As filed with the Securities and Exchange Commission on November 14, 2001
Registration No. 33-2659/811-4556
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-14
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
[ ] Pre-Effective Amendment No. [ ] Post-Effective Amendment No.
IDEX Mutual Funds
(Exact name of Registrant as specified in Charter)
Area Code and Telephone Number:
(888) 233-4339
570 Carillon Parkway
St. Petersburg, Florida 33716-1202
(address of Principal Executive Offices) (Zip Code)
John K. Carter, Esq.
IDEX Mutual Funds
570 Carillon Parkway
St. Petersburg, Florida 33716
(Name and address of agent for service)
------------------------------------
Copy To:
Kimberly J. Smith, Esq.
Sutherland Asbill & Brennan LLP
1275 Pennsylvania Avenue, N.W.
Washington, D.C. 20004-2415
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Approximate date of proposed public offering: As soon as practicable after the
effective date of this Registration Statement.
It is proposed that this filing will become effective on December 14, 2001,
pursuant to Rule 488.
Registrant has registered an indefinite number of shares of its common stock
pursuant to Rule 24f-2 under the Investment Company Act of 1940, as amended.
Accordingly, no filing fee is being paid at this time.
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IDEX MUTUAL FUNDS
Form N-14
Cross Reference Sheet
Pursuant to Rule 481(a) Under the Securities Act of 1933
ITEM NO. HEADING
Part A
1. Beginning of Registration Statement
And Outside Front Cover Page of Prospectus.... Cover Page
2. Beginning and Outside Back Cover Page of
Prospectus.................................... Cover Page
3. Synopsis and Risk Factors..................... Summary
4. Information About the Transaction............. Letter to Shareholders;
Summary; Reasons for the
Exchange; Information
About the Exchange; Q&A
5. Information About the Registrant.............. Letter to Shareholders;
Summary; Reasons For the
Exchange; Information
About the Exchange;
Additional Information
About the Fund and the
Acquiring Fund
6. Information About the Company Being Acquired Letter to Shareholders;
Reasons for the Exchange;
Information About the
Exchange; Additional
Information About the Fund
and The Acquiring Fund
7. Voting Information Letter to Shareholders;
Cover Page; Voting
Information; Q & A
8. Interest of Certain Persons and Experts Not Applicable
9. Additional Information Required for Not Applicable
Reoffering by Persons Deemed to be
Underwriters
PART B STATEMENT OF ADDITIONAL INFORMATION
CAPTION
10. Cover Page Cover Page
11. Table of Contents Not Applicable
12. Additional Information about the Statement of Additional
Registrant Information of IDEX (1)
13. Additional Information About the Not Applicable
Company being Acquired
i
14. Financial Statements Financial Statements; Pro
Forma Financial
Statements; IDEX Annual
Report (2)
(1) Incorporated by reference to the Registration Statement of the
Registrant on Form N-1A (File No. 33-2659).
(2) IDEX Annual Report incorporated by reference.
PART C
15. Indemnification
16. Exhibits
17. Undertakings
ii
IMPORTANT INFORMATION FOR SHAREHOLDERS OF IDEX AMERICAN
CENTURY INCOME & GROWTH TO HELP YOU UNDERSTAND AND VOTE
ON THE PROPOSALS
Please read the enclosed prospectus/proxy statement for a complete
description of the proposals. However, as a quick reference, the following
questions and answers provide a brief overview of the proposals:
Q. ON WHAT PROPOSALS AM I BEING ASKED TO VOTE?
A. Shareholders are being asked to:
- Consider, on behalf of the funds in which they own shares) an
Agreement and Plan of Reorganization for the transfer of all
of the assets, less liabilities, of IDEX American Century
Income & Growth for shares of IDEX GE U.S. Equity.
- Re-elect the current Trustees of the Board and elect two new
Trustees to the Board of Trustees.
- Approve a proposal to permit IDEX Management, Inc. ("IMI"),
after obtaining the approval of the Board of Trustees of the
Fund (the "Board"), to enter into and materially amend
Sub-Advisory Agreements with non-affiliated sub-advisers for
the Fund, without obtaining shareholder approval.
Q. HAS THE BOARD APPROVED THE PROPOSALS?
A. Yes. The IDEX Board has approved all of the proposals and recommends
that you vote "FOR" each applicable proposal.
Q. WHAT HAPPENS IF SHAREHOLDERS DECIDE IN FAVOR OF A MERGER?
A. A closing date will be set for the reorganization. Shareholders will
receive full and fractional shares of IDEX GE U.S. Equity equal in
value to the shares of IDEX American Century Income & Growth that they
owned on the Closing Date. The net asset value per share of IDEX
GE U.S. Equity American Century International will not be affected by
the transaction. So the reorganization will not result in a dilution of
any shareholder's interest.
Q. WHAT ARE THE ADVANTAGES OF MERGING THE FUNDS?
A. There are three key potential advantages: American Century Income &
Growth is managed by an investment team at American Century Investment
Management, Inc. ("American Century"). The investment team combines a
highly disciplined investment strategy and considerable expertise. The
IDEX Board has selected American Century to also serve as sub-adviser
to the IDEX GE U.S. Equity fund effective 3-1-02, subject to
shareholder approval.
By combining the funds, shareholders may enjoy lower expense ratios
over time. Larger funds tend to enjoy economies of scale not available
to funds with smaller assets under management.
These lower costs may lead to stronger performance, since total return
to a fund's shareholders is net of fund expenses.
The potential benefits are explained in more detail in the enclosed
prospectus/proxy statement.
Q. HOW ARE THESE TWO FUNDS ALIKE?
A. Both funds are categorized as growth and income funds and invest in
common stocks to achieve their investment goals.
Q. IF THE FUNDS MERGE, WILL THERE BE TAX CONSEQUENCES FOR ME?
A. Unlike a transaction where you direct IDEX to sell shares of one fund
in order to buy shares of another, the reorganization will not be
considered a taxable event. The funds themselves will recognize no
gains or losses on assets as a result of a reorganization. So you will
not have reportable capital gains or losses due to the reorganization.
1
Q. WHY ARE INDIVIDUALS RECOMMENDED FOR ELECTION TO THE BOARD OF TRUSTEES?
A. IDEX is devoted to serving the needs of its shareholders, and the Board
is responsible for managing the Fund's business affairs to meet those
needs. The Board represents the shareholders and can exercise all of
the Fund's powers, except those reserved for shareholders.
Trustees are selected for election to the Board on the basis of their
education and professional experience. Candidates are chosen based on their
distinct interest in, and capacity for understanding the complexities of, the
operation of a mutual fund. These individuals bring considerable experience to
the impartial oversight of a Fund's operation.
The Proxy Statement includes a brief description of each nominee's
history and current position with IDEX, if applicable.
Q. WHY AM I BEING ASKED TO APPROVE A PROPOSAL TO PERMIT IMI TO ENTER INTO,
OR AMEND, A SUB-ADVISORY AGREEMENT WITHOUT SHAREHOLDER APPROVAL?
A. The Board felt that it was in the best interest of IDEX and its
shareholders to permit IMI to have maximum flexibility to select,
supervise and evaluate sub-advisers, without incurring the unnecessary
delay or expense of obtaining shareholder approval because it will
allow each fund to operate more efficiently. Currently, a shareholders'
meeting must be held to appoint a sub-adviser or materially amend a
sub-advisory agreement. This necessitates creation and distribution of
proxy materials, and solicitation of proxy votes from shareholders.
This process is timely and costly. The Board also feels that IMI has
significant experience and expertise in working with, and selecting,
sub-advisers.
Q. HOW MANY VOTES DO YOU NEED TO APPROVE THESE PROPOSALS?
A. We need a plurality, or a majority of the votes cast, to approve the
proposal to elect the Trustees we need the affirmative vote of a
majority of each applicable fund's outstanding voting securities, as
defined by the Investment Company Act of 1940, for the fund specific
proposals.
Q. WHAT IF WE DO NOT HAVE ENOUGH VOTES TO MAKE THE DECISIONS BY THE
SCHEDULED SHAREHOLDER MEETING DATE?
A. If we do not receive sufficient votes to hold the meeting, we or ALAMO
Direct, a proxy solicitation firm, may contact you by mail or telephone
to encourage you to vote. Shareholders should review the proxy
materials carefully and cast their vote to avoid additional mailings or
telephone calls. If we do not have enough votes to approve the
proposals by the time of the shareholder meeting at 1:00 p.m. on
February 8, 2002, the meeting may be adjourned to permit further
solicitation of proxy votes.
Q. HOW MANY VOTES AM I ENTITLED TO CAST?
A. As a shareholder, you are entitled to one vote for each share of each
fund that you own, and fractional votes to reflect the fractional
shares that you own on the record date, November 30, 2001.
Q. HOW DO I VOTE MY SHARES?
A. You can vote your shares by mail, via the Internet, by telephone or by
facsimile. To vote by mail, complete and sign the enclosed proxy card,
and mail it in the enclosed, postage-paid envelope.
To vote via the Internet, by telephone or by fax, please follow the enclosed
instructions.
If you need any assistance, or have any questions regarding the proposals, or
how to submit your vote, please call IDEX Customer Service at 1-888-233-4339
between the hours of 8:00 a.m. and 8:00 p.m. ET (Monday - Friday).
2
Q. HOW DO I SIGN THE PROXY CARD?
A. INDIVIDUAL ACCOUNTS: Shareholders should sign exactly as their names
appear on the account registration shown on the card.
JOINT ACCOUNTS: Both the owners must sign and the signatures should
conform exactly to the names shown on the account registration.
ALL OTHER ACCOUNTS: The person signing must indicate his or her
capacity. For example, a trustee for a trust should include his or her title
when he or she signs, such as :Jane Doe, Trustee"; or an authorized officer of a
company should indicate his or her position with the company, such as "John
Smith, President."
Q. WHO DO I CALL IF I HAVE QUESTIONS ABOUT THE PROXY STATEMENT?
A. Call your IDEX Customer Service Representative at 1-888-233-4339
between the hours of 8:00 a.m. and 8:00 p.m. ET. (Monday - Friday).
THE ATTACHED PROSPECTUS/PROXY STATEMENT CONTAINS MORE DETAILED INFORMATION ABOUT
THE PROPOSALS RELATING TO THE APPLICABLE FUND. PLEASE READ IT CAREFULLY!
3
IDEX AMERICAN CENTURY INCOME & GROWTH
IDEX Mutual Funds
570 Carillon Parkway
St. Petersburg, Florida 33716
Dear Shareholder:
As a shareholder of IDEX American Century Income & Growth (the "Fund"),
you are entitled to vote on the following proposals that are described below and
in the enclosed materials:
1. To consider an Agreement and Plan of Reorganization providing for the
transfer of all of the assets, subject to liabilities, of the Fund to
IDEX GE U.S. Equity (the "Acquiring Fund") in exchange for Acquiring
Fund shares and the assumption by the Acquiring Fund of the Fund's
stated liabilities (the "Exchange"). The shares of the Acquiring Fund
received in the Exchange will be distributed by the Fund to its
shareholders in liquidation of the Fund, after which the Fund will be
dissolved;
2. To re-elect the current Trustees of the Board and to elect two new
Trustees to the Board;
3. To consider approval of a proposal permitting IDEX Management, Inc.
("IMI"), after obtaining the approval of the Board of Trustees of IDEX
(the "Board"), to enter into and materially amend sub-advisory
agreements with non-affiliated sub-advisers on behalf of the Fund and
future funds, without obtaining shareholder approval ("Sub-Adviser
Approval Policy");
as set forth in the Prospectus/Proxy Statement accompanying this notice, and to
transact such other business as may properly come before the meeting and any
adjournments. The Board is not aware of any other business to come before the
meeting.
The IDEX Board of Trustees has determined that it would be in the best
interest of the Fund and its shareholders if the Fund were to exchange its
assets (subject to liabilities) for shares of IDEX (the "Acquiring Fund") that
has a similar investment objective and similar management policies as the Fund.
The first proposal provides that the Fund exchange all of its assets,
subject to liabilities, for shares of the Acquiring Fund (the "Exchange").
Promptly thereafter, the Fund will distribute pro rata the Acquiring Fund shares
received in the Exchange to its shareholders in complete liquidation of the
Fund. Thus, each Fund shareholder will receive for his or her Fund shares a
number of Acquiring Fund shares equal to the aggregate NET ASSET VALUE of the
shareholder's Fund shares as of the date of the Exchange.
Here are some facts about the Exchange that will be useful to you as
you vote:
o There will be no gain or loss for you to become a shareholder of
the Acquiring Fund
o In the opinion of counsel, the Exchange will be free from Federal
income taxes to you, the Fund and Acquiring Fund
o The holding period and aggregate tax basis of the Acquiring Fund
shares you receive in the Exchange will be the same as the holding
period and aggregate tax basis of your Fund shares
o You will be able to redeem your shares of the Acquiring Fund for
cash at net asset value without any redemption fees or required
holding period
o Shares of the Acquiring Fund are priced each day the New York
Stock Exchange is open for business and you may redeem all or a
part of your shares at the then-current net asset value per share
o As a shareholder of the Acquiring Fund, you will have the ability
to exchange your shares of other open-end funds in the IDEX family
of funds
Further information about the transaction is contained in the enclosed
materials, which you should review carefully.
You are also being asked to re-elect the current members of the IDEX
Board Trustees and to elect two new Trustees to the Board.
Finally you are being asked to consider a proposal to permit IMI, after
obtaining Board approval, to enter into and materially amend Sub-Advisory
Agreements on behalf of the Fund with non-affiliated sub-advisers without
obtaining shareholder approval. This Sub-Adviser Approval Policy may result in
cost savings to IDEX and its shareholders.
A Question and Answer section is included regarding this proxy and its
proposals.
For your convenience, you may vote by mail, by telephone, via the
Internet or by facsimile.
TO VOTE BY MAIL: Please indicate your votes on the enclosed proxy card, date and
sign the proxy, and mail the proxy card promptly in the enclosed, postage-paid
envelope. Please allow sufficient time for the proxy card to be received on or
before 1:00 p.m., February 8, 2002.
TO VOTE BY TELEPHONE, VIA THE INTERNET OR BY FACSIMILE: Please follow the
enclosed instructions.
If you vote via the Internet, by telephone or via facsimile, please do not mail
your proxy card.
The IDEX Board recommends that the Fund's shareholders vote "FOR" the
proposals.
If you have any questions after considering the enclosed materials,
please call 1-888-233-IDEX (4339) between the hours of 8:00 a.m. and 8:00 p.m.
ET (Monday - Friday).
