of censure or suspension or termination of employment or
personal trading privileges of the violator. All material violations of the Code
and any sanctions imposed with respect thereto shall be reported periodically to
the Directors and the directors of any other Transamerica entity which has been
directly affected by the violation.
INTERNAL USE
The Code is intended solely for internal use by TISI/TIM and does not
constitute an admission by or on behalf of such companies, their controlling
persons or persons they control, as to any fact, circumstance or legal
conclusion. The Code is not intended to evidence, describe or define any
relationship of control between or among any persons. Further, the Code is not
intended to form the basis for describing or defining any conduct by a person
that should result in such person being liable to any other person, except
insofar as the conduct of such person in violation of the Code may constitute
sufficient cause for TISI/TIM to terminate or otherwise adversely affect such
person's relationship with TISI/TIM.
- ------------------------------------------------------------------------------
FORMS
- ------------------------------------------------------------------------------
Attached are blank forms for use in complying with the Code. These forms may
be revised from time to time, as the Ethics Committee shall determine. Please
contact Compliance if you need additional forms or if you have any questions.
26
<PAGE>
TRANSAMERICA INVESTMENT SERVICES, INC. CODE OF CONDUCT
ACKNOWLEDGEMENT FORM
This form must be completed by all Access Persons upon commencement of
services and annually thereafter.
ACKNOWLEDGEMENT
I hereby acknowledge that I have received and reviewed the Transamerica
Investment Services, Inc. Code of Conduct and that I understand its provisions
and its applicability to me. Furthermore, I acknowledge that, since the
commencement of my employment or other services with Transamerica Investment
Services, Inc. or the date of my last certification, I have complied with the
Code of Conduct and have disclosed or reported all applicable securities
transactions required thereunder.
INVESTMENT PERSONNEL:
All Investment Personnel must attach a completed Investment Personnel
Representation Form as of the date this acknowledgment is signed. Generally,
Investment Personnel include portfolio managers, research analysts, trading
department personnel, and other employees whose duties are to manage any client
account. See the Code of Conduct for a more complete definition of Investment
Personnel.
OUTSIDE DIRECTORS:
All Outside Directors must attach a completed Outside Director Representation
Form as of the date this acknowledgment is signed.
SIGNATURE
____________________________________
Name (PLEASE PRINT)
____________________________________ ____________________
Signature Date
27
<PAGE>
TRANSAMERICA INVESTMENT SERVICES, INC. CODE OF CONDUCT
INVESTMENT PERSONNEL REPRESENTATION FORM
This form must be completed by all Investment Personnel upon commencement of
services. It should be attached to the Acknowledgment Form. Generally,
Investment Personnel include portfolio managers, research analysts, trading
department personnel, and other employees whose duties are to manage any client
account. If this is your initial submission, complete parts one and two;
otherwise, complete part one only.
PLEASE PROVIDE THE FOLLOWING INFORMATION:
1. List ALL positions held (director, officer, other) with for-profit
entities other than TISI/TIM:
- -------------------------------------------------------------------------
ENTITY NAME POSITION
=========================================================================
- -------------------------------------------------------------------------
- -------------------------------------------------------------------------
- -------------------------------------------------------------------------
2. List all Covered Securities Beneficially Owned (see the Code of Conduct
for explanations of the terms Covered Security and Beneficial Ownership).
Note that Covered Securities do not include mutual funds, U.S. government
securities, money market instruments (e.g., CDs, commercial paper), Exempt
Investments (e.g., life insurance or annuity contracts) and physical
commodities:
<TABLE>
<CAPTION>
- ------------------------------------------ ------------------------------------------
SECURITY NAME AND TYPE SHARES SECURITY NAME AND TYPE SHARES
HELD HELD
- ------------------------------------------ ------------------------------------------
<S> <C>
1) 6)
- ------------------------------------------ ------------------------------------------
2) 7)
- ------------------------------------------ ------------------------------------------
3) 8)
- ------------------------------------------ ------------------------------------------
4) 9)
- ------------------------------------------ ------------------------------------------
5) 10)
- ------------------------------------------ ------------------------------------------
</TABLE>
I have complied with the Investment Personnel information disclosure
provision of the Code of Conduct by including all of the information requested
above, if applicable.
SIGNATURE
Name (PLEASE PRINT):________________________________________
Signature:_______________________________ Date:______________________
28
<PAGE>
TRANSAMERICA INVESTMENT SERVICES, INC. CODE OF CONDUCT
OUTSIDE DIRECTOR REPRESENTATION FORM
This form must be completed by all Outside Directors upon commencement of
services and annually thereafter. It should be attached to the Acknowledgment
Form.
REPRESENTATION
The undersigned serves as an Outside Director of Transamerica Investment
Services, Inc. In addition to complying with all applicable provisions of the
Code of Conduct, I agree that I will refrain from trading in any securities when
I am in possession of information regarding trading recommendations made or
proposed to be made to any client by TISI/TIM or its officers or employees with
respect to such securities.
SIGNATURE
Name (PLEASE PRINT):________________________________________
Signature:________________________________ Date:_____________________
29
<PAGE>
TRANSAMERICA INVESTMENT SERVICE, INC. CODE OF CONDUCT
ACCOUNT INFORMATION FORM
FOR ACCESS PERSONS
The following account information must be completed at least annually by all
Access Persons, and updated whenever a new account is opened or an existing
account is closed. For further explanation of the terms Access Person, Covered
Security and Exempt Investment, or for additional information on existing
account notification procedures, see the applicable section(s) in the Code of
Conduct. Note that Covered Securities do not include mutual funds, U.S.
government securities, money market instruments (e.g., CDs, commercial paper),
Exempt Investments (e.g., life insurance or annuity contracts) and physical
commodities.
PLEASE CHECK ONE OF THE FOLLOWING BOXES REGARDING YOUR BROKERAGE ACCOUNTS:
[ ] No, I do not have any open brokerage or commodity accounts.
[ ] Yes, I do have open brokerage or commodity accounts. With regard to
securities firms holding accounts for which I may be deemed a Beneficial
Owner, I agree to authorize TISI/TIM to request and receive directly,
duplicate trade confirmations and duplicate account statements. I ALSO AGREE
TO NOTIFY COMPLIANCE IN THE EVENT THAT A NEW ACCOUNT IS OPENED OR AN
EXISTING ACCOUNT IS CLOSED. All such Beneficially Owned accounts are listed
below.
- --------------------------------------------------------------------------------
FIRM ACCOUNT REGISTRATION ADDRESS
AND ACCOUNT NUMBER
================================================================================
1)
- --------------------------------------------------------------------------------
2)
- --------------------------------------------------------------------------------
3)
- --------------------------------------------------------------------------------
4)
- --------------------------------------------------------------------------------
5)
- --------------------------------------------------------------------------------
If you do not exercise any direct or indirect influence or control over the
trading in any of the above account(s), you may exempt such account(s) from the
provisions of the Code of Conduct by completing the Certification Of
Non-Influence and Non-Control Form.
SIGNATURE
Name (PLEASE PRINT): ______________________________
Signature:_____________________________ Date:___________________
30
<PAGE>
TRANSAMERICA INVESTMENT SERVICES, INC. CODE OF CONDUCT
CERTIFICATION OF NON-INFLUENCE AND NON-CONTROL FORM
The provisions of the Transamerica Investment Services, Inc. Code of Conduct
shall not apply to purchases or sales effected in any account(s) over which you
have no direct or indirect influence or control.
Listed below are my Beneficially Owned accounts which I certify are not
subject to the Code of Conduct because I do not have any direct or indirect
influence or control over the trading in such account(s). I further certify that
I have had no communications with the person(s) responsible for management of
the account(s) that may have influenced an investment to be made or not to be
made for the account(s).
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------
ACCOUNT REGISTRATION ACCOUNT ACCOUNT TYPE (E.G., SECURITIES FIRM
NUMBER(S) TRUST, HEDGE FUND, ETC.) ADDRESS
======================================================================================
<S> <C> <C> <C>
- --------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------
</TABLE>
Briefly describe below the reason you do not have direct or indirect
influence or control (e.g., independently managed trust, etc.):
SIGNATURE
Name (PLEASE PRINT):______________________________
Signature:____________________________ Date:____________________
31
<PAGE>
TRANSAMERICA INVESTMENT SERVICES, INC. CODE OF CONDUCT
OUTSIDE EMPLOYMENT FORM
All Inside Directors, officers and other Access Persons of TISI/TIM must
provide prompt written notice of outside employment or compensation from any
other person as a result of any business activity, other than a passive
investment. IN THE CASE OF SECURITIES-RELATED EMPLOYMENT OR COMPENSATION, PRIOR
WRITTEN APPROVAL MUST BE RECEIVED FROM THE ETHICS COMMITTEE.
COMPANY OR BUSINESS INFORMATION
Name: _____________________________________________
Address: _____________________________________________
_____________________________________________
Nature of Business:_______________________________________
POSITION INFORMATION
Title, position or role: _________________________________
Describe your responsibilities or role:___________________
Beginning date:_________________ , to present.
TIME COMMITMENT
Amount of time devoted monthly:___________________________
SIGNATURE
Name (PLEASE PRINT):_______________________________
Signature:_______________________________ Date:__________________
32
<PAGE>
TRANSAMERICA INVESTMENT SERVICES, INC. CODE OF CONDUCT
PRE-CLEARANCE FORM
Access Persons must complete this Pre-clearance Form prior to engaging in any
personal transaction (acquisition or disposition) in Covered Securities.
SECURITY INFORMATION
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
SECURITY TYPE (please circle): CMN PFD DEBT (indicate issue)______ DERIVATIVE (indicate type)________
SECURITY ISSUER: ________________________________________________________ TICKER/CUSIP: __________________
DOES THE ISSUER DERIVE ANY INCOME FROM BROKER-DEALER OPERATIONS? YES______ NO_______
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
TRANSACTION INFORMATION
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
TRANSACTION TYPE (PLEASE CIRCLE): BUY SELL SHORT SALE ANY ADDITIONAL FACTORS RELEVANT TO A CONFLICT
QUANTITY:___________________________________________ OF INTEREST ANALYSIS:________________________
ESTIMATED PRICE:____________________________________ _____________________________________________
BROKER/DEALER:______________________________________ ACCOUNT REGISTRATION:________________________
BRANCH:_____________________________________________ _____________________________________________
ACCOUNT NUMBER:_____________________________________ _____________________________________________
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
COMPLETE NEXT SECTION IF YOU ARE AN INVESTMENT PERSON (NOT REQUIRED IF SELLING A
SECURITY THAT IS NOT HELD BY MANAGED ACCOUNTS)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------
Indicate the primary reason(s) why the above transaction is not appropriate for Managed Accounts at this time:
<S> <C> <C>
[ ] Investment is too risky for clients. Reason:____________________________________________________
[ ] Clients/funds are already exposed to industry
[ ] Personal speculation not appropriate for clients. Reason:________________________________________
[ ] Insufficient information about the issuer or available information is not favorable
[ ] Investment is outside of clients'/funds' permitted policies (e.g. short selling)
[ ] Due to the nature of my responsibilities, I am not in a position to recommend this security to clients.
[ ] Other:
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
PLEASE COMPLETE AND SIGN THE BACK PAGE
33
<PAGE>
AUTHORIZED SIGNATURES
- -------------------------------------------------------------------------------
Analyst's Representation: I have discussed this transaction with my
supervisor and I am not recommending this investment for purchase or sale by any
Managed Accounts, or my prior recommendation was rejected.
Access Person's Representation (including Analysts): My trading in this
security is not based on any material nonpublic information. I understand that
pre-clearance will only be in effect for two business days from the date of the
last signature below.
________________________________ ________________________ ____________
Employee Name (please print) Employee Signature Date
_____________________________________ ______________
Designated Compliance Representative Date
______________________________________ ______________
Equity Review Committee Representative Date
(Investment Personnel Only)
______________________________________ ______________
Ethics Committee Representative Date
(If required)
- -------------------------------------------------------------------------------
34
<PAGE>
TRANSAMERICA INVESTMENT SERVICES, INC. CODE OF CONDUCT
MONTHLY TRANSACTION REPORT
MONTHLY ACCESS PERSON REPORT FOR UNREPORTED TRANSACTIONS
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------
DATE SECURITY NAME SHARES/ TRANSACTION TYPE PRICE BROKER
PRINCIPAL (BUY/SELL)
=================================================================================================================
<S> <C> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------
</TABLE>
35
<PAGE>
IDEX MUTUAL FUNDS
PROSPECTUS
JUNE 15, 2000
(Sub-Adviser Logos)
The Securities and Exchange Commission has not approved or disapproved these
securities or passed upon the adequacy or accuracy of this prospectus. Any
representation to the contrary is a criminal offense.
<PAGE>
The Securities and Exchange Commission has not approved or disapproved of
these securities or passed on the accuracy or adequacy of this
Prospectus. Any representation to the contrary is a criminal offense.
IDEX Mutual Funds
IDEX Great Companies - Americasm and
IDEX Great Companies - Technologysm
Supplement Dated June 15, 2000 to Prospectus
Dated June 15, 2000
THIS INFORMATION SUPPLEMENTS THE FUND'S PROSPECTUS DATED JUNE 15, 2000. THIS
SUPPLEMENT AND THE PROSPECTUS CONSTITUTE A CURRENT PROSPECTUS. TO REQUEST
ANOTHER COPY OF THE PROSPECTUS, PLEASE CALL 1-888-233-4339.
InterSecurities, Inc. ("ISI"), the distributor for IDEX Great Companies -
Americasm and IDEX Great Companies - Technologysm (each a "Fund," collectively,
the "Funds"), will solicit orders to purchase shares of each Fund during an
initial offering period from June 15, 2000 to July 14, 2000 (the "Subscription
Period"). Orders received during the Subscription Period will not be processed
before commencement of operations (currently scheduled for July 14, 2000). An
order in proper form to purchase shares of each Fund that is accompanied by
payment and is received by the Fund's transfer agent prior to July __, 2000,
will be deemed to be an order to purchase shares of the CEF Money Market
Portfolio, and a further order to exchange shares of the CEF Money Market
Portfolio for shares of the Funds as of July 14, 2000.The exchange will be
processed and priced at the initial offering price of $10.00 per share into the
Funds on July 14, 2000. An exchange order may be revoked at any time prior to
July 14, 2000. An order in proper form to purchase shares of the Funds that is
accompanied by payment and is received by the Fund's transfer agent from July
___, 2000 to July ____, 2000 will be held and invested in the Funds on July 14,
2000.
Existing IDEX fund shareholders may exchange all or a portion of shares of any
IDEX fund they currently hold into the Funds. Exchange orders will be effected
at the net asset value on July 14, 2000 of the IDEX fund(s) currently held and
being exchanged into the Funds. Shareholders bear the risk that the value of the
IDEX fund shares currently held and being exchanged into the Funds will go down
between the time an exchange order is given and when it is accepted by the Funds
on July 14, 2000. Shareholders may revoke their exchange order and avoid
realizing such a loss at any time before July 14, 2000. Any exchange into the
Funds represents the sale of shares from one fund and the purchase of shares of
the Funds, which may produce a taxable gain or loss in a non-tax deferred
account. [Shares of the Funds will not be available to the public prior to the
Funds' commencement of operations except through these subscription offers.]
<PAGE>
IDEX MUTUAL FUNDS
TABLE OF CONTENTS
ALL ABOUT THE IDEX FUNDS
[ ] 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
[ ] FRED ALGER MANAGEMENT, INC.
(Sub-Adviser)
IDEX Alger Aggressive Growth ...................................... 12
[ ] T. ROWE PRICE ASSOCIATES, INC.
(Sub-Adviser)
IDEX T. Rowe Price Dividend Growth................................. 14
IDEX T. Rowe Price Small Cap ...................................... 16
[ ] PILGRIM BAXTER & ASSOCIATES, LTD.
(Sub-Adviser)
IDEX Pilgrim Baxter Mid Cap Growth................................. 18
IDEX Pilgrim Baxter Technology .................................... 20
[ ] GOLDMAN SACHS ASSET MANAGEMENT
(Sub-Adviser)
IDEX Goldman Sachs Growth ......................................... 22
[ ] TRANSAMERICA INVESTMENT MANAGEMENT,
LLC (Sub-Adviser)
IDEX Transamerica Equity .......................................... 24
IDEX Transamerica Small Company ................................... 26
[ ] SALOMON BROTHERS ASSET MANAGEMENT
INC (Sub-Adviser)
IDEX Salomon All Cap .............................................. 28
[ ] GREAT COMPANIES, L.L.C. (Sub-Adviser)
IDEX Great Companies -- America(SM)................................ 30
IDEX Great Companies --
Technology(SM).................................................. 32
[ ] AEGON USA INVESTMENT
MANAGEMENT, INC. (Sub-Adviser)
IDEX AEGON Income Plus ............................................ 34
[ ] FEDERATED INVESTMENT MANAGEMENT
COMPANY (Sub-Adviser)
IDEX Federated Tax Exempt ......................................... 36
[ ] GE ASSET MANAGEMENT INCORPORATED
(Sub-Adviser)
IDEX GE International Equity ...................................... 38
IDEX GE U.S. Equity ............................................... 40
[ ] DEAN INVESTMENT ASSOCIATES
(Sub-Adviser)
IDEX Dean Asset Allocation ........................................ 42
[ ] LUTHER KING CAPITAL MANAGEMENT
CORPORATION (Sub-Adviser)
IDEX LKCM Strategic Total Return .................................. 44
[ ] NWQ INVESTMENT MANAGEMENT
COMPANY, INC. (Sub-Adviser)
IDEX NWQ Value Equity ............................................. 46
[ ] C.A.S.E. MANAGEMENT, INC.
(Sub-Adviser)
IDEX C.A.S.E. Growth .............................................. 48
EXPLANATION OF STRATEGIES
AND RISKS ............................................................. 50
HOW THE IDEX FUNDS ARE
MANAGED AND ORGANIZED ................................................. 54
PERFORMANCE INFORMATION ...............................................
[ ] Yield .............................................................
[ ] Total Return ......................................................
[ ] Similar Sub-Adviser Performance ...................................
SHAREHOLDER INFORMATION ...............................................
[ ] How to Buy Shares .................................................
[ ] How to Sell Shares ................................................
[ ] How to Exchange Shares ............................................
[ ] 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 fund's goal or objective.
/chess piece/ The chess piece indicates discussion about a fund's strategies.
/warning sign/ The warning sign indicates the risks of investing in a fund.
/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>
IDEX JCC GROWTH
SUMMARY OF 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:
[ ] 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, to a lesser
extent, 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.
- --------------------------------------------------------------------------------
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:
[ ] 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.
[ ] FOREIGN STOCKS
Investments in foreign securities (including American Depositary Receipts
(ADRs), Global Depositary Receipts (GDRs) and European Depositary Receipts
(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:
[ ] 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 prices
[ ] delays in settling foreign securities transactions
[ ] higher costs for holding shares (custodial fees)
[ ] higher transaction costs
[ ] vulnerability to seizure and taxes
[ ] political instability and small markets
[ ] different market trading days
[ ] 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>
/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, which includes applicable sales charges, 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 (%) (1)
CLASS A SHARES
[GRAPH OMITTED]
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999
---- ---- ---- ---- ---- ---- ---- ---- ---- ----
(0.49)% 58.62% 1.17% 3.81% (8.47)% 47.12% 17.06% 16.82% 63.98% 58.46%
(1) AS OF MARCH 31, 2000, THE END OF THE MOST RECENT CALENDAR QUARTER, THE
FUND'S YEAR-TO-DATE RETURN FOR CLASS A WAS %.
- --------------------------------------------------------------------------------
CLASS A SHARES: QUARTER ENDED RETURN
--------------- --------
Best Quarter: 12/31/99 31.77%
Worst Quarter: 9/30/99 (17.64)%
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS AS OF 12/31/99
SINCE
ONE YEAR 5 YEARS 10 YEARS INCEPTION
- --------------------------------------------------------------------------------
A Shares 49.75% 37.64% 22.32% 21.60%
- --------------------------------------------------------------------------------
B Shares 53.43% N/A N/A 35.90%
- --------------------------------------------------------------------------------
M Shares* 55.85% 38.72% N/A 27.83%
- --------------------------------------------------------------------------------
T Shares 58.49% 39.46% 23.44% 22.35%
- --------------------------------------------------------------------------------
S&P 500** 21.04% 28.51% 18.17% 14.33%
- --------------------------------------------------------------------------------
*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 24.22%; CLASS M SHARES (10/01/93) IS 20.46%; AND CLASS T
SHARES (6/04/85) IS 15.08%.
/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 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)(d)
% OF AVERAGE DAILY NET ASSETS
CLASS OF SHARES
A B C M T*
- --------------------------------------------------------------------------------
Management fees 0.90% 0.90% 0.90% 0.90% 0.90%
Distribution and service
(12b-1) fees 0.35% 1.00% 1.00% 0.90% 0.00%
Other expenses 0.18% 0.18% 0.18% 0.18% 0.18%
---------------------------------------------------
TOTAL ANNUAL FUND
OPERATING EXPENSES 1.43% 2.08% 2.08% 1.98% 1.08%
EXPENSE REDUCTION (c) 0.03% 0.03% 0.03% 0.03% 0.03%
---------------------------------------------------
NET OPERATING EXPENSES 1.40% 2.05% 2.05% 1.95% 1.05%
- --------------------------------------------------------------------------------
(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) 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 .
*Not available to new investors.
================================================================================
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 would 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 $685 $ 975 $1,286 $2,166
B* $708 $ 949 $1,216 $2,242
C $208 $ 649 $1,116 $2,408
M $395 $ 712 $1,154 $2,381
T $948 $1,162 $1,392 $2,053
- --------------------------------------------------------------------------------
If the shares are not redeemed:
SHARE CLASS 1 YEAR 3 YEARS 5 YEARS 10 YEARS
- --------------------------------------------------------------------------------
A $685 $ 975 $1,286 $2,166
B* $208 $ 649 $1,116 $2,242
C $208 $ 649 $1,116 $2,408
M $296 $ 712 $1,154 $2,381
T $948 $1,162 $1,392 $2,053
- --------------------------------------------------------------------------------
* EXAMPLES FOR CLASS B SHARES ASSUME THEY WILL CONVERT TO CLASS A SHARES EIGHT
YEARS AFTER YOU PURCHASE THEM.
3
<PAGE>
IDEX JCC GLOBAL
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.
/chess piece/ PRINCIPAL STRATEGIES AND
POLICIES
The sub-adviser, Janus Capital Corporation (JCC), seeks to achieve this
objective by investing principally in:
[ ] common stocks of foreign and domestic issuers
[ ] depositary 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:
[ ] expected levels of inflation in various countries
[ ] government policies that might affect business conditions
[ ] the outlook for currency relationships
[ ] 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, to a lesser extent, 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:
[ ] 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.
[ ] 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:
[ ] 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 prices
[ ] delays in settling foreign securities transactions
[ ] higher costs for holding shares (custodial fees)
[ ] higher transaction costs
[ ] vulnerability to seizure and taxes
[ ] political instability and small markets
[ ] different market trading days
[ ] 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, which includes applicable sales charges, 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 (%) (1)
CLASS A SHARES
1993 1994 1995 1996 1997 1998 1999
---- ---- ---- ---- ---- ---- ----
31.28% 0.62% 20.03% 26.76% 20.44% 24.86% 53.31%
(1) AS OF MARCH 31, 2000, THE END OF THE MOST RECENT CALENDAR QUARTER, THE
FUND'S YEAR-TO-DATE RETURN FOR CLASS A WAS %.
- --------------------------------------------------------------------------------
CLASS A SHARES: QUARTER ENDED RETURN
--------------- --------
Best Quarter: 12/31/99 43.29%
Worst Quarter: 9/30/98 (16.02)%
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS AS OF 12/31/99
SINCE
ONE YEAR 5 YEARS INCEPTION
- --------------------------------------------------------------------------------
A Shares 54.33% 28.70% 26.64%
- --------------------------------------------------------------------------------
B Shares 57.75% N/A 30.86%
- --------------------------------------------------------------------------------
M Shares* 60.23% 29.68% 26.08%
- --------------------------------------------------------------------------------
MSCIW** 25.06% 20.19% 17.73%
- --------------------------------------------------------------------------------
*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 20.04% AND CLASS M SHARES (10/01/93) IS 17.23%.
/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 0.38% 0.38% 0.38% 0.38%
--------------------------------------------
TOTAL ANNUAL FUND
OPERATING EXPENSES 1.73% 2.38% 2.38% 2.28%
- --------------------------------------------------------------------------------
(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 would 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 $716 $1,065 $1,437 $2,479
B* $741 $1,042 $1,370 $2,555
C $241 $ 742 $1,270 $2,716
M $428 $ 805 $1,308 $2,689
- --------------------------------------------------------------------------------
If the shares are not redeemed:
SHARE CLASS 1 YEAR 3 YEARS 5 YEARS 10 YEARS
- --------------------------------------------------------------------------------
A $716 $1,065 $1,437 $2,479
B* $241 $ 742 $1,270 $2,555
C $241 $ 742 $1,270 $2,716
M $329 $ 805 $1,308 $2,689
- --------------------------------------------------------------------------------
* EXAMPLES FOR CLASS B SHARES ASSUME THEY WILL CONVERT TO CLASS A SHARES EIGHT
YEARS AFTER YOU PURCHASE THEM.
5
<PAGE>
IDEX JCC BALANCED
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.
/chess piece/ PRINCIPAL STRATEGIES
AND POLICIES
The fund's sub-adviser, Janus Capital Corporation (JCC), seeks to achieve the
fund's objective by investing principally in:
[ ] 40% to 60% in securities selected primarily for growth potential - such as
common stocks
[ ] 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.
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, to a lesser extent, 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:
[ ] 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.
[ ] 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:
[ ] changes in interest rates
[ ] length of time to maturity
[ ] issuers defaulting on their obligations to pay interest or return principal
[ ] HIGH-YIELD/HIGH-RISK SECURITIES
[ ] Credit risk
[ ] Greater sensitivity to interest rate movements
[ ] Greater vulnerability to economic changes
[ ] Decline in market value in event of default
[ ] 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 the 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, which includes applicable sales charges, 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) 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 (%) (1)
CLASS A SHARES
[GRAPH OMITTED]
1995 1996 1997 1998 1999
---- ---- ---- ---- ----
25.20% 16.60% 21.17% 30.78% 23.55%
(1) AS OF MARCH 31, 2000, THE END OF THE MOST RECENT CALENDAR QUARTER, THE
FUND'S YEAR-TO-DATE RETURN FOR CLASS A WAS %.
- --------------------------------------------------------------------------------
CLASS A SHARES: QUARTER ENDED RETURN
--------------- --------
Best Quarter: 12/31/98 18.31%
Worst Quarter: 9/30/98 (3.63)%
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS AS OF 12/31/99
SINCE
ONE YEAR 5 YEARS INCEPTION
- --------------------------------------------------------------------------------
A Shares 16.75% 21.98% 21.55%
- --------------------------------------------------------------------------------
B Shares 17.81% N/A 22.89%
- --------------------------------------------------------------------------------
M Shares* 20.68% 22.47% 22.03%
- --------------------------------------------------------------------------------
S&P 500** 21.04% 28.51% 26.01%
- --------------------------------------------------------------------------------
LBGCB** (2.15)% 7.61% 7.05%
- --------------------------------------------------------------------------------
*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 5.68% (LBGCB) AND 24.22% (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)(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 0.47% 0.47% 0.47% 0.47%
------------------------------------------
TOTAL ANNUAL FUND
OPERATING EXPENSES 1.82% 2.47% 2.47% 2.37%
- --------------------------------------------------------------------------------
(a) Certain purchases of Class A shares in amounts greater than $1 million are
subject to a 1% contingent deferred sales charge for 24 months after
purchase.
(b) 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 would 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 $725 $1,091 $1,481 $2,570
B* $750 $1,070 $1,416 $2,646
C $250 $ 770 $1,316 $2,806
M $437 $ 832 $1,353 $2,779
- --------------------------------------------------------------------------------
If the shares are not redeemed:
SHARE CLASS 1 YEAR 3 YEARS 5 YEARS 10 YEARS
- --------------------------------------------------------------------------------
A $725 $1,091 $1,481 $2,570
B* $250 $ 770 $1,316 $2,646
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.
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.
/chess piece/ PRINCIPAL STRATEGIES AND
POLICIES
The fund's sub-adviser, Janus Capital Corporation (JCC), seeks to achieve the
fund's objective by investing principally in:
[ ] common stocks of medium-sized companies
Medium-sized companies are those whose market capitalizations, at the time of
purchase, fall within the range of the S&P Mid Cap 400 Index. As of February,
2000, this range was $170 million to $57 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, to a lesser extent, 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:
[ ] 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.
[ ] 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, which includes applicable sales charges, 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 (%) (1)
CLASS A SHARES
--------------
[GRAPH OMITTED]
1995 1996 1997 1998 1999
---- ---- ---- ---- ----
36.62% 13.00% 12.18% 31.32% 119.22%
(1) AS OF MARCH 31, 2000, THE END OF THE MOST RECENT CALENDAR QUARTER, THE
FUND'S YEAR-TO-DATE RETURN FOR CLASS A WAS %.
- --------------------------------------------------------------------------------
CLASS A SHARES: QUARTER ENDED RETURN
--------------- --------
Best Quarter: 12/31/99 56.94%
Worst Quarter: 9/30/98 (15.64)%
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS AS OF 12/31/99
SINCE
ONE YEAR 5 YEARS INCEPTION
- --------------------------------------------------------------------------------
A Shares 107.17% 36.34% 36.88%
- --------------------------------------------------------------------------------
B Shares 113.76% N/A 36.73%
- --------------------------------------------------------------------------------
M Shares* 115.65% 37.14% 37.66%
- --------------------------------------------------------------------------------
S&P MidCap 400** 14.66% 22.97% 21.08%
- --------------------------------------------------------------------------------
*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 18.56%.
/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)
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 0.67% 0.67% 0.67% 0.67%
------------------------------------------
TOTAL ANNUAL FUND
OPERATING EXPENSES 2.02% 2.67% 2.67% 2.57%
EXPENSE REDUCTION (c) 0.17% 0.17% 0.17% 0.17%
------------------------------------------
NET OPERATING EXPENSES 1.85% 2.50% 2.50% 2.40%
- --------------------------------------------------------------------------------
(a) Certain purchases of Class A shares in amounts greater than $1 million are
subject to a 1% contingent deferred sales charge for 24 months after
purchase.
(b) Purchases of Class M shares are subject to a 1% contingent deferred sales
charge if redeemed within 18 months of purchase.
(c) Contractual arrangement with Idex Management, Inc. through 4/30/2001, for
expenses that exceed 1.50%, excluding 12b-1 fees.
(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 would 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 $728 $1,133 $1,563 $2,756
B* $753 $1,113 $1,500 $2,833
C $253 $ 813 $1,400 $2,990
M $440 $ 876 $1,437 $2,963
- --------------------------------------------------------------------------------
If the shares are not redeemed:
SHARE CLASS 1 YEAR 3 YEARS 5 YEARS 10 YEARS
- --------------------------------------------------------------------------------
A $728 $1,133 $1,563 $2,756
B* $253 $ 813 $1,400 $2,833
C $253 $ 813 $1,400 $2,990
M $341 $ 876 $1,437 $2,963
- --------------------------------------------------------------------------------
*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.
/chess piece/ 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:
[ ] 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, to a
lesser extent, 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:
[ ] 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:
[ ] changes in interest rates
[ ] length of time to maturity
[ ] issuers defaulting on their obligations to pay interest or return principal
[ ] 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.
[ ] HIGH-YIELD/HIGH RISK SECURITIES
[ ] Credit Risk
[ ] Greater sensitivity to interest rate movements
[ ] Greater vulnerability to economic changes
[ ] Decline in market value in event of default
[ ] 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, which includes applicable sales charges,
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 (%) (1)
CLASS A SHARES
--------------
[GRAPH OMITTED]
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999
---- ---- ---- ---- ---- ---- ---- ---- ---- ----
(5.11)% 25.01% 11.00% 13.90% (4.29)% 18.89% 5.44% 11.57% 7.89% 0.93%
(1) AS OF MARCH 31, 2000, THE END OF THE MOST RECENT CALENDAR QUARTER, THE
FUND'S YEAR-TO-DATE RETURN FOR CLASS A WAS %.
- --------------------------------------------------------------------------------
CLASS A SHARES: QUARTER ENDED RETURN
--------------- --------
Best Quarter: 3/31/91 7.92%
Worst Quarter: 3/31/90 (8.59)%
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS AS OF 12/31/99
SINCE
ONE YEAR 5 YEARS 10 YEARS INCEPTION
- --------------------------------------------------------------------------------
A Shares (3.86)% 7.73% 7.61% 7.47%
- --------------------------------------------------------------------------------
B Shares (4.73)% N/A N/A 6.31%
- --------------------------------------------------------------------------------
M Shares* (1.63)% 7.96% N/A 5.65%
- --------------------------------------------------------------------------------
LBGCB** (2.15)% 7.61% 7.66% 8.08%
- --------------------------------------------------------------------------------
*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 5.71% AND CLASS M SHARES (10/01/93) IS 5.39%.
/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 0.90% 0.90% 0.90% 0.90%
Distribution and service
(12b-1) fees 0.35% 1.00% 1.00% 0.90%
Other expenses 0.75% 0.75% 0.75% 0.75%
-----------------------------------------
TOTAL ANNUAL FUND
OPERATING EXPENSES 2.00% 2.65% 2.65% 2.55%
EXPENSE REDUCTION (c) 0.15% 0.15% 0.15% 0.15%
-----------------------------------------
NET OPERATING EXPENSES 1.85% 2.50% 2.50% 2.40%
- --------------------------------------------------------------------------------
(a) Certain purchases of Class A shares in amounts greater than $1 million are
subject to a 1% contingent deferred sales charge for 24 months after
purchase.
(b) Purchases of Class M shares are subject to a 1% contingent deferred sales
charge if redeemed within 18 months of purchase.
(c) Contractual arrangement with Idex Management, Inc., through 4/30/2001, for
expenses that exceed 1.50%, excluding 12b-1 fees.
(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 would 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 $654 $1,059 $1,488 $2,680
B* $753 $1,109 $1,492 $2,815
C $253 $ 809 $1,392 $2,972
M $440 $ 871 $1,429 $2,945
- --------------------------------------------------------------------------------
If the shares are not redeemed:
SHARE CLASS 1 YEAR 3 YEARS 5 YEARS 10 YEARS
- --------------------------------------------------------------------------------
A $654 $1,059 $1,488 $2,680
B* $253 $ 809 $1,392 $2,815
C $253 $ 809 $1,392 $2,972
M $341 $ 871 $1,429 $2,945
- --------------------------------------------------------------------------------
*EXAMPLES FOR CLASS B SHARES ASSUME THEY WILL CONVERT TO CLASS A SHARES EIGHT
YEARS AFTER YOU PURCHASE THEM.
11
<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.
/warning sign/ 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:
[ ] equity securities such as common or preferred stocks
[ ] 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:
[ ] insiders' activity
[ ] market style leadership (market dominance of a particular company)
[ ] institutional activity
[ ] relative strength price change (price performance relative to an index)
[ ] price-to-declining U.S. dollar
[ ] earnings to projected change
[ ] 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 (I.E., considered to be "junk bonds"), 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 invests in
convertible securities which are rated at or above invesment grade.
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 (which is inconsistent with
the fund's principal investment strategies). 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 achieve its
investment objective.
Alger may sell a security in order to buy shares of another company expected to
have greater potential for growth or to meet redemptions.
While the fund invests principally in equity and convertible securities, Alger
may, to a lesser extent, invest in 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:
[ ] 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.
[ ] INVESTING AGGRESSIVELY
[ ] The value of developing-company stocks may be very volatile, and can drop
significantly in a short period of time.
[ ] Rights, options and futures contracts may not be exercised and may expire
worthless.
[ ] Warrants and rights may be less liquid than stocks.
[ ] Leveraging practices may make the fund more volatile:
[ ] leveraging may exaggerate the effect on net asset value of any increase
or decrease in the market value of the fund's securities
[ ] money borrowed for leveraging is subject to interest costs
[ ] 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
[ ] 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. However, when the market price
of the common stock underlying a convertible security exceeds the conversion
price, the price of the convertible security tends to reflect the value of the
underlying common stock. As the market price of the underlying common stock
declines, the convertible security tends to trade increasingly on a yield
basis, and thus may not depreciate to the same extent as the underlying stock.
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
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, which includes applicable sales charges, 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 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 (%) (1)
CLASS A SHARES
--------------
[GRAPH OMITTED]
1995 1996 1997 1998 1999
---- ---- ---- ---- ----
55.00% 5.99% 23.27% 48.92% 69.14%
(1) AS OF MARCH 31, 2000, THE END OF THE MOST RECENT CALENDAR QUARTER, THE
FUND'S YEAR-TO-DATE RETURN FOR CLASS A WAS %.
- --------------------------------------------------------------------------------
CLASS A SHARES: QUARTER ENDED RETURN
--------------- --------
Best Quarter: 12/31/99 43.38%
Worst Quarter: 9/30/98 (9.47)%
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS AS OF 12/31/99
SINCE
ONE YEAR 5 YEARS INCEPTION
- --------------------------------------------------------------------------------
A Shares 59.83% 38.24% 38.63%
- --------------------------------------------------------------------------------
B Shares 63.67% N/A 29.07%
- --------------------------------------------------------------------------------
M Shares* 66.05% 39.19% 39.56%
- --------------------------------------------------------------------------------
S&P 500** 21.04% 28.51% 26.01%
- --------------------------------------------------------------------------------
*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 24.22%.
/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 0.80% 0.80% 0.80% 0.80%
Distribution and service
(12b-1) fees 0.35% 1.00% 1.00% 0.90%
Other expenses 0.71% 0.71% 0.71% 0.71%
------------------------------------------
TOTAL ANNUAL FUND
OPERATING EXPENSES 1.86% 2.51% 2.51% 2.41%
EXPENSE REDUCTION (c) 0.31% 0.31% 0.31% 0.31%
------------------------------------------
NET OPERATING EXPENSES 1.55% 2.20% 2.20% 2.10%
- --------------------------------------------------------------------------------
(a) Certain purchases of Class A shares in amounts greater than $1 million are
subject to a 1% contingent deferred sales charge for 24 months after
purchase.
(b) Purchases of Class M shares are subject to a 1% contingent deferred sales
charge if redeemed within 18 months of purchase.
(c) Contractual arrangement with Idex Management, Inc. through 4/30/2001, for
expenses that exceed 1.20%, excluding 12b-1 fees.
(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 would 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 $699 $1,074 $1,473 $2,586
B* $723 $1,052 $1,408 $2,663
C $223 $ 752 $1,308 $2,823
M $410 $ 815 $1,345 $2,796
- --------------------------------------------------------------------------------
If the shares are not redeemed:
SHARE CLASS 1 YEAR 3 YEARS 5 YEARS 10 YEARS
- --------------------------------------------------------------------------------
A $699 $1,074 $1,473 $2,586
B* $223 $ 752 $1,308 $2,663
C $223 $ 752 $1,308 $2,823
M $311 $ 815 $1,345 $2,796
- --------------------------------------------------------------------------------
*EXAMPLES FOR CLASS B SHARES ASSUME THEY WILL CONVERT TO CLASS A SHARES EIGHT
YEARS AFTER YOU PURCHASE THEM.
13
<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.
/chess piece/ 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:
[ ] 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. Holdings tend to be in large to medium
sized companies. In selecting investments, T. Rowe Price favors companies with
one or more of the following:
[ ] either a track record of, or the potential for, above-average earnings
and dividend growth
[ ] a competitive current dividend yield
[ ] a sound balance sheet and solid cash flow to support future dividend
increases
[ ] a sustainable competitive advantage and leading market position
[ ] 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.
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 (which is inconsistent with
the fund's principal investment strategies). Under these circumstances, the
fund may be unable to achieve its investment objective.
While the fund invests principally in common stocks, T. Rowe Price may, to a
lesser extent, 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. If the fund
uses futures and options, it is exposed to additional volatility and potential
losses. These are explained beginning on page and in the SAI.
/warning sign/ PRINCIPAL RISKS
The fund is subject to the following principal investment risks:
[ ] 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.
[ ] DIVIDEND-PAYING COMPANIES
The fund's emphasis on dividend-paying companies could result in
large-capitalization stocks. At times, stocks such as these may lag shares of
smaller, faster-growing companies. Also, a company may reduce or eliminate its
dividend. The fund's efforts to buy stocks that appear temporarily out of favor
carry the risk that a stock or group of stocks may remain out of favor for a
long time and may continue to decline.
YOU MAY LOSE MONEY IF YOU INVEST IN THIS FUND.
These and other risks are fully described in the section entitled "Explanation
of Strategies and Risks," beginning on page .
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 6.42% 6.42% 6.42% 6.42%
------------------------------------------
TOTAL ANNUAL FUND
OPERATING EXPENSES 7.57% 8.22% 8.22% 8.12%
EXPENSE REDUCTION (c) 6.02% 6.02% 6.02% 6.02%
------------------------------------------
NET OPERATING EXPENSES 1.55 % 2.20% 2.20% 2.10%
- --------------------------------------------------------------------------------
(a) Certain purchases of Class A shares in amounts greater than $1 million are
subject to a 1% contingent deferred sales charge for 24 months after
purchase.
(b) Purchases of Class M shares are subject to a 1% contingent deferred sales
charge if redeemed within 18 months of purchase.
(c) Contractual arrangement with Idex Management, Inc. through 4/30/2001, for
expenses that exceed 1.20%, excluding 12b-1 fees.
(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 would 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 $699 $2,141 $3,510 $6,637
B* $723 $2,159 $3,492 $6,716
C $223 $1,859 $3,392 $6,811
M $410 $1,914 $3,419 $6,788
- --------------------------------------------------------------------------------
If the shares are not redeemed: Share Class
SHARE CLASS 1 YEAR 3 YEARS 5 YEARS 10 YEARS
- --------------------------------------------------------------------------------
A $699 $2,141 $3,510 $6,637
B* $223 1,859 $3,392 $6,716
C $223 $1,859 $3,392 $6,811
M $311 $1,914 $3,419 $6,788
- --------------------------------------------------------------------------------
* EXAMPLES FOR CLASS B SHARES ASSUME THEY WILL CONVERT TO CLASS A SHARES EIGHT
YEARS AFTER YOU PURCHASE THEM.
15
<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.
/chess piece/ 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:
[ ] 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
falls within the range of the smallest 100 companies in the Standard & Poor's
500 Stock Index (S&P 500) which was approximately $3.3 billion and below 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 (which is inconsistent with
the fund's principal investment strategies). Under these circumstances, the
fund may 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, to a lesser extent, 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:
[ ] 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.
[ ] 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. Such
companies usually do not pay significant dividends that could cushion returns
in a falling market.
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.
[ ] 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 .
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 6.78% 6.78% 6.78% 6.78%
------------------------------------------
TOTAL ANNUAL FUND
OPERATING EXPENSES 7.93% 8.58% 8.58% 8.48%
EXPENSE REDUCTION (c) 6.38% 6.38% 6.38% 6.38%
------------------------------------------
NET OPERATING EXPENSES 1.55% 2.20% 2.20% 2.10%
- --------------------------------------------------------------------------------
(a) Certain purchases of Class A shares in amounts greater than $1 million are
subject to a 1% contingent deferred sales charge for 24 months after
purchase.
(b) Purchases of Class M shares are subject to a 1% contingent deferred sales
charge if redeemed within 18 months of purchase.
(c) Contractual arrangement with Idex Management, Inc. through 4/30/2001, for
expenses that exceed 1.20%, excluding 12b-1 fees.
(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 would 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 $699 $2,204 $3,623 $6,821
B* $723 $2,225 $3,606 $6,899
C $223 $1,925 $3,506 $6,991
M $410 $1,979 $3,533 $6,969
- --------------------------------------------------------------------------------
If the shares are not redeemed:
SHARE CLASS 1 YEAR 3 YEARS 5 YEARS 10 YEARS
- --------------------------------------------------------------------------------
A $699 $2,204 $3,623 $6,821
B* $223 $1,925 $3,506 $6,899
C $223 $1,925 $3,506 $6,991
M $311 $1,979 $3,533 $6,969
- --------------------------------------------------------------------------------
* EXAMPLES FOR CLASS B SHARES ASSUME THEY WILL CONVERT TO CLASS A SHARES EIGHT
YEARS AFTER YOU PURCHASE THEM.
17
<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.
/chess piece/ 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:
[ ] 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
business momentum, earnings growth and capital appreciation potential.
Pilgrim Baxter uses its own fundamental research, computer models and
proprietary measures of growth and business momentum in determining which
stocks to buy and sell.
Pilgrim Baxter's decision to sell a stock depends on many factors. Generally
speaking, Pilgrim Baxter considers selling a security when its anticipated
appreciation is no longer probable, alternate investments offer more superior
appreciation prospects, or the risk of a decline in its market price is too
great.
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 (which is
inconsistent with the fund's principal investment strategies). 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, to a lesser extent, elect to invest in options and futures
contracts for hedging and risk 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:
[ ] 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.
[ ] MEDIUM-SIZED COMPANIES
These companies present additional risks because their earnings are less
predictable, their share price more volatile, and their securities less liquid
than larger, more established companies.
YOU MAY LOSE MONEY IF YOU INVEST IN THIS FUND.
These and other risks are fully described in the section entitled "Explanation
of Strategies and Risks," beginning on page .
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) 5.80% 5.80% 5.80% 5.80%
------------------------------------------
TOTAL ANNUAL FUND OPERATING
EXPENSES 6.95% 7.60% 7.60% 7.50%
EXPENSE REDUCTION (c) 5.40% 5.40% 5.40% 5.40%
------------------------------------------
NET OPERATING EXPENSES 1.55% 2.20% 2.20% 2.10%
- --------------------------------------------------------------------------------
(a) Certain purchases of Class A shares in amounts greater than $1 million are
subject to a 1% contingent deferred sales charge for 24 months after
purchase.
(b) Purchases of Class M shares are subject to a 1% contingent deferred sales
charge if redeemed within 18 months of purchase.
(c) Contractual arrangement with Idex Management, Inc. through 4/30/2001, for
expenses that exceed 1.20%, excluding 12b-1 fees.
(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 would 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 $699 $2,032 $3,313 $6,303
B* $723 $2,045 $3,289 $6,383
C $223 $1,745 $3,189 $6,484
M $410 $1,801 $3,218 $6,460
- --------------------------------------------------------------------------------
If the shares are not redeemed:
SHARE CLASS 1 YEAR 3 YEARS 5 YEARS 10 YEARS
- --------------------------------------------------------------------------------
A $699 $2,032 $3,313 $6,303
B* $223 $1,745 $3,189 $6,383
C $223 $1,745 $3,189 $6,484
M $311 $1,801 $3,218 $6,460
- --------------------------------------------------------------------------------
* EXAMPLES FOR CLASS B SHARES ASSUME THEY WILL CONVERT TO CLASS A SHARES EIGHT
YEARS AFTER YOU PURCHASE THEM.
19
<PAGE>
IDEX PILGRIM BAXTER TECHNOLOGY
SUMMARY OF RISKS AND RETURNS
/target/ OBJECTIVE
THE OBJECTIVE OF IDEX PILGRIM BAXTER TECHNOLOGY IS GROWTH OF CAPITAL. Current
income is incidental to this objective.
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.
/chess piece/ PRINCIPAL STRATEGIES
AND POLICIES
The fund's sub-adviser, Pilgrim Baxter & Associates, Ltd. (Pilgrim Baxter),
seeks to achieve this objective by investing principally in:
[ ] common stocks of companies doing business in the technology and
communications sectors of the market
In seeking growth of capital, Pilgrim Baxter normally invests at least 65% of
the fund's total assets in common stocks of small, medium or large
capitalization companies that rely extensively on technology or communications
doing business in the technology and communications sectors of the market. This
fund is also concentrated which means Pilgrim Baxter invests 25% or more of the
fund's total assets in one or more industries within those sectors.
These industries may include computer software and hardware, network and cable
broadcasting, defense and data storage and 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, using or marketing scientific advances.
Pilgrim Baxter uses its own fundamental research, computer models and
proprietary measures of growth and business momentum in determining which
stocks to buy and sell.
Pilgrim Baxter's decision to sell a stock depends on many factors. Generally
speaking, Pilgrim Baxter considers selling a security when its anticipated
appreciation is no longer probable, alternate investments offer more superior
appreciation prospects, or the risk of a decline in its market price is too
great.
While the fund invests principally in common stocks, Pilgrim Baxter may, to a
lesser extent, 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.
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.
/warning sign/ PRINCIPAL RISKS
The fund is subject to the following principal investment risks:
[ ] 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.
[ ] 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.
[ ] SMALL OR 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 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 .
20
<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 1.00% 1.00% 1.00% 1.00%
Distribution and service
(12b-1) fees 0.35% 1.00% 1.00% 0.90%
Other expenses (c) 2.70% 2.70% 2.70% 2.70%
------------------------------------------
TOTAL ANNUAL FUND OPERATING
EXPENSES 4.05% 4.70% 4.70% 4.60%
EXPENSE REDUCTION (d) 2.30% 2.30% 2.30% 2.30%
------------------------------------------
NET OPERATING EXPENSES 1.75% 2.40% 2.40% 2.30%
- --------------------------------------------------------------------------------
(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) Contractual arrangement with Idex Management, Inc. through 4/30/2001, for
expenses that exceed 1.40%, excluding 12b-1 fees.
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 would 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 $718 $1,516
B $743 $1,510
C $243 $1,210
M $430 $1,270
- --------------------------------------------------------------------------------
If the shares are not redeemed:
SHARE CLASS 1 YEAR 3 YEARS
- --------------------------------------------------------------------------------
A $718 $1,516
B $243 $1,210
C $243 $1,210
M $331 $1,270
- --------------------------------------------------------------------------------
21
<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.
/chess piece/ PRINCIPAL STRATEGIES AND
POLICIES
The fund's sub-adviser, Goldman Sachs Asset Management (GSAM), seeks to achieve
this objective by investing principally in:
[ ] 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 could have favorable growth prospects,
GSAM ordinarily looks for one or more of the following characteristics in
relation to the security's prevailing price:
[ ] prospects for above-average sales and earnings growth per share
[ ] high return on invested capital
[ ] free cash flow generation
[ ] sound balance sheet, financial and accounting policies, and overall
financial strength
[ ] strong competitive advantages
[ ] effective research, product development, and marketing
[ ] pricing flexibility
[ ] strength of management
[ ] 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 when other adverse conditions exist (which is inconsistent
with the fund's principal investment strategies). Under these circumstances,
the fund will be unable to achieve its investment objective.
While the fund invests principally in publicly traded U.S. securities, GSAM may
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, to a lesser extent, 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:
[ ] 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 .
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 6.50% 6.50% 6.50% 6.50%
------------------------------------------
TOTAL ANNUAL FUND
OPERATING EXPENSES 7.65% 8.30% 8.30% 8.20%
EXPENSE REDUCTION (c) 6.10% 6.10% 6.10% 6.10%
------------------------------------------
NET OPERATING EXPENSES 1.55% 2.20% 2.20% 2.10%
- --------------------------------------------------------------------------------
(a) Certain purchases of Class A shares in amounts greater than $1 million are
subject to a 1% contingent deferred sales charge for 24 months after
purchase.
(b) Purchases of Class M shares are subject to a 1% contingent deferred sales
charge if redeemed within 18 months of purchase.
(c) Contractual arrangement with Idex Management, Inc. through 4/30/2001, for
expenses that exceed 1.20%, excluding 12b-1 fees.
(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 would 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 $699 $2,155 $3,536 $6,678
B* $723 $2,174 $3,517 $6,757
C $223 $1,874 $3,417 $6,852
M $410 $1,929 $3,444 $6,829
- --------------------------------------------------------------------------------
If the shares are not redeemed:
SHARE CLASS 1 YEAR 3 YEARS 5 YEARS 10 YEARS
- --------------------------------------------------------------------------------
A $699 $2,155 $3,536 $6,678
B* $223 $1,874 $3,417 $6,757
C $223 $1,874 $3,417 $6,852
M $311 $1,929 $3,444 $6,829
- --------------------------------------------------------------------------------
* EXAMPLES FOR CLASS B SHARES ASSUME THEY WILL CONVERT TO CLASS A SHARES EIGHT
YEARS AFTER YOU PURCHASE THEM.
23
<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.
/chess piece/ PRINCIPAL STRATEGIES AND
POLICIES
The fund's sub-adviser, Transamerica Investment Management, LLC (TIM), uses a
"bottom up" approach to investing and builds the fund's portfolio one company
at a time by investing fund assets principally in:
[ ] COMMON STOCKS
TIM generally invests at least 65% of the fund's assets in a diversified
portfolio of domestic common stocks.
TIM buys securities of companies it feels are under-valued in the stock market.
The companies that it invests in may have, in the opinion of TIM, many or all
of the following features:
[ ] outstanding management
[ ] superior track record
[ ] well-defined plans for the future
[ ] unique low cost products
[ ] dominance in market share or products in specialized markets
[ ] strong earnings and cash flows to foster future growth
[ ] focus on shareholders through increasing dividends, stock repurchases and
strategic acquisitions
While TIM invests principally in domestic common stocks, the fund may, to a
lesser extent, invest in other securities or investment strategies in pursuit
of its investment objective, which are explained beginning on page and in
the SAI.
TIM may also invest in cash or cash equivalents for temporary defensive
purposes when market conditions warrant (which is inconsistent with the fund's
principal investment strategies). 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:
[ ] 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.
[ ] STOCK SELECTION ANALYSIS
The criteria used by TIM to evaluate securities and companies to include in the
fund's portfolio may not be effective and may cause overall returns to be lower
than if other evaluation methods are used.
YOU MAY LOSE MONEY IF YOU INVEST IN THIS FUND.
These and other risks are fully described in the section entitled "Explanation
of Strategies and Risks," beginning on page .
- --------------------------------------------------------------------------------
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.
- --------------------------------------------------------------------------------
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)
% 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) 2.70% 2.70% 2.70% 2.70%
------------------------------------------
TOTAL ANNUAL FUND
OPERATING EXPENSES 3.85% 4.50% 4.50% 4.40%
EXPENSE REDUCTION (d) 2.30% 2.30% 2.30% 2.30%
------------------------------------------
NET OPERATING EXPENSES 1.55% 2.20% 2.20% 2.10%
- --------------------------------------------------------------------------------
(a) Certain purchases of Class A shares in amounts greater than $1 million are
subject to a 1% contingent deferred sales charge for 24 months after
purchase.
(b) Purchases of Class M shares are subject to a 1% contingent deferred sales
charge if redeemed within 18 months of purchase.
(c) Because the fund commenced operations in March 2000, the "Other expenses"
are estimates.
(d) Contractual arrangement with Idex Management, Inc. through 04/30/2001, for
expenses that exceed 1.20%, excluding 12b-1 fees.
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 would 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 $699 $1,460
B $723 $1,453
C $223 $1,153
M $410 $1,213
- --------------------------------------------------------------------------------
If the shares are not redeemed:
SHARE CLASS 1 YEAR 3 YEARS
- --------------------------------------------------------------------------------
A $699 $1,460
B $223 $1,153
C $223 $1,153
M $311 $1,213
- --------------------------------------------------------------------------------
25
<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.
/chess piece/ PRINCIPAL STRATEGIES AND
POLICIES
The fund's sub-adviser, Transamerica Investment Management, LLC (TIM), uses a
"bottom-up" approach to investing and builds the fund's portfolio one company
at a time by investing fund assets principally in:
[ ] equity securities such as common stocks, preferred stocks, rights, warrants
and securities convertible into or exchangeable for common stocks of small
companies
TIM 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. TIM defines small companies as
those whose market capitalization falls within the range represented in the S&P
600 SmallCap Index.
TIM selects stocks that are issued by small U.S. companies which, in its
opinion, show:
[ ] strong potential for steady growth
[ ] high barriers to competition
It is the opinion of TIM 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, TIM
may also, to a lesser extent, 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.
TIM may also invest in cash or cash equivalents for temporary defensive
purposes when market conditions warrant (which is inconsistent with the fund's
principal investment strategies). 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:
[ ] 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.
[ ] 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. However, when the market price
of the common stock underlying a convertible security exceeds the conversion
price, the price of the convertible security tends to reflect the value of the
underlying common stock. As the market price of the underlying common stock
declines, the convertible security tends to trade increasingly on a yield
basis, and thus may not depreciate to the same extent as the underlying stock.
[ ] 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.
[ ] 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.
- --------------------------------------------------------------------------------
26
<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) 2.70% 2.70% 2.70% 2.70%
------------------------------------------
TOTAL ANNUAL FUND
OPERATING EXPENSES 3.85% 4.50% 4.50% 4.40%
EXPENSE REDUCTION (d) 2.30% 2.30% 2.30% 2.30%
------------------------------------------
NET OPERATING EXPENSES 1.55% 2.20% 2.20% 2.10%
- --------------------------------------------------------------------------------
(a) Certain purchases of Class A shares in amounts greater than $1 million are
subject to a 1% contingent deferred sales charge for 24 months after
purchase.
(b) Purchases of Class M shares are subject to a 1% contingent deferred sales
charge if redeemed within 18 months of purchase.
(c) Because the fund commenced operations in March 2000, the "Other expenses"
are estimates.
(d) Contractual arrangement with Idex Management, Inc. through 04/30/2001, for
expenses that exceed 1.20% excluding 12b-1 fees.
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 would 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 $699 $1,460
B $723 $1,453
C $223 $1,153
M $410 $1,213
- --------------------------------------------------------------------------------
If the shares are not redeemed:
SHARE CLASS 1 YEAR 3 YEARS
- --------------------------------------------------------------------------------
A $699 $1,460
B $223 $1,153
C $223 $1,153
M $311 $1,213
- --------------------------------------------------------------------------------
27
<PAGE>
IDEX SALOMON ALL CAP
SUMMARY OF RISKS AND RETURNS
/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.
/chess piece/ 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:
[ ] 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:
[ ] undervalued share prices
[ ] 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
[ ] 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 (which is inconsistent with
the fund's principal investment strategies). Under these circumstances, the
fund will be unable to pursue its investment objective.
While the fund invests principally in common stocks, SBAM may, to a lesser
extent, 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:
[ ] 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.
[ ] 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.
- --------------------------------------------------------------------------------
28
<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 7.70% 7.70% 7.70% 7.70%
------------------------------------------
TOTAL ANNUAL FUND
OPERATING EXPENSE 8.85% 9.50% 9.50% 9.40%
EXPENSE REDUCTION (c) 7.30% 7.30% 7.30% 7.30%
------------------------------------------
NET OPERATING EXPENSES 1.55% 2.20% 2.20% 2.10%
- --------------------------------------------------------------------------------
(a) Certain purchases of Class A shares in amounts greater than $1 million are
subject to a 1% contingent deferred sales charge for 24 months after
purchase.
(b) Purchases of Class M shares are subject to a 1% contingent deferred sales
charge if redeemed within 18 months of purchase.
(c) Contractual arrangement with Idex Management, Inc. through 4/30/2001, for
expenses that exceed 1.20%, excluding 12b-1 fees.
(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 would 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 $699 $2,363 $3,902 $7,259
B* $723 $2,389 $3,891 $7,336
C $223 $2,089 $3,791 $7.420
M $410 $2,143 $3,817 $7,399
- --------------------------------------------------------------------------------
If the shares are not redeemed:
SHARE CLASS 1 YEAR 3 YEARS 5 YEARS 10 YEARS
- --------------------------------------------------------------------------------
A $699 $2,363 $3,902 $7,259
B* $223 $2,089 $3,791 $7,336
C $223 $2,089 $3,791 $7,420
M $311 $2,143 $3,817 $7,399
- --------------------------------------------------------------------------------
* EXAMPLES FOR CLASS B SHARES ASSUME THEY WILL CONVERT TO CLASS A SHARES EIGHT
YEARS AFTER YOU PURCHASE THEM.
29
<PAGE>
IDEX GREAT COMPANIES -- AMERICA(SM)
SUMMARY OF RISKS AND RETURNS
/target/ OBJECTIVE
The objective of IDEX Great Companies -- America(SM) is long-term growth of
capital.
The fund may be appropriate for investors who seek long-term growth of capital
and who can tolerate fluctuations inherent in stock investing.
/chess piece/ PRINCIPAL STRATEGIES
AND POLICIES
The fund's sub-adviser, Great Companies, L.L.C. (Great Companies), seeks to
achieve this objective by investing principally in:
[ ] Large-cap stocks
The fund seeks to invest in common stocks of large, established, United States
based companies. Stocks for this fund are selected by Great Companies from a
group of companies that it has identified, in its opinion, as being a "great
company." To be considered a "great company" candidate by the sub-adviser, each
company must: have a market cap in excess of $15 billion; be highly regarded by
management experts; be headquartered in the U.S.; be publicly traded; be
engaged in what the sub-adviser consideres to be "terrific businesses"; have
superior business franchises; consider employees to be the company's most
valuable asset; have, in the sub-adviser's opinion, "world class managment";
deliver outstanding returns to shareholders; be a global company (40%
overseas); and, in the sub-adviser's opinion, be able to convert changes into
opportunities. Each company's common stock must have consistently outperformed
both the S&P 500 and the Dow Jones Industrial Average over the twenty-year
period ending December 31, 1998.
To determine which "great company" in which the fund should invest, Great
Companies uses Intrinsic Value investing. Intrinsic Value is the discounted
value of the cash that can be taken out of a business during its remaining
life. It is an estimate rather than a precise figure, and changes when interest
rates move or when forecasts of future cash flows are revised.
Great Companies monitors changes in each "great company's" Intrinsic Value over
a twelve to eighteen month period. It then determines a company's Intrinsic
Value Momentum (IVM), which is a measurement of the rate at which a company is
increasing or decreasing its Intrinsic Value. Great Companies looks at the
trading price of the stock and compares it to its Intrinsic Value calculation.
If a stock appears to be significantly overvalued and its IVM is flat or
declining in the market when compared to the Intrinsic Value calculation, Great
Companies does not invest in the stock or, if the fund has already invested in
the company, may reduce its position in the stock. When the stock share price
drops well below the Intrinsic Value calculation and its IVM is rising, Great
Companies will normally invest in the company, or, if the fund has already
invested in the company, attempt to buy more shares.
Because stock selections are limited to the companies identified as being a
"great company" by Great Companies, the fund is non-diversified.
/warning sign/ PRINCIPAL RISKS
The portfolio is subject to the following principal investment risks:
[ ] 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.
[ ] PROPRIETARY RESEARCH
Proprietary forms of research may not be effective and may cause overall
returns to be lower than if other forms of research are used.
THIS FUND IS NON-DIVERSIFIED.
YOU MAY LOSE MONEY IF YOU INVEST IN THIS PORTFOLIO.
- --------------------------------------------------------------------------------
WHAT IS A NON-DIVERSIFIED PORTFOLIO?
A "non-diversified" portfolio has the ability to take larger positions in
a smaller number of issuers. To the extent a portfolio invests in 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 widely diversified portfolio and may be
subject to a greater loss with respect to its portfolio securities.
However, to meet federal tax requirements, at the close of each quarter
the portfolio 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 in one issuer.
- --------------------------------------------------------------------------------
30
<PAGE>
/graph/ PAST PERFORMANCE
Because the fund commenced operations in July 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) 2.70% 2.70% 2.70% 2.70%
------------------------------------------
TOTAL ANNUAL FUND
OPERATING EXPENSES 3.85% 4.50% 4.50% 4.40%
EXPENSE REDUCTION (d) 2.30% 2.30% 2.30% 2.30%
------------------------------------------
NET OPERATING EXPENSES 1.55% 2.20% 2.20% 2.10%
- --------------------------------------------------------------------------------
(a) Certain purchases of Class A shares in amounts greater than $1 million are
subject to a 1% contingent deferred sales charge for 24 months after
purchase.
(b) Purchases of Class M shares are subject to a 1% contingent deferred sales
charge if redeemed within 18 months of purchase.
(c) Because the fund commenced operations in July 2000, the "Other expenses"
are estimates.
(d) Contractual arrangement with Idex Management, Inc. through 04/30/2001, for
expenses that exceed 1.20%, excluding 12b-1 fees.
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 would 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 $699 $1,460
B $723 $1,453
C $223 $1,153
M $410 $1,213
- --------------------------------------------------------------------------------
If the shares are not redeemed:
SHARE CLASS 1 YEAR 3 YEARS
- --------------------------------------------------------------------------------
A $699 $1,460
B $223 $1,153
C $223 $1,153
M $311 $1,213
- --------------------------------------------------------------------------------
31
<PAGE>
IDEX GREAT COMPANIES -- TECHNOLOGY(SM)
/target/ OBJECTIVE
The objective of IDEX Great Companies -- Technology(SM) is long-term growth of
capital.
The fund may be appropriate for investors who seek long-term growth of capital
and who can tolerate fluctuations inherent in stock investing.
/chess piece/ PRINCIPAL STRATEGIES
AND POLICIES
The fund sub-adviser, Great Companies, L.L.C. (Great Companies), seeks to
achieve this objective by investing primarily in:
[ ] Common Stocks of companies that offer technology or communications related
products and services
The fund seeks to invest in stocks of large, established, United States based
companies that rely extensively on technology or communications in their
product development or operations, and have benefited from technological or
communications in their operating history. Stocks for this fund are selected by
Great Companies from a group of companies that it has identified, in its
opintion, as being a "great company." To be considered a "great company"
candidate by the sub-adviser, a company must: have a market cap in excess of
$15 billion; be highly regarded by management experts; be headquartered in the
U.S.; be publicly traded; have been in business 15 years or more; be engaged in
what the sub-adviser considers to be "terrific technology businesses"; have
superior business franchises; consider employees to be the company's most
valuable asset; have, in the sub-adviser's opinion "world class management";
deliver outstanding returns to shareholders; be a global company (30%
overseas); and, in the sub-adviser's opinion, be able to convert changes into
opportunities. Its common stock must have outperformed both the S&P 500 and the
Dow Jones Industrial Average over the ten year period ending December 31, 1998.
To determine which "great company" in which the fund should invest, Great
Companies uses Intrinsic Value investing. Intrinsic Value is the discounted
value of the cash that can be taken out of a business during its remaining
life. It is an estimate rather than a precise figure, and changes when interest
rates move or when forecasts of future cash flows are revised.
Great Companies monitors changes in each company's Intrisic Value over a twelve
to eighteen month period. It then determines a company's Intrinsic Value
Momentum (IVM), which is a measurement of the rate at which a company is
increasing or decreasing its Intrinsic Value. Great Companies looks at the
trading price of the stock and compares it to its Intrinsic Value calculation.
If a stock appears to be significantly overvalued in the market and its IVM is
flat or declining when compared to the Intrinsic Value calculation, Great
Companies does not invest in the stock or, if the fund has already invested in
the company, may reduce its position in the stock. When the stock share price
drops well below the Intrinsic Value calculation and its IVM is rising, Great
Companies will normally invest in the Company or, if the fund has already
invested in the company, attempt to buy more shares.
Because stock selections are limited to the companies identified as being a
"great company" by Great Companies, the fund is non-diversified.
/warning sign/ PRINCIPAL RISKS
The fund is subject to the following principal investment risks:
[ ] 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.
[ ] 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.
[ ] PROPRIETARY RESEARCH
Proprietary forms of research may not be effective and may cause overall
returns to be lower than if other forms of research are used.
THIS PORTFOLIO IS NON-DIVERSIFIED.
YOU MAY LOSE MONEY IF YOU INVEST IN THIS PORTFOLIO.
- --------------------------------------------------------------------------------
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 in a greater
portion of its assets in the securities of a smaller number is issuers, it
may be more susceptible to any single economic, political or regulatory
occurrence than a widely diversified portfolio and may be subject to a
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 in one issuer.
- --------------------------------------------------------------------------------
32
<PAGE>
/graph/ PAST PERFORMANCE
Because the fund commenced operations in July 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) 2.70% 2.70% 2.70% 2.70%
------------------------------------------
TOTAL ANNUAL FUND
OPERATING EXPENSES 3.85% 4.50% 4.50% 4.40%
EXPENSE REDUCTION (d) 2.30% 2.30% 2.30% 2.30%
------------------------------------------
NET OPERATING EXPENSES 1.55% 2.20% 2.20% 2.10%
- --------------------------------------------------------------------------------
(a) Certain purchases of Class A shares in amounts greater than $1 million are
subject to a 1% contingent deferred sales charge for 24 months after
purchase.
(b) Purchases of Class M shares are subject to a 1% contingent deferred sales
charge if redeemed within 18 months of purchase.
(c) Because the fund commenced operations in July 2000, the "Other expenses"
are estimates.
(d) Contractual arrangement with Idex Management, Inc. through 04/30/2001, for
expenses that exceed 1.20%, excluding 12b-1 fees.
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 would 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 $699 $1,460
B $723 $1,453
C $223 $1,153
M $410 $1,213
- --------------------------------------------------------------------------------
If the shares are not redeemed:
SHARE CLASS 1 YEAR 3 YEARS
- --------------------------------------------------------------------------------
A $699 $1,460
B $223 $1,153
C $223 $1,153
M $311 $1,213
- --------------------------------------------------------------------------------
33
<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.
/chess piece/ 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:
[ ] 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). (The fund will not invest in any
security rated below BBB-).
Please see Appendix A for a description of bond 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) (which is
inconsistent with the fund's principal investment strategies). Under these
circumstances, the fund may 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:
[ ] 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:
[ ] changes in interest rates
[ ] length of time to maturity
[ ] issuers defaulting on their obligations to pay interest or return
principal
[ ] HIGH-YIELD/HIGH-RISK SECURITIES
[ ] Credit risk
[ ] Greater sensitivity to interest rate movements
[ ] Greater vulnerability to economic changes
[ ] Decline in market value in event of default
[ ] Less liquidity
[ ] 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 .
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, which includes applicable sales charges, 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 (%) (1)
CLASS A SHARES
--------------
[GRAPH OMITTED]
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999
---- ---- ---- ---- ---- ---- ---- ---- ---- ----
2.85% 22.28% 12.63% 13.35% (4.02)% 18.43% 9.45% 11.53% 4.33% (0.34)%
(1) AS OF MARCH 31, 2000, THE END OF THE MOST RECENT CALENDAR QUARTER, THE
FUND'S YEAR-TO-DATE RETURN FOR CLASS A WAS %.
- --------------------------------------------------------------------------------
CLASS A SHARES: QUARTER ENDED RETURN
--------------- --------
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 (5.07)% 7.44% 8.24% 9.10%
- --------------------------------------------------------------------------------
B Shares (5.92)% N/A N/A 5.51%
- --------------------------------------------------------------------------------
M Shares* (2.80)% 7.68% N/A 5.38%
- --------------------------------------------------------------------------------
MLHYM** 1.57% 9.56% 10.97% 10.97%
- --------------------------------------------------------------------------------
*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 7.50% and Class M shares (10/01/93) is 8.28%.
/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 0.43% 0.43% 0.43% 0.43%
------------------------------------------
TOTAL ANNUAL FUND
OPERATING EXPENSES 1.38% 2.03% 2.03% 1.93%
- --------------------------------------------------------------------------------
(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 would 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 $609 $891 $1,194 $2,054
B* $706 $937 $1,193 $2,192
C $206 $637 $1,093 $2,358
M $393 $700 $1,131 $2,331
- --------------------------------------------------------------------------------
If the shares are not redeemed:
SHARE CLASS 1 YEAR 3 YEARS 5 YEARS 10 YEARS
- --------------------------------------------------------------------------------
A $609 $891 $1,194 $2,054
B* $206 $637 $1,093 $2,192
C $206 $637 $1,093 $2,358
M $294 $700 $1,131 $2,331
- --------------------------------------------------------------------------------
* EXAMPLES FOR CLASS B SHARES ASSUME THEY WILL CONVERT TO CLASS A SHARES EIGHT
YEARS AFTER YOU PURCHASE THEM.
35
<PAGE>
IDEX FEDERATED TAX EXEMPT (FORMERLY IDEX AEGON TAX EXEMPT)
SUMMARY OF RISKS AND RETURNS
/target/ OBJECTIVE
THE OBJECTIVE OF IDEX FEDERATED 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.
/chess piece/ PRINCIPAL STRATEGIES AND
POLICIES
The fund's sub-adviser, Federated Investment Mangement Company (Federated),
seeks to achieve this objective by investing at least 65% of the fund's net
assets in:
[ ] long-term, investment grade, tax exempt securities (Grade AAA, AA, A and
BBB)
These securities must be tax-exempt and not subject to alternative minimum tax.
Interest income may be subject to the federal alternative minimum tax (amount).
Please see Appendix A for a description of bond ratings.
Federated manages the fund's portfolio, by seeking to manage the interest rate
risk and credit risk assumed by the fund and provide superior levels of after
tax total return.
Federated considers a variety of factors in formulating its interest rate
outlook, including the following: current and expected U.S. economic growth;
current and expected interest rates and inflation; the Federal Reserve's
monetary policy; and supply and demand factors related to the municipal market
and the effect they may have on the returns offered for various bond
maturities.
Federated manages credit risk by performing a fundamental credit analysis on
tax exempt securities before the fund purchases such securities. Federated
considers various factors, including the following: the economic feasibility of
revenue bond financings and general purpose financings; the financial condition
of the issuer or guarantor; and political developments that may affect credit
quality.
Federated monitors the credit risks of all portfolio securities on an ongoing
basis by reviewing periodic financial data and ratings of nationally recognized
ratings services.
Federated also will seek to further enhance after tax total return by engaging
in a relative value analysis; that is, Federated will assess the cost of a tax
exempt security compared with other tax exempt securities and taxable
securities such as U.S. Treasury obligations. Federated may also allocate
investments in sectors of the tax exempt market that offer the highest return.
Finally, Federated will invest a portion of the fund's portfolio in tax exempt
securities subject to AMT, which may offer higher returns.
Federated may also use credit enhancements and futures contracts, or other
securities and investment strategies in pursuit of its investment objective,
which are explained beginning on page and in the SAI.