Sincerely,
/s/ JOHN R. KENNEY
-----------------------------------------
John R. Kenney
Chairman and Chief Executive
Officer
December 14, 2001
IDEX MUTUAL FUNDS
IDEX American Century Income & Growth
570 Carillon Parkway
St. Petersburg, Florida 33716
(Toll-Free) 1-888-233-4339
NOTICE OF A SPECIAL MEETING OF SHAREHOLDERS
February 8, 2002
To the shareholders of IDEX American Century Income & Growth of IDEX Mutual
Funds:
Notice is hereby given that a special meeting of the shareholders of IDEX
American Century Income & Growth (the "Fund") of IDEX Mutual Funds ("IDEX") will
be held at 570 Carillon Parkway, St. Petersburg, Florida 33716, on the 8th day
of February, 2002 at 1:00 p.m., local time, or any adjournment(s) thereof, for
the following purposes:
1. To consider an Agreement and Plan of Reorganization providing for the
transfer of all of the assets, subject to liabilities, of the Fund to
IDEX (the "Acquiring Fund") in exchange for Acquiring Fund shares and
the assumption by the Acquiring Fund of the Fund's stated liabilities
(the "Exchange"). The shares of the Acquiring Fund received in the
Exchange will be distributed by the Fund to its shareholders in
liquidation of the Fund, after which the Fund will be dissolved;
2. To elect the current Trustees to the Board and to elect two new
Trustees to the Board;
3. To consider approval of a proposal permitting IDEX Management, Inc.
("IMI"), after obtaining the approval of the Board of Trustees of IDEX
(the "Board"), to enter into and materially amend Sub-Advisory
Agreements with non-affiliated sub-advisers on behalf of the Fund and
future funds, without obtaining shareholder approval ("Sub-Adviser
Approval Policy");
as set forth in the Prospectus/Proxy Statement accompanying this notice, and to
transact such other business as may properly come before the meeting and any
adjournments. The Board is not aware of any other business to come before the
meeting.
The Board of Trustees of IDEX (the "Board") has fixed the close of business on
November 30, 2001 as the record date (the "Record Date") for the determination
of shareholders of the Fund that are entitled to notice of, and to vote at, the
meeting. You are entitled to vote at the meeting and any adjournment(s) thereof
if you owned shares of the Fund at the close of business on November 30, 2001.
If you attend the meeting, you may vote your shares in person. If you do not
expect to attend the meeting, please vote by mail, by telephone, via the
Internet or by facsimile following the instructions included in this statement.
If your shares are held in the name of your brokerage firm (a street name
account), please complete your proxy card and return it to your broker. Your
vote is still important. If you vote prior to February 8, 2002, and then decide
to attend the meeting, you may change your vote in person at the meeting. The
proposal set forth above has been unanimously approved by the Board with respect
to the Fund. The Board recommends that you vote shares that you are entitled to
vote "FOR" each proposal. This Notice and accompanying Proxy Statement will be
mailed on or about December 12, 2001.
We look forward to your participation, and we thank you for your continued
confidence in IDEX.
By Order of the Board of Trustees,
John K. Carter, Secretary
IDEX Mutual Funds
St. Petersburg, Florida
December 14, 2001
YOUR VOTE IS IMPORTANT
NO MATTER HOW MANY SHARES YOU OWN
You may vote by mail, by telephone, via the Internet or by facsimile. Please
vote only one time, using the method that you prefer, unless you later decide to
change your vote prior to the Meeting. If you sign, date and return the proxy
card but give no voting instructions, your shares will be voted "FOR" each
proposal presented above.
If you vote by telephone, via the Internet, or by facsimile, please do not mail
your proxy card.
IDEX will furnish, without charge, a copy of its most recent annual report to
shareholders upon request. Any such request should be directed to IDEX by
calling (888) 233-4339 or by writing to IDEX at P.O. Box 9015, Clearwater, FL
33758-9015.
In order to avoid the additional expense and delay of further solicitation, we
ask that you mail your proxy promptly.
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PROPOSAL No. 1: THE ACQUISITION OF THE ASSETS OF IDEX AMERICAN CENTURY
INCOME & GROWTH BY AND IN EXCHANGE FOR SHARES OF IDEX GE U.S. EQUITY
- --------------------------------------------------------------------------------
PROSPECTUS/PROXY STATEMENT
SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD February 8, 2002
This Prospectus/Proxy Statement is furnished in connection with a solicitation
of proxies by the Board of Trustees of IDEX Mutual Funds ("IDEX") on behalf of
IDEX American Century Income & Growth (the "Fund") to be used at the Special
Meeting of Shareholders (the "Meeting") of the Fund to be held February 8, 2002,
at 1:00 p.m., Eastern Time, at the IDEX offices, 570 Carillon Parkway, St.
Petersburg, Florida 33716, for the purposes set forth in the accompanying Notice
of Special Meeting of Shareholders. Shareholder of record at the close of
business on November 30, 2001 are entitled to receive notice of and to vote at
the Meeting.
It is proposed that the Fund transfer all of its assets, subject to certain
liabilities, to IDEX GE U.S. Equity (the "Acquiring Fund"), as more fully
described in this Prospectus/Proxy Statement (the "Exchange" or
"Reorganization"). Upon consummation of the Exchange, the Acquiring Fund shares
received by the Fund will be distributed to Fund shareholders, with each
shareholder receiving a pro rata distribution of Acquiring Fund shares (or
fractions thereof) for Fund shares held prior to the Exchange. Thus, it is
contemplated that each shareholder will receive for his or her Fund shares a
number of Acquiring Fund shares (or fractions thereof) equal in value to the
aggregate net asset value of the shareholder's Fund shares as of the date of the
Exchange.
This Prospectus/Proxy Statement, which should be retained for future reference,
sets forth concisely information about the Acquiring Fund that Fund shareholders
should know before voting on the proposal or investing in the Acquiring Fund.
A Statement of Additional Information ("SAI") dated March 1, 2001, relating to
this Prospectus/Proxy Statement, has been filed with the Securities and Exchange
Commission ("SEC") and is incorporated herein by reference in its entirety. The
SEC maintains a web site (HTTP://WWW.SEC.GOV) that contains the SAI, material
incorporated in this Prospectus/Proxy Statement by reference, and other
information regarding the Acquiring Fund and the Fund. A copy of the SAI is
available without charge by calling 1-888-233-4339, or writing to IDEX at P.O.
Box 9015, Clearwater, Florida 33758-9015.
- --------------------------------------------------------------------------------
MUTUAL FUND SHARES ARE NOT BANK DEPOSITS AND ARE NOT INSURED OR GUARANTEED BY
THE FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER GOVERNMENT AGENCY. MUTUAL
FUND SHARES INVOLVE CERTAIN INVESTMENT RISKS, INCLUDING THE POSSIBLE LOSS OF
PRINCIPAL.
- --------------------------------------------------------------------------------
AS WITH ALL MUTUAL FUNDS, THE SEC HAS NOT APPROVED OR DISAPPROVED THESE
SECURITIES OR PASSED UPON THE ADEQUACY OF THIS PROSPECTUS/PROXY STATEMENT. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
- --------------------------------------------------------------------------------
1
The Acquiring Fund is a series of IDEX, an open-end, diversified management
investment company advised by Idex Management, Inc. ("IMI"). The Fund is also a
series of IDEX. The Acquiring Fund and the Fund have a similar investment
objective and similar management policies. The substantive difference between
the Fund and the Acquiring Fund are set forth in this Prospectus/Proxy
Statement.
The Acquiring Fund's Prospectus dated March 1, 2001, and the Acquiring Fund's
Gain and Loss Statement for the period ending April 30, 2001, each accompany
this Prospectus/Proxy Statement. Such Prospectus and financial statements are
incorporated by reference. For a free copy of the IDEX Annual Report or Semi-
Annual Report, write to IDEX at P.O. Box 9015, Clearwater, Florida 33758-9015,
or call 1-888-233-4339.
Shareholders are entitled to one vote for each Fund share held and fractional
votes for each fractional Fund share held. Fund shares represented by executed
and unrevoked proxies will be voted in accordance with the specifications made
thereon. If the enclosed form of proxy is executed and returned, it nevertheless
may be revoked by giving another proxy or by letter or telegram directed to
IDEX, which must indicate the shareholder's name. To be effective, such
revocation must be received before the Meeting. Also, any shareholder who
attends the Meeting in person may vote by ballot at the Meeting, thereby
canceling any proxy previously given. As of November 30, 2001, ______ shares of
the Fund's common stock were issued and outstanding.
Proxy materials will be mailed to shareholders of record on or about December
13, 2001.
2
TABLE OF CONTENTS
Proposal No. 1 - Acquisition of Assets:
Summary................................................................. 4
Reasons for the Exchange................................................ 10
Information about the Exchange.......................................... 10
Proposal No.2 - Election of Trustees to the IDEX Board.................. 10
Additional Information about the Fund and the Acquiring Fund............ 12
Proposal No. 3 - Approval of a Sub-Adviser Approval Policy.............. 16
Voting Information...................................................... 20
Financial Statements and Experts........................................ 22
Other Matters........................................................... 22
Notice to Broker/Dealers and Voting Trustees and Their Nominees......... 22
Exhibit A: Agreement and Plan of Reorganization........................ 1A
3
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PROPOSAL No. 1: SUMMARY - Re: REORGANIZATION
- --------------------------------------------------------------------------------
This Summary is qualified by reference to the more complete information
contained elsewhere in this Prospectus/Proxy Statement, the IDEX Prospectus
(which contains information about the Fund and the Acquiring Fund, dated March
1, 2001) the Annual and Semi-Annual Reports, and the form of Agreement and Plan
of Reorganization attached to this Prospectus/Proxy Statement as Exhibit A.
PROPOSED TRANSACTION. The IDEX Board, at a meeting held on October 30, 2001,
including Board members who are not "interested persons" (as defined in the
Investment Company Act of 1940, as amended ("1940 Act")), has approved an
Agreement and Plan of Reorganization (the "Plan"). The Plan provides that,
subject to the requisite approval of the Fund's shareholders, on the date of the
Exchange, the Fund will assign, transfer and convey to the Acquiring Fund all of
the assets (subject to certain liabilities) of the Fund, including all
securities and cash, in exchange for shares of the acquiring Fund having an
aggregate net asset value equal to the value of the Fund's net assets. The Fund
will distribute all Acquiring Fund shares received by it among its shareholders
so that each shareholder will receive a pro rata net asset value equal to the
aggregate net asset value of the shareholder's Fund shares as of the date of the
Exchange. Thereafter, the Fund will be dissolved.
As a result of the Exchange, each Fund shareholder will cease to be a
shareholder of the Fund and will become a shareholder of the Acquiring Fund as
of the close of business on the date of the Exchange.
The IDEX Board has concluded that the Exchange would be in the best interests of
the Fund and its shareholders, and the interests of existing shareholders of the
Fund would not be diluted as a result of the transactions contemplated by the
Exchange. See "Reasons for the Exchange."
TAX CONSEQUENCES. As a condition to the closing of the Exchange, the Fund and
the Acquiring Fund will receive an opinion of counsel to the effect that, for
Federal income tax purposes, (a) no gain or loss will be recognized by the Fund,
the Acquiring Fund, or the Fund's shareholders as a result of the Exchange, (b)
the holding period and aggregate tax basis of Acquiring Fund shares received by
a Fund shareholder will be the same as the holding period and aggregate tax
basis of the shareholder's Fund shares, provided the Fund shares are held as
capital assets and (c) the holding period and tax basis of the Fund's assets
transferred to the Acquiring Fund as a result of the Exchange will be the same
as the holding period and tax basis of such assets held by the Fund immediately
prior to the Exchange. See "Information about the Exchange - Federal Income Tax
Consequences."
COMPARISON OF THE FUND AND THE ACQUIRING FUND. The following discussion is
primarily a summary of certain parts of the Fund's Prospectus and the Acquiring
Fund's Prospectus. Information contained in this Prospectus/Proxy Statement is
qualified by the more complete information set forth in such IDEX Prospectus,
which is incorporated herein by reference.
Objectives. The Acquiring Fund seeks long-term growth of capital. The Fund seeks
dividend growth, current income and capital appreciation by investing in common
stock.
Acquiring Fund and Fund Strategies. To pursue its goal, the Acquiring Fund
invests principally in common stocks of U.S. companies. The Fund invests
principally in common stocks. The Acquiring Fund manager uses a Multi-Style(R)
investment strategy that combines growth and value investment management styles.
As a result, the Acquiring 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 Acquiring Fund.
Through fundamental company research, the Acquiring Fund manager seeks to
identify securities of large companies with characteristics such as: attractive
valuations, financial strength, high quality management focused on generating
shareholder value.
4
The Fund's investment strategy utilizes quantitative management techniques in a
two-step process that draws heavily on computer technology. In the first step,
the fund manager ranks stocks, primarily the 1,500 largest publicly traded
companies in the United States (measured by their market capitalization) from
most attractive to least attractive. This is determined by using a computer
model that combines measures of a stock's value, as well as measures of its
growth potential. To measure value, the manager uses ratios of stock
price-to-book value and stock price-to-cash flow, among others. To measure
growth, the manager uses, among others, the rate of growth of company's earnings
and changes in its earnings estimates.
In the second step, the manager uses a technique called portfolio optimization.
In portfolio optimization, the manager uses a computer model to build a
portfolio of stocks for the ranking described earlier that it believes will
provide the optimal balance between risk and expected return. The goal is to
create a fund that provides better returns than the S&P 500, without taking on
significant additional risk.
The Fund's manager does not attempt to time the market. Instead, under normal
market conditions, it intends to keep the fund essentially fully invested in
stocks regardless of the movement of stock prices. Stock index futures
contracts, a type of derivative security, can help the fund's cash assets remain
liquid while performing more like stocks. The fund has a policy governing stock
index futures and similar derivative securities to help manage the risk of these
types of instruments. For example, the manager cannot leverage the fund's assets
by investing in a derivative security.
Shareholders of the Fund are also receiving proxies to ask for approval of a new
Sub-Advisory Agreement on behalf of the Fund between IMI and American Century
Investment Management, Inc., the sub-adviser to the Fund ("American Century").
GE Asset Management Incorporated ("GEAM") has notified the Board that it will
resign as sub-adviser of the Acquiring Fund effective February 28, 2002. The
Board selected American Century as sub-adviser for the Acquiring Fund effective
March 1, 2002, subject to shareholder approval. The proposed Sub-Advisory
Agreement reflects a modest increase in fees.
Main Risks. The principal risk associated with an investment in the Acquiring
Fund is stock risk. The principal risks associated with investing in the Fund
are stock risk, foreign stock risks, and quantitative models risk.
Stock Risk - 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 a fund holds fluctuate in price, the value of your investment in a
fund will go up and down.
Foreign Stocks - 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.
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.
See "Explanation of Strategies and Risks" in the IDEX Prospectus for a more
complete description of investment risks applicable to an investment in the
Acquiring Fund.
Fees and Expenses. The fees and expenses of the Fund and the Acquiring Fund set
forth below are for the calendar year ended December 31, 2000. (The information
for the Fund is for a period ended _______, as the Fund had not commenced
operations as of December 31, 2000.) The "Pro Forma After Exchange" information
is based on net assets and fund accruals of the Fund and the Acquiring Fund as
of ___________. Annual fund operating expenses are paid out of fund assets, so
their effect is reflected in the fund's net asset value per share.
5
SHAREHOLDER FEES
(fees paid directly from your investment):
The maximum sales charge (load) imposed on purchases (as a % of offering price)
for Class A shares is 5.50% and for Class M shares is 1.00%. The sales charge is
not applicable to Class B and C shares. The maximum deferred sales charge (load)
for Class B is 5.00% and 1.00% for Class M shares. The charge is not applicable
to A and C shares. Certain purchases of Class A shares in amounts of $1 million
or more are subject to a 1% contingent deferred sales charge for 24 months after
purchase. Purchases of Class M shares are subject to a 1% contingent deferred
sales charge if redeemed within 18 months of purchase.
ANNUAL FUND OPERATING EXPENSES
(Expenses Paid from Fund Assets)
(percentage of average net assets):
Please note: Shareholders of the Acquiring Fund are being asked to approve a new
sub-advisory agreement on behalf of the Acquiring Fund between IMI and American
Century to be effective on March 1, 2002. The new sub-advisory agreement will
reflect a change in management fees to reflect the current fee structure of the
Fund's management fees. Implementation of the agreement is contingent upon the
approval of a special meeting of shareholders of IDEX GE U.S. Equity which will
be held on February 8, 2002 at 1:00 p.m.
FUND:
- ---------------------------------------------------------------------------------------------------------
Class A Class B Class C Class M
- ---------------------------------------------------------------------------------------------------------
Management Fees 0.90% 0.90% 0.90% 0.90%
- ---------------------------------------------------------------------------------------------------------
Distribution and 0.35% 1.00% 1.00% 0.90%
service (12b-1
fees)
- ---------------------------------------------------------------------------------------------------------
Other Expenses (a) 2.70% 2.70% 2.70% 2.70%
- ---------------------------------------------------------------------------------------------------------
Total annual fund 3.95% 4.60% 4.60% 4.50%
operating expenses
- ---------------------------------------------------------------------------------------------------------
Expense reduction 2.10% 2.10% 2.10% 2.10%
(a)(b)
- ---------------------------------------------------------------------------------------------------------
Net Operating 1.85% 2.50% 2.50% 2.40%
Expenses
- ---------------------------------------------------------------------------------------------------------
(a) Fund commenced operation in April 2001.
(b) Contractual arrangement with IMI through 4/30/02 for expenses that
exceed 1.50%, excluding 12b-1 fees.
ACQUIRING FUND*:
- ---------------------------------------------------------------------------------------------------------
Class A Class B Class C Class M
- ---------------------------------------------------------------------------------------------------------
Management Fees 0.80% 0.80% 0.80% 0.80%
- ---------------------------------------------------------------------------------------------------------
Distribution and 0.35% 1.00% 1.00% 0.90%
service (12b-1
fees)
- ---------------------------------------------------------------------------------------------------------
Other Expenses (a) 5.70% 5.70% 5.70% 5.70%
- ---------------------------------------------------------------------------------------------------------
Total annual fund 6.85% 7.50% 7.50% 7.40%
operating expenses
- ---------------------------------------------------------------------------------------------------------
Expense reduction (b) 5.25% 5.25% 5.25% 5.25%
- ---------------------------------------------------------------------------------------------------------
Net Operating Expenses 1.60% 2.25% 2.25% 2.15%
- ---------------------------------------------------------------------------------------------------------
(a) Because the Fund commenced operations in March 2000 the "Other
Expenses" are estimated.
(b) Contractual arrangement with IMI through 11/30/01, for expenses that
exceed 1.20%, and through 4/30/02 for expenses that exceed
1.40% excluding 12b-1 fees.
*Shareholders of the Acquiring Fund are being asked to approve the fee structure
of the Fund in a separate proxy.
6
PRO FORMA AFTER EXCHANGE (ACQUIRING FUND*):
- ---------------------------------------------------------------------------------------------------------
Class A Class B Class C Class M
- ---------------------------------------------------------------------------------------------------------
Management Fees 0.90% 0.90% 0.90% 0.90%
- ---------------------------------------------------------------------------------------------------------
Distribution and 0.35% 1.00% 1.00% 1.00%
service (12b-1
fees)
- ---------------------------------------------------------------------------------------------------------
Other Expenses 15.16% 15.16% 15.16% 15.16%
- ---------------------------------------------------------------------------------------------------------
Total annual fund 16.41% 17.06% 17.06% 16.96%
operating expenses
- ---------------------------------------------------------------------------------------------------------
Expense reduction 14.46% 14.46% 14.46% 14.46%
(a)
- ---------------------------------------------------------------------------------------------------------
Net Operating 1.85% 2.50% 2.50% 2.40%
Expenses
- ---------------------------------------------------------------------------------------------------------
*Reflects the new fee structure subject to the vote of the Acquiring Fund's
shareholders.
(a) Contractual arrangement with IMI through 4/30/02, for expenses that
exceed 1.50%, excluding 12b-1 fees.
EXAMPLE:
This example shows what you could pay in expenses over time. It will help you
compare the costs of investing in the Acquiring Fund with the costs of investing
in other mutual funds. It uses the same hypothetical conditions other funds use
in their prospectuses: $10,000 initial investment, 5% total return each year and
no changes in expenses. The return is for illustration purposes only and is not
guaranteed. Actual costs may be higher or lower.
ACQUIRING FUND*:
(The numbers included are based on estimates.)
If the shares are redeemed at the end of each period:
- ----------------------------------------------------------------
Share Class 1 Year 3 Years
- ----------------------------------------------------------------
A $ 704 $ 2,018
- ----------------------------------------------------------------
B** $ 728 $ 2,031
- ----------------------------------------------------------------
C $ 228 $ 1,731
- ----------------------------------------------------------------
M $ 415 $ 1,787
- ----------------------------------------------------------------
If the shares are not redeemed:
- ----------------------------------------------------------------
Share Class 1 Year 3 Years
- ----------------------------------------------------------------
A $ 704 $ 2,018
- ----------------------------------------------------------------
B** $ 228 $ 1,731
- ----------------------------------------------------------------
C $ 228 $ 1,731
- ----------------------------------------------------------------
M $ 316 $ 1,787
- ----------------------------------------------------------------
*The table reflects the expense cap increase on 12/01/01.
**Examples for Class B shares assume they will convert to Class A shares eight
years after you purchase them.
FUND:
(The numbers included below are based on estimated expenses.)
If the shares are redeemed:
- ----------------------------------------------------------------
Share Class 1 year 3 years
- ----------------------------------------------------------------
A $ 728 $ 1,506
- ----------------------------------------------------------------
B* $ 753 $ 1,500
- ----------------------------------------------------------------
C $ 253 $ 1,200
- ----------------------------------------------------------------
M $ 440 $ 801
- ----------------------------------------------------------------
*Examples for Class B shares assume they will convert to Class A shares eight
years after you purchase them.
If the shares are not redeemed:
7
- ----------------------------------------------------------------
Share Class 1 year 3 years
- ----------------------------------------------------------------
A $ 728 $ 1,506
- ----------------------------------------------------------------
B* $ 253 $ 1,200
- ----------------------------------------------------------------
C $ 253 $ 1,200
- ----------------------------------------------------------------
M $ 341 $ 801
- ----------------------------------------------------------------
*Examples for Class B shares assume they will convert to Class A shares eight
years after you purchase them.
PRO FORMA AFTER EXCHANGE-Fund: (the numbers included below are based on
estimated expenses/expense structure of Fund)
- -------------------------------------------
Share Class 1 year 3 years
- -------------------------------------------
$728 $3,572
- -------------------------------------------
B* $753 $3,641
- -------------------------------------------
C $253 $3,341
- -------------------------------------------
M $440 $1,767
- -------------------------------------------
*Examples for Class B shares assume they will convert to Class A shares eight
years after you purchase them.
If such shares are not redeemed:
- -------------------------------------------
Share Class 1 year 3 years
- -------------------------------------------
A $728 $3,572
- -------------------------------------------
B* $253 $3,341
- -------------------------------------------
C $253 $3,341
- -------------------------------------------
M $341 $1,767
- -------------------------------------------
*Examples for Class B shares assume they will convert to Class A shares eight
years after you purchase them.
Past Performance. There is no historical performance information for the
Acquiring Fund as it commenced operations in April 2001.
The investment advisory fee for the Fund is an annual rate of 0.90% of the first
$100 million of the fund's average daily net assets; 0.85% of the fund's average
daily net assets on the next $150 million; and 0.80% of the fund's average daily
net assets over $250 million. Shareholders of the Acquiring Fund are being asked
to adopt a modest increase in advisory fees to reflect the fee structure of the
Fund to be effective March 1, 2002.
MANAGEMENT FEES: The current investment advisory fee for the Acquiring Fund is
0.80% of the first $500 million of the Fund's average daily net assets and 0.70%
of average daily net assets over $500 million.
For the fiscal year ended October 31, 2000, IMI did not receive any advisory
fees due to reimbursements. If the current advisory fee for the Acquiring Fund
had been effect for the fiscal year ended October 31, 2000, the Fund would have
paid IMI $________ in investment advisory fees.
BOARD CONSIDERATION OF FEES. Upon the resignation of GEAM as sub-adviser for the
Acquiring Fund, the Board reviewed the performance of the Acquiring Fund, the
asset base of the Acquiring Fund and the fees. It considered a variety of
alternatives potentially available to the Acquiring Fund, including maintaining
the status quo or liquidating the Acquiring Fund. It then reviewed the Fund.
The Board examined the nature, quality and scope of the services provided to the
Fund by American Century. It selected American Century as sub-adviser for the
Acquiring Fund to be effective on March 1, 2002, subject to shareholder
approval. It then reviewed the fee structure and analyzed the fee structure of
the Fund. It reviewed the fees of similar funds in the mutual fund industry.
They also reviewed the reputation and presence of American Century in the mutual
fund industry.
The Board felt the combined higher net assets should enable the Acquiring Fund
to spread costs over accounting, legal and printing, and this larger asset base
may thereby potentially reduce the per share expense levels. The Board also
determined that higher net asset levels also may benefit portfolio management by
permitting larger individual portfolio investments that may result in reduced
transaction costs or more favorable pricing by providing the opportunity for
greater portfolio diversity.
The Board further determined that these benefits, in turn, should have a
favorable effect on the future economies of scale and eliminate certain costs
associated with operating separately. These factors, and the reputation of
American Century, resulted in the determination that reorganizing the Fund into
the Acquiring Fund, was in the best interest of the Fund and its shareholders.
SHARE DISTRIBUTION AND PURCHASE PROCEDURES. Both the Fund and the Acquiring
Fund's shares may be purchased at their net asset value on any day the New York
Stock Exchange (NYSE) is open. The Acquiring Fund continuously offers new shares
to investors at a price equal to the net asset value of the shares at the time
of purchase. The Acquiring Fund's net asset value per share is determined as of
close of regular trading on the NYSE, on each day that the NYSE is open, by
dividing the value of the Acquiring Fund's net assets by the total number of
shares outstanding. The Acquiring Fund's investments generally are valued based
on market value or, where market quotations are not readily available, based on
fair value as determined in good faith by the Acquiring Fund's Board. See
"Shareholder Information" in the IDEX Prospectus.
8
SHARE REDEMPTION PROCEDURES. A shareholder of the Acquiring Fund may redeem his
or her shares from the Acquiring Fund at any time during which IDEX is open for
business by tendering such shares to IDEX. The redemption price the Acquiring
Fund will pay for such shares is equal to their net asset value next determined
after receipt of a proper request for redemption. See "Shareholder Information -
How to Sell Shares" in the IDEX Prospectus.
EXCHANGE PRIVILEGES AND OTHER SHAREHOLDER SERVICES. You can exchange $500 or
more of one fund in the IDEX family for shares in the same class of another
fund. You may also exchange into the Cash Equivalent Fund without a sales
charge. Shareholders of the Acquiring Fund may exchange at net asset value all
or a portion of their shares. Please see "Shareholder Information - How to
Exchange Shares" in the IDEX Prospectus.
INVESTMENT ADVISER. The investment adviser for both the Fund and the Acquiring
Fund is IDEX Management, Inc. ("IMI"), located at 570 Carillon Parkway, St.
Petersburg, Florida 33716. IMI has served as an investment adviser since 1985.
IMI hires sub-advisers to furnish investment advice and recommendations and has
entered into sub-advisory agreements with each sub-adviser in the IDEX fund
family. 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 per the terms of the Investment Advisory Agreements.
IMI is a wholly-owned direct subsidiary of AUSA Holding Company ("AUSA"). AUSA
is a holding company that 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.
PORTFOLIO MANAGEMENT. The Acquiring Fund will be managed by the same team of
fund managers and analysts that currently manage the Fund. The team meets
regularly to review portfolio holdings and to discuss purchase and sale
activity. Team members buy and sell securities for the funds as they see fit,
under the supervision of IMI and the Board, and subject to the fund's investment
objective and strategy.
The fund managers on the team include: John Schneidwind, Senior Vice President,
Senior Portfolio Manager and Group Leader - Quantitative Equity, who has been a
member of the team since the fund's inception. He joined American Century in
1982 and also supervises other portfolio management teams.
Kurt Borgwardt, Senior Portfolio Manager and Director of Quantitative Equity
Research, joined American Century in August 1990 and has managed the
quantitative equity research effort since then. He has also been a member of the
team since the fund's inception.
The Acquiring Fund is currently managed by a team of fund managers that is led
by Eugene K. Bolton. 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.
BOARD MEMBERS. Both the Fund and the Acquiring Fund are managed by the same
Board. The Board is composed of seven members. John R. Kenney serves as Chairman
and Chief Executive Officer. Mr. Kenney is an affiliated person of IDEX and
related entities. Patrick S. Baird, also an affiliated person, serves as Trustee
and President of IDEX. The remaining Board members are "disinterested persons"
as defined by the 1940 Act. Peter R. Brown serves as Vice Chairman. The
remaining "disinterested" Board members are Daniel Calabria, Charles Harris,
William Short, Jr. and Jack E. Zimmerman. James L. Churchill and Julian Lerner
serve as Trustees Emeritus. Janice B. Case and Russell A. Kimball, Jr. are the
current nominees to the Board.
The Board is not required to hold annual meetings to elect Trustees. A
description of the Trustees is set forth in the Statement of Additional
Information.
9
CAPITALIZATION. The following table sets forth as of April 30, 2001 (1) the
capitalization of the Fund's shares; (2) the capitalization of the Acquiring
Fund's shares; and (3) the pro forma capitalization of the Acquiring Fund's
shares, as adjusted showing the effect of the Exchange had it occurred on such
date.