Federated may use hedging to reduce specific risks.
The fund may take a temporary defensive position from its principal investment
strategies by investing its assets in securities subject to federal income tax.
It may do this to minimize potential losses and maintain liquidity to meet
shareholder redemptions during adverse market conditions. This may cause the
fund to receive and distribute taxable income to investors.
Prior to June 15, 2000, this fund was sub-advised by AEGON.
/warning sign/ PRINCIPAL RISKS
The fund is subject to the following principal investment risks:
[ ] MUNICIPAL OBLIGATIONS
[ ] Their yields are usually lower than on similar, but taxable securities
[ ] The income may be subject to state and local taxes
[ ] The income may be a preference item for determining the federal
alternative minimum tax
[ ] Unrated municipal securities may be less liquid than rated securities
[ ] Congress occasionally considers restricting or eliminating the federal tax
exemption
[ ] Obligations could ultimately be federally taxable
[ ] 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:
[ ] fluctuations in market value
[ ] changes in interest rates
[ ] length of time to maturity
[ ] issuers defaulting on their obligations to pay interest or return
principle
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 return. The table, which includes applicable sales charges, 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 (%) (1)
CLASS A SHARES
--------------
[GRAPH OMITTED]
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999
---- ---- ---- ---- ---- ---- ---- ---- ---- ----
5.57% 10.24% 6.60% 8.66% (2.25)% 12.66% 3.89% 10.12% 4.58% (6.25)%
(1) AS OF MARCH 31, 2000, THE END OF THE MOST RECENT CALENDAR QUARTER, THE
FUND'S YEAR-TO-DATE RETURN FOR CLASS A WAS %.
- --------------------------------------------------------------------------------
CLASS A SHARES: QUARTER ENDED RETURN
--------------- --------
Best Quarter: 3/31/95 5.34%
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 (10.71)% 3.81% 4.74% 6.66%
- --------------------------------------------------------------------------------
B Shares (11.51)% N/A N/A 2.77%
- --------------------------------------------------------------------------------
M Shares* (8.36)% 4.33% N/A 3.19%
- --------------------------------------------------------------------------------
LBGMB** (0.87)% 7.16% 7.02% 8.48%
- --------------------------------------------------------------------------------
*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 5.16% AND CLASS M (10/01/93) IS 4.83%.
/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 0.55% 0.55% 0.55% 0.55%
------------------------------------------
TOTAL ANNUAL FUND
OPERATING EXPENSES 1.50% 2.15% 2.15% 1.75%
EXPENSE REDUCTION (c) 0.15% 0.15% 0.15% 0.15%
------------------------------------------
NET OPERATING EXPENSES 1.35% 2.00% 2.00% 1.60%
- --------------------------------------------------------------------------------
(a) Certain purchases of Class A shares in amounts greater than $1 million are
subject to a 1% contingent deferred sales charge for 24 months after
purchase.
(b) Purchases of Class M shares are subject to a 1% contingent deferred sales
charge if redeemed within 18 months of purchase.
(c) Contractual arrangement with Idex Management, Inc. through 4/30/2001, for
expenses that exceed 1.00%, excluding 12b-1 fees.
(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 would 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 $606 $913 $1,241 $2,168
B* $703 $959 $1,241 $2,306
C $203 $659 $1,141 $2,471
M $360 $631 $1,026 $2,130
- --------------------------------------------------------------------------------
If the shares are not redeemed:
SHARE CLASS 1 YEAR 3 YEARS 5 YEARS 10 YEARS
- --------------------------------------------------------------------------------
A $606 $913 $1,241 $2,168
B* $203 $659 $1,141 $2,306
C $203 $659 $1,141 $2,471
M $261 $631 $1,026 $2,130
- --------------------------------------------------------------------------------
* EXAMPLES FOR CLASS B SHARES ASSUME THEY WILL CONVERT TO CLASS A SHARES EIGHT
YEARS AFTER YOU PURCHASE THEM.
37
<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.
/chess piece/ PRINCIPAL STRATEGIES
AND POLICIES
The fund's sub-adviser, GE Asset Management Incorporated (GEAM), seeks to
achieve this objective by investing principally in:
[ ] common stocks of companies located in deveoped and developing countries
other than the United States.
GEAM focuses on companies that it expects will grow faster than relevant
markets and whose security price does not, in GEAM's view, fully reflect their
potential for growth. Under normal circumstances, the fund's assets are
invested in foreign securities of companies representing at least three
different countries.
GEAM determines the country represented by an issuer by reference to the
country in which the issuer is organized; derives at least 50% of its revenues
or profits from goods produced or sold, investments made or services performed;
has at least 50% of its assets situated; or has the principal trading market
for its securities.
GEAM seeks to identify securities of growth companies with characteristics such
as:
[ ] low prices relative to their long-term cash earnings potential
[ ] potential for significant improvement in the company's business
[ ] financial strength
[ ] 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 often do not 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, to a lesser extent, invest in equity securities other than common
stocks (including preferred securities, depositary receipts such as ADRs, EDRs
and GDRs, convertible securities, and rights and warrants), securities of
companies located in the United States, debt securities or other securities,
and use various investment techniques and investment strategies in pursuit of
its investment objective, which are explained beginning on page 46 and in the
SAI.
Prior to March 1, 2000, Scottish Equitable Investment Management Limited served
as co-manager of this fund and was responsible for managing a discrete portion
of its assets.
/warning sign/ PRINCIPAL RISKS
The fund is subject to the following principal investment risks:
[ ] 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.
[ ] 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.
[ ] EMERGING MARKETS
Emerging market securities bear most of the foreign exposure risks discussed
above. In addition, the risks associated with investing in emerging markets are
often greater than investing in developed foreign markets. These risks are
further explained on page .
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, which includes applicable sales charges, compares
how the fund's average annual returns for different calendar periods compare to
the returns of the Morgan Stanley Capital International-Europe, Asia and Far
East Index (MSCI-EAFE), a widely recognized unmanaged index of market
performance. The 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 (%) (1)
CLASS A SHARES
--------------
[GRAPH OMITTED]
1998 1999
---- ----
11.21% 30.63%
(1) AS OF MARCH 31, 2000, THE END OF THE MOST RECENT CALENDAR QUARTER, THE
FUND'S YEAR-TO-DATE RETURN FOR CLASS A WAS %.
- --------------------------------------------------------------------------------
CLASS A SHARES: QUARTER ENDED RETURN
--------------- --------
Best Quarter: 12/31/99 23.80%
Worst Quarter: 9/30/98 (16.94)%
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS AS OF 12/31/99
SINCE
ONE YEAR INCEPTION
- --------------------------------------------------------------------------------
A Shares 23.45% 13.91%
- --------------------------------------------------------------------------------
B Shares 25.01% 14.69%
- --------------------------------------------------------------------------------
M Shares* 27.80% 15.18%
- --------------------------------------------------------------------------------
MSCI-EAFE** 27.25% 17.98%
- --------------------------------------------------------------------------------
*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 0.80% 0.80% 0.80% 0.80%
Distribution and service
(12b-1) fees 0.35% 1.00% 1.00% 0.90%
Other expenses 2.31% 2.31% 2.31% 2.31%
------------------------------------------
TOTAL ANNUAL FUND
OPERATING EXPENSES 3.46% 4.11% 4.11% 4.01%
EXPENSE REDUCTION (c) 1.91% 1.91% 1.91% 1.91%
------------------------------------------
NET OPERATING EXPENSES 1.55% 2.20% 2.20% 2.10%
- --------------------------------------------------------------------------------
(a) Certain purchases of Class A shares in amounts greater than $1 million are
subject to a 1% contingent deferred sales charge for 24 months after
purchase.
(b) Purchases of Class M shares are subject to a 1% contingent deferred sales
charge if redeemed within 18 months of purchase.
(c) Contractual arrangement with Idex Management, Inc. through 4/30/2001, for
expenses that exceed 1.20%, excluding 12b-1 fees.
(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 would 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 $699 $1,386 $2,094 $3,963
B* $723 $1,376 $2,043 $4,043
C $223 $1,076 $1,943 $4,181
M $410 $1,136 $1,978 $4,155
- --------------------------------------------------------------------------------
If the shares are not redeemed:
SHARE CLASS 1 YEAR 3 YEARS 5 YEARS 10 YEARS
- --------------------------------------------------------------------------------
A $699 $1,386 $2,094 $3,963
B* $223 $1,076 $1,943 $4,043
C $223 $1,076 $1,943 $4,181
M $311 $1,136 $1,978 $4,155
- --------------------------------------------------------------------------------
* EXAMPLES FOR CLASS B SHARES ASSUME THEY WILL CONVERT TO CLASS A SHARES EIGHT
YEARS AFTER YOU PURCHASE THEM.
39
<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.
/chess piece/ PRINCIPAL STRATEGIES
AND POLICIES
The fund's sub-adviser, GE Asset Management Incorporated (GEAM), seeks to
achieve the fund's objective by investing principally in:
[ ] common stocks of U.S. companies.
GEAM uses a Multi-Style/registered trademark/ investment strategy that combines
growth and value investment management styles. As a result, the fund has
characteristics similar to the Standard & Poor's 500 Composite Stock Index,
including capital appreciation and income potential. Stock selection is key to
the performance of the fund.
Through fundamental company research, the portfolio managers seek to identify
securities of large companies with characteristics such as:
[ ] attractive valuations
[ ] financial strength
[ ] high quality management focused on generating shareholder value.
The fund may, to a lesser extent, invest in equity securities other than common
stocks (including preferred securities, depositary receipts such as ADRs, EDRs
and GDRs, convertible securities, and rights and warrants), foreign securities,
debt securities and use various investment techniques 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 risk:
[ ] 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.
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
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) 2.70% 2.70% 2.70% 2.70%
------------------------------------------
TOTAL ANNUAL FUND OPERATING
EXPENSES 3.85% 4.50% 4.50% 4.40%
EXPENSE REDUCTION (d) 2.30% 2.30% 2.30% 2.30%
------------------------------------------
NET OPERATING EXPENSES 1.55% 2.20% 2.20% 2.10%
- --------------------------------------------------------------------------------
(a) Certain purchases of Class A shares in amounts greater than $1 million are
subject to a 1% contingent deferred sales charge for 24 months after
purchase.
(b) Purchases of Class M shares are subject to a 1% contingent deferred sales
charge if redeemed within 18 months of purchase.
(c) Because the fund commenced operations in March 2000 the "Other expenses" are
estimates.
(d) Contractual arrangements with Idex Management, Inc. through 4/30/2001, for
expenses that exceed 1.20%, excluding 12b-1 fees.
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 would 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 $699 $1,460
B $723 $1,453
C $223 $1,153
M $410 $1,213
- --------------------------------------------------------------------------------
If the shares are not redeemed:
SHARE CLASS 1 YEAR 3 YEARS
- --------------------------------------------------------------------------------
A $699 $1,460
B $223 $1,153
C $223 $1,153
M $311 $1,213
- --------------------------------------------------------------------------------
41
<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.
/chess piece/ 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:
[ ] income-producing common and preferred stocks
[ ] debt obligations of U.S. issuers, some of which will be convertible into
common stocks
[ ] U.S. Treasury bonds, notes and bills
[ ] 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 "tactical 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:
[ ] 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.
[ ] 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. However, when the market price
of the common stock underlying a convertible security exceeds the conversion
price, the price of the convertible security tends to reflect the value of the
underlying common stock. As the market price of the underlying common stock
declines, the convertible security tends to trade increasingly on a yield
basis, and thus may not depreciate to the same extent as the underlying stock.
[ ] 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:
[ ] changes in interest rates
[ ] length of time to maturity
[ ] issuers defaulting on their obligations to pay interest or return principal
[ ] statistical models
[ ] TACTICAL ASSET ALLOCATION
The "tactical asset allocation" investment technique may not be effective. As a
result, overall returns of the fund may be lower than if other methods were
used to select the securities held by the fund.
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 .
42
<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, which includes applicable sales charges, 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 (%) (1)
CLASS A SHARES
--------------
[GRAPH OMITTED]
1996 1997 1998 1999
---- ---- ---- ----
13.16% 17.06% 6.87% (6.61)%
(1) AS OF MARCH 31, 2000, THE END OF THE MOST RECENT CALENDAR QUARTER, THE
FUND'S YEAR-TO-DATE RETURN FOR CLASS A WAS %.
- --------------------------------------------------------------------------------
CLASS A SHARES: QUARTER ENDED RETURN
--------------- --------
Best Quarter: 6/30/97 8.95%
Worst Quarter: 9/30/99 (8.25)%
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS AS OF 12/31/99
SINCE
ONE YEAR INCEPTION
- --------------------------------------------------------------------------------
A Shares (11.75)% 6.33%
- --------------------------------------------------------------------------------
B Shares (11.85)% 6.88%
- --------------------------------------------------------------------------------
M Shares* (8.97)% 6.92%
- --------------------------------------------------------------------------------
LBIGCB** 0.39% 5.68%
- --------------------------------------------------------------------------------
Russel 1000** 7.42% 20.09%
- --------------------------------------------------------------------------------
*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 0.80% 0.80% 0.80% 0.80%
Distribution and service
(12b-1) fees 0.35% 1.00% 1.00% 0.90%
Other expenses 0.63% 0.63% 0.63% 0.63%
------------------------------------------
TOTAL ANNUAL FUND
OPERATING EXPENSES 1.78% 2.43% 2.43% 2.33%
EXPENSE REDUCTION (c) 0.23% 0.23% 0.23% 0.23%
------------------------------------------
NET OPERATING EXPENSES 1.55% 2.20% 2.20% 2.10%
- --------------------------------------------------------------------------------
(a) Certain purchases of Class A shares in amounts greater than $1 million are
subject to a 1% contingent deferred sales charge for 24 months after
purchase.
(b) Purchases of Class M shares are subject to a 1% contingent deferred sales
charge if redeemed within 18 months of purchase.
(c) Contractual arrangement with Idex Management, Inc.
through 4/30/2001, for expenses that exceed 1.20%, excluding 12b-1 fees.
(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 would 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 $699 $1,058 $1,441 $2,511
B* $723 $1,036 $1,375 $2,588
C $223 $ 736 $1,275 $2,749
M $410 $ 798 $1,312 $2,722
- --------------------------------------------------------------------------------
If the shares are not redeemed:
SHARE CLASS 1 YEAR 3 YEARS 5 YEARS 10 YEARS
- --------------------------------------------------------------------------------
A $699 $1,058 $1,441 $2,511
B* $223 $ 736 $1,275 $2,588
C $223 $ 736 $1,275 $2,749
M $311 $ 798 $1,312 $2,722
- --------------------------------------------------------------------------------
* EXAMPLES FOR CLASS B SHARES ASSUME THEY WILL CONVERT TO CLASS A SHARES EIGHT
YEARS AFTER YOU PURCHASE THEM.
43
<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.
/chess piece/ 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:
[ ] common stocks
[ ] corporate bonds
[ ] 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:
[ ] balance sheet quality
[ ] cash flow generation
[ ] earnings and dividend growth record and outlook
[ ] 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 bond 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, to a lesser extent, 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 46 and in the SAI.
/warning sign/ PRINCIPAL RISKS
The fund is subject to the following principal investment risks:
[ ] 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.
[ ] 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:
[ ] changes in interest rates
[ ] length of time to maturity
[ ] 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 .
44
<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, which includes applicable sales charges, 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 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 (%) (1)
CLASS A SHARES
--------------
[GRAPH OMITTED]
1995 1996 1997 1998 1999
---- ---- ---- ---- ----
22.81% 16.42% 21.99% 10.07% 10.59%
(1) AS OF MARCH 31, 2000, THE END OF THE MOST RECENT CALENDAR QUARTER, THE
FUND'S YEAR-TO-DATE RETURN FOR CLASS A WAS %.
- --------------------------------------------------------------------------------
CLASS A SHARES: QUARTER ENDED RETURN
--------------- --------
Best Quarter: 6/30/97 12.74%
Worst Quarter: 9/30/98 (7.39)%
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS AS OF 12/31/99
SINCE
ONE YEAR 5 YEARS INCEPTION
- --------------------------------------------------------------------------------
A Shares 4.51% 14.94% 15.09%
- --------------------------------------------------------------------------------
B Shares 4.91% N/A 14.35%
- --------------------------------------------------------------------------------
M Shares* 7.91% 15.40% 15.53%
- --------------------------------------------------------------------------------
S&P 500** 21.04% 28.51% 26.01%
- --------------------------------------------------------------------------------
LBIGCB** 0.39% 7.10% 7.05%
- --------------------------------------------------------------------------------
*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 24.22% FOR THE S&P 500, AND 5.68% 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 0.80% 0.80% 0.80% 0.80%
Distribution and service
(12b-1) fees 0.35% 1.00% 1.00% 0.90%
Other expenses 0.63% 0.63% 0.63% 0.63%
------------------------------------------
TOTAL ANNUAL FUND
OPERATING EXPENSES 1.78% 2.43% 2.43% 2.33%
EXPENSE REDUCTION (c) 0.23% 0.23% 0.23% 0.23%
------------------------------------------
NET OPERATING EXPENSES 1.55% 2.20% 2.20% 2.10%
- --------------------------------------------------------------------------------
(a) Certain purchases of Class A shares in amounts greater than $1 million are
subject to a 1% contingent deferred sales charge for 24 months after
purchase.
(b) Purchases of Class M shares are subject to a 1% contingent deferred sales
charge if redeemed within 18 months of purchase.
(c) Contractual arrangement with Idex Management, Inc. through 4/30/2001, for
expenses that exceed 1.20%, excluding 12b-1 fees.
(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 would 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 $699 $1,058 $1,441 $2,511
B* $723 $1,036 $1,375 $2,588
C $223 $ 736 $1,275 $2,749
M $410 $ 798 $1,312 $2,722
- --------------------------------------------------------------------------------
If the shares are not redeemed:
SHARE CLASS 1 YEAR 3 YEARS 5 YEARS 10 YEARS
- --------------------------------------------------------------------------------
A $699 $1,058 $1,441 $2,511
B* $223 $ 736 $1,275 $2,588
C $223 $ 736 $1,275 $2,749
M $311 $ 798 $1,312 $2,722
- --------------------------------------------------------------------------------
* EXAMPLES FOR CLASS B SHARES ASSUME THEY WILL CONVERT TO CLASS A SHARES EIGHT
YEARS AFTER YOU PURCHASE THEM.
45
<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.
/chess piece/ 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:
[ ] 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. (The range for mid-capitalization companies is $1.5 - $10 billion,
and over $10 billion for large capitalization companies). When making a
security selection NWQ:
[ ] uses earnings averaged over both strong and weak periods in evaluating
cyclical companies
[ ] focuses on quality of earnings
[ ] invests in relative value
[ ] 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, to a lesser
extent, 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 46 and in the SAI.
/warning sign/ PRINCIPAL RISKS
The fund is subject to the following principal investment risks:
[ ] 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.
[ ] 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 .
46
<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, which includes applicable sales charges, 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 (%) (1)
CLASS A SHARES
--------------
[GRAPH OMITTED]
1998 1999
---- ----
(7.24)% 8.32%
(1) AS OF MARCH 31, 2000, THE END OF THE MOST RECENT CALENDAR QUARTER, THE
FUND'S YEAR-TO-DATE RETURN FOR CLASS A WAS %.
- --------------------------------------------------------------------------------
CLASS A SHARES: QUARTER ENDED RETURN
--------------- --------
Best Quarter: 6/30/99 14.67%
Worst Quarter: 9/30/98 (18.47)%
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS AS OF 12/31/99
SINCE
ONE YEAR INCEPTION
- --------------------------------------------------------------------------------
A Shares 2.36% 4.42%
- --------------------------------------------------------------------------------
B Shares 2.67% 4.90%
- --------------------------------------------------------------------------------
M Shares* 5.69% 5.56%
- --------------------------------------------------------------------------------
S&P 500** 21.04% 23.91%
- --------------------------------------------------------------------------------
*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 0.80% 0.80% 0.80% 0.80%
Distribution and service
(12b-1) fees 0.35% 1.00% 1.00% 0.90%
Other expenses 1.12% 1.12% 1.12% 1.12%
------------------------------------------
TOTAL ANNUAL FUND
OPERATING EXPENSES 2.27% 2.92% 2.92% 2.82%
EXPENSE REDUCTION (C) 0.72% 0.72% 0.72% 0.72%
------------------------------------------
NET OPERATING EXPENSES 1.55% 2.20% 2.20% 2.10%
- --------------------------------------------------------------------------------
(a) Certain purchases of Class A shares in amounts greater than $1 million are
subject to a 1% contingent deferred sales charge for 24 months after
purchase.
(b) Purchases of Class M shares are subject to a 1% contingent deferred sales
charge if redeemed within 18 months of purchase.
(c) Contractual arrangement with Idex Management, Inc. through 4/30/2001, for
expenses that exceed 1.20%, excluding 12b-1 fees.
(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 would 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 $699 $1,155 $1,636 $2,959
B* $723 $1,136 $1,575 $3,037
C $223 $ 836 $1,475 $3,191
M $410 $ 898 $1,511 $3,164
- --------------------------------------------------------------------------------
If the shares are not redeemed:
SHARE CLASS 1 YEAR 3 YEARS 5 YEARS 10 YEARS
- --------------------------------------------------------------------------------
A $699 $1,155 $1,636 $2,959
B* $223 $ 836 $1,475 $3,037
C $223 $ 836 $1,475 $3,191
M $311 $ 898 $1,511 $3,164
- --------------------------------------------------------------------------------
* EXAMPLES FOR CLASS B SHARES ASSUME THEY WILL CONVERT TO CLASS A SHARES EIGHT
YEARS AFTER YOU PURCHASE THEM.
47
<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.
/chess piece/ 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:
[ ] common stocks
[ ] preferred stocks
[ ] 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:
[ ] insiders' activity
[ ] market style leadership
[ ] earnings surprise
[ ] analysts' change in earnings projections
[ ] return on equity
[ ] 5-year earnings-per-share growth rate
[ ] price-earnings ratio
[ ] price-to-book ratio
[ ] price-to-cash flow
[ ] institutional activity and holdings
[ ] relative strength price change
[ ] price-to-200-day moving average
[ ] price-to-historical rising inflation
[ ] price-to-declining U.S. dollar
[ ] earnings projected change
[ ] 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:
[ ] 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.
[ ] 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.
[ ] 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. However, when the market price
of the common stock underlying a convertible security exceeds the conversion
price, the price of the convertible security tends to reflect the value of the
underlying common stock. As the market price of the underlying common stock
declines, the convertible security tends to trade increasingly on a yield
basis, and thus may not depreciate to the same extent as the underlying stock.
[ ] PREFERRED STOCKS
While preferred stocks pay dividends at a predetermined rate, capital
appreciation potential is limited to that level. Preferred stock is less risky
and less volatile than common stock, but your gains are limited when compared
to the growth potential of common stock.
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 .
48
<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, which includes applicable sales charges, compares
how the fund's average annual returns for different calendar periods compare to
the returns of the Wilshire 5000 Equity Index (Wilshire 5000), 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 (%) (1)
CLASS A SHARES
--------------
[GRAPH OMITTED]
1997 1998 1999
---- ---- ----
21.11% (5.34)% 29.33%
(1) AS OF MARCH 31, 2000, THE END OF THE MOST RECENT CALENDAR QUARTER, THE
FUND'S YEAR-TO-DATE RETURN FOR CLASS A WAS %.
- --------------------------------------------------------------------------------
CLASS A SHARES: QUARTER ENDED RETURN
--------------- --------
Best Quarter: 12/31/98 24.98%
Worst Quarter: 9/30/98 (24.42)%
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS AS OF 12/31/99
SINCE
ONE YEAR INCEPTION
- --------------------------------------------------------------------------------
A Shares 22.21% 11.65%
- --------------------------------------------------------------------------------
B Shares 23.70% 12.29%
- --------------------------------------------------------------------------------
M Shares* 26.51% 12.46%
- --------------------------------------------------------------------------------
Wilshire 5000** 23.56% 22.64%
- --------------------------------------------------------------------------------
* 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 0.80% 0.80% 0.80% 0.80%
Distribution and service
(12b-1) fees 0.35% 1.00% 1.00% 0.90%
Other expenses 1.66% 1.66% 1.66% 1.66%
----------------------------------------
TOTAL ANNUAL FUND
OPERATING EXPENSES 2.81% 3.46% 3.46% 3.36%
EXPENSE REDUCTION (c) 1.26% 1.26% 1.26% 1.26%
----------------------------------------
NET OPERATING EXPENSES 1.55% 2.20% 2.20% 2.10%
- --------------------------------------------------------------------------------
(a) Certain purchases of Class A shares in amounts greater than $1 million are
subject to a 1% contingent deferred sales charge for 24 months after
purchase.
(b) Purchases of Class M shares are subject to a 1% contingent deferred sales
charge if redeemed within 18 months of purchase.
(c) Contractual arrangement with Idex Management, Inc.
through 04/30/2001, for expenses that exceed 1.20%, excluding 12b-1 fees.
(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 would 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 $699 $1,261 $1,847 $3,429
B* $723 $1,245 $1,790 $3,508
C $223 $ 945 $1,690 $3,655
M $410 $1,007 $1,726 $3,628
- --------------------------------------------------------------------------------
If the shares are not redeemed:
SHARE CLASS 1 YEAR 3 YEARS 5 YEARS 10 YEARS
- --------------------------------------------------------------------------------
A $699 $1,261 $1,847 $3,429
B* $223 $ 945 $1,690 $3,508
C $223 $ 945 $1,690 $3,655
M $311 $1,007 $1,726 $3,628
- --------------------------------------------------------------------------------
* EXAMPLES FOR CLASS B SHARES ASSUME THEY WILL CONVERT TO CLASS A SHARES EIGHT
YEARS AFTER YOU PURCHASE THEM.
49
<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 fund.
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.
/chess piece/ 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, IDEX JCC Capital Appreciation,
IDEX Pilgrim Baxter Technology, IDEX Great Companies -- America(SM) and IDEX
Great Companies -- Technology(SM) 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):
[ ] 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.
[ ] 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, IDEX JCC Capital Appreciation and IDEX Pilgrim Baxter
Technology each reserves the right to become a diversified investment company
(as defined by the 1940 Act).
/chess piece/ 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 factor 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 is 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 inversely to interest rates 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. Price changes may be
temporary and for extended periods.
/warning sign/ INVESTING IN BONDS. Like common stocks, bonds fluctuate in value,
though the factors causing this are different, including:
[ ] 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.
[ ] 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.
[ ] 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.
[ ] 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
50
<PAGE>
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.
[ ] 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, subject to greater price volatility and are less liquid.
[ ] 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.
[ ] 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 bond 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:
[ ] 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.
[ ] CURRENCY SPECULATION. The foreign currency market is largely unregulated
and subject to speculation.
[ ] CURRENCY TRADING COSTS. Some funds also invest in American Depository
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.
[ ] EURO CONVERSION. On January 1, 1999, certain participating countries in the
European Economic Monetary Union (EU) 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.
[ ] DIFFERING ACCOUNTING AND REPORTING PRACTICES. Foreign tax laws are
different, as are laws, practices and standards for accounting, auditing
and reporting data to investors.
[ ] LESS INFORMATION AVAILABLE TO THE PUBLIC. Foreign companies usually make
far less information available to the public.
[ ] LESS REGULATION. Securities regulations in many foreign countries are more
lax than in the U.S.
[ ] 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.
[ ] LESS LIQUIDITY/MORE VOLATILITY. Some foreign securities are harder to
convert to cash than U.S. securities, and their prices may fluctuate more
dramatically.
[ ] 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.
[ ] HIGHER CUSTODIAL CHARGES. Fees charged by the fund's custodian for holding
shares are higher for foreign securities than those of domestic
securities.
[ ] 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.
[ ] 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.
[ ] 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.
[ ] 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. Shifting a
fund's currency exposure from one currency to another removes the fund's
opportunity to profit from the original
51
<PAGE>
EXPLANATION OF STRATEGIES AND RISKS
currency and involves a risk of increased losses for the fund if the
sub-adviser's projection of future exchange rates is inaccurate.
[ ] 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 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:
[ ] 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.
[ ] 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 (I.E., imperfect
correlation), the benefits of the transaction might be diminished.
[ ] Illiquid markets. If there is no market for the contracts, the fund may not
be able to control losses.
[ ] 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:
[ ] inaccurate market predictions
[ ] imperfect correlation
[ ] illiquidity
[ ] tax considerations
[ ] potential unlimited loss
[ ] volatile net asset value
/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 a 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.
/warning sign/ ZERO COUPON SECURITIES. Zero coupon securities do not pay
interest or principal until final maturity unlike debt securities
that provide periodic payments of interest (referred to as coupon payment).
Investors buy zero coupon securities at a price below the amount payable at
maturity. The difference between the purchase price and the amount paid at
maturity represents interest on the zero coupon security. Investors must wait
until maturity to receive interest and principal, which increases the interest
rate risks and credit risks of a zero coupon security.
/warning sign/ GENERAL OBLIGATION BONDS. General obligation bonds are supported
by the issuer's power to exact property or other taxes. The
issuer must impose and collect taxes sufficient to pay principal and interest on
the bonds. However, the issuer's authority to impose additional taxes may be
limited by its charter or state law.
/warning sign/ SPECIAL REVENUE BONDS. Special revenue bonds are payable solely
from specific revenues received by the issuer such as specific
taxes, assessments, tolls, or fees. Bondholders may not collect from the
municipality's general taxes or revenues. For example, a municipality may issue
bonds to build a toll road, and pledge the tolls to repay the bonds. Therefore,
a shortfall in the tolls normally would result in a default on the bonds.
/warning sign/ PRIVATE ACTIVITY BONDS. Private activity bonds are special
revenue bonds used to finance private entities. For example, a
municipality may issue bonds to finance a new factory to improve its local
economy. The municipality would lend the proceeds from its bonds to the company
using the factory, and the company would agree to make loan payments sufficient
to repay the bonds. The bonds would be payable solely from the company's loan
payments, not from any other revenues of the municipality. Therefore, any
default on the loan normally would result in a default on the bonds.
The interest on many types of private activity bonds is subject to Alternative
Minimum Tax (AMT). The Fund may invest in bonds subject to AMT.
/warning sign/ TAX INCREMENT FINANCING BONDS. Tax increment financing (TIF)
bonds are payable from increases in taxes or other revenues
attributable to projects financed by the bonds. For example, a
52
<PAGE>
municipality may issue TIF bonds to redevelop a commercial area. The TIF bonds
would be payable solely from any increase in sales taxes collected from
merchants in the area. The bonds could default if merchants' sales, and related
tax collections, failed to increase as anticipated.
/warning sign/ VARIABLE RATE DEMAND INSTRUMENTS. Variable rate demand
instruments are tax exempt securities that require the issuer or
a third party, such as a dealer or bank, to repurchase the security for its face
value upon demand. The securities also pay interest at a variable rate intended
to cause the securities to trade at their face value. The Fund treats demand
instruments as short-term securities, because their variable interest rate
adjusts in response to changes in market rates, even though their stated
maturity may extend beyond 13 months.
/warning sign/ CREDIT ENHANCEMENT. Credit enhancement consists of an arrangement
in which a company agrees to pay amounts due on a fixed income
security if the issuer defaults. In some cases the company providing credit
enhancement makes all payments directly to the security holders and receives
reimbursement from the issuer. Normally, the credit enhancer has greater
financial resources and liquidity than the issuer. For this reason, the Adviser
usually evaluates the credit risk of a fixed income security based solely upon
its credit enhancement.
/warning sign/ 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.
/warning sign/ 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:
[ ] a new product or process
[ ] a management change
[ ] a technological breakthrough
[ ] an extraordinary corporate event
[ ] 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 JCC Global, IDEX C.A.S.E. Growth, IDEX JCC Flexible
Income and IDEX Pilgrim Baxter Mid Cap Growth 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/ GROWTH INVESTING. Securities with different characteristics tend
to shift in and out of favor depending upon market and economic
conditions as well as investor sentiment. A fund may underperform other funds
that employ a different style. Growth stocks may be more volatile than other
stocks because they are more sensitive to investor perceptions of the issuing
company's growth potential. Growth-oriented funds typically will underperform
when value investing is in favor.
/warning sign/ VARIOUS INVESTMENT TECHNIQUES. Various investment techniques are
utilized to increase or decrease exposure to changing security
prices, interest rates, currency exchange rates, commodity prices or other
factors that affect security values. These techniques may involve derivative
securities and transactions such as buying and selling options and futures
contracts, entering into currency exchange contracts or swap agreements and
purchasing indexed securities. These techniques are designed to adjust the risk
and return characteristics of the fund's portfolio of investments and are not
used for leverage.
/warning sign/ T. ROWE PRICE RESERVE INVESTMENT FUND. The IDEX T. Rowe Price
Small Cap and IDEX T. Rowe Price Dividend Growth funds may invest
in money market instruments directly or indirectly through investment in the
Reserve Investment Fund (Reserve Fund). The Reserve Fund is advised by T. Rowe
Price and charges no advisory fees to the investment manager, but other fees may
be incurred which may result in a duplication of fees. Further information is
included in the 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 GEAM; GEAM
charges no advisory fee to the Investment Fund, but other fees may be incurred
which may result in a duplication of fees.
53
<PAGE>
HOW THE IDEX FUNDS ARE MANAGED AND ORGANIZED
IDEX Mutual Funds is run by a Board of Trustees.
The assets of each fund are managed by an investment adviser, who in turn
selects sub-advisers, who have hired fund managers. All such advisers to the
funds are supervised by the Board of Trustees. You can find information about
the Trustees and officers of the Fund in the SAI.
IDEX MANAGEMENT, INC. (IMI), located at 570 Carillon Parkway, St. Petersburg,
Florida 33716, serves as investment adviser to the Fund.
The investment adviser hires sub-advisers to furnish investment advice and
recommendations and has entered into 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
Alger IDEX Alger Aggressive Growth
T. Rowe Price IDEX T. Rowe Price Dividend
Growth
IDEX T. Rowe Price Small Cap
Pilgrim Baxter IDEX Pilgrim Baxter Mid Cap
Growth
IDEX Pilgrim Baxter Technology
GSAM IDEX Goldman Sachs Growth
TIM IDEX Transamerica Equity
IDEX Transamerica Small
Company
SBAM IDEX Salomon All Cap
Great Companies Great Companies -- America(SM)
Great Companies -- Technology(SM)
AIMI IDEX AEGON Income Plus
Federated IDEX Federated Tax Exempt
GEAM 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
54
<PAGE>
- --------------------------------------------------------------------------------
ADVISORY FEE SCHEDULE--ANNUAL RATES
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
IDEX IDEX IDEX IDEX
JCC* IDEX IDEX IDEX JCC** AEGON FEDERATED
CAPITAL JCC JCC* JCC* FLEXIBLE INCOME TAX
AVERAGE DAILY NET ASSETS APPRECIATION GLOBAL GROWTH BALANCED INCOME PLUS EXEMPT
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
First $750 million 1.00% 1.00% 1.00% 1.00% N/A 0.60% 0.60%
- -------------------------------------------------------------------------------------------------------------------
the next $250 million 0.90% 0.90% 0.90% 0.90% N/A 0.60% 0.60%
- -------------------------------------------------------------------------------------------------------------------
over $1 billion 0.85% 0.85% 0.85% 0.85% N/A 0.60% 0.60%
- -------------------------------------------------------------------------------------------------------------------
First $100 million 0.90%
- -------------------------------------------------------------------------------------------------------------------
the next $150 million 0.80%
- -------------------------------------------------------------------------------------------------------------------
over $250 million 0.70%
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
*IMI has contractually agreed to waive a portion of its advisory fee 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%).
**IMI has contractually agreed to waive a portion of its advisory fee 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 IDEX
ALGER T. ROWE PRICE IDEX PILGRIM BAXTER
AVERAGE DAILY AGGRESSIVE DIVIDEND T. ROWE PRICE MID CAP
NET ASSETS GROWTH GROWTH SMALL 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 GOLDMAN IDEX TRANSAMERICA IDEX
AVERAGE DAILY PILGRIM BAXTER SACHS TRANSAMERICA SMALL SALOMON
NET ASSETS TECHNOLOGY GROWTH EQUITY COMPANY ALL CAP
- --------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
First $500 million 1.00% 0.80% 0.80% 0.80% 0.80%
- --------------------------------------------------------------------------------------
over $500 million 0.90% 0.70% 0.70% 0.70% 0.70%
- --------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
IDEX IDEX IDEX IDEX
GE IDEX DEAN LKCM NWQ IDEX
AVERAGE DAILY INTERNATIONAL GE U.S. ASSET STRATEGIC VALUE C.A.S.E.