- -----------------------------------------------------------------------------------------------------------
Fund Shares Acquiring Fund Pro Forma Acquiring Fund
- -----------------------------------------------------------------------------------------------------------
Total net assets
- -----------------------------------------------------------------------------------------------------------
Class A $229,247 $ 5,085,183 $ 5,314,430
- -----------------------------------------------------------------------------------------------------------
Class B 300,091 10,236,587 10,536,678
- -----------------------------------------------------------------------------------------------------------
Class C 247,231 2,738,522 2,985,752
- -----------------------------------------------------------------------------------------------------------
Class M 139,495 1,449,585 1,589,080
- -----------------------------------------------------------------------------------------------------------
Total $916,063 $19,509,877 $20,425,940
===========================================================================================================
Net asset value per share
- -----------------------------------------------------------------------------------------------------------
Class A $ 11.16 $ 10.20 $ 10.20
- -----------------------------------------------------------------------------------------------------------
Class B $ 11.16 $ 10.12 $ 10.12
- -----------------------------------------------------------------------------------------------------------
Class C $ 11.16 $ 10.12 $ 10.12
- -----------------------------------------------------------------------------------------------------------
Class M $ 11.16 $ 10.13 $ 10.13
- -----------------------------------------------------------------------------------------------------------
Shares outstanding
- -----------------------------------------------------------------------------------------------------------
Class A 20,541 498,515 520,988
- -----------------------------------------------------------------------------------------------------------
Class B 26,901 1,010,931 1,041,174
- -----------------------------------------------------------------------------------------------------------
Class C 22,163 270,447 295,035
- -----------------------------------------------------------------------------------------------------------
Class M 12,504 142,994 156,869
- -----------------------------------------------------------------------------------------------------------
Total 82,109 1,922,887 2,014,065
===========================================================================================================
DIVIDENDS AND OTHER DISTRIBUTIONS. Both the Fund and the Acquiring Fund
distributes to its shareholders net investment income and any net realized
short-term capital gains _______, and net realized long-term capital gains, if
any, annually. Such dividends and distributions are automatically reinvested in
the Fund or Acquiring Fund shares at net asset value, unless the shareholder
requests cash. See "Shareholder Information - Distributions and Taxes" in the
IDEX SAI.
SHAREHOLDER RIGHTS. Both the Acquiring Fund and the Fund are part of a
Massachusetts Business Trust, and, thus, their shareholders have the same rights
due them under the state law. IDEX is not required to hold annual meetings of
shareholders and has no current intention to hold such meetings, except as
required by the 1940 Act. Under the 1940 Act, IDEX is required to hold a
shareholders' meeting if, among other reasons, the number of Trustees elected by
shareholders is less than a majority of the total number of Trustees, or if it
desires to change any fundamental investment policies. In addition, holders of
at least 10% of a fund's outstanding shares may require a fund to hold a
shareholder meeting for the purpose of voting on the removal of any Trustee.
REASONS FOR THE EXCHANGE
In determining whether to recommend approval of the Exchange, the Board
considered the following factors, among others: (1) the services offered by IMI
to both Funds; (2) the terms and conditions of the Exchange and whether the
Exchange would result in dilution of shareholder interests; (3) expense ratios
and information regarding the fees and expenses of the Acquiring Fund and the
Fund, as well as the expense rations of similar funds and the estimated expense
ratio of the combined fund; (4) the tax consequences of the Exchange; and (5)
the estimated costs to be incurred by the Acquiring Fund and the Fund as a
result of the Exchange.
The Board further considered that Fund shareholders could become shareholders of
a substantially larger fund advised by the same investment adviser with
generally historically better long-term performance, lower fund expenses, and
investment objectives, policies and strategies very similar to the Fund. In
addition, the Board considered the fact that the Acquiring Fund has the
potential for overall lower operating expenses. In addition, the Board
considered that both the Fund and Acquiring Fund have Class A, Class B, Class C
and Class M shares offered under identical sales charge arrangements. The Board
also considered the opinion of counsel that the Reorganization would be a tax-
free reorganization, and there would be no sales charge imposed in effecting the
Reorganization. In addition, due to the relatively moderate costs of the
reorganization, the Board concluded that neither fund would experience dilution
as a result of the Reorganization.
INFORMATION ABOUT THE EXCHANGE
Plan Of Exchange. The following summary of the Plan is qualified in its entirety
by reference to the form of Plan attached to this Prospectus/Proxy Statement as
Exhibit A. The Plan provides that the Acquiring Fund will acquire all of the
assets of the Fund at net asset value, in exchange for Acquiring Fund shares and
the assumption by the Acquiring Fund of the Fund's stated liabilities on
[date], or such later date as may be agreed upon by the parties (the "Closing
Date"). The number of Acquiring Fund shares to be issued to the Fund will be
determined on the basis of the relative net asset values per share and aggregate
net assets of the shares of the Acquiring Fund and the Fund, generally computed
as of the close of regular trading on the floor of the NYSE (currently at 4:00
p.m., New York time) on the Closing Date.
10
See "Shareholder Information - Pricing of Shares" in the IDEX Prospectus.
Prior to the Closing Date, the Fund will declare a dividend or dividends which,
together with all previous such dividends, will have the effect of distributing
to Fund shareholders all of the Fund's previously undistributed investment
company taxable income, if any, for the fiscal period ending on or prior to the
Closing Date (computed without regard to any deduction or dividends paid), its
net exempt interest income for the fiscal period ending on or prior to the
Closing Date, and all of its previously undistributed net capital gain realized
in the fiscal period ending on or prior to the Closing Date (after reduction for
any capital loss carried forward).
As conveniently as practicable after the Closing Date, the Fund will liquidate
and distribute pro rata to its shareholders of record as of the close of
business on the Closing Date, the shares received by it in the Exchange. Such
distribution and liquidation will be accomplished by establishing accounts on
the share records of the Acquiring Fund in the name of each Fund shareholder,
each account representing the respective pro rata number of Acquiring Fund
shares due to the shareholder. After such distribution and the winding up of its
affairs, the Fund will be dissolved. Some of the outstanding shares of the Fund
may be represented by physical certificates; however, in the interest of economy
and convenience, shares of the Acquiring Fund issued to Fund shareholders
pursuant to the Exchange, will be in uncertificated form. After the Closing
Date, any outstanding certificates representing Fund shares will be void.
The Plan may be amended at any time prior to the Exchange. The Fund will provide
its shareholders with information describing any material amendment to the Plan
prior to shareholder consideration. The obligations of the Fund and the
Acquiring Fund under the Plan are subject to various conditions, including
approval by Fund shareholders holding the requisite number of Fund shares,
the continuing accuracy of various representations and warranties of the Fund
and the Acquiring Fund being confirmed by the respective parties and approval of
a new sub-advisory agreement by shareholders of the Acquiring Fund.
The total expenses of the Exchange are expected to be approximately $_____,
which will be borne pro rata according to the aggregate net assets of the
Acquiring Fund and the Fund on the date of the Exchange.
Federal Income Tax Consequences. The exchange of the Fund's assets for the
Acquiring Fund shares and the assumption of the stated liabilities of the Fund
is intended to qualify for Federal income tax purposes as a tax-free
reorganization under Section 368(a) of the Code. As a condition to the closing
of the Exchange, the Fund and the Acquiring Fund will receive the opinion of
Sutherland Asbill & Brennan LLP, counsel to the Fund and the Acquiring Fund, to
the effect that on the basis of the existing provisions of the Code, Treasury
regulations thereunder, current administrative regulations and pronouncements
and court decisions, and certain facts, assumptions and representations, for
Federal income tax purposes: (1) the transfer of all of the Fund's assets in
exchange for Acquiring Fund shares and the assumption by the Acquiring Fund of
the Fund's stated liabilities will constitute a "reorganization" within the
meaning of Section 368(a)(1)(C) of the Code with respect to the Fund; (2) no
gain or loss will be recognized by the Acquiring Fund upon receipt of the Fund's
assets solely in exchange for Acquiring Fund shares and the assumption by the
Acquiring Fund of the stated liabilities of the Fund; (3) no gain or loss will
be recognized by the Fund upon transfer of its assets to the Acquiring Fund in
exchange for shares and the assumption by the Acquiring Fund of such Fund's
stated liabilities or upon the distribution (whether actual or constructive) of
Acquiring Fund shares to Fund shareholders in exchange for their Fund shares;
(4) no gain or loss will be recognized by Fund shareholders upon the exchange of
Fund shares for Acquiring Fund shares; (5) the aggregate tax basis for Acquiring
Fund shares received by each Fund shareholder pursuant to the Exchange will be
the same as the aggregate tax basis for Fund shares held by such shareholder
immediately prior to the Exchange, and the holding period of Acquiring Fund
shares received by a Fund shareholder will include the period during which Fund
shares surrendered in exchange therefore were held by such shareholder (provided
Fund shares were held as capital assets on the date of the Exchange); and (6)
the tax basis of Fund assets acquired by the Acquiring Fund will be the same as
the tax basis of such assets to the Fund immediately prior to the Exchange, and
the holding period of Fund assets in the hands of the Acquiring Fund will
include the period during which those assets were held by the Fund.
11
NEITHER THE FUND NOR THE ACQUIRING FUND HAS SOUGHT A TAX RULING FROM THE
INTERNAL REVENUE SERVICE ("IRS"). THE OPINION OF COUNSEL IS NOT BINDING ON THE
IRS NOR DOES IT PRECLUDE THE IRS FROM ADOPTING A CONTRARY POSITION. Fund
shareholders should consult their tax advisors regarding the effect, if any, of
the proposed Exchange in light of their individual circumstances. Since the
foregoing discussion relates only to the Federal income tax consequences of the
Exchange, Fund shareholders also should consult their tax advisors as to state,
and local tax, and foreign consequences, if any, of the Exchange.
REQUIRED VOTE AND BOARD'S RECOMMENDATION
The IDEX Board has approved the Plan and the Exchange on behalf of the Fund, and
has determined that (i) participation in the Exchange is in the best interest of
the Fund and its shareholders and (ii) the interests of shareholders of the Fund
will not be diluted as a result of the Exchange. Pursuant to the IDEX charter
documents, an affirmative vote of a majority of the Fund's shares outstanding
and entitled to vote is required to approve the Plan and the Exchange.
THE IDEX BOARD OF TRUSTEES, INCLUDING THE "NON-INTERESTED"
TRUSTEES, RECOMMENDS THAT THE FUND'S SHAREHOLDERS VOTE "FOR"
PROPOSAL No. 1 - APPROVAL OF THE PLAN AND THE EXCHANGE.
- --------------------------------------------------------------------------------
ADDITIONAL INFORMATION ABOUT THE FUND AND THE ACQUIRING FUND
Information about the Fund and the Acquiring Fund is incorporated by reference
into the Prospectus/Proxy Statement from the IDEX Prospectus forming a part of
its Registration Statement on Form N-1A (File No. 33-2659), as amended.
The Fund and the Acquiring Fund are subject to the requirements of the 1940 Act,
and file reports, proxy statements and other information with the SEC. These
materials may be inspected and copied at the Public Reference Facilities of the
SEC at 450 Fifth Street, N.W., Room 1024, Washington, D.C. 20549. Copies of such
materials may also bed obtained from the Public Reference Branch, Office of
Consumer Affairs and Information Services, SEC, Washington, D.C., at prescribed
rates.
- --------------------------------------------------------------------------------
PROPOSAL No. 2:
To elect the current Trustees of the Board and to elect two additional Trustees
to the Board.
- --------------------------------------------------------------------------------
IDEX is not required to hold annual meetings of shareholders for the election of
Trustees. Shareholders are being asked to consider the re-election of the seven
Trustees of the Board and the election of two new Trustees to the IDEX Board at
the Special Meeting pursuant to the Fund's Bylaws, which permit the election of
Trustees at any meeting required to be held. Election of the Trustees requires a
vote of ALL IDEX shareholders. Shareholders of other IDEX funds will be asked to
vote for the Trustees at a later date. The results of the Trustee election will
be effective March 1, 2002.
At a meeting held on June 14, 2001 (the "Board Meeting"), the Disinterested
Trustees unanimously nominated for re-election: Peter R. Brown, Charles C.
Harris, Jack E. Zimmerman, William W. Short, Jr., Daniel Calabria, John R.
Kenney, and Patrick S. Baird, the incumbent Trustees; and unanimously nominated
for election to the Board, Janice B. Case and Russell A. Kimball, Jr. The
Trustees are to be elected to serve until reaching their respective designated
retirement ages or until their successors are duly elected and qualified.
Following the Special Meeting, IDEX does not contemplate holding regular
meetings of shareholders to elect Trustees or otherwise. Each of the nominees
named has agreed to serve as a Trustee if elected. However, should any nominee
become unable or unwilling to accept nomination or election, the proxies will be
voted for one or more substitute nominees designated by the Board.
The following sets forth the names, ages, principal occupations, and other
information respecting the nominees:
12
- ----------------------------------------------------------------------------------------------------------------
Position(s) Term of Principal Occupation Number of
Name held Office or Employment Portfolios/Funds
With Fund and length in the past 5 years overseen by
of time Trustee or
served Nominee for
Trustee
- ----------------------------------------------------------------------------------------------------------------
Peter R. Brown Vice 1986 - Chairman of the Board, Peter All IDEX
1180 6th Street East Chairman present Brown Construction Company funds (31)
Treasure Island, (construction contractors and All AEGON/
Florida 33708 engineers), Largo, Florida Transamerica
(DOB 5/10/28) (1963-2000); Vice Chairman, Series Fund
AEGON/Transamerica Series Fund, ("ATSF")
Inc., Rear Admiral (Ret.) U.S. portfolios
Navy Reserve, Civil Engineer (34)
Corps.
- ----------------------------------------------------------------------------------------------------------------
Charles C. Harris Trustee 1994 - Director, AEGON/Transamerica All IDEX
35 Winston Drive present Series Fund, Inc. funds (31)
Clearwater, (1986-present); former Trustee
Florida 33756 of IDEX Fund, IDEX II Series All ATSF
(DOB 7/15/30) Fund and IDEX Fund 3. portfolios
(34)
- ----------------------------------------------------------------------------------------------------------------
Russell A. Kimball, Jr. Nominee Current Director, AEGON/Transamerica Nominee for
1160 Gulf Boulevard Nominee Series Fund, Inc. all IDEX
Clearwater Beach, (1986-present); General Manager, funds (31)
Florida 34630 Sheraton Sand Key Resort (resort
(DOB 8/17/44) hotel), Clearwater, Florida All ATSF
(1975-present) portfolios
(34)
- ----------------------------------------------------------------------------------------------------------------
John R. Kenney(1) Chairman 1996-present Chairman of the Board, Director All IDEX
P. O. Box 5068 and Co-CEO of Great Companies, funds (31)
Clearwater, L.L.C.; Chairman of the Board of
Florida 33758 Directors, Western Reserve Life All ATSF
(DOB 2/8/38) Assurance Co. of Ohio; Chairman portfolios
of the Board of Directors (34)
(September, 1996-present),
President (September,
1997-present);
AEGON/Transamerica Fund
Advisers, Inc. (investment
adviser), St. Petersburg,
Florida; Chairman of the Board
of Directors (September
1996-present),
AEGON/Transamerica Fund
Services, Inc., St. Petersburg,
Florida; Director (December,
1990-present); IDEX Management,
Inc., (investment adviser), St.