NET ASSETS EQUITY EQUITY ALLOCATION TOTAL RETURN EQUITY GROWTH
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
First $500 million 0.80% 0.80% 0.80% 0.80% 0.80% 0.80%
- ---------------------------------------------------------------------------------------------------------
over $500 million 0.70% 0.70% 0.70% 0.70% 0.70% 0.70%
- ---------------------------------------------------------------------------------------------------------
</TABLE>
For the fiscal year ended October 31, 1999, each fund paid the following
management fee as a percentage of the fund's average daily net assets, after
reimbursement and/or fee waivers (if applicable)*:
IDEX JCC Capital Appreciation 0.82%
IDEX JCC Global 1.00%
IDEX JCC Growth 0.87%
IDEX JCC Balanced 0.99%
IDEX JCC Flexible Income 0.75%
IDEX Alger Aggressive Growth 0.56%
IDEX AEGON Income Plus 0.60%
IDEX Federated Tax Exempt (formerly IDEX AEGON Tax Exempt) 0.49%
IDEX GE International Equity -0-%
IDEX Dean Asset Allocation 0.68%
IDEX LKCM Strategic Total Return 0.71%
IDEX NWQ Value Equity 0.21%
IDEX C.A.S.E. Growth -0-%
* Information is not included for IDEX T. Rowe Price Dividend Growth, IDEX T.
Rowe Price Small Cap, IDEX Salomon All Cap, IDEX Goldman Sachs Growth, IDEX
Pilgrim Baxter Mid Cap Growth, IDEX Pilgrim Baxter Technology, IDEX
Transamerica Equity, IDEX Transamerica Small Company, IDEX GE U.S. Equity,
IDEX Great Companies -- America(SM) and IDEX Great Companies -- Technology(SM)
as they have not been in operation for a full fiscal year.
55
<PAGE>
HOW THE IDEX FUNDS ARE MANAGED AND ORGANIZED
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 JCC GROWTH
EDWARD KEELY, vice president, 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 JCC GLOBAL
HELEN YOUNG HAYES, CFA, executive vice president, and LAURENCE CHANG, CFA,
executive vice president, serve as co-managers of this fund. Ms. Hayes has
served as manager or co-manager of this fund since inception. 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 JCC BALANCED
KAREN L. REIDY, CFA, executive vice president, 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 CAPITAL APPRECIATION
JAMES P. GOFF, executive vice president, has managed this fund since its
inception. He joined JCC in 1988.
IDEX JCC FLEXIBLE INCOME
RONALD V. SPEAKER, executive vice president, 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.
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 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. Mr. Stromberg
will not be manager of this fund effective March 29, 2000.
Effective March 29, 2000, Thomas J. Huber, CFA, will become manager of this
fund and will serve as head of the Investment Team. He joined T. Rowe Price in
1994. The Investment team also manages the T. Rowe Price Dividend Growth Fund.
IDEX T. ROWE PRICE SMALL CAP
RICHARD T. WHITNEY, CFA, managing director of T. Rowe Price, has managed this
fund since inception and heads the Investment Team for this fund. He joined T.
Rowe Price in 1985. In addition, Mr. Whitney serves as the president of the T.
Rowe Price Index Funds, T. Rowe Price Balanced Fund and the Diversified
Small-Cap Growth fund.
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.
Mr. Wrona also serves as the portfolio manager of the PBHG Technology &
Communications Fund. In addition, he manages small and mid cap portfolios.
While at Munder Capital Management, he co-founded Munder's Mid Cap Growth
product and managed both mutual fund and separate account portfolios.
IDEX GOLDMAN SACHS GROWTH
HERBERT E. EHLERS, has served as head of a seven 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.
This investment team also manages the Goldman Sachs Capital Growth Fund,
Goldman Sachs Balanced Fund, Goldman Sachs Strategic Growth Fund, Goldman Sachs
Growth Opportunities Fund and Goldman Sachs Tollkeeper Fund.
IDEX TRANSAMERICA EQUITY
JEFFREY S. VAN HARTE, C.F.A., primary manager, and GARY U. ROLLE, CFA,
secondary manager, serve as co-managers of this fund. Mr. Van Harte is senior
vice president and head of Equity Management, TIM, manager of the Transamerica
Premier Equity Fund since 1998 and Transamerica VIF Growth Portfolio since
1984, co-manager of the Transamerica Value Fund since 1998, and was manager of
the Transamerica Premier Balanced Fund from 1995 to 1998. He joined
Transamerica in 1980.
Mr. Rolle is executive vice president & chief investment officer, TIM, chairman
& president, Transamerica Income Shares, Transamerica Occidental's Separate
Account Fund B and Transamerica Variable Insurance Fund, Inc. and president of
Transamerica Investors, Inc. He was chief investment officer, Transamerica
Occidental Life Insurance Company, Transamerica Life
56
<PAGE>
Insurance & Annuity Company and Transamerica Assurance Company until 2000 and
investment officer of these companies since 2000. He has been manager of
Transamerica Premier Balanced Fund since 1998 and co-manager of Transamerica
Premier Equity Fund since 1999. He joined Transamerica in 1967.
IDEX TRANSAMERICA SMALL COMPANY
CHRISTOPHER J. BONAVICO, CFA, primary manager, and TIMOTHY S. GAUMER, CFA,
secondary manager, serve as co-managers of this fund. Mr. Bonavico is vice
president and fund manager, TIM, manager of the Transamerica Premier Aggressive
Growth Fund and Transamerica Premier Small Company Fund since 1999. He was
manager of the Transamerica Premier Value Fund from 1998 to 1999, manager of
the Transamerica Premier Index Fund from inception to 1998, co-manager of the
Transamerica Premier Aggressive Growth Fund, Transamerica Premier Small Company
Fund, Transamerica Premier Balanced Fund and Transamerica Premier Index Fund
from 1998 to 1999. He joined Transamerica in 1993.
Mr. Gaumer is an equity analyst, TIM. He has been co-manager of the
Transamerica Premier Small Company Fund since 1999. Prior to joining
Transamerica in 1997, he was an equity analyst, Chancellor LGT Asset
Management, 1995 - 1997, and Senior Analyst, Emerging Growth Management, 1994 -
1995.
IDEX SALOMON ALL CAP
ROSS S. MARGOLIES, managing director of SBAM, has managed this fund since
inception. Mr. Margolies joined SBAM in 1992.
ROBERT M. DONAHUE, JR., vice president and equity analyst with SBAM, 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. Mr. Margolies and Mr.
Donahue also manage the Capital Fund for SBAM.
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.
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.
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.
IDEX GE INTERNATIONAL EQUITY
RALPH R. LAYMAN is a director and executive vice president of GEAM. Mr. Layman
leads a team of portfolio managers for the Fund. He has served in this capacity
since the fund's inception. Mr. Layman joined GEAM in 1991 as executive vice
president for international investments.
Mr. Layman manages the overall international equity investments for GE Asset
Management Incorporated. He leads the team of portfolio managers for the GE
International Equity Fund and GE Emerging Markets Fund and serves as
co-portfolio manager for GE Global Equity Fund. Mr. Layman has also managed
foreign investments for GE Strategic Investment Fund.
IDEX GE U.S. EQUITY
EUGENE K. BOLTON is a director and executive vice president of GEAM. MR. Bolton
leads a team of fund managers for this fund. He has served in that capacity
since the fund's inception. Mr. Bolton joined GEAM in 1984 as Chief Financial
Officer and has been a portfolio manager since 1986. Mr. Bolton manages the
overall U.S. equity investments for GEAM. He leads the team of portfolio
managers for the GE U.S. Equity Fund.
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 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 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 GREAT COMPANIES -- AMERICA(SM)
IDEX GREAT COMPANIES -- TECHNOLOGY(SM)
JAMES H. HUGUET and GERALD W. BOLLMAN, CFA serve as co-managers of these funds.
Mr. Huguet serves as Director, President and Co-CEO of Great Companies, L.L.C.
Mr. Huguet also serves as director and president of Great Companies, Inc. From
1994 until 1998, Mr. Huguet was executive vice president of Information
Resources, Inc., Chicago, IL, a market research firm.
57
<PAGE>
HOW THE IDEX FUNDS ARE MANAGED AND ORGANIZED
Mr. Bollman is executive vice president of Great Companies, L.L.C. Mr. Bollman
also serves as executive vice president of Great Companies, Inc. From 1995
until 1999, Mr. Bollman was chairman and manager of Intrinsic Value Associates,
an investment advisory service for institutional mangers. He previously served
as executive vice president and portfolio manager for Continental Asset
Management Corporation.
IDEX FEDERATED TAX EXEMPT
J. SCOTT ALBRECHT, CFA and MARY JO OCHSON, CFA have served as co-managers of
this fund since inception. Mr. Albrecht joined Federated in 1989 and has been a
senior portfolio manager since 1997. He has served as a vice president of
Federated since 1994. He also serves as co-manager of Federated's Municipal
Securities Fund, Inc.
Ms. Ochson joined Federated in 1982 and has been a senior portfolio manager and
senior vice president since 1996. From 1988 through 1995, Ms. Ochson served as
a portfolio manager and vice president of Federated. She also serves as
co-manger of Federated's Municipal Securities Fund, Inc.
58
<PAGE>
SHAREHOLDER INFORMATION
/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 subject to:
[ ] the privileges or features established on your account
[ ] the type of account you have, and if there is more than one owner
[ ] the dollar amount you are requesting
[ ] 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:
[ ] in writing (by mail or fax)
[ ] by internet access to your account(s) at www.idexfunds.com
[ ] 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
may be held at IDEX up to 15 calendar days (or until your funds have cleared)
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
[ ] Class T shares may be exchanged for only Class A shares of any IDEX fund,
other than IDEX JCC
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<PAGE>
Growth. Class A shares of all IDEX funds are subject to distribution and
service (12b-1) fees.
[ ] You may not exchange other classes of shares of the IDEX funds for Class T
shares.
[ ] 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 if you engage in
excessive trading. In determining excessive trading, we consider 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 restrictions if there are
less frequent transactions.
/question mark/ OTHER ACCOUNT INFORMATION
MINIMUM PURCHASES
[ ] $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 regular 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:
[ ] accounts opened within the preceding 24 months
[ ] accounts with an active monthly Automatic Investment Plan ($50 minimum per
account)
[ ] accounts owned by individuals which, combined, have a balance of $5,000 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
to the address of
record
- --------------------------------------------------------------------------------
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.
PROFESSIONAL FEES
Your financial professional may charge a fee for his or her services. This fee
will be in addition to any fees charged by IDEX. Your financial professional
will answer any questions that you may have regarding such fees.
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<PAGE>
SHAREHOLDER INFORMATION
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 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:
[ ] no certificates issued for fractional shares
[ ] no certificates issued for less than 30 shares
[ ] no certificates issued for retirement plan accounts with State Street --
Kansas City as custodian
[ ] certificates are issued to the owner of the account on file only
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:
[ ] qualified retirement accounts
[ ] tax-exempt investors; or
[ ] 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
61
<PAGE>
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 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.
UNCASHED CHECKS ISSUED ON YOUR ACCOUNT
We issue checks periodically on accounts for disbursements such as redemptions
and cash dividends (accounts with this divided distribution option). If any
check we issue related to your account is returned by the Post Office as
undeliverable, or remains outstanding (uncashed) for six months, we reserve the
right to reinvest these sums back into the account at NAV with which the check
is associated. For dividend checks, we will change your account distribution
option from CASH to REINVEST. Interest does not accrue on amounts represented by
uncashed checks.
MINIMUM REDEMPTION AND DIVIDEND CHECK AMOUNTS
To control costs asociated with issuing, paying and tracind uncashed small check
amounts, we reserve the right to not issue checks under a small amount. We
reserve the right to not issue a redemption check less than $10, unless it is
for the total account balance. For accounts with the CASH BY CHECK dividend
distribution option, if the payment total is for less than $10, the distribution
will be reinvested into the account and nocheck will be issued, though the
account option for future distributions remains unchanged.
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.
62
<PAGE>
SHAREHOLDER INFORMATION
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------
HOW TO BUY SHARES TO OPEN A NEW ACCOUNT (FIRST-TIME IDEX INVESTORS)
- -------------------------------------------------------------------------------------------------------------------
<S> <C>
BY MAIL Send your completed application and check payable to:
[GRAPHIC OMITTED] 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
[GRAPHIC OMITTED] 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 (if
[GRAPHIC OMITTED] any), 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:
[GRAPHIC OMITTED] 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
[GRAPHIC OMITTED] 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
[GRAPHIC OMITTED] 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 InTouch(SM) 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
[GRAPHIC OMITTED] 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
[GRAPHIC OMITTED] 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.
[GRAPHIC OMITTED] 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
[GRAPHIC OMITTED] 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>
63
<PAGE>
<TABLE>
- ----------------------------------------------------------------------------------------------------------------------------
TO RECEIVE PAYMENT BY HOW TO REQUEST YOUR REDEMPTION
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C>
DIRECT DEPOSIT - ACH Call IDEX Customer Service (1-888-233-IDEX (4339)) to verify that this feature is in
(ONLY FOR ACCOUNTS THAT ARE NOT 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
[GRAPHIC OMITTED] 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
[GRAPHIC OMITTED] 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:
[GRAPHIC OMITTED] 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 InTouch(SM) 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'
[GRAPHIC OMITTED] 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)
[GRAPHIC OMITTED] 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
[GRAPHIC OMITTED] charge.) Contact your Registered Representative or call IDEX Customer Service
(1-888-233-IDEX (4339)) for assistance.
- ----------------------------------------------------------------------------------------------------------------------------
NOTE: Purchases must be held at IDEX up to 15 calendar days (or until the funds have cleared) before they are eligible
for redemption. Certain exceptions may apply.
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>
64
<PAGE>
PERFORMANCE INFORMATION
PERFORMANCE
IDEX may include quotations of a fund's total return or yield in
advertisements, sales literature or reports to shareholders or to prospective
investors. Total return and yield quotations for a fund reflect only the
performance of a hypothetical investment in the fund during the particular time
period shown as calculated based on the historical performance of the fund
during that period. Such quotations do not in any way indicate or project
future performance.
YIELD
Yield quotations for a fund refer to the income generated by a hypothetical
investment in the fund over a specified thirty-day period expressed as a
percentage rate of return for that period. The yield is calculated by dividing
the net investment income per share for the period by the price per share on
the last day of that period.
TOTAL RETURN
Total return refers to the average annual percentage change in value of an
investment in a fund held for a stated period of time as of a stated ending
date. When a fund has been in operation for the stated period, the total return
for such period will be provided if performance information is quoted. Total
return quotations are expressed as average annual compound rates of return for
each of the periods quoted. They also reflect the deduction of a proportionate
share of a fund's investment advisory fees and direct fund expenses, and assume
that all dividends and capital gains distributions during the period are
reinvested in the fund when made.
SIMILAR SUB-ADVISER PERFORMANCE
A fund may disclose to shareholders or to prospective investors the total
returns of an existing SEC-registered fund that is managed by the fund's
sub-adviser and that has investment objectives, policies, and strategies
substantially similar to those of such fund (a "similar Sub-Adviser Fund").
THESE ARE NOT RETURNS OF THE IDEX funds.
ALTHOUGH THE SIMILAR SUB-ADVISER FUNDS HAVE SUBSTANTIALLY SIMILAR INVESTMENT
OBJECTIVES, POLICIES, AND STRATEGIES AS THE DESIGNATED FUND YOU SHOULD NOT
ASSUME THAT THE dESIGNATED IDEX FUND WILL HAVE IDEX FUTURE PERFORMANCE
COMPARIBLE THE FUNDS WHOSE TOTAL RETURNS ARE SHOWN. An IDEX Fund's future
performance will likely be different, and may be lower than, be greater or
lesser than the historical perforance of the corresponding Similar Sub-Adviser
Fund. There can be no assurance, AND NO REPRESENTATION IS MADE, THAT THE
INVESTMENT RESULTS OF ANY FUND WILL BE COMPARABLE TO ANY OF THE RESULTS OF THE
SIMILAR-SUB ADVISER FUNDS OR ANY OTHER FUND MANAGED BY IMI OR ANY OF THE
SUBADVISERS.
The table below sets forth certain funds of IDEX and, for each fund's
corresponding Similar Sub-Adviser Fund, the Similar Sub-Adviser Fund's inception
date, asset size, and the average total returns for one, five and ten year
period (or life of the Similar Sub-Adviser Fund, if shorter) ending December
31, 1999.
THE FIGURES INCLUDED SHOW THE ACTUAL INVESTMENT PERFORMANCE OF THE SIMILAR
SUB-ADVISER FUND. THOSE RETURNS HAVE ALSO BEEN RECALCUALTED TO SHOW YOU A
HYPOTHETICAL RETURN FOR THE SIMILAR SUB-ADVISER FUND AS IF THE FUND WAS SUBJECT
TO THE IDEX EXPENSE STRUCTURE.
65
<PAGE>
<TABLE>
<CAPTION>
SIMILAR SUB-ADVISER FUND 1 YEAR
----------------------------- ------------------------
SIMILAR SUB- INCEPTION TOTAL ASSETS IDEX
IDEX FUND ADVISER FUND DATE & CLASS (12/31/99) ACTUAL HYPOTHETICAL*
(Class A)
- ----------------- ----------------- -------------- -------------- -------- ---------------
<S> <C> <C> <C> <C> <C>
IDEX T. Rowe T. Rowe Price 12/30/90 $1,027,968,177 2.09% (3.60)%
Price Dividend Dividend Growth
Growth
IDEX T. Rowe T. Rowe Price(1) 6/30/97 74,805,935 29.27% 27.32%
Price Small Cap Diversified
Small-Cap
Growth Fund
IDEX Pilgrim PBHG Growth II
Baxter Mid Cap
Growth
IDEX Pilgrim PBHG
Baxter Technology &
Technology Communications
IDEX Goldman Goldman Sachs
Sachs Growth Capital Growth
IDEX Premier Equity
Transamerica
Equity
IDEX Premier Small
Transamerica Company
Small Company
IDEX Salomon Salomon Capital
All Cap Fund
IDEX GE GE International 3/2/94 $25,878,453 30.99% 30.42%
International Equity Y
Equity
IDEX GE U.S. GE U.S. Equity 11/29/83 $370,326,429 19.62% 18.47%
Equity Y
IDEX NWQ NWQ Value
Value Equity Equity
<CAPTION>
10 YEAR OR SINCE
5 YEAR INCEPTION
------------------------ -----------------------
IDEX IDEX
IDEX FUND ACTUAL HYPOTHETICAL* ACTUAL HYPOTHETICAL*
(Class A) (Class A)
- ----------------- -------- --------------- -------- --------------
<S> <C> <C> <C> <C>
IDEX T. Rowe
Price Dividend 20.32% 18.49% 17.75% 15.96%
Growth
IDEX T. Rowe -- -- 16.36% 14.59%
Price Small Cap
IDEX Pilgrim
Baxter Mid Cap
Growth
IDEX Pilgrim
Baxter
Technology
IDEX Goldman
Sachs Growth
IDEX
Transamerica
Equity
IDEX
Transamerica
Small Company
IDEX Salomon
All Cap
IDEX GE 15.66% 15.09% 12.62% 12.06%
International
Equity
IDEX GE U.S. 26.68% 25.40% 21.36% 20.11%
Equity
IDEX NWQ
Value Equity
</TABLE>
- --------------
* The hypothetical returns are included to show you what your return would
have been for the Similar Sub-Adviser Fund if the IDEX fee structure,
including investment management and 12b-1 fees was applied to the Similar
Sub-Adviser Fund.
(1) The IDEX Funds are separate and distinct from the T. Rowe Price mutual
funds. They will have different holdings and their performance will vary.
The Actual returns were calculated gross of all fees and expenses. The IDEX
Hypothetical return figures were calculated by taking the Actual return
number, and then deducting IDEX net operating expenses of 1.55%. Actual and
IDEX Hypothetical return figures include changes in principal value,
reinvested dividends, and capital gain distributions. Investment return and
principal value will vary, and shares may be worth more or less at
redemption than at original purchase. The Actual and IDEX Hypothetical
returns are annualized, and returns for the T. Rowe Price Diversified
Small-Cap Growth Fund reflect past and present expense limitations, which
increased the fund's total return.
Past performance cannot guarantee future results.
(2)Returns are for Claa Y shares of GE International Equity Fund which does not
have a sales load. The fund also has Classes A, B and C, each of which have
sales loads and fees that are different from Class Y shares. Calculating
total return using those classes would result in lower total returns.
66
<PAGE>
DISTRIBUTION ARRANGEMENTS
CHOOSING 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 6 years) or Class C shares (if you plan to
invest for a period of less than 6 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>
[ ] Initial sales [ ] No up-front sales [ ] No up-front sales [ ] Initial sales [ ] Initial sales
charge of 5.50% charge charge charge of 1.00% charge of 8.50%
(except for IDEX JCC or less
Flexible Income, IDEX [ ] Deferred sales [ ] No deferred sales [ ] 12b-1 distribution
AEGON Income Plus and charge of 5.00% or charge and service [ ] No 12b-1
IDEX AEGON Tax-Exempt less on shares you fees of 0.90% per distribution and
which is 4.75%) or less sell within 6 years [ ] 12b-1 distribution year (except for service fees
(see Class A Share (see deferred sales and service fees the IDEX AEGON
Quanitity Discounts Table charge table of 1.00% Tax Exempt, whose [ ] Sales charge
below) 12b-1 distribution percentage can be
[ ] Discounts of sales [ ] No conversion to and service fee is reduced in the
charge for larger [ ] 12b-1 distribution Class A shares; 0.60%) same four ways as
investments and service fees expenses do not Class A Shares
of 1.00% decrease [ ] Deferred sales (see Class A Share
[ ] 12b-1 distribution charge of 1.00% if Quantity
and service fees [ ] Automatic you sell within 18 Discounts Table)
of 0.35% conversion to months of purchase
Class A shares
[ ] Lower annual after 8 years, [ ] Automatic
expenses reducing future conversion to
than Class B, C annual expenses Class A Shares
or M shares due after 10 years,
to lower 12b-1 reducing future
and service fees annual expenses
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
67
<PAGE>
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:
[ ] Substantial investments receive lower sales charge rates. Please see the SAI
for details on these reductions.
[ ] 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.
[ ] 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.
[ ] By investing as part of a qualified group.
68
<PAGE>
DISTRIBUTION ARRANGEMENTS
- --------------------------------------------------------------------------------
Class A Share Quantity Discounts
(all funds except IDEX JCC Flexible Income, IDEX AEGON
Income Plus & IDEX AEGON Tax Exempt)
SALES CHARGE SALES CHARGE
AS % OF AS % OF
OFFERING AMOUNT
AMOUNT OF PURCHASE PRICE INVESTED
- --------------------------------------------------------------------------------
Under $50,000 5.50% 5.82%
$50,000 to under $100,000 4.75% 4.99%
$100,000 to under $250,000 3.50% 3.63%
$250,000 to under $500,000 2.75% 2.83%
$500,000 to under $1,000,000 2.00% 2.04%
$1,000,000 and over 0.00% 0.00%
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Class A Share Quantity Discounts
(IDEX JCC Flexible Income, IDEX AEGON Income Plus
& IDEX AEGON Tax Exempt)
SALES CHARGE SALES CHARGE
AS % OF AS % OF
OFFERING AMOUNT
AMOUNT OF PURCHASE PRICE INVESTED
- --------------------------------------------------------------------------------
Under $50,000 4.75% 4.99%
$50,000 to under $100,000 4.00% 4.17%
$100,000 to under $250,000 3.50% 3.63%
$250,000 to under $500,000 2.25% 2.30%
$500,000 to under $1,000,000 1.25% 1.27%
$1,000,000 and over 0.00% 0.00%
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Class T Share Quantity Discounts
(IDEX JCC Growth)
SALES CHARGE SALES CHARGE
AS % OF AS % OF
OFFERING AMOUNT
AMOUNT OF PURCHASE PRICE INVESTED
- --------------------------------------------------------------------------------
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%
- --------------------------------------------------------------------------------
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 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 calendar year up to 12%
of your account balance at the time of redemption.
o If you redeem your 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.
- --------------------------------------------------------------------------------
69
<PAGE>
/question mark/ UNDERWRITING
/dollar sign/ 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
The Fund has adopted a 12b-1 Plan for each class of shares in each fund in the
series.
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 do not 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.
70
<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 IDEX GREAT COMPANIES --
AMERICA(SM) AND IDEX GREAT COMPANIES -- TECHNOLOGY(SM) AS THEY HAD NOT COMMENCED
OPERATIONS AS OF 10/31/99. (PRIOR TO MARCH 1, 2000, IDEX GE INTERNATIONAL
EQUITY WAS NAMED IDEX GE SCOTTISH EQUITABLE INTERNATIONAL EQUITY AND PRIOR TO
JUNE 15, 2000, IDEX FEDERATED TAX EXEMPT WAS NAMED IDEX AEGON TAX EXEMPT).
<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
ENDED OF PERIOD (LOSS)(10) GAIN (LOSS) OPERATIONS INCOME GAINS DISTRIBUTIONS
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
IDEX T. ROWE PRICE Class A 10/31/99 (1) $10.00 $ 0.02 $ 0.99 $ 1.01 $ -- $ -- $ --
SMALL CAP ----------------------------------------------------------------------------------------------------------------
Class B 10/31/99 (1) 10.00 (0.02) 0.99 0.97 -- -- --
----------------------------------------------------------------------------------------------------------------
CLASS M 10/31/99 (1) 10.00 (0.01) 0.99 0.98 -- -- --
- ------------------------------------------------------------------------------------------------------------------------------------
IDEX JCC CAPITAL Class A 10/31/99 16.97 0.05 15.88 15.93 -- (1.81) (1.81)
APPRECIATION 10/31/98 15.90 0.01 1.51 1.52 -- (0.45) (0.45)
10/31/97 15.49 0.04 0.58 0.62 -- (0.21) (0.21)
10/31/96 (3) 15.75 (0.02) (0.24) (0.26) -- -- --
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 -- -- --
----------------------------------------------------------------------------------------------------------------
CLASS B 10/31/99 16.72 (0.28) 15.88 15.60 -- (1.81) (1.81)
10/31/98 15.74 (0.08) 1.51 1.43 -- (0.45) (0.45)
10/31/97 15.42 (0.05) 0.58 0.53 -- (0.21) (0.21)
10/31/96 (3) 15.69 (0.03) (0.24) (0.27) -- -- --
09/30/96 13.49 (0.10) 3.12 3.02 -- (0.82) (0.82)
----------------------------------------------------------------------------------------------------------------
CLASS M 10/31/99 (2) 16.76 (0.23) 15.88 15.65 -- (1.81) (1.81)
10/31/98 15.77 (0.07) 1.51 1.44 -- (0.45) (0.45)
10/31/97 15.43 (0.03) 0.58 0.55 -- (0.21) (0.21)
10/31/96 (3) 15.70 (0.03) (0.24) (0.27) -- -- --
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 -- -- --
- ------------------------------------------------------------------------------------------------------------------------------------
IDEX PILGRIM
BAXTER CLASS A 10/31/99 (1) 10.00 0.02 4.78 4.80 -- -- --
MID CAP GROWTH ----------------------------------------------------------------------------------------------------------------
CLASS B 10/31/99 (1) 10.00 (0.02) 4.78 4.76 -- -- --
----------------------------------------------------------------------------------------------------------------
CLASS M 10/31/99 (1) 10.00 (0.01) 4.78 4.77 -- -- --
- ------------------------------------------------------------------------------------------------------------------------------------
IDEX ALGER CLASS A 10/31/99 22.24 0.17 11.82 11.99 -- (1.18) (1.18)
AGGRESSIVE GROWTH 10/31/98 18.77 0.03 4.02 4.05 -- (0.58) (0.58)
10/31/97 15.70 0.05 3.69 3.74 -- (0.67) (0.67)
10/31/96 (3) 15.75 (0.01) (0.04) (0.05) -- -- --
09/30/96 (4) 17.68 (0.15) (0.76) (0.91) -- (1.02) (1.02)
09/30/95 (5) 10.00 (0.14) 7.82 7.68 -- -- --
----------------------------------------------------------------------------------------------------------------
CLASS B 10/31/99 21.93 (0.13) 11.82 11.69 -- (1.18) (1.18)
10/31/98 18.58 (0.09) 4.02 3.93 -- (0.58) (0.58)
10/31/97 15.58 (0.02) 3.69 3.67 -- (0.67) (0.67)
10/31/96 (3) 15.63 (0.01) (0.04) (0.05) -- -- --
09/30/96 (4) 17.64 (0.23) (0.76) (0.99) -- (1.02) (1.02)
----------------------------------------------------------------------------------------------------------------
CLASS M 10/31/99 (2) 21.98 (0.09) 11.82 11.73 -- (1.18) (1.18)
10/31/98 18.61 (0.07) 4.02 3.95 -- (0.58) (0.58)
10/31/97 15.60 (0.01) 3.69 3.68 -- (0.67) (0.67)
10/31/96 (3) 15.65 (0.01) (0.04) (0.05) -- -- --
09/30/96 (4) 17.64 (0.21) (0.76) (0.97) -- (1.02) (1.02)
09/30/95 (5) 10.00 (0.18) 7.82 7.64 -- -- --
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
*Please see notes to financial highlights on page 74
71
<PAGE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
RATIOS/SUPPLEMENTAL DATA
----------------------------------------------------------------------
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(10)(11) RATE(12)
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
$11.01 10.13% $ 1,272 1.55% 7.93% 1.55% (1.15)% 42.52%
- ------------------------------------------------------------------------------------------------------------------------
10.97 9.70 1,135 2.20 8.58 2.20 (1.80) 42.52
- ------------------------------------------------------------------------------------------------------------------------
10.98 9.77 685 2.10 8.48 2.10 (1.70) 42.52
- ------------------------------------------------------------------------------------------------------------------------
31.09 102.19 74,614 1.84 2.02 1.84 (1.55) 93.54
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
- ------------------------------------------------------------------------------------------------------------------------
30.51 101.72 36,467 2.49 2.67 2.49 (2.20) 93.54
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
- ------------------------------------------------------------------------------------------------------------------------
30.60 101.79 10,062 2.39 2.57 2.39 (2.10) 93.54
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
- ------------------------------------------------------------------------------------------------------------------------
14.80 48.06 2,571 1.55 6.95 1.55 (0.88) 150.78
- ------------------------------------------------------------------------------------------------------------------------
14.76 47.63 2,875 2.20 7.60 2.20 (1.53) 150.78
- ------------------------------------------------------------------------------------------------------------------------
14.77 47.70 1,016 2.10 7.50 2.10 (1.43) 150.78
- ------------------------------------------------------------------------------------------------------------------------
33.05 55.49 100,078 1.61 1.90 1.61 (1.15) 96.25
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
- ------------------------------------------------------------------------------------------------------------------------
32.44 54.88 47,399 2.26 2.55 2.26 (1.80) 96.25
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
- ------------------------------------------------------------------------------------------------------------------------
32.53 54.97 18,538 2.16 2.45 2.16 (1.70) 96.25
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
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
72
<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)(10) GAIN (LOSS) OPERATIONS INCOME GAINS DISTRIBUTIONS
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
IDEX GE CLASS A 10/31/99 $10.77 $ 0.03 $ 2.05 $ 2.08 $ -- $ -- $ --
INTERNATIONAL 10/31/98 (4) 10.57 0.07 0.20 0.27 (0.07) -- (0.07)
EQUITY 10/31/97 (6) 10.00 0.07 0.50 0.57 -- -- --
(FORMERLY, --------------------------------------------------------------------------------------------------------------------
IDEX GE/ Class B 10/31/99 10.71 (0.06) 2.05 1.99 -- -- --
SCOTTISH
EQUITABLE 10/31/98 (4) 10.52 -- 0.20 0.20 (0.01) -- (0.01)
INTERNATIONAL 10/31/97 (6) 10.00 0.02 0.50 0.52 -- -- --
EQUITY) --------------------------------------------------------------------------------------------------------------------
Class M 10/31/99 (2) 10.72 (0.04) 2.05 2.01 -- -- --
10/31/98 (4) 10.53 0.01 0.20 0.21 (0.02) -- (0.02)
10/31/97 (6) 10.00 0.03 0.50 0.53 -- -- --
- ------------------------------------------------------------------------------------------------------------------------------------
IDEX JCC CLASS A 10/31/99 (13) 24.09 0.22 9.49 9.71 -- -- --
GLOBAL 10/31/98 (4) 23.74 0.08 2.34 2.42 -- (2.07) (2.07)
10/31/97 21.39 0.07 4.38 4.45 -- (2.10) (2.10)
10/31/96 (3) 21.40 (0.02) 0.01 (0.01) -- -- --
09/30/96 17.73 (0.09) 4.38 4.29 -- (0.62) (0.62)
09/30/95 15.93 (0.06) 2.42 2.36 -- (0.56) (0.56)
--------------------------------------------------------------------------------------------------------------------
CLASS B 10/31/99 (13) 23.62 (0.13) 9.49 9.36 -- -- --
10/31/98 (4) 23.38 (0.03) 2.34 2.31 -- (2.07) (2.07)
10/31/97 21.13 (0.03) 4.38 4.35 -- (2.10) (2.10)
10/31/96 (3) 21.14 (0.02) 0.01 (0.01) -- -- --
09/30/96 17.57 (0.19) 4.38 4.19 -- (0.62) (0.62)
--------------------------------------------------------------------------------------------------------------------
CLASS M 10/31/99(2) (13) 23.56 (0.14) 9.49 9.35 -- -- --
10/31/98 (4) 23.30 (0.01) 2.34 2.33 -- (2.07) (2.07)
10/31/97 21.03 (0.01) 4.38 4.37 -- (2.10) (2.10)
10/31/96 (3) 21.04 (0.02) 0.01 (0.01) -- -- --
09/30/96 17.46 (0.18) 4.38 4.20 -- (0.62) (0.62)
09/30/95 15.74 (0.14) 2.42 2.28 -- (0.56) (0.56)
- ------------------------------------------------------------------------------------------------------------------------------------
IDEX SALOMON CLASS A 10/31/99 (1) 10.00 0.02 1.68 1.70 -- -- --
ALL CAP --------------------------------------------------------------------------------------------------------------------
ALL CAP CLASS B 10/31/99 (1) 10.00 (0.02) 1.68 1.66 -- -- --
--------------------------------------------------------------------------------------------------------------------
CLASS M 10/31/99 (1) 10.00 (0.01) 1.68 1.67 -- -- --
- ------------------------------------------------------------------------------------------------------------------------------------
IDEX JCC CLASS A 10/31/99 29.35 0.06 17.70 17.76 -- (0.39) (0.39)
GROWTH 10/31/98 25.04 (0.02) 7.64 7.62 -- (3.31) (3.31)
10/31/97 21.97 (0.02) 3.56 3.54 -- (0.47) (0.47)
10/31/96 (3) 22.21 -- (0.24) (0.24) -- -- --
09/30/96 22.84 (0.11) 4.66 4.55 -- (5.18) (5.18)
09/30/95 16.78 (0.05) 6.18 6.13 -- (0.07) (0.07)
--------------------------------------------------------------------------------------------------------------------
CLASS B 10/31/99 28.63 (0.56) 17.70 17.14 -- (0.39) (0.39)
10/31/98 24.55 (0.25) 7.64 7.39 -- (3.31) (3.31)
10/31/97 21.60 (0.14) 3.56 3.42 -- (0.47) (0.47)
10/31/96 (3) 21.85 (0.01) (0.24) (0.25) -- -- --
09/30/96 22.64 (0.27) 4.66 4.39 -- (5.18) (5.18)
--------------------------------------------------------------------------------------------------------------------
CLASS M 10/31/99 (2) 28.74 (0.47) 17.70 17.23 -- (0.39) (0.39)
10/31/98 24.62 (0.21) 7.64 7.43 -- (3.31) (3.31)
10/31/97 21.65 (0.12) 3.56 3.44 -- (0.47) (0.47)
10/31/96 (3) 21.91 (0.02) (0.24) (0.26) -- -- --
09/30/96 22.64 (0.21) 4.66 4.45 -- (5.18) (5.18)
09/30/95 16.68 (0.15) 6.18 6.03 -- (0.07) (0.07)
--------------------------------------------------------------------------------------------------------------------
CLASS T 10/31/99 29.74 0.40 17.70 18.10 -- (0.39) (0.39)
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 -- (0.47) (0.47)
10/31/96 (3) 22.41 -- (0.24) (0.24) -- -- --
09/30/96 (7) 22.23 -- 0.18 0.18 -- -- --
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
73
<PAGE>
<TABLE>
<CAPTION>
RATIOS/SUPPLEMENTAL DATA
----------------------------------------------------------------------
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(10)(11) RATE(12)
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
$12.85 19.12% $ 4,902 1.90% 3.53% 1.90% (0.16)% 71.70%
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
- ------------------------------------------------------------------------------------------------------------------------
12.70 18.45 1,527 2.55 4.18 2.55 (0.81) 71.70
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
- ------------------------------------------------------------------------------------------------------------------------
12.73 18.55 480 2.45 4.08 2.45 (0.71) 71.70
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
- ------------------------------------------------------------------------------------------------------------------------
33.80 40.31 487,787 1.73 -- 1.73 (0.22) 145.40
24.09 11.30 296,450 1.82 -- 1.82 (0.45) 87.68
23.74 22.72 218.681 1.91 -- 1.91 (0.50) 91.02
21.39 (0.05) 135,837 2.08 -- 2.07 (1.15) 2.59
21.40 25.04 131,347 2.09 -- 2.06 (0.67) 97.94
17.73 15.47 89,397 2.10 -- 1.97 (0.43) 161.48
- ------------------------------------------------------------------------------------------------------------------------
32.98 39.62 283,847 2.38 -- 2.38 (0.87) 145.40
23.62 10.93 110,630 2.47 -- 2.47 (1.10) 87.68
23.38 22.53 43,951 2.56 -- 2.56 (1.15) 91.02
21.13 (0.05) 5,966 2.73 -- 2.72 (1.80) 2.59
21.14 24.70 5,000 2.74 -- 2.71 (1.32) 97.94
- ------------------------------------------------------------------------------------------------------------------------
32.91 39.73 155,147 2.28 -- 2.28 (0.77) 145.40
23.56 11.08 63,552 2.37 -- 2.37 (1.00) 87.68
23.30 22.72 27,210 2.46 -- 2.46 (1.05) 91.02
21.03 (0.05) 8,624 2.63 -- 2.62 (1.70) 2.59
21.04 24.91 8,081 2.64 -- 2.61 (1.22) 97.94
17.46 15.14 3,567 2.65 -- 2.52 (0.98) 161.48
- ------------------------------------------------------------------------------------------------------------------------
11.70 17.03 1,880 1.55 8.85 1.54 0.35 82.70
- ------------------------------------------------------------------------------------------------------------------------
11.66 16.60 1,571 2.20 9.50 2.19 (0.30) 82.70
- ------------------------------------------------------------------------------------------------------------------------
11.67 16.67 728 2.10 9.40 2.09 (0.20) 82.70
- ------------------------------------------------------------------------------------------------------------------------
46.72 61.00 1,467,595 1.40 1.43 1.40 (0.60) 70.97
29.35 35.21 817,749 1.51 -- 1.51 (0.55) 27.19
25.04 16.40 614,544 1.61 -- 1.61 (0.10) 91.52
21.97 (1.09) 565,032 1.68 -- 1.68 (0.13) 9.40
22.21 22.41 567,564 1.83 -- 1.82 (0.22) 57.80
22.84 36.70 485,935 1.86 -- 1.84 (0.26) 123.26
- ------------------------------------------------------------------------------------------------------------------------
45.38 60.36 327,926 2.05 2.08 2.05 (1.25) 70.97
28.63 34.96 40,809 2.16 -- 2.16 (1.20) 27.19
24.55 16.11 13,046 2.26 -- 2.26 (0.75) 91.52
21.60 (1.14) 5,242 2.32 -- 2.32 (0.78) 9.40
21.85 21.87 4,536 2.46 -- 2.45 (0.86) 57.80