Petersburg, Florida; Trustee and
Chairman (September
1996-present),
AEGON/Transamerica Series Fund,
Inc. (investment company), St.
Petersburg, Florida.
- ----------------------------------------------------------------------------------------------------------------
Patrick S. Baird (1) President, 1999-present Executive Vice President, Chief All IDEX
4333 Edgewood Road NE Trustee Operating Officer (February, funds (31)
Cedar Rapids, 1996-present), AEGON USA;
Iowa 52499 President and Director, All ATSF
(DOB 1/19/54) AEGON/Transamerica Series Fund, portfolios
Inc. (34)
- ----------------------------------------------------------------------------------------------------------------
Jack E. Zimmerman (2) Trustee 1986 - Director (December, All IDEX
507 Saint Michael Circle present 1987-present), Western Reserve funds (31)
Kettering, Life Assurance Co. of Ohio;
Ohio 45429 currently retired; formerly,
(DOB 2/3/28) Director, Regional Marketing of
Martin Marietta
Corporation, Dayton
(aerospace
industry) and
Director of
Strategic Planning
of Martin Marietta
Baltimore
Aerospace.
- ----------------------------------------------------------------------------------------------------------------
13
- ----------------------------------------------------------------------------------------------------------------
William W. Short, Jr. Trustee 1986-present Director, AEGON/Transamerica All IDEX
12420 73rd Court Series Fund, Inc. funds (31)
Largo, (2000-present); President and
Florida 33773 majority shareholder of Short's, All ATSF
(DOB 2/25/36) Inc. (men's retail apparel); portfolios
Chairman of Southern Apparel (34)
Corporation, S.A.C. Apparel
Corporation and S.A.C.
Distributors (nationwide
wholesale apparel distributors),
Largo, Florida.
- ----------------------------------------------------------------------------------------------------------------
Daniel Calabria Trustee 1996-present Director, AEGON/Transamerica All IDEX
7068 S. Shore Drive So., Series Fund, Inc. funds (31)
South Pasadena, (2001-present); Trustee
Florida 33707 (1993-present) and President All ATSF
(DOB 3/5/36) (1993-1995) of the Florida Tax portfolios
Free Funds (mutual funds); (34)
President and Director (1995) of
Sun Chiropractic Clinics, Inc.,
Executive Vice President
(1993-1995), William R. Hough &
Co. (investment adviser,
municipal bond and underwriting
firm).
- ----------------------------------------------------------------------------------------------------------------
Janice B. Case Nominee Current Director, AEGON/Transamerica Nominee
Nominee Series Fund, Inc. All IDEX
(2001-present); Senior Vice funds (31)
President (1996-2000), Vice
President (1990-1996), Director
of Customer Service & Marketing
(1987-1990), Florida Power
Corporation, St. Petersburg,
Florida
- ----------------------------------------------------------------------------------------------------------------
(1) Such Trustee is an "Interested Person" of the fund as defined in the
1940 Act and an affiliated person of IDEX, and did not receive
compensation directly from IDEX. Such Director is also an affiliated
person of IMI.
(2) Mr. Zimmerman is the brother-in-law of John R. Kenney, Chairman of
IDEX.
The Board met four times during the twelve months ended October 31, 2000 (the
"Period").
The Board's Audit Committee is composed of Messrs. Brown, Harris, and Short, and
met 2 times in the Period. All Audit Committee members are considered
"independent" under Rule 4200(a)(14) of the National Association of Securities
Dealers' listing standards. The functions performed by the Audit Committee
include the recommendation of the independent public accountants for IDEX to be
selected by the Board, the review of the scope and results of audit services,
the review of the adequacy of internal accounting and financial controls, the
review of material changes in accounting principals and practices and other
matters when requested from time to time by the Board. The Audit Committee has
adopted a charter to set forth its responsibilities (the "Charter"). A copy of
the Charter is attached to this Prospectus/Proxy Statement as Exhibit __
As required by the Charter, the Audit Committee received and reviewed the report
of PricewaterhouseCoopers LLP (PWC), the independent public accountants for
IDEX, regarding the results of their audit, as well as the written disclosures
and the letter from PWC required by Independence Standards Board Standard No. 1.
The Audit Committee reviewed the audited financial statements with the
management of IDEX. A representative of PWC also discussed with the Audit
Committee the independence of PWC from IDEX, as well as the matters required to
be discussed by Statement of Auditing Standards 61. Discussions between the
Audit Committee and the representative of PWC included the following:
o PWC's responsibilities in accordance with generally accepted auditing
standards
o The initial selection of, and whether there were any changes in,
significant accounting policies or their application
o Management's judgments and accounting estimates
o Whether there were any significant audit adjustments
o Whether there were any disagreements with management
o Whether there was any consultation with other accountants
o Whether there were any major issues discussed with management prior to
PWC's retention
14
o Whether PWC encountered any difficulties in performing the audit
o PWC's judgments about the quality of the IDEX accounting principles
o PWC's responsibilities for information prepared by management that is
included in documents containing audited financial statements
Based on its review of the financial statements and its discussions with
management and the representative of PWC, the Audit Committee did not become
aware of any material misstatements or omissions in the financial statements.
Accordingly, the Audit Committee recommended to the Board that the audited
financial statements be included in the Annual Report for the year ended
October 31, 2000, and filed with the SEC.
Fund Related Fees
Audit Fees: For the IDEX fiscal year ended October 31, 2000, PWC billed IDEX $
234,000 for professional services rendered for the audit of the IDEX annual
financial statements (PWC also serves as independent accountant for ATSF).
All Other Fees: During the fiscal year ended October 31, 2000, PWC was paid
approximately $_____ for all other services, including tax-related and other
accounting services, rendered to the funds.
Non-Fund Related Fees
- ---------------------
All Other Fees: For the IDEX fiscal year ended October 31, 2000, PWC was paid
$_____ for certain non-audit services rendered on behalf of IDEX.
The Board's Nominating Committee is composed of Messrs. Brown, Harris, and
Short, and met 1 time during the Period. The functions performed by the
Nominating Committee includes making nominations for independent trustees, and
for membership on committees. The Nominating Committee will consider nominees
recommended by shareholders. Recommendations should be submitted in writing to
the Committee in care of the Secretary of IDEX at the address shown on page 1 of
this Proxy Statement.
Each Disinterested Trustee currently receives a total annual retainer fee of
$20,000, plus $4,000 and incidental expenses for each regular meeting attended
and $2,500 for each special meeting attended.
During the fiscal year ended October 31, 2000, the Trustees received the
following compensation from IDEX:
- --------------------------------------------------------------------------------
Compensation for Year Ended
Name of Person, Position October 31, 2000
- --------------------------------------------------------------------------------
Peter R. Brown,
Vice Chairman $ 43,500
- --------------------------------------------------------------------------------
Daniel Calabria,
Trustee $ 38,500
- --------------------------------------------------------------------------------
Charles C. Harris,
Trustee $ 43,500
- --------------------------------------------------------------------------------
William W. Short, Jr.,
Trustee $ 43,500
- --------------------------------------------------------------------------------
Jack E. Zimmerman,
Trustee $ 38,500
- --------------------------------------------------------------------------------
15
Disinterested Trustees may participate in a non-qualified deferred compensation
plan. Under this plan, compensation may be deferred that would otherwise be
payable by IDEX and by certain other entities, including AEGON/Transamerica
Series Fund, Inc. Compensation may be deferred on a current basis for services
rendered as a director/trustee.
Shareholder Approval. The selection of each nominee requires an affirmative vote
of a majority of outstanding voting securities entitled to vote present at the
Special Meeting, in person or by proxy.
- --------------------------------------------------------------------------------
THE BOARD OF TRUSTEES OF THE FUND RECOMMENDS
A VOTE "FOR" PROPOSAL No. 2
- --------------------------------------------------------------------------------
Proposal No. 3: A Proposal To Permit IMI, After Obtaining Approval Of The Board,
To Enter Into And Materially Amend Sub-Advisory Agreements With Non-Affiliated
Investment Sub-Advisers On Behalf of the Fund Without Obtaining Shareholder
Approval.
At the Board Meeting held on September 11, 2000, the Trustees, including a
majority of the trustees 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 Trustees"), approved and recommended that
shareholders of each Fund approve a policy to permit IMI, on behalf of each Fund
and subject to approval of the Board, to appoint sub-advisers, to enter into
sub-advisory agreements, and to materially amend existing sub-advisory
agreements (the "Sub-Adviser Approval Policy") without further shareholder
approval for the existing Funds of IDEX, and for future Funds, subject to
certain conditions. Special restrictions apply to the Sub-Advisers that are
affiliates of the Investment Adviser ("Affiliated Sub-Adviser"). Implementation
of the Sub-Adviser Approval Policy approved by the Board is subject to the terms
and conditions of an Exemptive Order from the SEC as described below.
IDEX
IDEX Mutual Funds is a Massachusetts Business Trust organized as a diversified,
open-end management investment company under the 1940 Act. Shares of IDEX are
registered under the Securities Act of 1933 (the "1933 Act"), and IDEX itself is
registered under the 1940 Act on Form N-1A with the SEC. Idex Investor Services,
Inc. ("IIS"), located at 570 Carillon Parkway, St. Petersburg, Florida 33716, an
affiliate of IDEX and IMI, serves as transfer agent and administrator for IDEX.
AFSG Securities Corporation, located at 4333 Edgewood Road, NE, Cedar Rapids,
Iowa 52499, serves as principal underwriter for IDEX. IDEX currently consists of
31 funds.
THE INVESTMENT ADVISER
IMI serves as investment adviser to IDEX. IMI does not currently act as an
investment adviser with respect to any registered investment company other than
IDEX. IMI has served as investment adviser of the Fund since each Fund's
inception.
IMI is registered as an investment adviser under the Investment Advisers Act of
1940, as amended (the "Advisers Act"). IMI has served as the investment adviser
to each Fund of IDEX since January 1, 1998. (Prior to that date,
InterSecurities, Inc. served as the investment adviser to various Funds in
existence prior to that date.) Pursuant to the Investment Advisory Agreement
(the "Agreement") between IDEX and IMI, dated ______, and subject to the
supervision of the Board, IMI is responsible for furnishing continuous advice
and recommendations to IDEX as to the acquisition, holding, or disposition of
any or all the securities or other assets that the Fund may own or contemplate
acquiring from time to time. IMI's officers attend meetings of the Board and are
responsible for furnishing oral or written reports to keep the Board and
officers of IDEX fully informed as to the condition of the investments of each
fund, the investment recommendations of IMI, and the investment considerations
that have given rise to those recommendations. IMI supervises the purchase and
sale of the investments of the Fund and maintains all books and records required
to be maintained pursuant to the 1940 Act and the rules and regulations
promulgated thereunder with respect to transactions on behalf of IDEX.
16
The Investment Advisory Agreement contemplates that IMI, in connection with the
performance of its responsibilities under the Agreement, will enter into
sub-advisory agreements with sub-advisers to provide the Fund with investment
management services. IMI selects a sub-adviser based on a qualitative and
quantitative evaluation of the proposed sub-adviser. IMI monitors the
performance of each sub-adviser and evaluates how well the sub-adviser has
performed in managing the assets of its respective fund(s) in light of each such
fund's stated investment objective and policies. IMI also monitors each
sub-adviser's long-term performance and the level of risk assumed in achieving
that level of performance. Particular criteria for the selection and retention
of a sub-adviser include the sub-adviser's discipline and thoroughness in
pursuit of a fund's stated investment objective and the sub-adviser's long-term
performance. Short-term performance by itself is not a significant factor in
selecting or terminating a sub-adviser.
IMI also may, from time to time, recommend that the services of a sub-adviser be
terminated. The criteria for termination includes the departure of a
sub-adviser's key investment advisory personnel, a change in control of
management of the sub-adviser, a departure from a fund's stated investment
objective or policies, or other developments relating to the sub-adviser that
are deemed not to be in the best interest of shareholders by IMI.
THE SUB-ADVISERS
With respect to the Fund, IMI has entered into an investment sub-advisory
agreement (each a "Sub-Advisory Agreement" and, together, the "Sub-Advisory
Agreements") with one or more investment sub-advisers for each fund (each, a
"Sub-Adviser"). IDEX currently has 18 different sub-advisers. Each fund
currently has one sub-adviser. Each sub-adviser provides investment advisory
assistance and portfolio management advice for the fund(s) with respect to which
the sub-adviser is engaged. Subject to review and supervision by IMI and the
Board, and subject to a fund's investment objective, policies and restrictions
each sub-adviser is responsible for the actual investment management of its
fund(s) and for making decisions to buy, sell, or hold any particular security.
Each sub-adviser also places orders to buy or sell securities on behalf of that
fund. Each sub-adviser bears all of its expenses in connection with the
performance of its services, such as compensating and furnishing office space
for its officers and employees connected with investment and economic research,
trading, and investment management of its fund(s). Each sub-adviser is a
registered investment adviser under the Advisers Act. Each sub-adviser receives
monthly compensation from IMI based on a specified percentage of the average
daily net assets of each fund managed by that sub-adviser.
Each sub-adviser has been recommended by IMI, and selected and approved by the
Board, including a majority of Trustees who are not parties to the sub-advisory
agreements or interested persons (within the meaning of Section 2(a)(19) of the
1940 Act) of any such party ("Disinterested Trustees"), as well as by the
shareholders of the relevant fund. The Sub-Advisory Agreement for the Fund was
approved on _______.
As required by the 1940 Act, each sub-advisory agreement: describes the
compensation that is to be paid to each sub-adviser by IMI; continues in effect
for up to two years and from year to year thereafter, only so long as such
continuance is specifically approved at least annually by the Board or by a vote
of the majority of the outstanding voting securities of the appropriate fund in
the manner required by the 1940 Act, and Rules thereunder; may be terminated at
any time, without the payment of any penalty, by the IDEX Board or by
shareholders on sixty (60) days' written notice to the Sub-Adviser, on (60)
days' written notice from IMI to the sub-adviser provided certain conditions are
met, or on sixty (60) days' written notice from the sub-adviser to IMI; will
terminate automatically in the event of its assignment; and requires approval of
amendments thereto as specified by the 1940 Act.
The Section 15 Exemptive Order
On August 5, 1998, the SEC granted an exemption from Section 15(a) of the 1940
Act, and Rule 18f-2 under the 1940 Act, to AEGON/Transamerica Series Fund, Inc.
(formerly, WRL Series Fund, Inc.), AEGON/Transamerica Fund Advisers, Inc.
(formerly, WRL Investment Management, Inc.) ("ATSF") and any other registered
investment company advised by the ATSF, or a person controlling, controlled by,
or under common control with ATSF (ICI Release No. 23379). IDEX and IMI are
affiliates with those entities and are under common control with ATSF. The
provisions of
17
the 1940 Act require that shareholders approve investment advisory agreements,
including sub-advisory agreements, and to approve any material amendment to such
an investment advisory agreement. If shareholders approve the Sub-Adviser
Approval Policy as described in the Exemptive Order, IMI will be authorized,
subject to approval by the Board, to evaluate, select and retain new sub-adviser
the Funds, or materially amend an existing sub-advisory agreement without
obtaining further approval of the affected Fund's shareholders, whenever IMI and
the Board believe such actions are in the best interests of a Fund and its
shareholders.