- ------------------------------------------------------------------------------------------------------------------------
45.58 60.45 141,586 1.95 1.98 1.95 (1.15) 70.97
28.74 35.00 58,265 2.06 -- 2.06 (1.10) 27.19
24.62 16.19 14,295 2.16 -- 2.16 (0.65) 91.52
21.65 (1.19) 11,016 2.23 -- 2.23 (0.68) 9.40
21.91 22.15 11,167 2.34 -- 2.33 (0.77) 57.80
22.64 36.32 5,593 2.41 -- 2.38 (0.81) 123.26
- ------------------------------------------------------------------------------------------------------------------------
47.45 61.34 1,166,965 1.05 1.08 1.05 (0.25) 70.97
29.74 35.53 755,770 1.16 -- 1.16 (0.20) 27.19
25.31 16.54 603,129 1.26 -- 1.26 (0.25) 91.52
22.17 (1.03) 573,884 1.33 -- 1.33 (0.20) 9.40
22.41 0.81 585,505 1.18 -- 1.17 (0.36) 57.80
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
74
<PAGE>
<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)(10) GAIN (LOSS) OPERATIONS INCOME GAINS DISTRIBUTIONS
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
IDEX CLASS A 10/31/99(1) $10.00 $ 0.03 $ 1.37 $ 1.40 $ -- $ -- $ --
GOLDMAN ------------------------------------------------------------------------------------------------------------------
SACHS GROWTH
CLASS B 10/31/99 (1) 10.00 (0.02) 1.37 1.35 -- -- --
------------------------------------------------------------------------------------------------------------------
CLASS M 10/31/99 (1) 10.00 (0.01) 1.37 1.36 -- -- --
- -----------------------------------------------------------------------------------------------------------------------------------
IDEX C.A.S.E. CLASS A 10/31/99 10.14 0.06 2.78 2.84 -- (0.84) (0.84)
GROWTH 10/31/98 12.90 0.03 (1.84) (1.81) -- (0.95) (0.95)
10/31/97 (4) 10.56 (0.01) 2.86 2.85 (0.51) -- (0.51)
10/31/96 (3) 10.46 (0.07) 0.17 0.10 -- -- --
09/30/96 (8) 10.00 0.61 (0.15) 0.46 -- -- --
------------------------------------------------------------------------------------------------------------------
CLASS B 10/31/99 10.02 (0.03) 2.78 2.75 -- (0.84) (0.84)
10/31/98 12.85 (0.04) (1.84) (1.88) -- (0.95) (0.95)
10/31/97 (4) 10.51 (0.07) 2.86 2.79 (0.45) -- (0.45)
10/31/96 (3) 10.41 (0.07) 0.17 0.10 -- -- --
09/30/96 (8) 10.00 0.56 (0.15) 0.41 -- -- --
------------------------------------------------------------------------------------------------------------------
CLASS M 10/31/99 (2) 10.04 (0.02) 2.78 2.76 -- (0.84) (0.84)
10/31/98 12.86 (0.03) (1.84) (1.87) -- (0.95) (0.95)
10/31/97 (4) 10.52 (0.06) 2.86 2.80 (0.46) -- (0.46)
10/31/96 (3) 10.42 (0.07) 0.17 0.10 -- -- --
09/30/96 (8) 10.00 0.57 (0.15) 0.42 -- -- --
- -----------------------------------------------------------------------------------------------------------------------------------
IDEX NWQ CLASS A 10/31/99(4) 11.09 0.05 0.41 0.46 -- (0.27) (0.27)
VALUE EQUITY 10/31/98 11.71 0.03 (0.61) (0.58) -- (0.04) (0.04)
10/31/97(6) 10.00 0.02 1.69 1.71 -- -- --
------------------------------------------------------------------------------------------------------------------
CLASS B 10/31/99 (4) 10.98 (0.03) 0.41 0.38 -- (0.27) (0.27)
10/31/98 11.67 (0.04) (0.61) (0.65) -- (0.04) (0.04)
10/31/97 (6) 10.00 (0.02) 1.69 1.67 -- -- --
------------------------------------------------------------------------------------------------------------------
CLASS M 10/31/99 (2)(4) 11.00 (0.02) 0.41 0.39 -- (0.27) (0.27)
10/31/98 11.67 (0.02) (0.61) (0.63) -- (0.04) (0.04)
10/31/97 (6) 10.00 (0.02) 1.69 1.67 -- -- --
- -----------------------------------------------------------------------------------------------------------------------------------
IDEX T. ROWE CLASS A 10/31/99 (1) 10.00 0.06 0.18 0.24 (0.04) -- (0.04)
PRICE DIVIDEND ------------------------------------------------------------------------------------------------------------------
GROWTH CLASS B 10/31/99 (1) 10.00 0.01 0.18 0.19 -- -- --
------------------------------------------------------------------------------------------------------------------
CLASS M 10/31/99 (1) 10.00 0.02 0.18 0.20 (0.01) -- (0.01)
- -----------------------------------------------------------------------------------------------------------------------------------
IDEX DEAN CLASS A 10/31/99 (4) 13.14 0.27 (0.73) (0.46) (0.24) (0.65) (0.89)
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 -- -- --
09/30/96 10.00 0.08 1.03 1.11 (0.08) -- (0.08)
------------------------------------------------------------------------------------------------------------------
CLASS B 10/31/99 (4) 13.13 0.19 (0.73) (0.54) (0.16) (0.65) (0.81)
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 -- -- --
09/30/96 10.00 -- 1.03 1.03 (0.01) -- (0.01)
------------------------------------------------------------------------------------------------------------------
CLASS M 10/31/99 (2)(4) 13.13 0.20 (0.73) (0.53) (0.17) (0.65) (0.82)
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 -- -- --
09/30/96 10.00 0.02 1.03 1.05 (0.02) -- (0.02)
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
75
<PAGE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
RATIOS/SUPPLEMENTAL DATA
---------------------------------------------------------------------------
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(10)(11) RATE(12)
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
$ 11.40 13.97% $ 1,978 1.55% 7.65% 1.54% (0.55)% 21.91%
- ------------------------------------------------------------------------------------------------------------------------------
11.35 13.54 2,261 2.20 8.30 2.19 (1.20) 21.91
- ------------------------------------------------------------------------------------------------------------------------------
11.36 13.61 748 2.10 8.20 2.09 (1.10) 21.91
- ------------------------------------------------------------------------------------------------------------------------------
12.14 30.07 4,537 1.64 2.87 1.64 (0.99) 125.60
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
- ------------------------------------------------------------------------------------------------------------------------------
11.93 29.45 3,868 2.29 3.52 2.29 (1.64) 125.60
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
- ------------------------------------------------------------------------------------------------------------------------------
11.96 29.54 1,338 2.19 3.42 2.19 (1.54) 125.60
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
- ------------------------------------------------------------------------------------------------------------------------------
11.28 4.34 7,972 1.64 2.28 1.64 0.21 26.29
11.09 (4.96) 8,035 1.85 2.51 1.85 -- 30.43
11.71 17.14 5,305 1.50 4.05 1.50 0.38 6.40
- ------------------------------------------------------------------------------------------------------------------------------
11.09 3.68 7,311 2.29 2.93 2.29 (0.44) 26.29
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
- ------------------------------------------------------------------------------------------------------------------------------
11.12 3.79 2,204 2.19 2.83 2.19 (0.34) 26.29
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
- ------------------------------------------------------------------------------------------------------------------------------
10.20 2.79 1,840 1.55 7.57 1.55 1.09 20.48
- ------------------------------------------------------------------------------------------------------------------------------
10.19 2.00 2,134 2.20 8.22 2.20 0.44 20.48
- ------------------------------------------------------------------------------------------------------------------------------
10.19 2.12 1,058 2.10 8.12 2.10 0.54 20.48
- ------------------------------------------------------------------------------------------------------------------------------
11.79 (3.74) 12,377 1.66 1.85 1.66 2.12 82.20
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
- ------------------------------------------------------------------------------------------------------------------------------
11.78 (4.36) 12,171 2.31 2.50 2.31 1.47 82.20
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
11.02 10.39 4,848 3.50 3.85 3.50 0.07 56.22
- ------------------------------------------------------------------------------------------------------------------------------
11.78 (4.26) 4,689 2.21 2.40 2.21 1.57 82.20
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
- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
76
<PAGE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
INVESTMENT OPERATIONS
----------------------------------------
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)(10) GAIN (LOSS) OPERATIONS INCOME GAINS DISTRIBUTIONS
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
IDEX LKCM CLASS A 10/31/99 $16.18 $0.20 $ 1.65 $1.85 $ (0.20) $ (0.21) $ (0.41)
STRATEGIC TOTAL 10/31/98 15.91 0.21 0.94 1.15 (0.21) (0.67) (0.88)
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 -- -- --
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) -- (0.10)
---------------------------------------------------------------------------------------------------------------
CLASS B 10/31/99 16.17 0.09 1.65 1.74 (0.10) (0.21) (0.31)
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 -- 0.15 0.15 -- -- --
09/30/96 11.73 0.13 1.65 1.78 (0.09) (0.15) (0.24)
---------------------------------------------------------------------------------------------------------------
CLASS M 10/31/99 (2) 16.17 0.11 1.65 1.76 (0.11) (0.21) (0.32)
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 -- 0.15 0.15 -- -- --
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) -- (0.05)
- ------------------------------------------------------------------------------------------------------------------------------------
IDEX JCC CLASS A 10/31/99 14.75 0.19 4.27 4.46 (0.17) (0.08) (0.25)
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 -- -- --
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) -- (0.05)
---------------------------------------------------------------------------------------------------------------
CLASS B 10/31/99 14.74 0.08 4.27 4.35 (0.06) (0.08) (0.14)
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 -- 0.10 0.10 -- -- --
09/30/96 11.47 0.15 2.25 2.40 (0.13) (0.28) (0.41)
---------------------------------------------------------------------------------------------------------------
CLASS M 10/31/99 (2) 14.74 0.10 4.27 4.37 (0.08) (0.08) (0.16)
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 -- -- --
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) -- (0.01)
- ------------------------------------------------------------------------------------------------------------------------------------
IDEX JCC CLASS A 10/31/99 9.84 0.54 (0.38) 0.16 (0.54) -- (0.54)
FLEXIBLE 10/31/98 9.75 0.61 0.10 0.71 (0.62) -- (0.62)
INCOME 10/31/97 9.33 0.61 0.42 1.03 (0.61) -- (0.61)
10/31/96 (3) 9.19 0.05 0.14 0.19 (0.05) -- (0.05)
09/30/96 9.17 0.60 -- 0.60 (0.58) -- (0.58)
09/30/95 8.83 0.61 0.37 0.98 (0.64) -- (0.64)
---------------------------------------------------------------------------------------------------------------
CLASS B 10/31/99 9.83 0.49 (0.38) 0.11 (0.48) -- (0.48)
10/31/98 9.75 0.54 0.10 0.64 (0.56) -- (0.56)
10/31/97 9.32 0.56 0.42 0.98 (0.55) -- (0.55)
10/31/96 (3) 9.18 0.05 0.14 0.19 (0.05) -- (0.05)
09/30/96 9.17 0.53 -- 0.53 (0.52) -- (0.52)
---------------------------------------------------------------------------------------------------------------
CLASS M 10/31/99 (2) 9.84 0.49 (0.38) 0.11 (0.49) -- (0.49)
10/31/98 9.75 0.56 0.10 0.66 (0.57) -- (0.57)
10/31/97 9.32 0.57 0.42 0.99 (0.56) -- (0.56)
10/31/96 (3) 9.18 0.05 0.14 0.19 (0.05) -- (0.05)
09/30/96 9.17 0.54 -- 0.54 (0.53) -- (0.53)
09/30/95 8.83 0.56 0.37 0.93 (0.59) -- (0.59)
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
77
<PAGE>
<TABLE>
<CAPTION>
RATIOS/SUPPLEMENTAL DATA
---------------------------------------------------------------------------
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(10)(11) RATE(12)
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
$ 17.62 11.61% $37,959 1.64% 1.79% 1.64% 1.20% 60.18%
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
- -----------------------------------------------------------------------------------------------------------------------------
17.60 10.91 15,531 2.29 2.44 2.29 0.55 60.18
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
- -----------------------------------------------------------------------------------------------------------------------------
17.61 11.02 8,779 2.19 2.34 2.19 0.65 60.18
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
- -----------------------------------------------------------------------------------------------------------------------------
18.96 30.43 67,749 1.81 1.82 1.81 1.28 59.57
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
- -----------------------------------------------------------------------------------------------------------------------------
18.95 29.64 92,833 2.46 2.47 2.46 0.63 59.57
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
- -----------------------------------------------------------------------------------------------------------------------------
18.95 29.76 34,122 2.36 2.37 2.36 0.73 59.57
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
- -----------------------------------------------------------------------------------------------------------------------------
9.46 1.70 14,963 1.85 2.00 1.85 5.72 100.22
9.84 7.43 14,970 1.83 -- 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
- -----------------------------------------------------------------------------------------------------------------------------
9.46 1.01 9,006 2.50 2.65 2.50 5.07 100.22
9.83 6.74 2,387 2.48 -- 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
- -----------------------------------------------------------------------------------------------------------------------------
9.46 1.11 3,778 2.40 2.55 2.40 5.17 100.22
9.84 6.84 2,207 2.38 -- 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
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
78
<PAGE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
INVESTMENT OPERATIONS
----------------------------------------
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)(10) GAIN (LOSS) OPERATIONS INCOME GAINS DISTRIBUTIONS
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
IDEX AEGON CLASS A 10/31/99 $10.43 $0.65 $ (0.54) $ 0.11 $ (0.67) $ (0.20) $ (0.87)
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) -- (0.06)
09/30/96 10.36 0.72 0.04 0.76 (0.71) -- (0.71)
09/30/95 9.75 0.75 0.71 1.46 (0.75) (0.10) (0.85)
-----------------------------------------------------------------------------------------------------------------
CLASS B 10/31/99 10.42 0.59 (0.54) 0.05 (0.60) (0.20) (0.80)
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) -- (0.06)
09/30/96 10.35 0.65 0.04 0.69 (0.64) -- (0.64)
-----------------------------------------------------------------------------------------------------------------
CLASS M 10/31/99 (2) 10.42 0.60 (0.54) 0.06 (0.61) (0.20) (0.81)
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) -- (0.06)
09/30/96 10.35 0.66 0.04 0.70 (0.65) -- (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 11.94 0.44 (1.14) (0.70) (0.44) (0.20) (0.64)
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) -- (0.05)
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 11.94 0.35 (1.14) (0.79) (0.36) (0.20) (0.56)
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) -- (0.04)
09/30/96 11.34 0.48 0.10 0.58 (0.49) (0.07) (0.56)
-----------------------------------------------------------------------------------------------------------------
CLASS M 10/31/99 (2) 11.94 0.39 (1.14) (0.75) (0.40) (0.20) (0.60)
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) -- (0.04)
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)
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
79
<PAGE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
RATIOS/SUPPLEMENTAL DATA
---------------------------------------------------------------------------
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(10)(11) RATE(12)
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
$ 9.67 1.09% $59,082 1.38% --% 1.38% 6.41% 26.95%
10.43 3.54 63,494 1.24 -- 1.24 6.38 53.09
10.96 11.86 65,612 1.27 -- 1.27 7.14 62.28
10.61 2.53 66,285 1.33 -- 1.32 5.60 1.58
10.41 7.64 65,252 1.33 -- 1.31 6.89 65.96
10.36 15.85 68,746 1.29 -- 1.26 7.53 25.07
- -----------------------------------------------------------------------------------------------------------------------------
9.67 0.38 12,930 2.03 -- 2.03 5.76 26.95
10.42 2.87 5,041 1.89 -- 1.89 5.73 53.09
10.96 11.10 1,761 1.92 -- 1.92 6.49 62.28
10.61 2.59 804 1.98 -- 1.97 4.95 1.58
10.40 6.95 774 1.98 -- 1.96 6.24 65.96
- -----------------------------------------------------------------------------------------------------------------------------
9.67 0.54 5,515 1.93 -- 1.93 5.86 26.95
10.42 2.97 4,073 1.79 -- 1.79 5.83 53.09
10.96 11.22 3,480 1.82 -- 1.82 6.59 62.28
10.61 2.59 2,781 1.88 -- 1.87 5.05 1.58
10.40 7.05 2,684 1.88 -- 1.86 6.34 65.96
10.35 15.08 1,980 1.84 -- 1.81 6.98 25.07
- -----------------------------------------------------------------------------------------------------------------------------
10.60 (6.23) 20,996 1.35 1.50 1.31 3.83 35.97
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
- -----------------------------------------------------------------------------------------------------------------------------
10.59 (6.89) 1,253 2.00 2.15 1.96 3.18 35.97
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
- -----------------------------------------------------------------------------------------------------------------------------
10.59 (6.23) 2,193 1.60 1.75 1.56 3.58 35.97
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>
80
<PAGE>
(1) From commencement of investment operations, March 1, 1999.
(2) On March 1, 1999, the Fund changed the load and expense 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 C 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 $0.01 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 and
for IDEX NWQ Value Equity Classes A, B and M for the period ended 10/31/ 99
in the amount of $0.12 and IDEX Dean Asset Allocation Classes A, B and M
for the period ended 10/31/99 in the amount of $0.11.
(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). Net Investment
Income (Loss) Net Investment Income prior to certain reclassifications for
Federal income or excise taxes.
(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.
(13) Net investment income, the ratio net investment income to average net
assets and the portfolio turnover rate reflect activity relating to a non
recurring initiative to invest in dividend producing securities.
81
<PAGE>
BOND RATINGS
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.
BB,B, and Predominantly speculative with respect to the issuer's capacity to meet
CC,CC,C required interest and principal payments. BB - lowest degree of
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.
A-1
<PAGE>
IDEX MUTUAL FUNDS
570 Carillon Parkway
St. Petersburg, Florida, 33716-1202
INVESTMENT ADVISER: CUSTODIAN:
IDEX Management, Inc. State Street Bank & Trust Co.
570 Carillon Parkway
St. Petersburg, Forida 33716-1202
DISTRIBUTOR: INDEPENDENT ACCOUNTANTS:
InterSecurities, Inc. PricewaterhouseCoopers LLP
570 Carillon Parkway 1055 Broadway, 10th Floor
St. Petersburg, Florida, 33716-1201 Kansas City, Missouri 64105-1591
SUB-ADVISERS:
AEGON USA INVESTMENT LUTHER KING CAPITAL MANAGEMENT
MANAGEMENT, INC. 301 Commerce Street, Suite 1600
4333 Edgewood Road, N.E. Fort Worth, Texas 76102-4190
Cedar Rapids, Iowa 52499-0002
NWQ INVESTMENT MANAGEMENT
C.A.S.E. MANAGEMENT, INC. COMPANY, INN.
5355 Town Center Road, Suite 701 2049 Century Park East, 4th Floor
Boca Raton, Florida 33486-1081 Los Angeles, California 90067-3214
DEAN INVESTMENT ASSOCIATES PILGRIM BAXTER & ASSOCIATES, LTD.
2480 Kettering Tower 825 Duportail Road
Dayton, Ohio 45423-2480 Wayne, Pennsylvania 19087-5593
FRED ALGER MANAGEMENT, INC. SALOMON BROTHERS ASSET
One World Trade Center, Suite 9333 MANAGEMENT INC
New York, New York 10048-9301 7 World Trade Center
New York, New York 10048-4600
GE ASSET MANAGEMENT INCORPORATED T. ROWE PRICE ASSOCIATES, INC.
3003 Summer Street 100 East Pratt Street
Stamford, Connecticut 06905-4316 Baltimore, Maryland 21202-1090
GOLDMAN SACHS ASSET MANAGEMENT TRANSAMERICA INVESTMENT
One New York Plaza MANAGEMENT, LLC
New York, New York 10004-1950 1150 South Olive Street Suite 2700
Los Angeles, California 90015
JANUS CAPITAL CORPORATION
100 Fillmore Street,
Denver, Colorado 80206-4928
SEND YOUR CORRESPONDENCE TO: CUSTOMER SERVICE:
Idex Investor Services, Inc. (888) 233-IDEX (4339) toll free call
P.O. Box 9015 Hours: 8 a.m. to 7 p.m. Monday - Friday
Clearwater, Florida 33758-9015
IDEX WEBSITE: WWW.IDEXFUNDS.COM
<PAGE>
ADDITIONAL INFORMATION about these funds is contained in the Funds annual and
semi-annual reports to shareholders, and in the Statement of Additional
Information, dated March 1, 2000 which is incorporated by reference into this
prospectus. Other information about these funds has been filed with and is
available from the U.S. Securities and Exchange Commission. Information about
the Funds (including the Statement of Additional Information) can be reviewed
and copied at the Securities and Exchange Commissions Public Reference Room in
Washington, D.C. Information on the operation of the public reference room may
be obtained by calling the Commission at 1-202-942-8090. Copies of this
information may be obtained, upon payment of a duplicating fee, by writing the
Public Reference Section of the Commission, Washington, D.C. 20549-6009. Reports
and other information about the funds are also available on the Commissions
Internet site at http://www.sec.gov. (IDEX Mutual Funds File No. 811-4556) To
obtain a copy of the Statement of Additional Information or the Annual and
Semi-Annual Reports, without charge, or to make other inquiries about these
funds, call or write to IDEX Mutual Funds at the phone number or address at the
bottom of this page. In the Funds annual report, you will find a discussion of
the market conditions and investment strategies that significantly affected the
Funds performance during the last fiscal year.
Visit our website at www.idexfunds.com
IDEX Mutual Funds o P. O. Box 9015 o Clearwater, FL o 33758-9015
Customer Service 1-888-233-4339 o Investment Professionals 1-800-624-4339
Distributor: InterSecurities, Inc.
ISF-00002-06/2000 2000 InterSecurities, Inc.
<PAGE>
IDEX MUTUAL FUNDS
IDEX JCC GROWTH
IDEX JCC GLOBAL
IDEX JCC BALANCED
IDEX JCC CAPITAL APPRECIATION
IDEX JCC FLEXIBLE INCOME
IDEX ALGER AGGRESSIVE GROWTH
IDEX T. ROWE PRICE DIVIDEND GROWTH
IDEX T. ROWE PRICE SMALL CAP
IDEX PILGRIM BAXTER MID CAP GROWTH
IDEX PILGRIM BAXTER TECHNOLOGY
IDEX GOLDMAN SACHS GROWTH
IDEX TRANSAMERICA EQUITY
IDEX TRANSAMERICA SMALL COMPANY
IDEX SALOMON ALL CAP
IDEX GREAT COMPANIES -- AMERICA(SM)
IDEX GREAT COMPANIES -- TECHNOLOGY(SM)
IDEX AEGON INCOME PLUS
IDEX FEDERATED 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
STATEMENT OF ADDITIONAL INFORMATION
JUNE 15, 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, IDEX Pilgrim Baxter Technology, IDEX Salomon All Cap, IDEX Great
Companies -- America(SM) and IDEX Great Companies -- TechnologySM, are
diversified.
This Statement of Additional Information is not a prospectus, and should be
read in conjunction with the Fund's prospectus dated June 15, 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
PAGE
----
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 Alger Aggressive Growth ................... 5
Investment Restrictions of IDEX T. Rowe Price Small Cap and
IDEX T. Rowe Price Dividend Growth ...................................... 6
Investment Restrictions of IDEX Pilgrim Baxter Mid Cap Growth ............. 7
Investment Restrictions of IDEX Pilgrim Baxter Technology ................. 8
Investment Restrictions of IDEX Goldman Sachs Growth ...................... 8
Investment Restrictions of IDEX Transamerica Small Company and
IDEX Transamerica Equity ................................................ 9
Investment Restrictions of IDEX Salomon All Cap ........................... 10
Investment Restrictions of IDEX Great Companies -- America(SM) and
IDEX Great Companies -- Technology(SM)................................... 11
Investment Restrictions of IDEX AEGON Income Plus ......................... 12
Investment Restrictions of IDEX Federated Tax Exempt ...................... 13
Investment Restrictions of IDEX GE International Equity ................... 15
Investment Restrictions of IDEX GE U.S. Equity ............................ 16
Investment Restrictions of IDEX Dean Asset Allocation ..................... 17
Investment Restrictions of IDEX LKCM Strategic Total Return ............... 19
Investment Restrictions of IDEX NWQ Value Equity .......................... 20
Investment Restrictions of IDEX C.A.S.E. Growth ........................... 21
OTHER POLICIES AND PRACTICES OF THE FUND ................................... 22
Futures, Options and Other Derivative Instruments ......................... 22
Futures Contracts ........................................................ 22
Options on Futures Contracts ............................................. 25
Options on Securities .................................................... 25
Options on Foreign Currencies ............................................ 28
Forward Contracts ........................................................ 29
Swaps and Swap-Related Products .......................................... 30
Index Options ............................................................ 31
WEBS and Other Index-Related Securities .................................. 32
Euro Instruments ......................................................... 32
Special Investment Considerations and Risks .............................. 32
Additional Risks of Options on Foreign Currencies,
Forward Contracts and Foreign Instruments .............................. 33
Other Investment Companies ................................................ 34
When-Issued, Delayed Settlement and Forward Delivery Securities ........... 34
Zero Coupon, Pay-In-Kind and Step Coupon Securities ....................... 35
Income Producing Securities ............................................... 35
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Lending of Fund Securities ............................................ 36
Joint Trading Accounts ................................................ 36
Illiquid Securities ................................................... 36
Repurchase and Reverse Repurchase Agreements .......................... 37
Pass-Through Securities ............................................... 37
High-Yield/High-Risk Bonds ............................................ 38
Warrants and Rights ................................................... 39
U.S. Government Securities ............................................ 39
Temporary Defensive Position .......................................... 39
Money Market Reserves (IDEX T. Rowe Price Small Cap and
IDEX T. Rowe Price Dividend Growth) ................................. 39
Turnover Rate ......................................................... 40
Investment Advisory and Other Services ................................ 40
DISTRIBUTOR ............................................................ 46
ADMINISTRATIVE SERVICES ................................................ 47
CUSTODIAN, TRANSFER AGENT AND OTHER AFFILIATES ......................... 48
FUND TRANSACTIONS AND BROKERAGE ........................................ 49
TRUSTEES AND OFFICERS .................................................. 52
PURCHASE OF SHARES ..................................................... 55
DEALER REALLOWANCES .................................................... 56
DISTRIBUTION PLANS ..................................................... 57
DISTRIBUTION FEES ...................................................... 58
NET ASSET VALUE DETERMINATION .......................................... 60
DIVIDENDS AND OTHER DISTRIBUTIONS ...................................... 62
SHAREHOLDER ACCOUNTS ................................................... 62
RETIREMENT PLANS ....................................................... 62
REDEMPTION OF SHARES ................................................... 63
TAXES .................................................................. 64
PRINCIPAL SHAREHOLDERS ................................................. 65
MISCELLANEOUS .......................................................... 69
Organization .......................................................... 69
Shares of Beneficial Interest ......................................... 69
Legal Counsel and Auditors ............................................ 70
Registration Statement ................................................ 70
PERFORMANCE INFORMATION ................................................ 70
FINANCIAL STATEMENTS ................................................... 75
APPENDIX A-CERTAIN SECURITIES IN WHICH THE FUNDS MAY INVEST ............ A-1
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INVESTMENT OBJECTIVES
The prospectus discusses the investment objective of each fund of the IDEX
Mutual Funds, the principal types of securities in which each fund will invest,
and the policies and practices of each fund. The following discussion of
Investment Restrictions, Policies and Practices supplements that set forth in
the prospectus.
There can be no assurance that a fund will, in fact, achieve its objective. A
fund's investment objective may be changed by the Board of Trustees without
shareholder approval. A change in the investment objective of a fund may result
in the fund having an investment objective different from that which the
shareholder deemed appropriate at the time of investment. A fund will not
change its objective without 30 days prior notice to its shareholders, nor will
it charge shareholders an exchange fee or redemption fee after such notice and
prior to the expiration of such 30-day notice period. However, should a
shareholder decide to redeem fund shares because of a change in the objective,
the shareholder may realize a taxable gain or loss.
INVESTMENT RESTRICTIONS, POLICIES AND PRACTICES
As indicated in the prospectus, each fund is subject to certain fundamental
policies and restrictions which as such may not be changed without shareholder
approval. Shareholder approval would be the approval by the lesser of (i) more
than 50% of the outstanding voting securities of a fund, or (ii) 67% or more of
the voting securities present at a meeting if the holders of more than 50% of
the outstanding voting securities of a fund are present or represented by
proxy.
INVESTMENT RESTRICTIONS OF IDEX 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, (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;
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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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 RESTRICTIONS 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 (a) the value of the holdings of the fund in
the securities
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of such issuer exceeds 5% of the value of such fund's total assets, or (b) 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). Borrowings that exceed 25% of the value of the fund's total
assets by reason of a decline in net assets will reduce 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
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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 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;
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
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(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 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;
(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;
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(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 PILGRIM BAXTER MID CAP GROWTH
IDEX Pilgrim Baxter Mid Cap Growth may not, as a matter of fundamental policy:
1. With respect to 75% of the fund's total assets, purchase the
securities of any one issuer (other than government securities as defined in
the 1940 Act) if immediately after and as a result of such purchase (a) the
value of the holdings of the fund in the securities of such issuer exceeds 5%
of the value of the fund's total assets, or (b) the fund owns more than 10% of
the outstanding voting securities of any one class of securities of such
issuer;
2. Borrow money except for temporary or emergency purposes (not for
leveraging or investment) in an amount exceeding 10% of the value of the fund's
total assets. This borrowing provision is included solely to facilitate the
orderly sale of fund securities to accommodate substantial redemption requests
if they should occur and is not for investment purposes. All borrowings in
excess of 5% of the fund's total assets will be repaid before making
investments;
3. Make loans, except that the fund, in accordance with its investment
objectives and policies, may purchase or hold debt securities, and enter into
repurchase agreements as described in the fund's prospectus and this SAI;
4. Purchase or sell real estate, real estate limited partnership
interests, futures contracts, commodities or commodity contracts, except that
this shall not prevent the fund from (i) investing in readily marketable
securities of issuers which can invest in real estate or commodities,
institutions that issue mortgages, or real estate investment trusts which deal
in real estate or interests therein, pursuant to the fund's investment
objective and policies, and (ii) entering into futures contracts and options
thereon that are listed on a national securities or commodities exchange where,
as a result thereof, no more than 5% of the fund's total assets (taken at
market value at the time of entering into the futures contracts) would be
committed to margin deposits on such futures contracts and premiums paid for
unexpired options on such futures contracts; provided that, in the case of an
option that is "in-the-money" at the time of purchase, the "in-the-money"
amount, as defined under the Commodities Futures Trading Commission
regulations, may be excluded in computing the 5% limit. The fund (as a matter
of operating policy) will utilize only listed futures contracts and options
thereon;
5. Act as an underwriter of securities of other issuers except as it may
be deemed an underwriter in selling a fund security;
6. Issue senior securities, except as permitted by the 1940 Act; 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.
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With respect to restriction 7 above, the fund may use (with the consent of the
Investment Adviser) industry classifications reflected by Bloomberg Sub-Groups
for the communications equipment, electronic components and accessories, and
the computer and other data processing service sectors, if applicable at the
time of determination.
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, except as permitted by the 1940 Act.
6. 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 investment purposes. All borrowings in excess of 5% of the
fund's total assets will be repaid before making investments.
7. Invest in companies for the purpose of exercising control.
8. 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.
9. 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.
10. Purchase securities of other investment companies except as permitted
by the 1940 Act and the rules and regulations thereunder.
11. 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.
Furthermore, the fund has adopted the following non-fundamental restrictions
which may be changed 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 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
8
<PAGE>
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
(D) The fund may not make short sales of securities, except short sales
"against the box."
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.
9
<PAGE>
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 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.
12. 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;
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.
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
10
<PAGE>
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 short sales "against
the box".
INVESTMENT RESTRICTIONS OF WRL GREAT COMPANIES -- AMERICA(SM) AND
WRL GREAT COMPANIES -- TECHNOLOGY(SM)
Each fund may not, as a matter of fundamental policy:
1. Act as underwriter of securities issued by other persons, except to
the extent that, in connection with the disposition of fund securities, it may
technically be deemed to be an underwriter under certain securities laws;
2. Invest in interests in oil, gas, or other mineral exploration or
development programs, although it may invest in the marketable securities of
companies which invest in or sponsor such programs;
3. Buy or sell commodities or commodity contracts or future contracts
(other than gold or foreign currencies unless acquired as a result of ownership
of securities);
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. Borrow money or pledge, mortgage or hypothecate any of its assets
except that the fund may borrow on a secured or unsecured basis as a temporary
measure for extraordinary or emergency purposes. Such temporary borrowing may
not exceed 5% of the value of the fund's total assets when the borrowing is
made;
6. Issue any senior security except as permitted by the 1940 Act; and
7. Lend any security or make any other loan if, as a result, more than
33 1/3% 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).
Furthermore, each fund has adopted the following non-fundamental investment
restrictions which may be changed by the Board of Trustees of the Fund without
shareholder or policyowner approval:
(A) Each fund may not make short sales of securities or maintain a short
position. This restriction shall not apply to transactions involving selling
securities "short against the box;"
11
<PAGE>
(B) Each fund may not participate on a "joint" or "joint and several"
basis in any trading account in securities; and
(C) Each fund may not invest in securities of other investment companies,
except as it may be acquired as part of a merger, consolidation,
reorganization, acquisition of assets, or offer of exchange.
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;
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;
12
<PAGE>
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 FEDERATED TAX EXEMPT
(FORMERLY IDEX AEGON TAX EXEMPT)
IDEX Federated Tax Exempt 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. 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;
3. Make investments that will result in the concentration of its
investments in the securities of issuers primarily engaged in the same
industry, provided that the fund may invest more than 25% of the value of its
assets in industrial development bonds. Government securities, municipal
securities and bank instruments will not be deemed to constitute an industry.
As to industrial development bonds, the fund may purchase securities of an
issuer resulting in the ownership of more than 25% of the fund's assets in one
industry, and the fund reserves the right to invest more than 25% of its assets
in industrial development bonds in the same state;
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. Invest in securities of other investment companies, except in the
event of merger or reorganization with another investment company;
7. Make loans, except to the extent the purchase of notes, bonds, or
other evidences of indebtedness or the
13
<PAGE>
entry into repurchase agreements or deposits with banks may be considered
loans;
8. Invest in companies for the purpose of exercising management or
control;
9. The fund may not purchase or sell physical commodities, provided that
the fund may purchase securities of companies that deal in commodities. For
purposes of this restriction, investments in transactions involving futures
contracts and options, forward currency contracts, swap transactions and other
financial contracts that settle by payment of cash are not deemed to be
investments in commodities; and
10. 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.