Current Sub-Adviser Approval Process. Currently, for each Fund, IMI enters into
a separate sub-advisory agreement with the respective sub-adviser selected by
IMI and approved by the Board. Under the terms of these sub-advisory agreements,
the sub-advisers have authority to provide the respective fund(s) with advice
concerning the investment management of a fund's assets. Subject to a fund's
investment objective, policies and restrictions, sub-advisers determine what
securities shall be purchased or sold, and what portion of a fund's assets shall
remain uninvested. For these sub-advisory services to the funds, IMI pays each
sub-adviser a monthly fee at an annual rate based on the average daily net
assets of the fund, as specified in the specific sub-advisory agreement. Each
sub-adviser bears its own expenses of providing sub-advisory services to the
respective fund. Each fund's sub-advisory agreement are subject to annual
approval by the Board, including the Disinterested Trustees. Any material
amendments to an existing sub-advisory agreement currently require approval by
the Board and a fund's shareholders.
Each sub-adviser of a fund is an "investment adviser" to that fund, as that term
is defined in Section 2(a)(20) of the 1940 Act. Section 15(a) of the 1940 Act
and Rule 18f-2 thereunder provide, in effect, that it is unlawful for any person
to act as an investment adviser to a fund except pursuant to a written contract
that has been submitted to and approved by the vote of a majority of the voting
securities of that fund. Therefore, when a sub-adviser is initially retained,
shareholders of each affected fund generally are required to approve the
sub-advisory agreement with the proposed sub-adviser. Similarly, if an existing
sub-advisory agreement were amended in any material respect, such amendment
would generally be deemed to result in a new contract for which shareholder
approval would be required. Moreover, under Section 15(a), a sub-advisory
agreement terminates automatically upon its "assignment," which in most
instances would occur upon a change of control of the sub-adviser.
Proposed Sub-Adviser Approval Policy. Approval of the Sub-Adviser Approval
Policy on behalf of the Fund will not affect any of the requirements under the
federal securities laws that govern the Fund, the investment adviser, the
sub-advisers or the sub-advisory agreements other than the requirement to call
meetings of the Fund's shareholders and obtain shareholder approval for certain
changes affecting a non-affiliated sub-adviser. The Board, including the
Disinterested Trustees, will continue to evaluate and approve all new sub-
advisory agreements between IMI and a sub-adviser as well as all changes to
existing sub-advisory agreements. IDEX and IMI will be subject to several
conditions imposed by the SEC to ensure that the interests of the Fund's
shareholders are adequately protected whenever IMI acts under the Sub-Adviser
Approval Policy. Furthermore, within 90 days of the hiring of a new sub-adviser,
IMI will provide the Fund's shareholders with an information statement that
contains substantially the same information about the sub-adviser, the sub-
advisory agreement and the sub-advisory fee that would be required to be sent to
shareholders in a proxy statement.
SHAREHOLDER APPROVAL OF THIS PROPOSAL WILL NOT RESULT IN AN INCREASE OR DECREASE
IN THE TOTAL AMOUNT OF INVESTMENT ADVISORY FEES PAID BY THE FUND TO IMI.
Shareholders should recognize that in engaging a new sub-adviser and entering
into a sub-advisory agreement, IMI will negotiate fees with that sub-adviser
and, because these fees are paid by IMI and not directly by the Fund, any fee
reduction negotiated by IMI may inure to IMI's benefit and any increase will
inure to its detriment. The fees paid to IMI by the Fund and the fees paid to a
sub-adviser by IMI are considered by the Board in approving the advisory and
sub-advisory arrangements, and any change in fees paid by the Fund to IMI would
require shareholder approval. In any event, if the shareholders approve this
Policy, then IMI, pursuant to the Fund's Agreement, will continue to provide the
same level of management and administrative services to the Fund as it has
always provided.
18
In addition to shareholder approval, the relief granted by the SEC and set forth
in the Exemptive Order is subject to the following conditions:
(1) IMI will not enter into a sub-advisory agreement with any
affiliated sub-adviser without the sub-advisory agreement,
including the compensation to be paid thereunder, being
approved by the Fund's shareholders.
(2) At all times, a majority of the Board will be persons each of
whom is a Disinterested Trustee and the nomination of new or
additional Disinterested Trustees will be within the
discretion of the then-existing Disinterested Trustees.
(3) When a sub-adviser change is proposed for a Fund with an
affiliated sub-adviser, the Board, including a majority of the
Disinterested Trustees, will make a separate finding,
reflected in the minutes of the meetings of the Board, that
the change is in the best interests of the Fund and the
shareholders, and does not involve a conflict of interest from
which IMI or the affiliated sub-adviser derives an
inappropriate advantage.
(4) IMI will provide general management and administrative
services to IDEX and the Fund, including overall supervisory
responsibility for the general management and investment of
the Fund's securities portfolios, and subject to review and
approval by the Board, will: (a) set each Fund's overall
investment strategies; (b) select sub-advisers; (c) monitor
and evaluate the performance of sub-advisers; (d) allocate
and, when appropriate, reallocate the Fund's assets among its
sub-advisers in those cases where the Fund has more than one
sub-adviser; and (e) implement procedures reasonably designed
to ensure that the sub-advisers comply with the Fund's
investment objective, policies, and restrictions.
(5) Within ninety (90) days of the hiring of any new sub-adviser,
IMI will furnish shareholders with all information about the
new sub-adviser that would be included in a proxy statement.
The information will include any change in the disclosure
caused by the addition of a new sub-adviser. IMI will meet
this condition by providing the shareholders with an
information statement that meets certain requirements of the
Securities Exchange Act of 1934, as amended, and the rules
thereunder.
(6) IDEX will disclose in its prospectus the existence, substance,
and effect of the Sub-Adviser Approval Policy. The IDEX
prospectus will prominently disclose that the investment
adviser has ultimate responsibility for the investment
performance of the Fund due to its responsibility to oversee
sub-advisers and recommend their hiring, termination, and
replacement.
(7) No Trustee or officer of IDEX or IMI will own directly or
indirectly (other than through a pooled investment vehicle
that is not controlled by the Trustee or officer) any interest
in a sub-adviser, except for: (a) ownership of interests in
IMI or any entity that controls, is controlled by, or is under
common control with IMI; or (b) ownership of less than one
percent (1%) of the outstanding securities of any class of
equity or debt securities of a publicly traded company that is
either a sub-adviser or an entity that controls, is controlled
by, or is under common control with a sub-adviser.
In addition, in connection with the implementation of the Sub-Adviser Approval
Policy, the Board and IMI may amend, from time to time, certain provisions of
the sub-advisory agreements to reflect the terms and conditions of the Exemptive
Order and the Sub-Adviser Approval Policy.
Reasons for Requesting Approval of the Sub-Adviser Approval Policy
The Board believes that providing IMI with maximum flexibility to perform those
duties that shareholders expect IMI to perform - selecting, supervising and
evaluating sub-advisers - without incurring the unnecessary delay or expense of
obtaining shareholder approval is in the best interests of the Fund's
shareholders because it will allow the Fund to operate more efficiently.
Currently, in order for IMI to
19
appoint a sub-adviser or materially amend a sub-advisory agreement, IDEX must
call and hold a shareholders meeting of the Fund, create and distribute proxy
materials, and solicit proxy votes from the Fund's shareholders. This process is
time consuming and costly, and the costs are usually borne entirely by the Fund.
Without the delay inherent in holding a shareholders meeting, the Fund would be
able to act more quickly and with less expense to appoint a sub-adviser when the
Trustees and IMI feel that the appointment would benefit the Fund.
Also, the IDEX Board believes that it is appropriate to allow the selection,
supervision and evaluation of a sub-adviser to be done by IMI (subject to review
and approval by the IDEX Board) in light of the management structure of IDEX, as
well as IMI's significant experience and expertise in selecting sub-advisers and
the shareholders' expectation that IMI will utilize that expertise to select the
most competent sub-advisers. In the opinion of the Trustees, IMI has
demonstrated that it has the requisite expertise to evaluate, select and
supervise sub-advisers. The Board believes that many investors choose to invest
in a fund because of IMI's experience and expertise in evaluating and choosing
sub-advisers who can add the most value to a shareholder's investment in a Fund.
Finally, the Board will provide sufficient oversight of the sub-adviser
selection process to ensure that shareholders' interests are protected whenever
IMI selects a new sub-adviser or materially amends an existing sub-advisory
agreements. The Board, including a majority of the Disinterested Trustees, will
continue to evaluate and approve all new sub-advisory agreements as well as any
amendments to existing sub-advisory agreements. In its review, the Board will
analyze all factors that it considers to be relevant to the determination,
including the nature, quality and scope of services provided by the sub-adviser.
The Trustees will compare the investment performance of the assets managed by
the sub-adviser with other accounts with similar investment objectives managed
by other advisers and will review the sub-adviser's compliance with federal
securities laws and regulations. The Board believes that its comprehensive
review will ensure that IMI continues to act in the best interests of the Fund
and its shareholders. Each sub-advisory agreement will continue to be subject to
all provisions of the 1940 Act, except for the specific provisions of the 1940
Act for which relief was granted by the SEC in the Exemptive Order.
Shareholder Approval
- --------------------
The adoption of the Sub-Adviser Approval Policy requires an affirmative vote of
a majority of outstanding shares present or by proxy. Shareholders of each Fund
will vote as separate classes on the proposals.
- --------------------------------------------------------------------------------
THE IDEX BOARD OF TRUSTEES RECOMMENDS A VOTE "FOR APPROVAL" OF THE
SUB-ADVISER APPROVAL POLICY
- --------------------------------------------------------------------------------
VOTING INSTRUCTIONS
Shareholders of record of the Fund who own shares of beneficial interest at the
close of business on November 30, 2001 (the "Record Date") will be entitled to
vote at the Meeting, including any adjournment(s) thereof, with respect to the
Reorganization and Exchange, election of Trustees and the Sub-Adviser Approval
Policy. Shareholders of the Fund are entitled to one vote for each share held
and fractional votes for fractional shares held with no share having cumulative
voting rights.
With respect to the Fund, the presence in person or by proxy, of a majority of
the Fund shares outstanding and entitled to vote will constitute a quorum for
the transaction of business at the Meeting. If a quorum is not present at the
Meeting, or if a quorum is present at the Meeting but sufficient votes to
approve the proposal is not received, the persons names as proxies may propose
one or more adjournments of the Meeting to permit further solicitation of
proxies. Any such adjournment will require the affirmative vote of a majority of
the Fund's shares represented at the Meeting in person or by proxy (excluding
abstentions and "broker non-votes," as defined below).
20
The individuals named as proxies on the enclosed proxy card will vote in
accordance with your directions, if your proxy is received in a timely manner
and is properly executed. If we receive your proxy, and it is executed properly,
but you give no voting instructions with respect to the proposal, your shares
will be voted "FOR" the proposal set forth herein. The duly appointed proxies
may, in their discretion, vote upon such other matters as may properly come
before the Meeting.
Abstentions (proxies that are properly executed and returned and are accompanied
by instructions to withhold authority to vote), or broker "non-votes" (shares
held by a broker or nominee as to which instructions have not been received from
the beneficial owners or persons entitled to vote and the broker or nominee does
not have discretionary voting power) will be considered present for purposes of
determining the existence of a quorum for the transaction of business, but, not
being cast, will have no effect on the outcome of matters.
You may revoke your proxy: (a) at any time prior to its exercise by written
notice of its revocation to the Secretary of IDEX at the above address prior to
the Meeting; (b) by the subsequent execution and return of another proxy prior
to the Meeting; or (c) by being present and voting in person at the Meeting and
giving oral notice of revocation to the Chairman of the Meeting.
The number of outstanding shares of beneficial interest for the Fund as of the
Record Date are ________.
Beneficial Owners. Occasionally, the number of shares of the Fund held in the
"street name" accounts of various securities dealers for the benefit of their
clients may exceed 5% of the total shares outstanding. Schedule __ of this
Prospectus/Proxy Statement includes the person or persons that hold 5% or more
of the Fund's outstanding Class A, Class B, Class C or Class M shares. On the
Record Date, the following individuals had 5% or more of the voting securities
of the Fund: [INFO TO COME]
Solicitation. The principal solicitation of proxies will be by the mailing of
this Prospectus/Proxy Statement on or about December 12, 2001, but proxies may
also be solicited by telephone and/or in person by representatives of IDEX, its
affiliates, and ALAMO, a proxy services firm. The estimated cost for the
services by ALAMO is $_____. Arrangements will be made with brokerage houses and
other custodians, nominees, and fiduciaries to forward proxies and proxy
materials to their principals. The cost of the Special Meeting, including the
preparation and mailing of the Notice, Proxy Statement and proxies, and the
solicitation of proxies, including reimbursement to broker-dealers and others
who forward proxy materials to their clients, will be borne by the shareholders
of the Fund.
As the date of the Meeting approaches, certain shareholders of the Fund may
receive a call from a representative of IDEX or ALAMO if IDEX has not yet
received their votes. Authorization to permit the IDEX representative to execute
proxies may be obtained from shareholders by telephonic instructions. Proxies
that are obtained telephonically in the solicitation process will be recorded in
accordance with the procedures set forth below.
If a telephonic proxy is solicited by a representative, the representative is
required to ask the shareholder for such shareholder's full name, address,
social security or employer identification number, title (if the person giving
the proxy is authorized to act on behalf of an entity, such as a corporation),
the number of shares owned, and to confirm that the shareholder has received the
Proxy Statement in the mail. If the information solicited agrees with the
information provided to the representative, then the representative has the
responsibility to explain the process, read the proposal listed on the proxy
card, and ask for the shareholder's instructions on such proposal. Although the
representative is permitted to answer questions about the solicitation process,
he or she is not permitted to recommend to the shareholder how to vote, other
than to read the recommendation set forth in the Proxy Statement. The
representative will record the shareholder's instructions on the card. Within 72
hours, IDEX will send the shareholder a letter or mailgram to confirm the
shareholder's vote and ask the shareholder to call immediately if the
shareholder's instructions are not correct in the confirmation.
If a shareholder wishes to participate in the Meeting, but does not wish to give
a proxy by telephone, such shareholder may still submit the proxy card
originally sent with the Proxy Statement or attend the Meeting
21
in person. Any proxy given by a shareholder, whether in writing, via the
Internet, by telephone or by facsimile, is revocable. A shareholder may revoke
the accompanying proxy or a proxy given telephonically, via the Internet or by
facsimile at any time prior to its use by filing with IDEX a written revocation
or duly executed proxy bearing a later date. In addition, any shareholder that
attends the Meeting in person may vote by ballot at the Meeting, thereby
canceling any proxy previously given.