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 15% of its net assets in illiquid
securities;
(B) The fund may not invest in real estate limited partnerships; and
(C) 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 in interest rate futures contracts,
options thereon, and options on portfolio securities.
The fund applies its concentration investment restrictions as follows:
Utility companies will be divided according to their services, for
example, gas, gas transmission, electric and telephone will each be
considered a separate industry;
Financial service companies will be classified according to the end
users of their services, for example automobile finance, bank
finance and diversified finance will each be considered a separate
industry, and
Asset-backed securities will be classified according to the
underlyling assets securing such securities.
To conform to the current view of the SEC staff that only domestic bank
instruments may be excluded from industry concentration limitations, the fund
will not exclude foreign bank instruments from industry concentration tests as
long as the policy of the SEC remains in effect.
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
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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, 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,
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<PAGE>
swaps, forward contracts and other derivative instruments are not deemed to
constitute selling securities short;
(D) The fund may not purchase securities on margin, except that the fund
may obtain such short-term credits as are necessary for the clearance of
transactions, and provided that margin payments and other deposits made in
connection with transactions in options, futures contracts, swaps, forward
contracts, and other derivative instruments shall not be deemed to constitute
purchasing securities on margin;
(E) The fund may not invest more than 15% of its net assets in illiquid
securities. This does not include securities eligible for resale pursuant to
Rule 144A under the 1933 Act, or any successor to such Rule, Section 4(2)
commercial paper or other securities for which the Board of Trustees has made a
determination of liquidity, as permitted under the 1940 Act;
(F) The fund may not (i) purchase securities of other investment
companies, except in the open market where no commission except the ordinary
broker's commission is paid, or (ii) purchase or retain securities issued by
other open-end investment companies. Limitations (i) and (ii) do not apply to
money market funds or to securities received as dividends, through offers of
exchange, or as a result of consolidation, merger or other reorganization. The
fund may also invest in the GEI Short-Term Investment Fund, an investment fund
advised by GE Asset Management Incorporated ("GEAM"), created specifically to
serve as a vehicle for the collective investment of cash balances of the fund
and other accounts advised by GEAM 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
IDEX GE U.S. Equity may not, as a matter of fundamental policy:
1. Borrow money, except that a fund may enter into reverse repurchase
agreements and may 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 1/3% 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 borrowings, including reverse repurchase
agreements, of 5% or more of a fund's total assets are outstanding, the fund
will not make any additional investments.
2. Lend its assets or money to other persons, except through (a)
purchasing debt obligations, (b) lending portfolio securities in an amount not
to exceed 30% of the fund's total 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.
3. Purchase securities (other than 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.
4. Purchase more than 10% of the voting securities of any one issuer, or
more than 10% of the outstanding securities of any class of issuer, except that
(a) this limitation is not applicable to a fund's investments in Government
Securities and (b) up to 25% of the value of the 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.
5. Invest more than 25% of the value of its total assets in securities of
issuers in any one industry. For purposes of this restriction, the term
industry will be deemed to include (a) the government of any one country other
than the United States, but not the U.S. Government and (b) all supra-national
organizations.
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<PAGE>
6. Underwrite any issue of securities, except to the extent that the sale
of portfolio 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
Securities Act of 1933, as amended.
7. 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 a 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.
8. 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.
9. Purchase securities on margin, except that a 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, options on securities
indexes and options on currencies will not be deemed to be a purchase of
securities on margin by a fund.
10. Invest in commodities, except that each non-money market fund may
invest in futures contracts (including financial futures contracts, index
futures contracts or securities index futures contracts) and related options and
other similar contracts (including foreign currency forward, futures and options
contracts) as described in this Statement of Additional Information and in the
Prospectus.
11. Invest in companies for the purpose of exercising control or
management.
12. Issue senior securities except as otherwise permitted by the 1940 Act
and as otherwise permitted herein.
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 purchase illiquid securities if more than 15% of the
net assets of the fund would be invested in illiquid securities. For purposes
of this restriction, illiquid securities are securities that cannot be disposed
of by a fund within seven days in the ordinary course of business at
approximately the amount at which the fund has valued the securities.
(B) The fund may not purchase restricted securities if more than 10% of
the total assets of the fund would be invested in restricted securities.
Restricted securities are securities that are subject to contractual or legal
restrictions on transfer, excluding for purposes of this restriction,
restricted securities that are eligible for resale pursuant to Rule 144A under
the Securities Act of 1933, as amended ("Rule 144A Securities"), that have been
determined to be liquid by the Trust's Board of Trustees based upon the trading
markets for the securities.
(C) 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 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 Asset Management Incorporated ("GEAM"),
created specifically to serve as a vehicle for the collective investment of
cash balances of the fund and other accounts advised by GEAM or General
Electric Investment Corporation ("GEIC"), are not subject to this restriction,
pursuant to and in accordance with necessary regulatory approvals.
The percentage limitations in the restrictions listed above apply at the time
of purchases of securities. For purposes of investment restriction number 5,
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 portfolio 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
17
<PAGE>
immediately after and as a result of such purchase (a) the value of the
holdings of the fund in the securities of such issuer exceeds 5% of the value
of the fund's total assets, or (b) the fund owns more than 10% of the
outstanding voting securities of such issuer;
2. Invest more than 25% of the fund's assets in the securities of issuers
primarily engaged in the same industry. Utilities will be divided according to
their services, for example, gas, gas transmission, electric and telephone, and
each will be considered a separate industry for purposes of this restriction.
In addition, there shall be no limitation on the purchase of obligations issued
or guaranteed by the U.S. government or its agencies or instrumentalities, or
of certificates of deposit and bankers' acceptances;
3. Purchase or sell physical commodities unless acquired as a result of
ownership of securities or other instruments (but this limitation shall not
prevent the fund from investing in securities or other instruments backed by
physical commodities);
4. Purchase or sell real estate (but this shall not prevent the fund from
investing in securities or other instruments backed by real estate, including
mortgage-backed securities, or securities of companies engaged in the real
estate business);
5. Lend any security or make any other loan if, as a result, more than
25% of its total assets would be lent to other parties (but this limitation
does not apply to purchases of commercial paper or debt securities);
6. Act as an underwriter of securities issued by others, except to the
extent that it may be deemed an underwriter in connection with the disposition
of its portfolio securities;
7. The fund may borrow money only for temporary or emergency purposes
(not for leveraging or investment) in an amount not exceeding 25% of the value
of the fund's total assets (including the amount borrowed) less liabilities
(other than borrowings). Any borrowings that exceed 25% of the value of the
fund's total assets by reason of a decline in net assets will be reduced within
three business days to the extent necessary to comply with the 25% limitation;
and
8. Issue senior securities, except as permitted by the 1940 Act.
Furthermore, the fund has adopted the following non-fundamental investment
restrictions which may be changed by the Board of Trustees without shareholder
approval:
(A) The fund may not sell securities short, unless it owns or has the
right to obtain securities equivalent in kind and amount to the securities sold
short, and provided that margin payments and other deposits in connection with
transactions in options, swaps and forward and futures contracts are not deemed
to constitute selling securities short;
(B) The fund may not purchase securities on margin, except that the fund
may obtain such short-term credits as are necessary for the clearance of
transactions, and provided that margin payments and other deposits in
connection with transactions in options, futures, swaps and forward contracts
shall not be deemed to constitute purchasing securities on margin;
(C) The fund may not (i) purchase securities of other investment
companies, except in the open market where no commission except the ordinary
broker's commission is paid, or (ii) purchase or retain securities issued by
other open-end investment companies. Limitations (i) and (ii) do not apply to
money market funds or to securities received as dividends, through offers of
exchange, or as a result of a consolidation, merger or other reorganization;
(D) The fund may not mortgage or pledge any securities owned or held by
the fund in amounts that exceed, in the aggregate, 15% of the fund's net
assets, provided that this limitation does not apply to reverse repurchase
agreements, deposits of assets to margin, guarantee positions in futures,
options, swaps or forward contracts or segregation of assets in connection with
such contracts;
(E) The fund may not invest directly in oil, gas, or other mineral
development or exploration programs or leases; however, the fund may own debt
or equity securities of companies engaged in those businesses;
(F) The fund may not invest in companies for the purpose of exercising
control or management; and
(G) The fund may not invest more than 15% of its net assets in illiquid
securities. This does not include securities eligible for resale pursuant to
Rule 144A under the 1933 Act, or any successor to such Rule, Section 4(2)
commercial paper or any other securities as to which the Board of Trustees has
made a determination as to liquidity, as permitted under the 1940 Act.
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<PAGE>
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;
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
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(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.
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
20
<PAGE>
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 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
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bona fide hedging transactions would exceed 5% of the fair market value of the
fund's net assets, after taking into account unrealized profits and losses on
such contracts it has entered into and (ii) enter into any futures contracts or
options on futures contracts if the aggregate amount of the fund's commitments
under outstanding futures contracts positions and options on futures contracts
would exceed the market value of its total assets;
(B) The fund may not mortgage or pledge any securities owned or held by
the fund in amounts that exceed, in the aggregate, 15% of the fund's net
assets, provided that this limitation does not apply to reverse repurchase
agreements or in the case of assets deposited to provide margin or guarantee
positions in options, futures contracts, swaps, forward contracts or other
derivative instruments or the segregation of assets in connection with such
transactions;
(C) The fund may not sell securities short, unless it owns or has the
right to obtain securities equivalent in kind and amount to the securities sold
short, and provided that transactions in options, futures contracts, swaps,
forward contracts and other derivative instruments are not deemed to constitute
selling securities short;
(D) The fund may not purchase securities on margin, except that the fund
may obtain such short-term credits as are necessary for the clearance of
transactions, and provided that margin payments and other deposits made in
connection with transactions in options, futures contracts, swaps, forward
contracts, and other derivative instruments shall not be deemed to constitute
purchasing securities on margin;
(E) The fund may not invest more than 15% of its net assets in illiquid
securities. This does not include securities eligible for resale pursuant to
Rule 144A under the 1933 Act, or any successor to such Rule, Section 4(2)
commercial paper or other securities for which the Board of Trustees has made a
determination of liquidity, as permitted under the 1940 Act;
(F) The fund may not (i) purchase securities of other investment
companies, except in the open market where no commission except the ordinary
broker's commission is paid, or (ii) purchase or retain securities issued by
other open-end investment companies. Limitations (i) and (ii) do not apply to
money market funds or to securities received as dividends, through offers of
exchange, or as a result of consolidation, merger or other reorganization;
(G) The fund may not invest directly in oil, gas or other mineral
development or exploration programs or 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.
In addition to the above, as a fundamental policy, each of the funds, other
than IDEX Federated 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 (which might result in duplication of certain fees
and expenses).
OTHER POLICIES AND PRACTICES OF THE FUNDS
FUTURES, OPTIONS AND OTHER DERIVATIVE INSTRUMENTS
The following investments are subject to limitations as set forth in each
fund's investment restrictions and policies.
FUTURES CONTRACTS. A fund may enter into futures contracts. Futures contracts
are for the purchase or sale, for future delivery, of equity or fixed-income
securities, foreign currencies or contracts based on financial indices,
including indices of U.S. government securities, foreign government securities
and equity or fixed-income securities. The IDEX AEGON Income Plus may enter
into interest rate futures contracts. These contracts are for the purchase or
sale of fixed-income securities. U.S. futures contracts are traded on exchanges
which have been designated "contract markets" by the Commodity Futures Trading
Commission ("CFTC") and must be executed through a Futures Trading Commission
merchant ("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.
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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 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,
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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 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
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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. An "in-the-money" call option is any
whose strike price is lower than the current price of the underlying stock.
(The strike price per share for which the underlying stock may be purchased (in
the case of a call) by the option buyer upon exercise of the option contract.)
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.
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,
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each of the funds, other than IDEX Federated 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 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
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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.
If the call options are exercised in such transactions, the fund's maximum gain
will be the premium received by it for writing the option, adjusted upwards or
downwards by the difference between that fund's purchase price of the security
and the exercise price. If the options are not exercised and the price of the
underlying security declines, the amount of such decline will be offset by the
amount of premium received.
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The writing of covered put options is similar in terms of risk and return
characteristics to buy-and-write transactions. If the market price of the
underlying security rises or otherwise is above the exercise price, the put
option will expire worthless and a fund's gain will be limited to the premium
received. If the market price of the underlying security declines or otherwise
is below the exercise price, a fund may elect to close the position or take
delivery of the security at the exercise price and that fund's return will be
the premium received from the put options minus the amount by which the market
price of the security is below the exercise price.
A fund may buy put options to hedge against a decline in the value of its fund.
By using put options in this way, a fund will reduce any profit it might
otherwise have realized in the underlying security by the amount of the premium
paid for the put option and by transaction costs.
A fund may buy call options to hedge against an increase in the price of
securities that it may buy in the future. The premium paid for the call option
plus any transaction costs will reduce the benefit, if any, realized by such
fund upon exercise of the option, and, unless the price of the underlying
security rises sufficiently, the option may expire worthless to that fund.
In purchasing an option, a fund would be in a position to realize a gain if,
during the option period, the price of the underlying security increased (in
the case of a call) or decreased (in the case of a put) by an amount in excess
of the premium paid. The fund would realize a loss if the price of the
underlying security did not increase (in the case of a call) or decrease (in
the case of a put) during the period by more than the amount of the premium. If
a put or call option purchased by a fund were permitted to expire without being
sold or exercised, the fund would lose the amount of the premium.
Although they entitle the holder to buy equity securities, warrants on and
options to purchase equity securities do not entitle the holder to dividends or
voting rights with respect to the underlying securities, nor do they represent
any rights in the assets of the issuer of those securities.
In addition to options on securities, a fund may also purchase and sell call
and put options on securities indexes. A stock index reflects in a single
number the market value of many different stocks. Relative values are assigned
to the stocks included in an index and the index fluctuates with changes in the
market values of the stocks. The options give the holder the right to receive a
cash settlement during the term of the option based on the difference between
the exercise price and the value of the index. By writing a put or call option
on a securities index, a fund is obligated, in return for the premium received,
to make delivery of this amount. A fund may offset its position in stock index
options prior to expiration by entering into a closing transaction on an
exchange or it may let the option expire unexercised.
Use of options on securities indexes entails the risk that trading in the
options may be interrupted if trading in certain securities included in the
index is interrupted. A fund will not purchase these options unless a fund's
sub-adviser is satisfied with the development, depth and liquidity of the
market and believes the options can be closed out.
Price movements in a fund's securities may not correlate precisely with
movements in the level of an index and, therefore, the use of options on
indexes cannot serve as a complete hedge and will depend, in part, on the
ability of its sub-adviser to predict correctly movements in the direction of
the stock market generally or of a particular industry. Because options on
securities indexes require settlement in cash, a fund's sub-adviser may be
forced to liquidate fund securities to meet settlement obligations.
The amount of risk a fund assumes when it buys an option on a futures contract
is the premium paid for the option plus related transaction costs. In addition
to the correlation risks discussed above, the purchase of an option also
entails the risk that changes in the value of the underlying futures contract
will not be fully reflected in the value of the options bought.
OPTIONS ON FOREIGN CURRENCIES. Subject to any investment restrictions, a fund
may buy and write options on foreign currencies in a manner similar to that in
which futures contracts or forward contracts on foreign currencies will be
utilized. For example, a decline in the U.S. dollar value of a foreign currency
in which fund securities are denominated will reduce the U.S. dollar value of
such securities, even if their value in the foreign currency remains constant.
In order to protect against such diminutions in the value of fund securities, a
fund may buy put options on the foreign currency. If the value of the currency
declines, such fund will have the right to sell such currency for a fixed
amount in U.S. dollars and will offset, in whole or in part, the adverse effect
on its portfolio.
Conversely, when a rise in the U.S. dollar value of a currency in which
securities to be acquired are denominated is projected, thereby increasing the
cost of such securities, a fund may buy call options thereon. The purchase of
such options could offset, at least partially, the
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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 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
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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 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
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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 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
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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. Investing in these
securities may result in duplication of certain fees and 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 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
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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 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
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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 GEAM or its affiliate, GEIC. 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 GEAM. No advisory fee is charged by GEAM 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. There
may be a duplication of certain other fees and expenses.
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.
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
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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 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
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<PAGE>
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.
/diamond/ Risk Factors
These investments are subject to credit risk and market risk. Credit risk
relates to the party's ability to make payment upon demand; market risk relates
to the fact that the value of the security will be impacted by the rise and
fall of interest rates.
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
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<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
Federated 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.
Repurchase agreements involve the risk that the seller will fail to repurchase
the security, as agreed. In that case, a fund will bear the risk of market
value fluctuations until the security can be sold and may encounter delays and
incur costs in liquidating the security. In the event of bankruptcy or
insolvency of the seller, delays and costs are incurred.
Reverse repurchase agreements may expose a fund to greater fluctuations in the
value of its assets.
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.
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<PAGE>
The most common type of pass-through securities are mortgage-backed securities.
Government National Mortgage Association ("GNMA") Certificates are mortgage-
backed securities that evidence an undivided interest in a pool of mortgage
loans. GNMA Certificates differ from traditional bonds in that principal is
paid back monthly by the borrowers over the term of the loan rather than
returned in a lump sum at maturity. A fund will generally purchase "modified
pass-through" GNMA Certificates, which entitle the holder to receive a share of
all interest and principal payments paid and owned on the mortgage pool, net of
fees paid to the "issuer" and GNMA, regardless of whether or not the mortgagor
actually makes the payment. GNMA Certificates are backed as to the timely
payment of principal and interest by the full faith and credit of the U.S.
government.
The Federal Home Loan Mortgage Corporation ("FHLMC") issues two types of
mortgage pass-through securities: mortgage participation certificates ("PCs")
and guaranteed mortgage certificates ("GMCs"). PCs resemble GNMA Certificates
in that each PC represents a pro rata share of all interest and principal
payments made and owned on the underlying pool. FHLMC guarantees timely
payments of interest on PCs and the full return of principal. GMCs also
represent a pro rata interest in a pool of mortgages. However, these
instruments pay interest semi-annually and return principal once a year in
guaranteed minimum payments. This type of security is guaranteed by FHLMC as to
timely payment of principal and interest, but is not backed by the full faith
and credit of the U.S. government.
The Federal National Mortgage Association ("FNMA") issues guaranteed mortgage
pass-through certificates ("FNMA Certificates"). FNMA Certificates resemble
GNMA Certificates in that each FNMA Certificate represents a pro rata share of
all interest and principal payments made and owned on the underlying pool. This
type of security is guaranteed by FNMA as to timely payment of principal and
interest, but it is not backed by the full faith and credit of the U.S.
government.
Each of the mortgage-backed securities described above is characterized by
monthly payments to the holder, reflecting the monthly payments made by the
borrowers who received the underlying mortgage loans. The payments to the
security holders (such as a fund), like the payments on the underlying loans,
represent both principal and interest. Although the underlying mortgage loans
are for specified periods of time, such as 20 or 30 years, the borrowers can,
and typically do, pay them off sooner. Thus, the security holders frequently
receive prepayments of principal in addition to the principal that is part of
the regular monthly payments. A borrower is more likely to prepay a mortgage
that bears a relatively high rate of interest. This means that in times of
declining interest rates, some of a fund's higher yielding mortgage-backed
securities may be converted to cash. That fund will then be forced to accept
lower interest rates when that cash is used to purchase additional securities
in the mortgage-backed securities sector or in other investment sectors.
Mortgage and asset-backed securities may have periodic income payments or may
pay interest at maturity (as is the case with Treasury bills or zero-coupon
bonds).
Asset-backed securities represent interests in pools of consumer loans and are
backed by paper or accounts receivables originated by banks, credit card
companies or other providers of credit. Generally, the originating bank or
credit provider is neither the obligor or guarantor of the security and
interest and principal payments ultimately depend upon payment of the
underlying loans by individuals. Tax-exempt asset-backed securities include
units of beneficial interests in pools of purchase contracts, financing leases,
and sales agreements that may be created when a municipality enters into an
installment purchase contract or lease with a vendor. Such securities may be
secured by the assets purchased or leased by the municipality; however, if the
municipality stops making payments, there generally will be no recourse against
the vendor. The market for tax-exempt asset-backed securities is still
relatively new. These obligations are likely to involve unscheduled prepayments
of principal.
HIGH YIELD/HIGH-RISK BONDS
High-yield/high-risk 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
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<PAGE>
substantial period of rising interest rates, highly leveraged issuers may
experience financial stress which would adversely affect their ability to
service their principal and interest payments obligations, to meet projected
business goals and to obtain additional financing.
The market prices of lower grade securities are generally less sensitive to
interest rate changes than higher rated investments, but more sensitive to
adverse economic or political changes or individual developments specific to
the issuer. Periods of economic or political uncertainty and change can be
expected to result in volatility of prices of these securities. 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.
TEMPORARY DEFENSIVE POSITION
For temporary defensive purposes, a portfolio may, at times, choose to hold
some portion of its net assets in cash, or to invest that cash in a variety of
debt securities. This may be done as a defensive measure at times when
desirable risk/reward characteristics are not available in stocks or to earn
income from otherwise uninvested cash. When a fund increases its cash or debt
investment position, its income may increase while its ability to participate
in stock market advances or declines decrease. Furthermore, when a fund assumes
a temporary defensive position it may not be able to achieve its investment
objective.
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
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<PAGE>
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.
Investing in these securities may result in duplication of certain fees and
expenses.
TURNOVER RATE
FUND* OCTOBER 31, 1999 OCTOBER 31,1998
- ----- ---------------- ---------------
IDEX Alger Aggressive Growth 96.25% 142.08%
IDEX GE International Equity** 71.70% 50.01%
IDEX JCC Capital Appreciation 93.54% 136.59%
IDEX JCC Global 145.40% 87.68%
IDEX JCC Growth 70.97% 27.19%
IDEX C.A.S.E. Growth 125.60% 147.01%
IDEX NWQ Value Equity 26.29% 30.43%
IDEX LKCM Strategic Total Return 60.18% 32.12%
IDEX Dean Asset Allocation 82.20% 55.45%
IDEX JCC Balanced 59.57% 61.50%
IDEX JCC Flexible Income 100.22% 90.63%
IDEX AEGON Income Plus 26.95% 53.09%
IDEX Federated Tax Exempt*** 35.97% 42.42%
IDEX Goldman Sachs Growth 21.91% N/A
IDEX T. Rowe Price Dividend Growth 20.48% N/A
IDEX T. Rowe Price Small Cap 42.52% N/A
IDEX T. Rowe Price Salomon All Cap 82.70% N/A
IDEX Pilgrim Baxter Mid Cap Growth 150.78% N/A
- ------------------------------
* Information is not included for IDEX Pilgrim Baxter Technology, IDEX GE U.S.
Equity, IDEX Transamerica Small Company, IDEX Transamerica Equity funds as
these funds commenced operations on March 1, 2000, and for IDEX Great
Companies -- America(SM) and IDEX Great Companies -- Technology(SM) as they
will commence operations on July 14, 2000.
** Prior to March 1, 2000, Scottish Equitable Investment Management Limited
served as co-manager of this fund.
*** Prior to June 15, 2000, AEGON served as sub-adviser to 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 Federated 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 Federated 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
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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 Federated Tax
Exempt, IMI receives 0.60% of each fund's average daily net 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, IDEX Transamerica Equity, IDEX Great Companies --
America(SM) and IDEX Great Companies -- TechnologySM, 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 Federated Tax Exempt -
June 15, 2000; 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; 1.40% for IDEX Pilgrim Baxter
Technology, in the case of IDEX AEGON Income Plus, 1.25% of average daily net
assets; in the case of the IDEX Federated 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.
41
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<TABLE>
<CAPTION>
ADVISORY FEE AFTER REIMBURSEMENT ADVISORY FEE REIMBURSEMENTS
---------------------------------------------- ----------------------------------------
OCTOBER 31 OCTOBER 31
---------------------------------------------- ----------------------------------------
FUND* ADVISER 1999 1998 1997 1999 1998 1997
- ----- ------- ----------- ---------- ----------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
IDEX Alger Aggressive
Growth IMI $ 617,922 $ 344,018 $ 130,896 $318,097 $173,443 $192,695
IDEX GE International
Equity** IMI $ (53,604) $ (64,180) $ (110,543) $114,536 $117,653 $128,291
IDEX JCC Capital Apprecia-
tion IMI $ 466,930 $ 167,150 $ 45,071 $ 94,449 $107,861 $193,491
IDEX JCC Global IMI $ 6,949,268 $3,907,062 $ 2,224,062 $ 0 0 0
IDEX JCC Growth IMI $21,381,062 $1,352,188 $11,676,637 $713,062 0 0
IDEX C.A.S.E. Growth IMI $ (31,048) $ 36,124 $ (96,157) $103,977 $ 51,462 $150,161
IDEX NWQ Value Equity IMI $ 35,123 $ 46,140 $ (63,589) $105,260 $ 93,563 $104,638
IDEX LKCM Strategic Total
Return IMI $ 393,829 $ 380,273 $ 127,630 $ 85,282 $ 30,860 $ 96,214
IDEX Dean Asset Allocation IMI $ 237,931 $ 325,285 $ 120,873 $ 68,735 $ 8,119 $ 99,277
IDEX JCC Balanced IMI $ 1,086,804 $ 206,736 $ (4,940) $ 6,324 $ 50,820 $139,247
IDEX JCC Flexible Income IMI $ 184,981 $ 151,489 $ 60,744 $ 36,126 $ 186 $ 95,242
IDEX AEGON Income Plus IMI $ 484,795 $ 441,912 $ 416,928 $ 0 0 0
IDEX Federated Tax
Exempt*** IMI $ 122,580 $ 136,481 $ (7,330) $ 28,238 $ 10,071 $155,172
IDEX Goldman Sachs Growth IMI $ (76,699) N/A N/A $ 88,276 N/A N/A
IDEX T. Rowe Price Dividend
Growth IMI $ (76,054) N/A N/A $ 87,719 N/A N/A
IDEX Salomon All Cap IMI $ (70,744) N/A N/A $ 79,464 N/A N/A
IDEX Pilgrim Baxter Mid Cap
Growth IMI $ (67,394) N/A N/A $ 79,128 N/A N/A
IDEX T. Rowe Price Small
Cap IMI $ (70,793) N/A N/A $ 80,896 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, or for IDEX Great
Companies -- America(SM) and IDEX Great Companies -- Technology(SM) as they
will commence operations on July 14, 2000.
** Prior to March 1, 2000, Scottish Equitable Investment Management Limited
served as co-manager of this fund.
*** Prior to June 15, 2000, AEGON served as sub-adviser to 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 Asset Management Incorporated ("GEAM"), 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.
42
<PAGE>
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.
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 Income Plus pursuant to
an Investment Counsel Agreement dated April 22, 1992. AIMI is an affiliate of
the Fund.
Transamerica Investment Management, LLC, 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. Transamerica is an affiliate of the Fund.
Great Companies, L.L.C., 8550 Ulmerton Road, Largo, FL 33771, serves as
sub-adviser to IDEX Great Companies -- America(SM) and IDEX Great Companies --
Technology(SM) pursuant to a sub-advisory agreement dated June 15, 2000. Great
Companies is an affiliate of the Fund. John R. Kenney, Trustee, owns 25% of
Great Companies, L.L.C.
Federated Investment Management Company, Federated Investors Tower, Pittsburgh,
PA 15222-3779, serves as sub-adviser to IDEX Federated Tax Exempt pursuant to a
Sub-Advisory Agreement dated June 15, 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 Asset 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
</TABLE>
43
<PAGE>
<TABLE>
<CAPTION>
FUND SUB-ADVISER SUB-ADVISORY FEE
- ---- ----------- ----------------
<S> <C> <C>
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*
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 Federated Tax Exempt Federated, Inc. 50% of the fees received by IMI under the
Advisory Agreement, less 50% of any amount
reimbursed pursuant to its expense limitation
IDEX Pilgrim Baxter Technology Pilgrim Baxter & Associates, 0.55% of the first $500 million or average daily
Ltd. assets; 0.50% of assets in excess of $500
million
IDEX GE U.S. Equity GE Asset Management 50% of the fees received by IMI under the
Incorporated 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 Management, LLC 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
Management, LLC Advisory Agreement, less 50% of any amount
reimbursed pursuant to its expense limitation
</TABLE>
44
<PAGE>
<TABLE>
<CAPTION>
FUND SUB-ADVISER SUB-ADVISORY FEE
- ---- ----------- ----------------
<S> <C> <C>
IDEX Great Companies -- Great Companies, L.L.C. 50% of the advisory fees received by IMI, less
America(SM) 50% of any amount reimbursed pursuant to its
expense limitation
IDEX Great Companies -- Great Companies, L.L.C. 50% of the advisory fees received by IMI, less
Technology(SM) 50% of any amount reimbursed pursuant to its
expense limitation
</TABLE>
- ------------------------------
* Janus has contractually 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. This
agreement will terminate on June 25, 2000.
SUB-ADVISORY FEES PAID*
(NET OF FEES REIMBURSED)
<TABLE>
<CAPTION>
OCTOBER 31
---------------------------------------------
FUND 1999 1998 1997
- ---- ----------- ----------- -----------
<S> <C> <C> <C>
IDEX Alger Aggressive Growth $ 342,362 $ 137,607 $ 52,325
IDEX GE International Equity $ 0 $ 0 0
IDEX JCC Capital Appreciation $ 233,465 $ 83,575 $ 22,536
IDEX JCC Global $ 3,480,875 $ 1,953,531 $ 1,112,031
IDEX JCC Growth $11,063,717 $ 6,769,684 $ 5,838,319
IDEX C.A.S.E. Growth $ 0 $ 14,450 0
IDEX NWQ Value Equity $ 16,106 $ 18,456 0
IDEX LKCM Strategic Total Return $ 197,195 $ 152,109 $ 50,944
IDEX Dean Asset Allocation $ 119,012 $ 130,114 $ 48,349
IDEX JCC Balanced $ 545,519 $ 103,368 0
IDEX JCC Flexible Income $ 95,664 $ 75,745 $ 30,372
IDEX AEGON Income Plus $ 242,397 $ 220,956 $ 208,464
IDEX AEGON Tax Exempt $ 61,347 $ 68,241 0
IDEX Goldman Sachs Growth $ 10,780 N/A N/A
IDEX T. Rowe Price Dividend Growth $ 10,862 N/A N/A
IDEX Salomon All Cap $ 4,872 N/A N/A
IDEX Pilgrim Baxter Mid Cap Growth $ 10,925 N/A N/A
IDEX T. Rowe Price Small Cap $ 6,615 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 and for IDEX Great
Companies -- America(SM) and IDEX Great Companies -- Technology(SM) as they
will commence operations on July 14, 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. This agreement will terminate on
that date.
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
45
<PAGE>
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.
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 ENDED COMMISSIONS RETAINED FOR THE PERIOD ENDED
------------------------------------------- -------------------------------------------
OCTOBER 31 OCTOBER 31
------------------------------------------- -------------------------------------------
FUND 1999 1998 1997 1999 1998 1997
- ---- ----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
IDEX Alger Aggressive Growth $ 1,519,511 $ 449,078 $ 330,689 $ 1,321,658 $ 64,099 $ 47,828
IDEX GE International Equity** $ 21,901 $ 64,324 $ 48,603 $ 19,102 $ 9,250 $ 7,335
IDEX JCC Capital Appreciation $ 882,472 $ 164,358 $ 271,016 $ 772,645 $ 26,358 $ 42,668
IDEX JCC Global $ 4,132,880 $ 2,784,651 $ 2,336,372 $ 3,671,479 $ 401,257 $ 353,015
IDEX JCC Growth $11,290,051 $ 2,848,238 $ 2,541,907 $ 9,851,566 $ 424,803 $ 396,160
IDEX C.A.S.E. Growth $ 65,496 $ 70,063 $ 69,637 $ 57,639 $ 9,325 $ 10,625
IDEX NWQ Value Equity $ 117,549 $ 172,567 $ 105,441 $ 102,842 $ 25,433 $ 15,512
IDEX LKCM Strategic Total Return $ 416,127 $ 419,778 $ 260,944 $ 356,357 $ 67,470 $ 41,330
IDEX Dean Asset Allocation $ 111,737 $ 186,182 $ 208,715 $ 97,158 $ 28,499 $ 34,415
IDEX JCC Balanced $ 1,767,590 $ 344,872 $ 174,256 $ 1,566,316 $ 34,919 $ 27,931
IDEX JCC Flexible Income $ 131,918 $ 40,463 $ 28,133 $ 115,018 $ 1,530 $ 4,862
IDEX AEGON Income Plus $ 348,609 $ 165,033 $ 99,411 $ 296,635 $ 21,369 $ 17,322
IDEX Federated Tax Exempt*** $ 78,111 $ 30,201 $ 25,760 $ 66,807 $ 5,356 $ 4,591
IDEX Goldman Sachs Growth $ 57,489 N/A N/A $ 50,035 N/A N/A
IDEX T. Rowe Price Dividend Growth $ 65,630 N/A N/A $ 57,802 N/A N/A
IDEX Salomon All Cap $ 56,382 N/A N/A $ 48,803 N/A N/A
IDEX Pilgrim Baxter Mid Cap Growth $ 66,207 N/A N/A $ 57,809 N/A N/A
IDEX T. Rowe Price Small Cap $ 33,728 N/A N/A $ 29,698 N/A N/A
</TABLE>
46
<PAGE>
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 $1,321,658 $ 16,561 0 $ 265,092
IDEX GE International Equity** $ 19,102 $ 4,889 0 $ 13,086
IDEX JCC Capital Appreciation $ 772,645 $ 36,013 0 $ 121,878
IDEX JCC Global $3,671,479 $ 56,276 0 $1,836,360
IDEX JCC Growth $9,851,566 $199,755 0 $2,358,409
IDEX C.A.S.E. Growth $ 57,639 $ 3,796 0 $ 24,631
IDEX NWQ Value Equity $ 102,842 $ 8,142 0 $ 49,144
IDEX LKCM Strategic Total Return $ 356,357 $ 12,682 0 $ 121,320
IDEX Dean Asset Allocation $ 97,158 $ 3,660 0 $ 103,690
IDEX JCC Balanced $1,566,316 $ 35,435 0 $ 456,321
IDEX JCC Flexible Income $ 115,018 $ 20,562 0 $ 66,778
IDEX AEGON Income Plus $ 296,635 $ 18,391 0 $ 130,361
IDEX Federated Tax Exempt*** $ 66,807 $ 2,663 0 $ 26,703
IDEX Goldman Sachs Growth $ 50,035 $ 247 0 $ 2,428
IDEX T. Rowe Price Dividend Growth $ 57,802 $ 1,040 0 $ 3,204
IDEX Salomon All Cap $ 48,803 $ 2 0 $ 1,765
IDEX Pilgrim Baxter Mid Cap Growth $ 57,809 $ 1,022 0 $ 2,280
IDEX T. Rowe Price Small Cap $ 29,698 $ 206 0 $ 2,557
</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, and for IDEX Great
Companies -- America(SM) and IDEX Great Companies -- Technology(SM) as they
will commence operations on July 14, 2000.
** Prior to March 1, 2000, Scottish Equitable Investment Management Limited
served as co-manager of this fund.
*** Prior to June 15, 2000, AEGON served as sub-adviser to this fund.
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.
47
<PAGE>
ADMINISTRATIVE FEES**
FUND
---- 1998 1999
IDEX JCC Capital Appreciation $ 137,506 $ 227,137
IDEX JCC Global $1,953,531 $ 3,468,393
IDEX JCC Growth $6,812,504 $10,317,345
IDEX JCC Balanced $ 128,778 $ 541,285
IDEX Alger Aggressive Growth* $ 310,477 $ 275,560
IDEX GE International Equity* -0- -0-
IDEX C.A.S.E. Growth* $ 52,552 -0-
IDEX NWQ Value Equity* $ 83,822 $ 19,017
IDEX LKCM Strategic Total Return* $ 246,680 $ 196,382
IDEX Dean Asset Allocation* $ 200,042 $ 119,083
IDEX AEGON Income Plus* $ 220,956 $ 242,398
IDEX Federated Tax Exempt* $ 73,276 $ 61,347
IDEX Goldman Sachs Growth N/A -0-
IDEX T. Rowe Price Dividend Growth N/A -0-
IDEX Salomon All Cap N/A -0-
IDEX Pilgrim Baxter Mid Cap Growth N/A -0-
IDEX T. Rowe Price Small Cap N/A -0-
IDEX JCC Flexible Income* $ 75,838 $ 89,131
- ------------------------------
* Effective March 1, 1999, Idex Management, Inc. replaced ISI as investment
adviser to these funds.
** No information is included for IDEX Transamerica Small Company, IDEX
Transamerica Equity and IDEX GE U.S. Equity as they commenced operations on
March 1, 2000, and for IDEX Great Companies -- America(SM) and IDEX Great
Companies -- Technology(SM) as they will commence operations on July 14,
2000.
CUSTODIAN, TRANSFER AGENT AND OTHER AFFILIATES
State Street Bank & Trust, 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 $15.70 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.
48
<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 $ 592,015 $ 311,310 $ 217,941
IDEX GE International Equity** $ 29,790 $ 25,385 $ 11,583
IDEX JCC Capital Appreciation $ 209,550 $ 128,201 $ 133,515
IDEX JCC Global $1,662,198 $1,032,225 $ 628,833
IDEX JCC Growth $3,525,633 $2,628,305 $2,811,027
IDEX C.A.S.E. Growth $ 54,690 $ 46,730 $ 32,500
IDEX NWQ Value Equity $ 87,425 $ 71,985 $ 20,957
IDEX LKCM Strategic Total Return $ 199,815 $ 145,685 $ 89,918
IDEX Dean Asset Allocation $ 117,310 $ 107,100 $ 71,335
IDEX JCC Balanced $ 304,645 $ 81,805 $ 48,876
IDEX JCC Flexible Income $ 60,510 $ 32,859 $ 48,615
IDEX AEGON Income Plus $ 141,930 $ 119,036 $ 86,126
IDEX Federated Tax Exempt*** $ 31,360 $ 21,690 $ 34,786
IDEX Goldman Sachs Growth $ 12,130 NA NA
IDEX T. Rowe Price Dividend Growth $ 12,370 NA NA
IDEX Salomon All Cap $ 12,370 NA NA
IDEX Pilgrim Baxter Mid Cap Growth $ 12,370 NA NA
IDEX T. Rowe Price Small Cap $ 12,370 NA NA
</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, and for IDEX Great
Companies -- America(SM) and IDEX Great Companies -- Technology(SM) as they
will commence operations on July 14, 2000.
** Prior to March 1, 2000, Scottish Equitable Investment Management Limited
served as co-manager of this fund.
*** Prior to June 15, 2000, AEGON served as sub-adviser to 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
49
<PAGE>
advisability of purchasing or selling specific securities and the
availability of securities or purchasers or sellers of securities;
Furnishing seminars, information, analyses and reports concerning
issuers, industries, securities, trading markets and methods, legislative
developments, changes in accounting practices, economic factors and
trends and portfolio strategy;
Access to research analysts, corporate management personnel, industry
experts, economists and government officials; and
Comparative performance evaluation and technical measurement services and
quotation services, and other services (such as third party publications,
reports and analyses, and computer and electronic access, equipment,
software, information and accessories that deliver process or otherwise
utilize information, including the research described above) that assist
the sub-adviser in carrying out its responsibilities.
Most of the brokers and dealers used by the 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 $136,631
Fiscal 1999 Percentages:
Commissions with affiliates to
total commissions 99%
Value of brokerage transactions
with affiliates to value of total
brokerage transactions 99%
As of October 31, 1999, IDEX JCC Balanced owned $2,440,447 and IDEX JCC Capital
Appreciation owned $1,263,133 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 Alger Aggressive Growth owned $1,831,188 and IDEX
Dean Asset Allocation owned $951,250 of the common stock of Morgan Stanley,
Dean Witter, Discover and Company. Morgan Stanley, Dean Witter, Discover and
Company is one of the ten brokers or dealers that received the greatest dollar
amount of brokerage commissions from IDEX Alger Aggressive Growth and IDEX Dean
Asset Allocation during the fiscal year ended October 31, 1999.
50
<PAGE>
As of October 31, 1999, IDEX LKCM Strategic Total Return owned $204,000 of the
common stock of J.P. Morgan & Company, Inc. J.P. Morgan & Company, Inc. is one
of the ten brokers or dealers that received the greatest dollar amount of
brokerage commissions from IDEX LKCM Strategic Total Return during the fiscal
year ended October 31, 1999.
As of October 31, 1999, IDEX T. Rowe Price Small Cap owned $1,413 of the common
stock of Donaldson, Lufkin & Jenrette, Inc. Donaldson, Lufkin & Jenrette, Inc.
is one of the ten brokers or dealers that received the greatest dollar amount
of brokerage commissions from IDEX T. Rowe Price Small Cap during the fiscal
year ended October 31, 1999.
BROKERAGE COMMISSIONS
<TABLE>
<CAPTION>
IDEX ALGER IDEX GE IDEX JCC
BROKERAGE COMMISSIONS PAID AGGRESSIVE INTERNATIONAL CAPITAL
(INCLUDING AFFILIATED BROKERAGE) GROWTH EQUITY* APPRECIATION
- -------------------------------- ---------- ------------- ------------
<S> <C> <C> <C>
October 31, 1999 $136,673 $20,219 $179,054
October 31, 1998 $155,668 $17,998 $ 89,687
October 31, 1997 $ 79,346 $ 6,337 $108,748
AFFILIATED BROKERAGE PAID
- -------------------------
October 31, 1999 $136,631 $ 0 $ 0
October 31, 1998 $154,866 $ 0 $ 0
October 31, 1997 $ 78,761 $ 0 $ 0
<CAPTION>
IDEX NWQ
BROKERAGE COMMISSIONS PAID IDEX JCC IDEX JCC IDEX C.A.S.E. VALUE
(INCLUDING AFFILIATED BROKERAGE) GLOBAL GROWTH GROWTH EQUITY
- -------------------------------- ---------- ---------- ------------ -------
<S> <C> <C> <C> <C>
October 31, 1999 $2,189,777 $2,668,652 $29,437 $13,580
October 31, 1998 $ 954,707 $ 843,937 $38,910 $15,539
October 31, 1997 $ 119,665 $1,301,654 $34,840 $10,553
AFFILIATED BROKERAGE PAID
- -------------------------
October 31, 1999 $ 0 $ 0 $ 0 $ 0
October 31, 1998 $ 0 $ 0 $ 0 $ 0
October 31, 1997 $ 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 FEDERATED**
(INCLUDING AFFILIATED BROKERAGE) TOTAL RETURN ALLOCATION BALANCED INCOME PLUS TAX EXEMPT
- -------------------------------- ------------ ---------- -------- -------- ---------- ----------------
<S> <C> <C> <C> <C> <C> <C>
October 31, 1999 $62,337 $55,676 $376,364 $165,196 $0 $0
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 $ 0 $ 0 $ 0 $ 0 $0 $0
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 $5,614 $2,883 $11,258 $6,289 $2,752
October 31, 1998 $ NA $ NA $ NA $ NA $ NA
October 31, 1997 $ NA $ NA $ NA $ NA $ NA
AFFILIATED BROKERAGE PAID
- -------------------------
October 31, 1999 $ 538 $ 0 $ 68 $ 0 $ 0
October 31, 1998 $ NA $ NA $ NA $ NA $ NA
October 31, 1997 $ NA $ NA $ NA $ NA $ NA
</TABLE>
- ------------------------------
* Prior to March 1, 2000, Scottish Equitable Investment Management Limited
served as co-manager of this fund.
** Prior to June 15, 2000, AEGON served as sub-adviser to this fund.
IDEX JCC Global, IDEX JCC Growth, IDEX LKCM Strategic Total Return, IDEX JCC
Balanced, IDEX JCC Flexible Income and IDEX JCC Capital Appreciation all
experienced a significant increase in brokerage commissions paid as a result of
the increased volume of sales of the respective funds for fiscal year ended
10/31/99.
During the fiscal year ended October 31, 1999, IDEX C.A.S.E. Growth, IDEX Dean
Asset Allocation, IDEX NWQ Value Equity, IDEX LKCM Strategic Total Return, IDEX
Goldman Sachs Growth and IDEX Pilgrim Baxter Mid Cap Growth had transactions in
the amounts of $16,075,765, $16,075,691, $3,390,556,000, $6,549,213, $58,608,
and $1,489,815, respectively, which resulted in brokerage commissions of
$14,260, $29,352, $5,270, $1,047, $2,993 and $7,647, respectively, that were
directed to brokers for brokerage and research services provided. IDEX GE
International Equity, IDEX JCC Growth, IDEX JCC Global, IDEX JCC Balanced and
51
<PAGE>
IDEX JCC Capital Appreciation had brokerage commissions in the amounts of $305,
$53,372, $7,609, $2,442 and $882, respectively, that were directed to brokers
for brokerage and research services provided.
TRUSTEES AND OFFICERS
DIRECTORS AND OFFICERS
The fund is governed 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 Directors and
officers of the Fund is as follows:
<TABLE>
<CAPTION>
POSITION(S)
NAME, ADDRESS AND AGE HELD WITH THE FUND PRINCIPAL OCCUPATION(S) DURING THE PAST 5 YEARS
- -------------------------------- -------------------- --------------------------------------------------------------
<S> <C> <C>
PETER R. BROWN TRUSTEE Currently Retired, (January, 2000 - present); Chairman of
(DOB 05/10/28), the Board, Peter Brown Construction Company (construc-
11180 6th Street East tion contractors and engineers), Largo, Florida (1963 -
Treasure Island, Florida 33706 2000); Director of WRL Series Fund, Inc. (investment
company); Rear Admiral (Ret.) U.S. Navy Reserve, Civil
Engineer Corps.
DANIEL CALABRIA TRUSTEE Trustee (1993 - present) and President (1993 - 1995) of
(DOB 03/05/36) The Florida Tax Free Funds (mutual funds); currently
7068 S. Shore Drive S., South retired; formerly President and Director (1995) of Sun
Pasadena, FL 33707-4605 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 Manage-
ment, Inc. (investment advisers); and Vice President (1986
- 1992) of all U.S. Templeton Funds (mutual funds).
JAMES L. CHURCHILL TRUSTEE Currently retired (1990 - present).
(DOB 07/15/30)
15 Hawthorne Road,
Bluffington, SC 29910-4901
CHARLES C. HARRIS TRUSTEE Director (March 1994 - present), of WRL Series Fund, Inc.
(DOB 07/15/30), (investment company); currently retired (1988 - present).
35 Winston Drive,
Clearwater, Florida 33756
WILLIAM W. SHORT, JR. TRUSTEE President and sole shareholder of Shorts, Inc. (men's retail
(DOB 02/25/36), apparel); Chairman of Southern Apparel Corporation and
12420 73rd Court, S.A.C. Apparel Corporation and S.A.C. Distributors
Largo, FL 33773 (nationwide wholesale apparel distributors), Largo, Florida;
Member of Advisory Board of Nations 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 TRUSTEE Director (1987 - present), Western Reserve Life Assurance
(DOB 02/03/28), Co. of Ohio (life insurance); currently retired; formerly,
507 Saint Michael Circle, Director, Regional Marketing (September, 1986 - January,
Kettering, OH 45429 1993) Martin Marietta Corporation, Dayton, OH (aerospace
industry). Mr. Zimmerman is also the brother-in-law of John
Kenney, Chairman and CEO of the Fund.
</TABLE>
52
<PAGE>
<TABLE>
<CAPTION>
POSITION(S)
NAME, ADDRESS AND AGE HELD WITH THE FUND PRINCIPAL OCCUPATION(S) DURING THE PAST 5 YEARS
- -------------------------- ------------------------ ------------------------------------------------------------
<S> <C> <C>
PATRICK S. BAIRD PRESIDENT AND President and Director (December 1999 - present), WRL
(DOB 01/19/54), TRUSTEE Series Fund, Inc.; Executive Vice President, Chief Operat-
4333 Edgewood Road, NE, ing Officer (February, 1996 - present), Executive Vice
Cedar Rapids, Iowa 52499 President and CFO (February, 1995 - February, 1996),
Vice President and Chief Financial Officer (May, 1992 -
February, 1995) AEGON USA.
JOHN E. KENNEY(1,2) CHAIRMAN, TRUSTEE Chairman of the Board (1986 - present), of WRL Series
(DOB 02/8/38) AND CHIEF EXECUTIVE Fund, Inc. (investment company); Director (December,
OFFICER 1990 - present) of IDEX Management, Inc. (investment
adviser); Chairman (1988 - July, 1999) of InterSecurities,
Inc. (broker-dealer); Director (October, 1992 - present) of
ISI Insurance Agency, Inc.; Chairman, and Chief Executive
Officer (1992 - present) and President (1992 - 1999) of
Western Reserve Life Assurance Co. of Ohio (life insur-
ance); Senior Vice President (May, 1992 - 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. Mr. Kenney Owns 25% of Great
Companies, L.L.C.
THOMAS R. MORIARTY(1,2) SENIOR VICE PRESIDENT, Director, Chief Executive Officer and President (July,
(DOB 05/03/51) TREASURER AND 1999 - present); Senior Vice President (June, 1991 - July,
PRINCIPAL FINANCIAL 1999) of InterSecurities, Inc. (broker-dealer); Director,
OFFICER Chairman and President (November 1999 - present),
Senior Vice President (September, 1992 - November,
1999) of ISI Insurance Agency, Inc.; President (November,
1990 - present) of PW Securities, Inc. (broker-dealer);
Senior Vice President (June, 1991 - November, 1999) of
IDEX Investor Services, Inc. (transfer agent); Vice
President (June, 1993 - present) of Western Reserve Life
Assurance Co. of Ohio (life insurance); President and CFO
(November, 1999 - present) of AEGON Asset Management
Services, Inc.
DAVID BULLOCK(1,2) EXECUTIVE VICE Executive Vice President (December, 1998 - present),
(DOB 04/25/56) PRESIDENT IDEX Mutual Funds; Executive Vice President (September,
1998 - present), AEGON Equity Group; President
(September, 1998 - present), AEGON Distributors;
President and CEO (September, 1999 - present)
Transamerica Capital, Inc. (formerly Endeavor Group);
prior to 1998, Senior Vice President, National Sales
Manager and Division Vice President of GE Financial
Assurance.
JOHN K. CARTER(1,2) VICE PRESIDENT, Assistant Secretary (June, 1999 - December, 1999) of
(DOB 04/24/61) SECRETARY AND IDEX Mutual Funds; Vice President, Secretary and
COUNSEL Counsel (December, 1999 - present), WRL Series Fund,
Inc.; Vice President and Counsel (March, 1997 - May,
1999), Salomon Smith Barney; Assistant Vice President,
Associate Corporate Counsel and Trust Officer
(September, 1993 - March, 1997) Franklin Templeton
Mutual Funds; Assistant Vice President and Counsel
(September, 1999 - present ) of Western Reserve Life
Assurance Co. of Ohio.
</TABLE>
53
<PAGE>
<TABLE>
<CAPTION>
POSITION(S)
NAME, ADDRESS AND AGE HELD WITH THE FUND PRINCIPAL OCCUPATION(S) DURING THE PAST 5 YEARS
- ----------------------------- --------------------- ---------------------------------------------------------------
<S> <C> <C>
THOMAS E. PIERPAN(1,2) VICE PRESIDENT AND Vice President, Associate General Counsel and Secretary
(DOB 10/18/43) ASSISTANT 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 (November, 1997 -
present) of InterSecurities, Inc. (broker-dealer); Senior Vice
President and General Counsel (December, 1999 -
present), Associate General Counsel and Assistant
Secretary (February, 1995 - December, 1999), Assistant
Vice President (November, 1992 - November, 1993) of
Western Reserve Life Assurance of Ohio (life insurance).
CHRISTOPHER G. ROETZER(1,2) VICE PRESIDENT, Principal Accounting Officer (March, 1995 - March, 1997),
(DOB 01/11/63) ASSISTANT TREASURER and Assistant Vice President (November, 1990 - March,
AND PRINCIPAL 1997) of IDEX Mutual Funds; Assistant Vice President and
ACCOUNTING OFFICER Controller (May, 1998 - present) of InterSecurities, Inc.
(broker-dealer); Assistant Vice President (September, 1992
- present) of ISI Insurance Agency, Inc.; Assistant Vice
President and Controller (May, 1988 - present) of IDEX
Investor Services, Inc. (transfer agent); Assistant Vice
President (November, 1990 - present) of IDEX Manage-
ment, Inc. (investment adviser).
JULIAN LERNER TRUSTEE EMERITUS Currently retired; Trustee of American Skandia Trust;
(DOB 11/12/24), Director of American Skandia Advisory Funds; Trustee of
One Spurling Plaza, American Skandia Master Trust; formerly Investment
Suite 208, Consultant (1995 - 1996) and Sr. Vice President (1987 -
12850 Spurling Road, 1995) of Aim Capital Management (investment adviser).
Dallas, Texas 75230
</TABLE>
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.
54
<PAGE>
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 $ 28,250 $28,750 $ 41,000
Daniel Calabria, Trustee $ 25,500 $ 6,375 $ 25,500
James L. Churchill, Trustee $ 25,500 $16,400 $ 25,500
Charles C. Harris, Trustee $ 28,250 $ 0 $ 41,000
Julian A. Lerner, Trustee*** $ 25,500 $ 0 $ 25,500
William W. Short, Jr., Trustee $ 28,250 $22,750 $ 28,250
Jack E. Zimmerman, Trustee $ 25,500 $ 5,500 $ 25,500
-------- ------- --------
Total $186,750 $79,775 $212,250
</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, $30,961;
Daniel Calabria, $7,542; James L. Churchill, $19,425; William W. Short,
Jr., $22,750; and Jack E. Zimmerman, $5,500.
** The Fund Complex consists of IDEX Mutual Funds and WRL Series Fund, Inc.
*** Effective January 1, 2000, Mr. Lerner became a Trustee Emeritus.
The Board of Trustees has adopted a policy whereby any Disinterested Trustee of
the Fund in office on September 1, 1990 who has served at least three years as
a trustee may, subject to certain limitations, elect upon his resignation to
serve as a trustee emeritus for a period of two years. A trustee emeritus has
no authority, power or responsibility with respect to any matter of the Fund.
While serving as such, a trustee emeritus is entitled to receive from the Fund
an annual fee equal to one-half the fee then payable per annum to Disinterested
Trustees of the Fund, plus reimbursement of expenses incurred for attendance at
Board meetings.
The Fund has an Executive Committee whose members currently are John R. Kenney,
Pat Baird 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 $266,525 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.
55
<PAGE>
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 Federated 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%
CLASS A SHARE DEALER REALLOWANCES
(IDEX JCC Flexible Income, IDEX AEGON Income Plus
and IDEX Federated 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%
56
<PAGE>
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. This Plan is
structured as a Compensation Plan. 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 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.
57
<PAGE>
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
AGGRESSIVE GROWTH INTERNATIONAL EQUITY(a)
------------------------------------------ --------------------------------------
A B M** A B M**
SHARES SHARES SHARES SHARES SHARES SHARES
-------------- -------------- ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Advertising $ 9,595.00 $ 3,772.00 $ 1,921.00 $ 1,413.00 $ 243.00 $ 61.00
Printing/mailing
prospectuses to
other than current
shareholders $ 61,356.00 $ 35,263.00 $14,239.00 $ 3,966.00 $1,096.00 $ 296.00
Compensation to
underwriters $ 82,159.00 $ 10,650.00 $ 9,908.00 $ 9,009.00 $ 911.00 $ 700.00
Compensation to
dealers $ 90,221.00 $ 10,388.00 $10,669.00 $ 4,101.00 $ 730.00 $ 225.00
Compensation to
sales personnel $ 96,459.00 $ 60,562.00 $23,724.00 $ 5,726.00 $1,625.00 $ 407.00
Interest or other
finance charges $ 0.00 $ 0.00 $ 0.00 $ 0.00 $ 0.00 $ 0.00
Travel $ 16,087.00 $ 9,885.00 $ 3,905.00 $ 988.00 $ 277.00 $ 70.00
Office expenses $ 38,951.00 $ 21,915.00 $ 9,011.00 $ 2,981.00 $ 728.00 $ 189.00
Administrative
processing costs $ 7,707.00 $ 3,345.00 $ 1,432.00 $ 718.00 $ 545.00 $ 434.00
TOTAL $402,535.00 $155,780.00 $74,809.00 $28,902.00 $6,155.00 $2,382.00
<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 $ 2,890.00 $ 398.00 $ 202.00 $ 60,768.00 $ 40,576.00 $ 19,900.00
Printing/mailing
prospectuses to
other than current
shareholders $ 35,743.00 $21,964.00 $ 6,143.00 $ 206,007.00 $174,040.00 $ 96,475.00
Compensation to
underwriters $ 57,551.00 $ 4,255.00 $ 2,636.00 $ 372,477.00 $ 33,054.00 $ 37,174.00
Compensation to
dealers $ 34,182.00 $ 4,710.00 $ 2,142.00 $ 571,972.00 $125,943.00 $173,332.00
Compensation to
sales personnel $ 66,949.00 $44,328.00 $11,597.00 $ 306,976.00 $267,195.00 $146,338.00
Interest or other
finance charges $ 0.00 $ 0.00 $ 0.00 $ 0.00 $ 0.00 $ 0.00
Travel $ 10,767.00 $ 7,017.00 $ 1,860.00 $ 52,291.00 $ 45,010.00 $ 24,637.00
Office expenses $ 22,185.00 $13,106.00 $ 3,612.00 $ 147,920.00 $118,752.00 $ 63,977.00
Administrative
processing costs $ 2,922.00 $ 1,461.00 $ 716.00 $ 18,930.00 $ 10,701.00 $ 5,475.00
TOTAL $233,189.00 $97,239.00 $28,908.00 $1,737,341.00 $815,271.00 $567,308.00
</TABLE>
<TABLE>
<CAPTION>
IDEX JCC GROWTH* IDEX C.A.S.E. GROWTH
----------------------------------------------- --------------------------------------
A B M** A B M**
SHARES SHARES SHARES SHARES SHARES SHARES
---------------- ---------------- ------------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Advertising $ 120,362.00 $ 38,742.00 $ 35,590.00 $ 1,230.00 $ 414.00 $ 89.00
Printing/mailing
prospectuses to other
than current shareholders $ 709,903.00 $ 321,350.00 $160,177.00 $ 4,125.00 $ 2,554.00 $ 952.00
Compensation to
underwriters $1,226,914.00 $ 36,618.00 $ 56,341.00 $ 5,522.00 $ 1,347.00 $ 828.00
Compensation to dealers $1,594,500.00 $ 33,541.00 $ 85,572.00 $ 5,118.00 $ 3,182.00 $1,320.00
Compensation to sales
personnel $1,099,234.00 $ 532,917.00 $247,632.00 $ 6,270.00 $ 4,247.00 $1,701.00
Interest or other finance
charges $ 0.00 $ 0.00 $ 0.00 $ 0.00 $ 0.00 $ 0.00
Travel $ 183,902.00 $ 87,694.00 $ 41,623.00 $ 1,065.00 $ 701.00 $ 276.00
Office expenses $ 455,525.00 $ 199,947.00 $106,804.00 $ 2,983.00 $ 1,660.00 $ 588.00
Administrative processing
costs $ 42,263.00 $ 10,518.00 $ 4,740.00 $ 958.00 $ 718.00 $ 513.00
TOTAL $5,432,603.00 $1,261,327.00 $736,479.00 $27,271.00 $14,823.00 $6,267.00
<CAPTION>
IDEX NWQ VALUE EQUITY
--------------------------------------
A B M**
SHARES SHARES SHARES
------------ ------------ ------------
<S> <C> <C> <C>
Advertising $ 1,420.00 $ 1,043.00 $ 336.00
Printing/mailing
prospectuses to other
than current shareholders $ 6,262.00 $ 7,745.00 $ 2,386.00
Compensation to
underwriters $13,681.00 $ 3,940.00 $ 2,371.00
Compensation to dealers $ 7,189.00 $ 2,955.00 $ 1,751.00
Compensation to sales
personnel $ 9,647.00 $11,800.00 $ 4,031.00
Interest or other finance
charges $ 0.00 $ 0.00 $ 0.00
Travel $ 1,626.00 $ 1,991.00 $ 664.00
Office expenses $ 4,238.00 $ 4,693.00 $ 1,517.00
Administrative processing
costs $ 1,272.00 $ 1,004.00 $ 622.00
TOTAL $45,335.00 $35,171.00 $13,678.00
</TABLE>
58
<PAGE>
<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 $ 5,607.00 $ 2,534.00 $ 1,658.00 $ 2,245.00 $ 2,530.00 $ 1,502.00
Printing/mailing prospectuses
to other than
current shareholders $ 35,549.00 $16,235.00 $ 8,564.00 $ 9,472.00 $ 9,110.00 $ 4,801.00
Compensation to
underwriters $ 61,529.00 $ 9,946.00 $11,628.00 $25,307.00 $12,506.00 $11,988.00
Compensation to dealers $ 25,366.00 $ 4,768.00 $ 5,883.00 $11,318.00 $ 9,605.00 $ 4,123.00
Compensation to sales
personnel $ 57,388.00 $26,654.00 $13,365.00 $14,485.00 $13,099.00 $ 6,864.00
Interest or other finance
charges $ 0.00 $ 0.00 $ 0.00 $ 0.00 $ 0.00 $ 0.00
Travel $ 9,509.00 $ 4,413.00 $ 2,239.00 $ 2,434.00 $ 2,242.00 $ 1,180.00
Office expenses $ 22,846.00 $10,423.00 $ 5,636.00 $ 6,516.00 $ 6,393.00 $ 3,474.00
Administrative processing
costs $ 2,843.00 $ 1,465.00 $ 941.00 $ 1,502.00 $ 1,277.00 $ 847.00
TOTAL $220,637.00 $76,438.00 $49,914.00 $73,279.00 $56,762.00 $34,779.00
<CAPTION>
IDEX JCC BALANCED
-------------------------------------------
A B M**
SHARES SHARES SHARES
-------------- ------------- --------------
<S> <C> <C> <C>
Advertising $ 9,144.00 $ 15,076.00 $ 5,529.00
Printing/mailing prospectuses
to other than
current shareholders $139,822.00 $142,813.00 $ 61,446.00
Compensation to
underwriters $ 59,763.00 $ 7,922.00 $ 5,529.00
Compensation to dealers $ 41,737.00 $ 6,619.00 $ 17,262.00
Compensation to sales
personnel $230,602.00 $238,851.00 $101,218.00
Interest or other finance
charges $ 0.00 $ 0.00 $ 0.00
Travel $ 37,769.00 $ 39,217.00 $ 16,637.00
Office expenses $ 81,951.00 $ 87,601.00 $ 36,895.00
Administrative processing
costs $ 2,653.00 $ 2,524.00 $ 1,127.00
TOTAL $603,441.00 $540,623.00 $245,643.00
</TABLE>
<TABLE>
<CAPTION>
IDEX JCC FLEXIBLE INCOME IDEX AEGON INCOME PLUS
-------------------------------------- ----------------------------------------
A B M** A B M**
SHARES SHARES SHARES SHARES SHARES SHARES
------------ ------------ ------------ -------------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Advertising $ 2,868.00 $ 3,747.00 $ 1,285.00 $ 9,469.00 $ 4,363.00 $ 3,253.00
Printing/mailing prospectuses
to other than current
shareholders $11,523.00 $15,528.00 $ 5,540.00 $ 41,806.00 $18,607.00 $10,176.00
Compensation to
underwriters $22,938.00 $ 1,052.00 $ 2,057.00 $123,779.00 $ 2,942.00 $ 5,430.00
Compensation to dealers $14,607.00 $ 1,120.00 $ 3,928.00 $ 37,940.00 $ 1,767.00 $ 9,235.00
Compensation to sales
personnel $17,700.00 $23,413.00 $ 8,388.00 $ 61,234.00 $29,237.00 $15,662.00
Interest or other finance
charges $ 0.00 $ 0.00 $ 0.00 $ 0.00 $ 0.00 $ 0.00
Travel $ 2,989.00 $ 3,973.00 $ 1,414.00 $ 10,382.00 $ 4,901.00 $ 2,642.00
Office expenses $ 7,969.00 $10,573.00 $ 3,774.00 $ 28,643.00 $12,806.00 $ 7,598.00
Administrative processing
costs $ 1,084.00 $ 634.00 $ 516.00 $ 2,574.00 $ 822.00 $ 651.00
TOTAL $81,678.00 $60,040.00 $26,902.00 $315,827.00 $75,445.00 $54,647.00
<CAPTION>
IDEX FEDERATED TAX EXEMPT(B)
-----------------------------------------
A B M**
SHARES SHARES SHARES
-------------- ------------- ------------
<S> <C> <C> <C>
Advertising $ 2,583.00 $ 945.00 $ 1,003.00
Printing/mailing prospectuses
to other than current
shareholders $ 20,983.00 $13,898.00 $ 7,195.00
Compensation to
underwriters $ 32,574.00 $ 463.00 $ 1,618.00
Compensation to dealers $ 22,579.00 $ 330.00 $ 2,845.00
Compensation to sales
personnel $ 32,605.00 $24,429.00 $11,453.00
Interest or other finance
charges $ 0.00 $ 0.00 $ 0.00
Travel $ 5,441.00 $ 3,965.00 $ 1,906.00
Office expenses $ 12,784.00 $ 8,323.00 $ 4,492.00
Administrative processing
costs $ 891.00 $ 412.00 $ 449.00
TOTAL $130,440.00 $52,765.00 $30,961.00
</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 $ 0.00 $ 0.00 $ 7.00 $ 0.00 $ 0.00 $ 0.00
Printing/mailing prospectuses
to other than current
shareholders $1,520.00 $2,323.00 $ 693.00 $1,611.00 $2,192.00 $1,255.00
Compensation to underwriters $ 659.00 $ 0.00 $ 0.00 $ 610.00 $ 0.00 $ 0.00
Compensation to dealers $ 302.00 $ 0.00 $ 0.00 $ 226.00 $ 0.00 $ 0.00
Compensation to sales
personnel $3,136.00 $4,480.00 $1,363.00 $3,501.00 $4,622.00 $2,252.00
Interest or other finance
charges $ 0.00 $ 0.00 $ 0.00 $ 0.00 $ 0.00 $ 0.00
Travel $ 493.00 $ 714.00 $ 214.00 $ 545.00 $ 724.00 $ 402.00
Office expenses $ 891.00 $1,324.00 $ 414.00 $ 959.00 $1,285.00 $ 739.00
Administrative processing
costs $ 46.00 $ 47.00 $ 14.00 $ 37.00 $ 52.00 $ 15.00
TOTAL $7,047.00 $8,888.00 $2,705.00 $7,489.00 $8,875.00 $4,663.00
<CAPTION>
IDEX SALOMON ALL CAP
--------------------------------------
A B M**
SHARES SHARES SHARES
------------ ------------ ------------
<S> <C> <C> <C>
Advertising $ 0.00 $ 0.00 $ 3.00
Printing/mailing prospectuses
to other than current
shareholders $1,218.00 $1,314.00 $ 466.00
Compensation to underwriters $ 595.00 $ 0.00 $ 0.00
Compensation to dealers $ 173.00 $ 0.00 $ 0.00
Compensation to sales
personnel $2,728.00 $2,987.00 $ 966.00
Interest or other finance
charges $ 0.00 $ 0.00 $ 0.00
Travel $ 422.00 $ 461.00 $ 150.00
Office expenses $ 737.00 $ 797.00 $ 287.00
Administrative processing
costs $ 29.00 $ 30.00 $ 10.00
TOTAL $5,902.00 $5,589.00 $1,882.00
</TABLE>
59
<PAGE>
<TABLE>
<CAPTION>
IDEX PILGRIM BAXTER MID CAP GROWTH
--------------------------------------
A B M**
SHARES SHARES SHARES
------------ ------------ ------------
<S> <C> <C> <C>
Advertising $ 119.00 $ 0.00 $ 0.00
Printing/mailing prospectuses to other than current shareholders $1,474.00 $1,607.00 $ 737.00
Compensation to underwriters $ 829.00 $ 0.00 $ 0.00
Compensation to dealers $ 240.00 $ 0.00 $ 0.00
Compensation to sales personnel $3,124.00 $3,493.00 $1,564.00
Interest or other finance charges $ 0.00 $ 0.00 $ 0.00
Travel $1,474.00 $1,607.00 $ 737.00
Office expenses $ 940.00 $ 957.00 $ 446.00
Administrative processing costs $ 53.00 $ 109.00 $ 15.00
TOTAL $8,253.00 $7,773.00 $3,499.00
<CAPTION>
IDEX T. ROWE PRICE SMALL CAP
--------------------------------------
A B M**
SHARES SHARES SHARES
------------ ------------ ------------
<S> <C> <C> <C>
Advertising $ 24.00 $ 24.00 $ 27.00
Printing/mailing prospectuses to other than current shareholders $1,217.00 $1,072.00 $ 694.00
Compensation to underwriters $ 778.00 $ 0.00 $ 0.00
Compensation to dealers $ 261.00 $ 0.00 $ 0.00
Compensation to sales personnel $2,252.00 $1,987.00 $1,263.00
Interest or other finance charges $ 0.00 $ 0.00 $ 0.00
Travel $ 359.00 $ 316.00 $ 200.00
Office expenses $ 714.00 $ 634.00 $ 422.00
Administrative processing costs $ 50.00 $ 42.00 $ 10.00
TOTAL $5,655.00 $4,075.00 $2,616.00
</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.
(a) Prior to March 1, 2000, Scottish Equitable Investment Management Limited
served as co-manager of this fund.
(b) Prior to June 15, 2000, AEGON served as sub-adviser to this fund.
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, and for IDEX Great Companies --
America(SM) and IDEX Great Companies -- Technology(SM) as they will commence
operations on July 14, 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 adding
the fund's total assets, subtracting liabilities and dividing by the number of
shares outstanding. 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 and
for IDEX Great Companies -- America(SM) and IDEX Great Companies -- TechnologySM
as they will commence operations July 14, 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 $33.05 5.50% $1.92 $34.97
Class B $32.44 0.00% $ -- $32.44
Class M* $32.53 1.00% $0.33 $32.86
IDEX GE International Equity(a)
</TABLE>
60
<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 A $12.85 5.50% $0.75 $13.60
Class B $12.70 0.00% $ -- $12.70
Class M* $12.73 1.00% $0.13 $12.86
IDEX JCC Capital Appreciation
Class A $31.09 5.50% $1.81 $32.90
Class B $30.51 0.00% $ -- $30.51
Class M* $30.60 1.00% $0.31 $30.91
IDEX JCC Global
Class A $33.80 5.50% $1.97 $35.77
Class B $32.98 0.00% $ -- $32.98
Class M* $32.91 1.00% $0.33 $33.24
IDEX JCC Growth
Class A $46.72 5.50% $2.72 $49.44
Class B $45.38 0.00% $ -- $45.38
Class M* $45.58 1.00% $0.46 $46.04
Class T $47.45 8.50% $4.41 $51.86
IDEX C.A.S.E. Growth
Class A $12.14 5.50% $0.71 $12.85
Class B $11.93 0.00% $ -- $11.93
Class M* $11.96 1.00% $0.12 $12.08
IDEX NWQ Value Equity
Class A $11.28 5.50% $0.66 $11.94
Class B $11.09 0.00% $ -- $11.09
Class M* $11.12 1.00% $0.11 $11.23
IDEX LKCM Strategic Total Return
Class A $17.62 5.50% $1.03 $18.65
Class B $17.60 0.00% $ -- $17.60
Class M* $17.61 1.00% $0.18 $17.79
IDEX Dean Asset Allocation
Class A $11.79 5.50% $0.69 $12.48
Class B $11.78 0.00% $ -- $11.78
Class M* $11.78 1.00% $0.12 $11.90
IDEX JCC Balanced
Class A $18.96 5.50% $1.10 $20.06
Class B $18.95 0.00% $ -- $18.95
Class M* $18.95 1.00% $0.19 $19.14
IDEX JCC Flexible Income
Class A $ 9.46 4.75% $0.47 $ 9.93
Class B $ 9.46 0.00% $ -- $ 9.46
Class M* $ 9.46 1.00% $0.10 $ 9.56
IDEX AEGON Income Plus
Class A $ 9.67 4.75% $0.48 $10.15
Class B $ 9.67 0.00% $ -- $ 9.67
Class M* $ 9.67 1.00% $0.10 $ 9.77
IDEX Federated Tax Exempt(b)
Class A $10.60 4.75% $0.53 $11.13
Class B $10.59 0.00% $ -- $10.59
Class M* $10.59 1.00% $0.11 $10.70
IDEX Goldman Sachs Growth
Class A $11.40 5.50% $0.66 $12.06
Class B $11.35 0.00% $ -- $11.35
Class M* $11.36 1.00% $0.11 $11.47
IDEX T. Rowe Price Dividend Growth
Class A $10.20 5.50% $0.59 $10.79
Class B $10.19 0.00% $ -- $10.19
Class M* $10.19 1.00% $0.10 $10.29
IDEX Salomon All Cap
Class A $11.70 5.50% $0.68 $12.38
Class B $11.66 0.00% $ -- $11.66
Class M* $11.67 1.00% $0.12 $11.79
IDEX Pilgrim Baxter Mid Cap Growth
Class A $14.80 5.50% $0.86 $15.66
Class B $14.76 0.00% $ -- $14.76
Class M* $14.77 1.00% $0.15 $14.92
IDEX T. Rowe Price Small Cap
Class A $11.01 5.50% $0.64 $11.65
Class B $10.97 0.00% $ -- $10.97
</TABLE>
61
<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 M* $10.98 1.00% $0.11 $11.09
</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.
(a) Prior to March 1, 2000, Scottish Equitable Investment Management Limited
served as co-manager of this fund.
(b) Prior to June 15, 2000, AEGON served as sub-adviser to this fund.
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. State Street Bank & Trust, 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 Federated 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.
62
<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 (and Class A, C
and T, when applicable) 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 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.
Please 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 calendar year up to 12% of your account
balance at the time of redemption.
(c) REINVESTMENT PRIVILEGE
The CDSC is also waived on redemption of 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
For accounts opened prior to April 1, 2000, 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.)