Voting by telephone, via the Internet or by facsimile. Please follow the
instructions that are included herein if you wish to cast your vote by
telephone, via the Internet or by facsimile. Unless you later decide to change
your vote, please vote only one time using the method that is most convenient
for you..
FINANCIAL STATEMENTS AND EXPERTS
The financial statements incorporated in this Prospectus/Proxy Statement by
reference to the Annual Report to shareholders of IDEX Mutual Funds as of
10/31/00 and for each of the periods indicated, have been so incorporated in
reliance on the report of PricewaterhouseCoopers LLP, independent accountants,
firm as experts given on the authority of said financial in auditing and
accounting.
In addition, the unaudited financial statements of the Fund (which commenced
operation April, 2001) and the Acquiring Fund for the period ended April 30,
2001 have been incorporated herein by reference.
OTHER MATTERS
The IDEX Trustees are not aware of any other matters which may come before the
Meeting. However, should any such matters properly come before the Meeting, it
is the intention of the persons named in the accompanying form of proxy to vote
the proxy in accordance with their judgment on such matters.
NOTICE TO BANKS, BROKER/DEALERS AND VOTING TRUSTEES
AND THEIR NOMINEES
Please advise IDEX, in care of ________, Attn: IDEX Mutual Funds,
______________, whether other persons are the beneficial owners of Fund shares
for which proxies are being solicited from you, and, if so, the number of copies
of the Prospectus/Proxy Statement and other soliciting material you wish to
receive in order to supply copies to the beneficial owners of Fund shares.
IT IS IMPORTANT THAT YOU VOTE PROMPTLY. THEREFORE, SHAREHOLDERS WHO DO NOT
EXPECT TO ATTEND IN PERSON ARE URGED TO COMPLETE, DATE, SIGN AND RETURN THE
PROXY CARD IN THE ENCOSED, STAMPED ENVELOPE. OR IF YOU PREFER, VOTE BY
TELEPHONE, VIA THE INTERNET OR BY FACSIMILE BY FOLLOWING THE INSTRUCTIONS
INCLUDED HEREIN.
22
EXHIBIT A
AGREEMENT AND PLAN OF REORGANIZATION
AGREEMENT AND PLAN OF REORGANIZATION dated _____ (the "Agreement") between IDEX
American Century Income & Growth (the "Fund") and IDEX GE U.S. Equity (the
"Acquiring Fund") of IDEX Mutual Funds ("IDEX"), a Massachusetts Business Trust.
This Agreement is intended to be and is adopted as a plan of reorganization and
liquidation within the meaning of Section 368(a)(1)(C) of the United States
Internal Revenue Code of 1986, as amended (the "Code"). The reorganization (the
"Reorganization") will consist of the transfer of all of the assets of the Fund
in exchange solely for shares of the Acquiring Fund and the assumption by the
Acquiring Fund of certain liabilities of the Fund and the distribution, after
the Closing Date hereinafter referred to, of the Acquiring Fund shares to the
shareholders of the Fund in liquidation of the Fund as provided herein, all upon
the terms and conditions hereinafter set forth in this Agreement.
WHEREAS, both the Fund and the Acquiring Fund are registered, diversified,
open-end management investment companies, and the Fund owns securities which are
assets of the character in which the Acquiring Fund is permitted to invest;
WHEREAS, both the Acquiring Fund and the Fund are authorized to issue their
shares of common stock;
WHEREAS, the Board of Trustees of IDEX has determined that the exchange of all
of the assets of the Fund and certain liabilities of the Fund for shares of the
Acquiring Fund and the assumption of such liabilities is in the best interest of
the Acquiring Fund's shareholders and that the interests of the Acquiring Fund's
existing shareholders would not be diluted as a result of this transaction; and
WHEREAS, the Board of Trustees of IDEX has determined that the exchange of all
of the assets and certain of the liabilities of the Fund for shares of the
Acquiring Fund and the assumption of such liabilities is in the best interest of
the Fund's shareholders and that the interests of the Fund's existing
shareholders would not be diluted as a result of the transaction.
NOW THEREFORE, in consideration of the premises and covenants and agreements
hereinafter set forth, the parties agree as follows:
1. TRANSFER OF ASSETS OF THE FUND IN EXCHANGE FOR THE ACQUIRING FUND
SHARES AND ASSUMPTION OF FUND LIABILITIES AND LIQUIDATION OF THE FUND.
1.1 Subject to the terms and conditions contained herein, the Fund
agrees to assign, transfer and convey to the Acquiring Fund
all of the assets of the Fund, including all securities and
cash (subject to certain liabilities), and the Acquiring Fund
agrees in exchange therefor (i ) to deliver to the Fund the
number of Acquiring Fund shares, including fractional
Acquiring Fund shares, determined as set forth in paragraph
2.3; and (ii) to assume certain liabilities of the Fund, as
set forth in paragraph 1.2. Such transactions shall take place
at the closing (the "Closing") on the closing date ("Closing
Date") provided for in paragraph 3.1. In lieu of delivering
certificates for the Acquiring Fund shares, the Acquiring Fund
shall credit the Acquiring Fund shares to the Fund's account
on the books of the Acquiring Fund and shall deliver a
confirmation thereof to the Fund.
1.2 The Fund will endeavor to discharge all of its know
liabilities and obligations prior to the Closing Date. The
Acquiring Fund shall assume all liabilities, expenses, costs,
charges and reserves reflected on an unaudited statement of
assets and liabilities of the Fund prepared by IDEX, as of the
Valuation Date (as defined in paragraph 2.1), in accordance
with generally accepted accounting principles consistently
applied from the prior audited period. The Acquiring Fund
shall assume only those liabilities of the Fund reflected in
1
that unaudited statement of assets and liabilities and shall
not assume any other liabilities, whether absolute or
contingent.
1.3 Delivery of the assets of the Fund to be transferred shall be
made on the Closing Date and shall be delivered to State
Street Bank, the IDEX custodian (the "Custodian"), for the
account of the Acquiring Fund, with all securities not in
bearer or book-entry form duly endorsed, or accompanied by
duly executed separate assignments or stock powers, in proper
form for transfer, with signatures guaranteed, and with all
necessary stock transfer stamps, sufficient to transfer good
and marketable title thereto (including all accrued interest
and dividends and rights pertaining thereto) to the Custodian
for the account of the Acquiring Fund free and clear of all
liens, encumbrances, rights, restrictions and claims. All cash
delivered shall be in the form of immediately available funds
payable to the order of the Custodian for the account of the
Acquiring Fund.
1.4 The Fund will pay or cause to be paid to the Acquiring Fund
any interest received on or after the Closing Date with
respect to assets transferred to the Acquiring Fund hereunder.
The Fund will transfer to the Acquiring Fund any
distributions, rights or other assets received by the Fund
after the Closing Date as distributions on or with respect to
the securities transferred. Such assets shall be deemed
included in assets transferred to the Acquiring Fund on the
Closing Date and shall not be separately valued.
1.5 As soon after the Closing Date as is conveniently practicable
(the "Liquidation Date"), the Fund will liquidate and
distribute pro rata to the Fund's shareholders of record,
determined as of the close of business on the Closing Date,
Acquiring Fund shares received by the Fund pursuant to
paragraph 1.1. Such liquidation and distribution will be
accomplished by the transfer of the applicable Acquiring Fund
shares then credited to the account of the Fund on the books
of the Acquiring Fund to open accounts on the share records of
the Acquiring Fund in the names of the Fund's shareholders and
representing the respective pro rata number of the applicable
Acquiring Fund shares due such shareholders. All issued and
outstanding shares of the Fund simultaneously will be canceled
on the books of the Fund.
1.6 Ownership of Acquiring Fund shares will be shown on the books
of the Acquiring Fund's transfer agent. Shares of the
Acquiring Fund will be issued in the manner described in the
IDEX current prospectus and statement of additional
information.
1.7 Any transfer taxes payable upon issuance of the Acquiring Fund
shares in a name other than the registered holder of the
Acquiring Fund shares on the books of the Fund as of that time
shall, as a condition of such issuance and transfer, be paid
by the person to whom such Acquiring Fund shares are to be
issued and transferred.
1.8 Any reporting responsibility of the Fund is and shall remain
the responsibility of the Fund up to and including the Closing
Date and such later date on which the Fund is dissolved.
2. VALUATION.
2.1 The value of the Fund's assets to be acquired by the Acquiring
Fund hereunder shall be the value of such assets computed as
of the close of trading on the floor of the New York Stock
Exchange (currently, 4:00 p.m., New York time), except that
options and futures contracts will be valued 15 minutes after
the close of trading on the floor of the New York Stock
Exchange, on the Closing Date (such time and date being
hereinafter called the "Valuation Date"),using the valuation
procedures set forth in the IDEX Declaration of Trust, as
amended, (the "IDEX Charter"), and then-current prospectus or
statement of additional information. In no event shall the
same security held by both the Fund and the Acquiring Fund be
valued at different prices.
2
2.2 The net asset value of an Acquiring Fund share shall be the
net asset value per share computed as of the Valuation Date,
using the valuation procedures set forth in the Acquiring
Fund's Charter and then-current prospectus or statement of
additional information.
2.3 The number of Acquiring Fund shares to be issued (including
fractional shares, if any) in exchange for the Fund's net
assets shall be determined by dividing the value of the net
assets of the Fund determined using the same valuation
procedures referred to in paragraph 2.1 by the net asset value
of one Acquiring Fund share, determined in accordance with
paragraph 2.2.
2.4 All computations of value shall be made in accordance with the
regular practices of the Acquiring Fund.
3. CLOSING AND CLOSING DATE.
3.1 The Closing Date shall be February 28, 2001 or such later date
as the parties may mutually agree. All acts taking place at
the Closing shall be deemed to take place simultaneously as of
the close of business on the Closing Date unless otherwise
provided. The Closing shall be held at 5:00 p.m. New York
time, at the offices of IDEX, 570 Carillon Parkway, St.
Petersburg, Florida 33716 or such other time and/or place as
the parties may mutually agree.
3.2 The Custodian shall deliver at the Closing a certificate of an
authorized officer stating that: (a) the Fund's portfolio
securities, cash and any other assets have been delivered
immediately following the closing and will conform to such
information on the Fund's books immediately before the
closing; and (b) all necessary taxes including all applicable
stock transfer stamps have been paid, or provision for payment
shall have been made, in conjunction with the delivery of
portfolio securities.
3.3 If on the Valuation Date (a) the New York Stock Exchange or
another primary trading market for portfolio securities of the
Acquiring Fund or the Fund shall be closed to trading or
trading thereon shall be restricted, or (b) trading or the
reporting of trading on said Exchange or elsewhere shall be
disrupted so that accurate appraisal of the value of the net
assets of the Acquiring Fund or the Fund is impracticable, the
Closing Date shall be postponed until the first business day
after the day when trading shall have been fully resumed and
reporting shall have been restored.
3.4 The transfer agent for the Fund shall deliver at the Closing a
certificate of an authorized officer stating that its records
contain the names and addresses of the Fund's shareholders and
the number and percentage ownership of outstanding shares,
respectively, owned by each such shareholder immediately prior
to the Closing. The Acquiring Fund shall issue and deliver a
confirmation evidencing the Acquiring Fund shares to be
credited on the Closing Date to the Secretary of the Fund, or
provide evidence satisfactory to the Fund that such Acquiring
Fund shares have been credited to the Fund's account on the
books of the Acquiring Fund. At the Closing, each party shall
deliver to the other such bills of sale, checks, assignments,
receipts or other documents as such other party or its counsel
may reasonably request.
4. REPRESENTATIONS AND WARRANTIES.
4.1 The Fund represents and warrants to the Acquiring Fund as
follows:
(a) The Fund is a series of IDEX Mutual Funds, a
Massachusetts Business Trust duly organized and validly
existing under the laws of the State of Massachusetts and has
3
power to own all of its properties and assets and to carry out
its obligations under this Agreement.
(b) The Fund is registered under the Investment Company Act of
1940, as amended (the "1940 Act"), as a open-end, diversified,
management investment company, and such registration has not
been revoked or rescinded and is in full force and effect.
(c) The Fund is not, and the execution, delivery and
performance of this Agreement will not result, in material
violation of the IDEX Declaration of Trust, as amended (the
"Fund's Charter"), or its Bylaws or of any agreement,
indenture, instrument, contract, lease or other undertaking to
which the Fund is a party or by which it is bound.
(d) The Fund has no material contracts or other commitments
outstanding (other than this Agreement) which will be
terminated with liability to it on or prior to the Closing
Date.
(e) No litigation or administrative proceeding or
investigation of or before any court or governmental body is
currently pending or to its knowledge threatened against the
Fund or any of its properties or assets which, if adversely
determined, would materially and adversely affect its
financial condition or the conduct of its business. The Fund
knows of no facts which might form the basis for the
institution of such proceedings, and is not a party to or
subject to the provisions of any order, decree or judgment of
any court or governmental body which materially and adversely
affects its business or its ability to consummate the
transactions herein contemplated.
(f) The Statements of Assets and Liabilities of the Fund dated
April 30, 2001, have not been audited. The unaudited statement
(copies of which have been furnished to the Acquiring Fund)
fairly reflect the financial condition of the Fund as of such
dates, and there are no known contingent liabilities of the
Fund as of such dates not disclosed therein.
(g) Since October 31, 2000, there has not been any material
adverse change in the Fund's financial condition, assets,
liabilities or business other than changes occurring in the
ordinary course of business, or any incurrence by the Fund of
indebtedness maturing more than one year from the date such
indebtedness was incurred, except as disclosed on the
statement of assets and liabilities referred to in Section 1.2
hereof.
(h) At the Closing Date, all Federal and other tax returns and
reports of the Fund required by law to have been filed by such
dates shall have been filed, and all Federal and other taxes
shall have been paid so far as due, or provision shall have
been made for the payment thereof, and to the best of the
Fund's knowledge no such return is currently under audit and
no assessment has been asserted with respect to such returns.
(i) The Fund intends to meet, and to continue to meet, the
requirements of Subchapter M of the Code for qualification and
treatment as a regulated investment company.
(j) All issued and outstanding shares of the Fund are, and at
the Closing Date will be, duly and validly issued and
outstanding, fully paid and non-assessable. All of the issued
and outstanding shares of the Fund will, at the time of
Closing, be held by the persons and in the amounts set forth
in the records of the transfer agent as provided in paragraph
3.4. The Fund does not have outstanding any options, warrants
or other rights to subscribe for or purchase any of the Fund
shares, nor is there outstanding any security convertible into
any of the Fund shares.
(k) On the Closing Date, the Fund will have full right, power
and authority to sell, assign, transfer and deliver the assets
to be transferred by it hereunder.
4
(l) The execution, delivery and performance of this Agreement
will have been duly authorized prior to the Closing Date by
all necessary action on the part of the IDEX Board of Trustees
and, subject to the approval of shareholders of the Fund, this
Agreement will constitute the valid and legally binding
obligation of the Fund, enforceable in accordance with its
terms, subject to the effect of bankruptcy, insolvency,
reorganization, moratorium, fraudulent conveyance and other
similar laws relating to or affecting creditors' rights
generally and court decisions with respect thereto, and to
general principles of equity and the discretion of the court
(regardless of whether the enforceability is considered in a
proceeding in equity or at law).