63
<PAGE>
TAXES
Each fund has qualified (except IDEX Great Companies -- America(SM) and IDEX
Great Companies -- Technology(SM) 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. If a fund fails to qualify as a regulated
investment company, the fund will be subject to federal, and possibly state,
corporate taxes on its taxable income and gains, and distributions to its
shareholders will constitute ordinary dividend income to the extent of the
fund's available earnings and profits.
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.
In order for IDEX Federated Tax Exempt to pay exempt-interest dividends for any
taxable year, at the close of each taxable quarter, at least 50% of the
aggregate value of the fund's portfolio must consist of exempt-interest
obligations. If IDEX Federated 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 Federated Tax Exempt and the value of its
portfolio securities would be affected. In that event, IDEX Federated 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. However, tax conventions between certain
countries and the United States may reduce or eliminate these foreign taxes. In
addition, most foreign countries do not impose taxes on capital gains in
respect of investments by foreign investors and most U.S. Tax conventions
preclude the imposition of such taxes.
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 limitation applicable to 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
64
<PAGE>
sources within, and taxes paid to, foreign countries and U.S. possessions if it
makes this election.
Each fund, except IDEX Federated Tax Exempt, may invest in the stock of
"passive foreign investment companies" ("PFICs"). A PFIC is a foreign
corporation that, in general, meets either of the following tests: (1) at least
75% of its gross income is passive; or (2) an average of at least 50% of its
assets produce, or are held for the production of, passive income. Under
certain circumstances, a fund will be subject to federal income tax on a
portion of any "excess distribution" received on the stock of a PFIC or of any
gain on disposition of that stock (collectively, "PFIC income"), plus interest
thereon, even if the fund distributes the PFIC income as a taxable dividend to
its shareholders. The balance of the PFIC income will be included in the fund's
investment company taxable income and, accordingly, will not be taxable to it
to the extent that income is distributed to its shareholders. If a fund invests
in a PFIC and elects to treat the PFIC as a "qualified electing fund," then in
lieu of the foregoing tax and interest obligation, the fund will be required to
include in income each year its pro rata share of the qualified electing fund's
annual ordinary earnings and net capital gain (the excess of net long-term
capital gain over net short-term capital loss). This will occur even if such
income and gains are not distributed to the fund and those amounts would be
subject to the Distribution Requirement described above. In most instances it
will be very difficult, if not impossible, to make this election because of
certain requirements thereof.
In addition, another election may be 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 excess distribution 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. In order
to comply with the diversification and other requirements applicable to RICs, a
fund may not be able to buy or sell certain securities at certain times, so the
investments utilized (and the time at which such investments are purchased and
sold) may be different from what the fund might otherwise believe to be
desirable. 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, generally will
qualify as permissible income under the Income Requirement.
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 February 24, 2000, no shareholders owned
beneficially or 5% or more of the outstanding shares of beneficial interest of
IDEX Alger Aggressive Growth, IDEX JCC Capital Appreciation and IDEX JC Global.
% OF SHARES OF
NAME/ADDRESS FUND CLASS BENEFICIAL INTEREST
- ------------------------ ------------------------ ------- --------------------
CONAGRA IDEX JCC Growth T 24%
Boston, MA
Gerlach & Co. IDEX AEGON Income Plus A 11%
Tampa, FL
PFL Life Insurance Co. IDEX AEGON Income Plus A 6%
(Shelly Robinson)
Cedar Rapids, IA
65
<PAGE>
<TABLE>
<CAPTION>
% OF SHARES OF
NAME/ADDRESS FUND CLASS BENEFICIAL INTEREST
- ------------------------------------ ------------------------------------ ------- --------------------
<S> <C> <C> <C>
Donaldson Lufkin Jenrette IDEX Federated Tax Exempt M 14%
Securities Corp. Inc. IDEX Federated Tax Exempt B 6.6%
Jersey City, NJ IDEX Federated Tax Exempt B 5.1%
IDEX T. Rowe Price Dividend Growth M 6.1%
IDEX Salomon All Cap C 27%
IDEX Salomon All Cap C 13.5%
IDEX T. Rowe Price Dividend Growth C 22.4%
IDEX JCC Flexible Income C 12.3%
IDEX Goldman Sachs Growth C 15.5%
IDEX Goldman Sachs Growth C 12.8%
IDEX AEGON Income Plus C 30.1%
IDEX Pilgrim Baxter Mid Cap Growth C 9.2%
IDEX LKCM Strategic Total Return C 11.2%
IDEX LKCM Strategic Total Return C 9.6%
Stephen P. Elias IDEX Federated Tax Exempt M 10%
Amherst, NH
Mary Austin IDEX Federated Tax Exempt M 5%
Arvado, CO
Patricia Jennings IDEX AEGON Income Plus M 11%
New Vernon, NJ
John Williams & IDEX Dean Asset Allocation A 5%
Delton Parks
Grand Rapids, MI
Ernest Roadhouse IDEX Federated Tax Exempt B 9%
Greenville, IL
Jessie S. Judice Jr. & IDEX Federated Tax Exempt B 7.1%
Irby S. Judice, Jr.
Beaumont, TX
Neil & Walana M. Ulrich IDEX Federated Tax Exempt B 6.6%
Clear Lake, WI
National Heritage Foundation IDEX GE International Equity A 8.5%
Falls Church, VA
Timothy & Deborah O'Donnell IDEX GE International Equity C 20.9%
Orlando, FL
Alan R. & Donna May Hochstetler IDEX GE International Equity C 18.6%
Williamsburg, VA
Dorothy Tanner IDEX NWQ Value Equity M 9.3%
Adairsville, GA IDEX Goldman Sachs Growth M 6.4%
IDEX T. Rowe Price Small Cap M 10.3%
Dorothy Towne IDEX Goldman Sachs Growth M 8.2%
Lincoln, NE
Joseph J. & Margaret A. Cannizzaro IDEX T. Rowe Price Dividend Growth M 7%
Cave Creek, AZ
David W. Fitzgerald IDEX T. Rowe Price Dividend Growth M 5.1%
Augusta, GA
</TABLE>
66
<PAGE>
<TABLE>
<CAPTION>
% OF SHARES OF
NAME/ADDRESS FUND CLASS BENEFICIAL INTEREST
- ---------------------------- ------------------------------------ ------- --------------------
<S> <C> <C> <C>
Lady Suzanna P. Tweed and IDEX Salomon All Cap M 19.7%
Carleton Tweed
Charitable Foundation, Inc.
Coral Gables, FL
Richard & Sara Drummond IDEX Salomon All Cap M 8.9%
Ft. Worth, TX
Robert Sabin IDEX Pilgrim Baxter Mid Cap Growth A 16.5%
Mill Neck, NY
Kenneth R. Scholl IDEX Salomon All Cap C 18.5%
Chatham, New Jersey
Richard & Joan Baker IDEX Salomon All Cap C 12.1%
Evant, TX
Warren & Velma Nelson IDEX Salomon All Cap C 5.5%
Idaho City, ID
Barbara Hay IDEX Dean Asset Allocation C 13.6%
Simpsonville, SC
Karen & Bradley Spaulding IDEX Dean Asset Allocation C 11.4%
Lawrenceburg, IN
Michael & Amber Rosvall IDEX Dean Asset Allocation C 8.8%
Alpine, UT
NGA T. Truong IDEX Dean Asset Allocation C 8.3%
San Jose, CA
Daniel M. Landers IDEX C.A.S.E. Growth C 12%
Chandler, AZ IDEX LKCM Strategic Total Return C 5.6%
Howard & Avis Spivey IDEX C.A.S.E. Growth C 5.1%
Liberty, SC IDEX GE International Equity C 8.3%
Jerry & Anne Wilson T. Rowe Price Dividend Growth C 17.8%
Richardson, TX
Phyllis A. Kamas IDEX T. Rowe Price Dividend Growth C 8.9%
Living Trust
Wichita, KS
Donald & Linda Clark IDEX T. Rowe Price Dividend Growth C 6.8%
Salineville, OH IDEX LKCM Strategic Total Return C 6.7%
William Handy IDEX T. Rowe Price Dividend Growth C 6.7%
Wichita, KS
Peggy Hudiburg Foulston IDEX T. Rowe Price Dividend Growth C 5.8%
Whitewater, KS
Carolyn Tiemeyer IRA IDEX JCC Flexible Income C 15%
Johnny D. Kovar IDEX LKCM Strategic Total Return C 7.6%
Thorndale, TX
Jeffrey LeBMorse IDEX JCC Flexible Income C 13.9%
Sextonville, WI
</TABLE>
67
<PAGE>
<TABLE>
<CAPTION>
% OF SHARES OF
NAME/ADDRESS FUND CLASS BENEFICIAL INTEREST
- ---------------------------------- --------------------------------------- ------- --------------------
<S> <C> <C> <C>
Curt P. Braun IDEX JCC Flexible Income C 6.7%
Racine, WI
Shirley Daniels IDEX JCC Flexible Income C 5.6%
Cedar Rapids, IA
Shirley J. McCoy IDEX JCC Flexible Income C 5.6%
Tomah, WI
Francis Schmitz IDEX JCC Flexible Income C 5%
Naperville, IL
David Eckenrode IDEX Goldman Sachs Growth C 11.7%
Bismark, ND
Ralph E. Reed IDEX Goldman Sachs Growth C 8%
Driftwood, TX
George & Marilyn Paice IDEX Goldman Sachs Growth C 7.9%
Spanish Fork, UT
Thomas Spinella Sr. IDEX Goldman Sachs Growth C 7.7%
Methuen, GA
Susan Spiro IDEX Goldman Sachs Growth C 7.6%
Worcester, MA
Doris Walshin & Barbara Springer IDEX AEGON Income Plus C 5.8%
The Woodlands, TX
Drs. Lamura & Sweet TTE IDEX GE International Equity C 45.7%
FBO Patricia Tagliamonti IDEX T. Rowe Price Small Cap C 6.8%
Worcester, MA
National Investor Services, FBO IDEX GE International Equity C 22.1%
New York NY
Carol A. Reilly IDEX Pilgrim Baxter Mid Cap Growth C 7.8%
Saddle Brook, NJ
Eugene Sandler IDEX Pilgrim Baxter Mid Cap Growth C 7.2%
Weehawken, NJ
Adrian Moore IDEX T. Rowe Price Small Cap C 15.3%
Belton, TX
Eugenia Napp IDEX T. Rowe Price Small Cap C 11.5%
Lynbrook, NY
Susan C. Spiro IDEX T. Rowe Price Small Cap C 10%
Worcester, MA IDEX NWQ Value Equity C 12%
Gary Prickett IDEX T. Rowe Price Small Cap C 6%
Mission Viejo, CA
Ronald C. Miller IDEX T. Rowe Price Small Cap C 5%
Weehawken, NJ IDEX NWQ Value Equity C 13.9%
Thomas & Sharon Tudor IDEX Federated Tax Exempt C 8.3%
Bismark, ND
</TABLE>
68
<PAGE>
<TABLE>
<CAPTION>
% OF SHARES OF
NAME/ADDRESS FUND CLASS BENEFICIAL INTEREST
- ----------------------- ------------------------------------ ------- --------------------
<S> <C> <C> <C>
Arthur Carlson IDEX NWQ Value Equity C 38.9%
Bismark, ND
William C. Hames IDEX NWQ Value Equity C 9%
N. Lauderdale, FL
Russell A. Voss IDEX NWQ Value Equity C 7.6%
Chicago, IL
Intersecurities, Inc. IDEX Goldman Sachs Growth A 7.2%
Clearwater, FL IDEX Goldman Sachs Growth M 15.7%
IDEX NWQ Value Equity A 7.6%
IDEX T. Rowe Price Dividend Growth A 6.1%
IDEX T. Rowe Price Dividend Growth B 5.2%
IDEX T. Rowe Price Dividend Growth M 14.8%
IDEX T. Rowe Price Small Cap A 12.5%
IDEX T. Rowe Price Small Cap B 16.6%
IDEX T. Rowe Price Small Cap M 35.5%
IDEX Salomon All Cap A 6.7%
IDEX Salomon All Cap B 6.8%
IDEX Salomon All Cap M 21.9%
IDEX Pilgrim Baxter Mid Cap Growth M 9.3%
IDEX Dean Asset Allocation C 55.8%
IDEX C.A.S.E. Growth C 7.1%
IDEX GE International Equity C 14%
IDEX AEGON Tax Exempt C 17.3%
IDEX C.A.S.E. Growth A 12.5%
IDEX GE International Equity A 22.6%
Salomon Smith Barney IDEX AEGON Income Plus C 28%
New York, NY IDEX AEGON Income Plus C 7.7%
Neil & Walana Ulrich IDEX Federated Tax Exempt B 5.1%
Clear Lake, WI
</TABLE>
MISCELLANEOUS
ORGANIZATION
Each fund is a series of the IDEX Mutual Funds, a Massachusetts business trust
that was formed by a Declaration of Trust dated January 7, 1986. The Trust
currently is governed by a Restatement of Declaration of Trust ("Declaration of
Trust") dated as of August 30, 1991.
On October 1, 1993, in a tax-free reorganization, IDEX JCC Flexible Income
acquired all of the assets and assumed all of the liabilities of IDEX Total
Income Trust ("IDEX Total") in exchange for shares of IDEX JCC Flexible Income
which were then distributed to IDEX Total shareholders. All historical
financial and performance information set forth in this SAI relates to IDEX
Total prior to the date it was reorganized into the IDEX JCC Flexible Income.
On September 20, 1996 in a tax-free reorganization, IDEX JCC Growth (formerly
IDEX II Growth Fund) acquired all of the assets and assumed all of the
liabilities of IDEX Fund and IDEX Fund 3 in exchange for Class T shares of IDEX
JCC Growth which were then distributed on a pro rata basis to the respective
shareholders of IDEX Fund and IDEX Fund 3. Upon closing of the reorganization,
IDEX II Series Fund changed its name to IDEX Series Fund. IDEX Series Fund
became IDEX Mutual Funds effective March 1, 1999.
SHARES OF BENEFICIAL INTEREST
The Declaration of Trust permits the Fund to issue an unlimited number of
shares of beneficial interest. Shares of the Fund are fully paid and
nonassessable when issued. Shares of the Fund have no preemptive, cumulative
voting, conversion or subscription rights. Shares of
69
<PAGE>
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, 1055 Broadway, Kansas City, MO 64105 serves as
independent accountants for the Fund.
REGISTRATION STATEMENT
This SAI and the prospectus for the Fund does not contain all the information
set forth in the registration statement and exhibits relating thereto, which
the Fund has filed with the SEC, Washington, D.C. under the 1933 Act and the
1940 Act, to which reference is hereby made.
PERFORMANCE INFORMATION
Quotations of average annual total return for a particular class of shares of a
fund will be expressed in terms of the average annual compounded rate of return
of a hypothetical investment in the fund over periods of 1, 5, and 10 years.
These are the average annual compounded rates of return that would equate the
initial amount invested to the ending redeemable value. These rates of return
are calculated pursuant to the following formula:
P(1 + T)n = ERV
(where P = a hypothetical initial investment of $1,000; T = the average annual
total return; N = the number of years; and ERV = the ending redeemable value of
a hypothetical $1,000 investment made at the beginning of the period). All
average annual total return figures reflect the deduction of a proportionate
share of each fund's expenses on an annual basis, and assume that the maximum
sales load (Class A, 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.)
70
<PAGE>
AVERAGE ANNUAL TOTAL RETURN
<TABLE>
<CAPTION>
IDEX ALGER AGGRESSIVE GROWTH IDEX GE INTERNATIONAL EQUITY IDEX JCC CAPITAL 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 12/2/94 10/1/95 12/2/94 2/1/97 2/1/97 2/1/97 12/2/94 10/1/95 12/2/94
Sales Charge* 5.50% * 1.00% 5.50% * 1.00% 5.50% * 1.00%
12b-1 Fee 0.35% 1.00% 0.90% 0.35% 1.00% 0.90% 0.35% 1.00% 0.90%
Average Annual Total Return Including
Sales Charges:
1 year 46.93% 49.88% 52.42% 12.57% 13.45% 16.37% 91.07% 96.72% 98.77%
5 years N/A N/A N/A N/A N/A N/A N/A N/A N/A
10 years N/A N/A N/A N/A N/A N/A N/A N/A N/A
Inception 30.94% 21.43% 31.80% 7.61% 8.23% 8.88% 29.88% 28.28% 30.62%
Average Annual Total Return Without
Deduction of Sales Charge:
1 year 55.49% 54.88% 54.97% 19.12% 18.45% 18.55% 102.19% 101.72% 101.79%
5 years N/A N/A N/A N/A N/A N/A N/A N/A N/A
10 years N/A N/A N/A N/A N/A N/A N/A N/A N/A
Inception 32.45% 21.56% 32.07% 9.86% 9.18% 9.28% 31.38% 28.39% 30.89%
Cumulative Total Return Without
Deduction of Sales Charge:
1 year 55.49% 54.88% 54.97% 19.12% 18.45% 18.55% 102.19% 101.72% 101.79%
5 years N/A N/A N/A N/A N/A N/A N/A N/A N/A
10 years N/A N/A N/A N/A N/A N/A N/A N/A N/A
Inception 298.26% 121.97% 292.59% 29.36% 27.17% 27.51% 282.71% 177.54% 275.67%
</TABLE>
<TABLE>
<CAPTION>
IDEX JCC GLOBAL IDEX JCC GROWTH
AS OF OCTOBER 31, 1999 CLASS CLASS
- -------------------------------------- -------------------------------------- -------------------------------------------------
A B M*** A B M*** T**
------------ ------------ ------------ ----------- ------------ ------------ -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Inception Date 10/1/92 10/1/95 10/1/93 5/8/86 10/1/95 10/1/93 6/4/85
Sales Charge* 5.50% * 1.00% 5.50% * 1.00% 8.50%
12b-1 Fee 0.35% 1.00% 0.90% 0.35% 1.00% 0.90% 0%
Average Annual Total Return Including
Sales Charges:
1 year 32.59% 34.62% 37.33% 52.14% 55.36% 57.85% 47.63%
5 years 20.38% N/A 21.26% 30.75% N/A 31.65% 30.23%
10 years N/A N/A N/A 20.11% N/A N/A 20.14%
Inception 22.33% 23.33% 21.06% 20.14% 31.05% 24.56% 20.26%
Average Annual Total Return Without
Deduction of Sales Charge:
1 year 40.31% 39.62% 39.73% 61.00% 60.36% 60.45% 61.34%
5 years 21.75% N/A 21.51% 32.24% N/A 31.91% 32.57%
10 years N/A N/A N/A 20.79% N/A N/A 21.21%
Inception 23.31% 23.47% 21.26% 20.65% 31.16% 24.77% 21.01%
Cumulative Total Return Without
Deduction of Sales Charge:
1 year 40.31% 39.62% 39.73% 61.00% 60.36% 60.45% 61.34%
5 years 167.54% N/A 164.84% 304.39% N/A 299.42% 309.40%
10 years N/A N/A N/A 561.06% N/A N/A 584.43%
Inception 340.53% 136.54% 222.88% 1155.64% 202.73% 284.04% 1459.51%
<CAPTION>
IDEX C.A.S.E. GROWTH
AS OF OCTOBER 31, 1999 CLASS
- -------------------------------------- -----------------------------------
A B M**
----------- ----------- -----------
<S> <C> <C> <C>
Inception Date 2/1/96 2/1/96 2/1/96
Sales Charge* 5.50% * 1.00%
12b-1 Fee 0.35% 1.00% 0.90%
Average Annual Total Return Including
Sales Charges:
1 year 22.92% 24.45% 27.25%
5 years N/A N/A N/A
10 years N/A N/A N/A
Inception 9.76% 10.38% 10.59%
Average Annual Total Return Without
Deduction of Sales Charge:
1 year 30.07% 29.45% 29.54%
5 years N/A N/A N/A
10 years N/A N/A N/A
Inception 11.42% 10.79% 10.89%
Cumulative Total Return Without
Deduction of Sales Charge:
1 year 30.07% 29.45% 29.54%
5 years N/A N/A N/A
10 years N/A N/A N/A
Inception 50.00% 46.81% 47.30%
</TABLE>
71
<PAGE>
<TABLE>
<CAPTION>
IDEX NWQ VALUE EQUITY IDEX LKCM STRATEGIC TOTAL RETURN
AS OF OCTOBER 31, 1999 CLASS CLASS
- ------------------------------------ ----------------------------------- --------------------------------------
A B M*** A B M***
----------- ----------- ----------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Inception Date 2/1/97 2/1/97 2/1/97 12/2/94 10/1/95 12/2/94
Sales Charge* 5.50% * 1.00% 5.50% * 1.00%
12b-1 Fee 0.35% 1.00% 0.90% 0.35% 1.00% 0.90%
Average Annual Total Return
Including Sales Charges:
1 year (1.40)% (1.32)% (1.75)% 5.47% 5.91% 8.91%
5 years N/A N/A N/A N/A N/A N/A
10 years N/A N/A N/A N/A N/A N/A
Inception 3.47% 3.97% 4.70% 14.36% 13.46% 14.83%
Average Annual Total Return Without
Deduction of Sales Charge:
1 year 4.34% 3.68% 3.79% 11.61% 10.91% 11.02%
5 years N/A N/A N/A N/A N/A N/A
10 years N/A N/A N/A N/A N/A N/A
Inception 5.63% 4.98% 5.08% 15.68% 13.63% 15.07%
Cumulative Total Return Without
Deduction of Sales Charge:
1 year 4.34% 3.68% 3.79% 11.61% 10.91% 11.02%
5 years N/A N/A N/A N/A N/A N/A
10 years N/A N/A N/A N/A N/A N/A
Inception 16.17% 14.24% 14.54% 104.70% 68.52% 99.40%
<CAPTION>
IDEX DEAN ASSET ALLOCATION
AS OF OCTOBER 31, 1999 CLASS
- ------------------------------------ --------------------------------------
A B M***
------------ ------------ ------------
<S> <C> <C> <C>
Inception Date 10/1/95 10/1/95 10/1/95
Sales Charge* 5.50% * 1.00%
12b-1 Fee 0.35% 1.00% 0.90%
Average Annual Total Return
Including Sales Charges:
1 year (9.03)% (9.14)% (6.17)%
5 years N/A N/A N/A
10 years N/A N/A N/A
Inception 6.98% 7.59% 7.62%
Average Annual Total Return Without
Deduction of Sales Charge:
1 year (3.74)% (4.36)% (4.26)%
5 years N/A N/A N/A
10 years N/A N/A N/A
Inception 8.48% 7.78% 7.89%
Cumulative Total Return Without
Deduction of Sales Charge:
1 year (3.74)% (4.36)% (4.26)%
5 years N/A N/A N/A
10 years N/A N/A N/A
Inception 39.42% 35.81% 36.36%
</TABLE>
<TABLE>
<CAPTION>
IDEX JCC BALANCED IDEX JCC FLEXIBLE INCOME
AS OF OCTOBER 31, 1999 CLASS CLASS
- -------------------------------------- ----------------------------------- -----------------------------------
A B M*** A B M***
----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Inception Date 12/2/94 10/1/95 12/2/94 6/29/87 10/1/95 10/1/93
Sales Charge* 5.50% * 1.00% 4.75% * 1.00%
12b-1 Fee 0.35% 1.00% 0.90% 0.35% 1.00% 0.90%
Average Annual Total Return Including
Sales Charge:
1 year 23.26% 24.64% 27.46% (3.13)% (3.99)% (0.90)%
5 years N/A N/A N/A 7.17% N/A 7.40%
10 years N/A N/A N/A 7.38% N/A N/A
Inception 20.17% 21.28% 20.67% 7.46% 6.27% 5.60%
Average Annual Total Return Without
Deduction of Sales Charge:
1 year 30.43% 29.64% 29.76% 1.70% 1.01% 1.11%
5 years N/A N/A N/A 8.22% N/A 7.62%
10 years N/A N/A N/A 7.91% N/A N/A
Inception 21.56% 21.41% 20.92% 7.89% 6.47% 5.77%
Cumulative Total Return Without
Deduction of Sales Charge:
1 year 30.43% 29.64% 29.76% 1.70% 1.01% 1.11%
5 years N/A N/A N/A 48.42% N/A 44.33%
10 years N/A N/A N/A 114.06% N/A N/A
Inception 161.16% 120.85% 154.48% 155.22% 29.19% 40.66%
<CAPTION>
IDEX AEGON INCOME PLUS
AS OF OCTOBER 31, 1999 CLASS
- -------------------------------------- -----------------------------------
A B M***
----------- ----------- -----------
<S> <C> <C> <C>
Inception Date 6/14/85 10/1/95 10/1/93
Sales Charge* 4.75% * 1.00%
12b-1 Fee 0.35% 1.00% 0.90%
Average Annual Total Return Including
Sales Charge:
1 year (3.71)% (4.62)% (1.46)%
5 years 7.43% N/A 7.66%
10 years 8.33% N/A N/A
Inception 9.16% 5.59% 5.43%
Average Annual Total Return Without
Deduction of Sales Charge:
1 year 1.09% 0.38% 0.54%
5 years 8.48% N/A 7.88%
10 years 8.86% N/A N/A
Inception 9.53% 5.80% 5.61%
Cumulative Total Return Without
Deduction of Sales Charge:
1 year 1.09% 0.38% 0.54%
5 years 50.21% N/A 46.13%
10 years 133.69% N/A N/A
Inception 270.15% 25.86% 39.33%
</TABLE>
72
<PAGE>
<TABLE>
<CAPTION>
IDEX FEDERATED TAX EXEMPT IDEX PILGRIM BAXTER MID CAP GROWTH
AS OF OCTOBER 31, 1999 CLASS***** CLASS
- ------------------------------------ --------------------------------------- -----------------------------------
A B M*** A B M
------------- ------------ ------------ ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Inception Date 4/1/85 10/1/95 10/1/93 3/1/99 3/1/99 3/1/99
Sales Charge* 4.75% * 1.00% 5.50% * 1.00%
12B-1 Fee 0.35% 1.00% 0.60% 0.35% 1.00% 0.90%
Average Annual Total Return
Including Sales Charges:
1 year (10.69)% (11.55)% (8.42)% N/A N/A N/A
5 years 3.93% N/A 4.45% N/A N/A N/A
10 years 4.99% N/A N/A N/A N/A N/A
Inception 6.74% 2.93% 3.30% N/A N/A N/A
Average Annual Total Return Without
Deduction of Sales Charge:
1 year (6.23)% (6.89)% (6.56)% N/A N/A N/A
5 years 4.95% N/A 4.66% N/A N/A N/A
10 years 5.50% N/A N/A N/A N/A N/A
Inception 7.10% 3.15% 3.47% N/A N/A N/A
Cumulative Total Return Without
Deduction of Sales Charge:
1 year (6.23)% (6.89)% (6.56)% N/A N/A N/A
5 years 27.30% N/A 25.59% N/A N/A N/A
10 years 70.83% N/A N/A N/A N/A N/A
Inception 171.85% 13.49% 23.05% 48.06% 47.63% 47.70%
<CAPTION>
IDEX T. ROWE PRICE SMALL CAP
AS OF OCTOBER 31, 1999 CLASS
- ------------------------------------ -----------------------------------
A B M
----------- ----------- -----------
<S> <C> <C> <C>
Inception Date 3/1/99 3/1/99 3/1/99
Sales Charge* 5.50% * 1.00%
12B-1 Fee 0.35% 1.00% 0.90%
Average Annual Total Return
Including Sales Charges:
1 year N/A N/A N/A
5 years N/A N/A N/A
10 years N/A N/A N/A
Inception N/A N/A N/A
Average Annual Total Return Without
Deduction of Sales Charge:
1 year N/A N/A N/A
5 years N/A N/A N/A
10 years N/A N/A N/A
Inception N/A N/A N/A
Cumulative Total Return Without
Deduction of Sales Charge:
1 year N/A N/A N/A
5 years N/A N/A N/A
10 years N/A N/A N/A
Inception 10.13% 9.70% 9.77%
</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 3/1/99 3/1/99 3/1/99 3/1/99 3/1/99 3/1/99
Sales Charge 5.50% * 1.00% 5.50% * 1.00%
12B-1 Fee 0.35% 1.00% 0.90% 0.35% 1.00% 0.90%
Average Annual Total Return
Including Sales Charges:
1 year N/A N/A N/A N/A N/A N/A
5 years N/A N/A N/A N/A N/A N/A
10 years N/A N/A N/A N/A N/A N/A
Inception N/A N/A N/A N/A N/A N/A
Average Annual Total Return
Without Deduction of Sales Charge:
1 year N/A N/A N/A N/A N/A N/A
5 years N/A N/A N/A N/A N/A N/A
10 years N/A N/A N/A N/A N/A N/A
Inception N/A N/A N/A N/A N/A N/A
Cumulative Total Return Without
Deduction of Sales Charge:
1 year N/A N/A N/A N/A N/A N/A
5 years N/A N/A N/A N/A N/A N/A
10 years N/A N/A N/A N/A N/A N/A
Inception 2.79% 2.00% 2.12% 13.97% 13.54% 13.61%
<CAPTION>
IDEX SALOMON ALL CAP
AS OF OCTOBER 31, 1999 CLASS
- -------------------------------- -----------------------------------
A B M
----------- ----------- -----------
<S> <C> <C> <C>
Inception Date 3/1/99 3/1/99 3/1/99
Sales Charge 5.50% * 1.00%
12B-1 Fee 0.35% 1.00% 0.90%
Average Annual Total Return
Including Sales Charges:
1 year N/A N/A N/A
5 years N/A N/A N/A
10 years N/A N/A N/A
Inception N/A N/A N/A
Average Annual Total Return Without
Deduction of Sales Charge:
1 year N/A N/A N/A
5 years N/A N/A N/A
10 years N/A N/A N/A
Inception N/A N/A N/A
Cumulative Total Return Without
Deduction of Sales Charge:
1 year N/A N/A N/A
5 years N/A N/A N/A
10 years N/A N/A N/A
Inception 17.03% 16.60% 16.67%
</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 contingent deferred sales charge
on Class M shares is 1% during the first 18 months. The Class A and T
shares are subject to a 1% contingent deferred sales charge in certain
circumstances.
** 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.
***** Prior to June 15, 2000, AEGON served as sub-adviser for this fund.
73
<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, or for IDEX Great Companies --
America(SM) and IDEX Great Companies -- Technology(SM) which will commence
operations July 14, 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
30 DAY PERIOD
ENDED 10/31/99
---------------
IDEX LKCM STRATEGIC TOTAL RETURN
Class A 1.52%
Class B 0.95%
Class M* 1.04%
IDEX JCC BALANCED
Class A 5.99%
Class B 5.69%
Class M* 5.73%
IDEX JCC FLEXIBLE INCOME
Class A 6.14%
Class B 5.79%
Class M* 5.83%
IDEX FEDERATED TAX EXEMPT**
Class A 3.96%
Class B 3.50%
Class M* 3.87%
IDEX AEGON INCOME PLUS
Class A 7.00%
Class B 6.70%
Class M* 6.65%
IDEX DEAN ASSET ALLOCATION
Class A 2.78%
Class B 2.28%
Class M* 2.35%
- ------------------------------
* 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.
** Prior to June 15, 2000, AEGON served as sub-adviser to this fund.
The tax equivalent yield of IDEX Federated 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
Federated Tax Exempt Class A, Class B and Class M shares based on a 30-day
period ended October 31, 1999 was 2.85%, 2.52% and 2.79%, 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,
74
<PAGE>
BOSTON HERALD, WASHINGTON POST, KIPLINGER'S WASHINGTON LETTER, KIPLINGER'S TAX
REPORT, KIPLINGER'S PERSONAL FINANCE MAGAZINE, BARRON'S, BUSINESS WEEK,
FINANCIAL SERVICES WEEK, NATIONAL UNDERWRITER, TIME, NEWSWEEK, PENSIONS &
INVESTMENTS, U.S. NEWS AND WORLD REPORT, MORNINGSTAR MUTUAL FUND VALUES,
ECONOMIST, BANK LETTER, BOSTON BUSINESS JOURNAL, RESEARCH RECOMMENDATIONS, FACS
OF THE WEEK, MONEY, MODERN MATURITY, FORBES, FORTUNE, FINANCIAL PLANNER,
AMERICAN BANKER, U.S. BANKER, ABA BANKING JOURNAL, INSTITUTIONAL INVESTOR
(U.S./EUROPE), REGISTERED REPRESENTATIVE, INDEPENDENT AGENT, AMERICAN
DEMOGRAPHICS, TRUSTS & ESTATES, CREDIT UNION MANAGEMENT, PERSONAL INVESTOR, NEW
ENGLAND BUSINESS, BUSINESS MONTH, GENTLEMEN'S QUARTERLY, EMPLOYEE RESEARCH
REPORT, EMPLOYEE BENEFIT PLAN REVIEW, ICI MUTUAL FUND NEWS, SUCCEED, JOHNSON
CHARTS, WEISENBERGER INVESTMENT COMPANIES SERVICE, MUTUAL FUND QUARTERLY,
FINANCIAL WORLD MAGAZINE, CONSUMER REPORTS, BABSON-UNITED MUTUAL FUND SELECTOR
AND MUTUAL FUND ENCYCLOPEDIA (DEARBORN FINANCIAL PUBLISHING). A fund may also
advertise non-standardized performance information which is for a period in
addition to those required to be presented, or which provides actual
year-by-year return, or any combination thereof, or both. For Class A, Class 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 Federated
Tax Exempt or otherwise.
FINANCIAL STATEMENTS
Audited financial statements for 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 Federated 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. (Information is not included for IDEX
Transamerica Small Company, IDEX Transamerica Equity, IDEX Pilgrim Baxter
Technology and IDEX GE U.S. Equity because they did not commence operations
until March 1, 2000, or for IDEX Great Companies -- America(SM) and IDEX Great
Companies -- Technology(SM) which will commence operations July 14, 2000).
75
<PAGE>
APPENDIX A
CERTAIN SECURITIES IN WHICH THE FUNDS MAY INVEST
I. MUNICIPAL OBLIGATIONS IN WHICH IDEX FEDERATED 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
Federated 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 Federated 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 Federated Tax Exempt may sell the municipal bonds before the settlement
date, it will ordinarily do so only for investment management reasons.
Ordinarily, the IDEX Federated 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 Federated 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 Federated 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 Federated Tax Exempt may invest in the following types of municipal
notes, subject to the quality requirements described in the prospectus:
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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
Federated 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 Federated 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 Federated 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
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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 Federated Tax Exempt.
E. PARTICIPATION INTERESTS
IDEX Federated 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 Federated 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 Federated Tax Exempt.
The sub-adviser will monitor the pricing, quality and liquidity of the variable
rate demand instruments held by the IDEX Federated 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
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Land Banks, Federal Intermediate Credit Banks, Federal Home Loan Banks
("FHLB"), Federal National Mortgage Association ("FNMA"), Government National
Mortgage Association ("GNMA"), Export-Import Bank of the United States, and
Tennessee Valley Authority ("TVA"). Issues of these agencies, while not direct
obligations of the United States government, are either backed by the full
faith and credit of the United States (e.g., GNMA Certificates or certain TVA
bonds) or are guaranteed by the Treasury (e.g., certain other TVA bonds) or
supported by the issuing agencies' right to borrow from the Treasury (e.g.,
FHLB and FNMA bonds). There can be no assurance that the United States
government itself will pay interest and principal on securities as to which it
is not legally obligated to do so.
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
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present minimal credit risks in accordance with guidelines adopted by the
Trustees. To the extent that proceeds from any sales of collateral upon a
default in the counterparty's obligation to repurchase were less than the
repurchase price, the fund would suffer a loss. If the counterpart's petitions
for bankruptcy or otherwise becomes subject to bankruptcy or liquidation
proceedings, there might be restrictions on a fund's ability to sell the
collateral and the fund could suffer a loss.
III. OTHER SECURITIES IN WHICH THE FUNDS MAY INVEST
A. CORPORATE DEBT SECURITIES
A fund may invest in corporate bonds, notes and debentures of long and short
maturities and of various grades, including unrated securities. Corporate debt
securities exist in great variety, differing from one another in quality,
maturity, and call 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
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may be cumulative or non-cumulative and participating or non-participating,
redemption provisions, and voting rights. Such features will establish the
income return and may affect the prospects for capital appreciation or risks of
capital loss.
F. CONVERTIBLE SECURITIES
Subject to its investment restrictions, a fund may invest in debt securities
convertible into or exchangeable for equity securities, or debt securities that
carry with them the right to acquire equity securities, as evidenced by
warrants attached to such securities or acquired as part of units of the
securities. Such securities normally pay less current income than securities
without conversion features, but add the potential opportunity for appreciation
from enhanced value for the equity securities into which they are convertible,
and the concomitant risk of loss from declines in those values.
G. COMMON STOCKS
Subject to its investment restrictions, a fund may invest in common stocks.
IDEX JCC Flexible Income will consider investment in income-producing common
stocks if the yields of common stocks generally become competitive with the
yields of other income securities. Common stocks are junior to the debt
obligations and preferred stocks of an issuer. Hence, dividend payments on
common stocks should be regarded as less secure than income payments on
corporate debt securities.
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