(m) The proxy statement of the Fund (the "Proxy Statement"),
included in the Registration Statement referred to in
paragraph 5.5 (other than information therein that has been
furnished by the Acquiring Fund) will, on the effective date
of the Registration Statement and on the Closing Date, not
contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or
necessary to make the statements therein, in light of the
circumstances under which such statements were made, not
materially misleading.
4.2 The Acquiring Fund represents and warrants as follows:
(a) The Acquiring Fund is a series of IDEX Mutual Funds duly
organized and validly existing under the laws of the State of
Massachusetts and has power to carry on its business as it is
now being conducted and to carry out its obligations under
this Agreement.
(b) The Acquiring Fund is registered under the 1940 Act as an
open-end, diversified management investment company, and such
registration has not been revoked or rescinded and is in full
force and effect.
(c) The current prospectus and statement of additional
information of the Acquiring Fund conform in all material
respects to the applicable requirements of the Securities Act
of 1933, as amended (the "1933 Act"), and the 1940 Act and the
rules and regulations of the Securities and Exchange
Commission thereunder and do not include any untrue statement
of a material fact or omit to state any material fact required
to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were
made, not materially misleading.
(d) The Acquiring Fund is not, and the execution, delivery and
performance of this Agreement will not result, in material
violation of the IDEX Charter or its Bylaws or of any
agreement, indenture, instrument, contract, lease or other
undertaking to which the Acquiring Fund is a party or by which
it is bound.
(e) No litigation or administrative proceeding or
investigation of or before any court or governmental body is
currently pending or to its knowledge threatened against the
Acquiring Fund or any of its properties or assets which, if
adversely determined, would materially and adversely affect
its financial condition or the conduct of its business. The
Acquiring Fund knows of no facts which might form the basis
for the institution of such proceedings, and is not a party to
or subject to the provisions of any order, decree or judgment
of any court or governmental body which materially and
adversely affects its business or its ability to consummate
the transactions contemplated herein.
(f) The Statements of Assets and Liabilities of the Acquiring
Fund for the period ending October 31, 2000 were taken from
the audited IDEX Mutual Funds financial statements and are in
accordance with generally accepted accounting principles,
consistently applied, and such statements (copies of which
have been
5
furnished to the Fund) fairly reflect the financial condition
of the Acquiring Fund as of such dates.
(g) Since October 31, 2000 there has not been any material
adverse change in the Acquiring Fund's financial condition,
assets, liabilities or business other than changes occurring
in the ordinary course of business, or any incurrence by the
Acquiring Fund of indebtedness maturing more than one year
from the date such indebtedness was incurred, except as
disclosed on the statement of assets and liabilities referred
to in Section 4.2(f) hereof.
(h) At the Closing Date, all Federal and other tax returns and
reports of the Acquiring Fund required by law then to be filed
shall have been filed, and all Federal and other taxes shown
as due on said returns and reports shall have been paid or
provision shall have been made for the payment thereof.
(i) For each fiscal year of its operation, the Acquiring Fund
has met the requirements of Subchapter M of the Code for
qualification and treatment as a regulated investment company.
(j) All issued and outstanding shares of the Acquiring Fund
are, and at the Closing Date will be, duly and validly issued
and outstanding, fully paid and non-assessable. The Acquiring
Fund does not have outstanding any options, warrants or other
rights to subscribe for or purchase any of the Acquiring
Fund's shares, nor is there outstanding any security
convertible into any Acquiring Fund shares.
(k) The execution, delivery and performance of this Agreement
will have been duly authorized prior to the Closing Date by
all necessary action on the part of the Acquiring Fund's Board
of Trustees, and this Agreement will constitute the valid and
legally binding obligation of the Acquiring Fund enforceable
in accordance with its terms, subject to the effect of
bankruptcy, insolvency, reorganization, moratorium, fraudulent
conveyance and other similar laws relating to or affecting
creditors' rights generally and court decisions with respect
thereto, and to general principles of equity and the
discretion of the court (regardless of whether the
enforceability is considered in a proceeding in equity or at
law).
(l) The Proxy Statement included in the Registration Statement
(only insofar as it relates to the Acquiring Fund and is based
on information furnished by the Acquiring Fund) will, on the
effective date of the Registration Statement and on the
Closing Date, not contain any untrue statement of a material
fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein, in light
of the circumstances under which such statements were made,
not materially misleading.
5. COVENANTS OF THE ACQUIRING FUND AND THE FUND.
5.1 The Acquiring Fund and the Fund each will operate its business
in the ordinary course between the date hereof and the Closing
Date, it being understood that such ordinary course of
business will include payment of customary dividends and
distributions.
5.2 The Fund will call a meeting of Fund shareholders to consider
and act upon this Agreement and to take all other action
necessary to obtain approval of the transactions contemplated
herein.
5.3 Subject to the provisions of this Agreement, the Acquiring
Fund and the Fund will each take, or cause to be taken, all
action, and do or cause to be done, all things reasonably
necessary, proper or advisable to consummate and make
effective the transactions contemplated by this Agreement.
5.4 As promptly as practicable, but in any case within sixty days
after the Closing Date, the Fund shall furnish the Acquiring
Fund, in such form as is reasonably satisfactory to the
Acquiring Fund, a statement of the earnings and profits of the
Fund for Federal income tax purposes which will be
6
carried over to the Acquiring Fund as a result of Section 381
of the Code and which will be certified by the Fund's
President or its Vice President and Treasurer.
5.5 The Fund will provide the Acquiring Fund with information
reasonably necessary for the preparation of a prospectus (the
"Prospectus") which will include the Proxy Statement, referred
to in paragraph 4.1(m), all to be included in a Registration
Statement on Form N-14 of the Acquiring Fund (the
"Registration Statement"), in compliance with the 1933 Act,
the Securities Exchange Act of 1934, as amended, and the 1940
Act in connection with the meeting of the Fund shareholders to
consider approval of this Agreement and the transactions
contemplated herein.
5.6 The Acquiring Fund agrees to use all reasonable efforts to
obtain the approvals and authorizations required by the 1933
Act, the 1940 Act and such of the state Blue Sky or securities
laws as it may deem appropriate in order to continue its
operations after the Closing Date.
6. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE ACQUIRING FUND.
The obligations of the Acquiring Fund to complete the transactions provided for
herein shall be subject, at its election, to the performance by the Fund of all
the obligations to be performed by it hereunder on or before the Closing Date
and, in addition thereto, the following conditions:
6.1 All representations and warranties of the Fund contained in
this Agreement shall be true and correct in all material
respects as of the date hereof and, except as they may be
affected by the transactions contemplated by this Agreement,
as of the Closing Date with the same force and effect as if
made on and as of the Closing Date.
6.2 The Fund shall have delivered to the Acquiring Fund a
statement of the Fund's assets and liabilities, together with
a list of the Fund's portfolio securities showing the tax
basis of such securities by lot and the holding periods of
such securities, as of the Closing Date, certified by the
Treasurer of the Fund.
6.3 The Fund shall have delivered to the Acquiring Fund on the
Closing Date a certificate executed in its name by the IDEX
President or Vice President and its Treasurer, in form and
substance satisfactory to the Acquiring Fund, to the effect
that the representations and warranties of the Fund made in
this Agreement are true and correct at and as of the Closing
Date, except as they may be affected by the transactions
contemplated by this Agreement, and as to such other matters
as the Acquiring Fund shall reasonably request.
7. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE FUND.
The obligations of the Fund to consummate the transactions provided for herein
shall be subject, at its election, to the performance by the Acquiring Fund of
all the obligations to be performed by it hereunder on or before the Closing
Date and, in addition thereto, the following conditions:
7.1 All representations and warranties of the Acquiring Fund
contained in this Agreement shall be true and correct in all
material respects as of the date hereof and, except as they
may be affected by the transactions contemplated by this
Agreement, as of the Closing Date with the same force and
effect as if made on and as of the Closing Date.
7.2 The Acquiring Fund shall have delivered to the Fund on the
Closing Date a certificate executed in its name by the IDEX
President or Vice President and its Treasurer, in form and
substance reasonably satisfactory to the Fund, to the effect
that the representations and warranties of the Acquiring Fund
made in this Agreement are true and correct at and as of the
Closing Date, except as they may be affected by the
transactions contemplated by this Agreement, and as to such
other matters as the Acquiring Fund shall reasonably request.
7
8. FURTHER CONDITIONS PRECEDENT TO OBLIGATIONS OF THE ACQUIRING FUND AND
THE FUND.
If any of the conditions set forth below do not exist on or before the Closing
Date with respect to the Fund or the Acquiring Fund, the other party to this
Agreement shall, at its option, not be required to consummate the transactions
contemplated by this Agreement.
8.1 This Agreement and the transactions contemplated herein shall
have been approved by the requisite vote of the holders of the
outstanding shares of the Fund in accordance with the
provisions of the IDEX Charter.
8.2 On the Closing Date, no action, suit or other proceeding shall
be pending before any court or governmental agency in which it
is sought to restrain or prohibit, or obtain damages or other
relief in connection with, this Agreement or the transactions
contemplated herein.
8.3 All consents of other parties and all other consents, orders
and permits of Federal, state and local regulatory authorities
(including those of the Securities and Exchange Commission and
of state Blue Sky and securities authorities) deemed necessary
by the Acquiring Fund or the Fund to permit consummation, in
all material respects, of the transactions contemplated hereby
shall have been obtained, except where failure to obtain any
such consent, order or permit would not involve a risk of a
material adverse effect on the assets or properties of the
Acquiring Fund or the Fund, provided that either party hereto
may for itself waive any of such conditions.
8.4 The Registration Statement shall have become effective under
the 1933 Act and no stop orders suspending the effectiveness
thereof shall have been issued and, to the best knowledge of
the parties hereto, no investigation or proceeding for that
purpose shall have been instituted or be pending, threatened
or contemplated under the 1933 Act.
8.5 The Fund shall have declared a dividend or dividends which,
together with all previous such shall have the effect of
distributing to the Fund's shareholders all of the Fund's
investment company taxable income for all taxable years or
periods ending on or prior to the Closing Date (computed
without regard to any deduction for dividends paid); the
excess of its interest income excludable from gross income
under Section 103(a) of the Code over its disallowed
deductions under Sections 265 and 171(a)(2) of the Code, for
all taxable years or periods ending on or prior to the Closing
Date; and all of its net capital gain realized in all taxable
years or periods ending on or prior to the Closing Date (after
reduction for any capital loss carry forward).
8.6 The parties shall have received an opinion of Sutherland
Asbill & Brennan LLP substantially to the effect that for
Federal income tax purposes:
(a) The transfer of all or substantially all of the Fund's
assets in exchange for the Acquiring Fund shares and the
assumption by the Acquiring Fund of certain identified
liabilities of the Fund will constitute a "reorganization"
within the meaning of Section 368(a)(1)(C) of the Code; (b) No
gain or loss will be recognized by the Acquiring Fund upon the
receipt of the assets of the Fund solely in exchange for the
Acquiring Fund shares and the assumption by the Acquiring Fund
of certain identified liabilities of the Fund; (c) No gain or
loss will be recognized by the Fund upon the transfer of the
Fund's assets to the Acquiring Fund in exchange for the
Acquiring Fund shares and the assumption by the Acquiring Fund
of certain identified liabilities of the Fund or upon the
distribution (whether actual or constructive) of the Acquiring
Fund shares to Fund shareholders in exchange for their shares
of the Fund; (d) No gain or loss will be recognized by Fund
shareholders upon the exchange of their Fund shares for the
Acquiring Fund shares; (e) The aggregate tax basis for the
Acquiring Fund shares received by each of the Fund's
shareholders pursuant to the Reorganization will be the same
as the aggregate tax basis of the Fund shares held by such
shareholder immediately prior to the Reorganization, and the
holding period of the Acquiring Fund shares to be received by
each Fund shareholder will include the period during which the
Fund shares exchanged therefor were held by such shareholder
(provided the Fund shares were
8
held as capital assets on the date of the Reorganization); and
(f) The tax basis of the Fund assets acquired by the Acquiring
Fund will be the same as the tax basis of such assets to the
Fund immediately prior to the Reorganization, and the holding
period of the assets of the Fund in the hands of the Acquiring
Fund will include the period during which those assets were
held by the Fund.
9. TERMINATION OF AGREEMENT.
9.1 This Agreement and the transaction contemplated hereby may be
terminated and abandoned by resolution of the Board of the
Fund or of the Acquiring Fund, as the case may be, at any time
prior to the Closing Date (and notwithstanding any shareholder
vote) if circumstances should develop that, in the opinion of
either Board, make proceeding with the Agreement inadvisable.
9.2 If this Agreement is terminated and the transaction
contemplated hereby is abandoned pursuant to the provisions of
this Section 9, this Agreement shall become void and have no
effect, without any liability on the part of any party hereto
or the directors, officers or shareholders of the Acquiring
Fund or of the Fund, as the case may be, in respect of this
Agreement, except that the parties shall bear the aggregate
expenses of the transaction contemplated hereby in proportion
to their respective net assets as of the date this Agreement
is terminated or the exchange contemplated hereby is
abandoned.
10. WAIVER.
At any time prior to the Closing Date, any of the foregoing conditions may be
waived by the IDEX Board on behalf of the Fund or of the Acquiring Fund if, in
its judgment of either, such waiver will not have a material adverse effect on
the benefits intended under this Agreement to the shareholders of the Fund or of
the Acquiring Fund, as the case may be.
11. MISCELLANEOUS.
11.1 None of the representations and warranties included or
provided for herein shall survive consummation of the
transactions contemplated hereby.
11.2 This Agreement contains the entire agreement and understanding
between the parties hereto with respect to the subject matter
hereof, and merges and supersedes all prior discussions,
agreements and understandings of every kind and nature between
them relating to the subject matter hereof. Neither party
shall be bound by any condition, definition, warranty or
representation, other than as set forth or provided in this
Agreement or as may be, on or subsequent to the date hereof,
set forth in a writing signed by the party to be bound
thereby.
11.3 This Agreement shall be governed and construed in accordance
with the internal laws of the State of Florida, without giving
effect to principles of conflict of laws; provided, however,
that the due authorization, execution and delivery of this
Agreement by the Fund and the Acquiring Fund shall be governed
and construed in accordance with the internal laws of the
State of Massachusetts without giving effect to principles of
conflict of laws.
11.4 This Agreement may be executed in counterparts, each of which,
when executed and delivered, shall be deemed to be an
original.
9
11.5 This Agreement shall bind and inure to the benefit of the
parties hereto and their respective successors and assigns,
but no assignment or transfer hereof or of any rights or
obligations hereunder shall be made by any party without the
written consent of the other party. Nothing herein expressed
or implied is intended or shall be construed to confer upon or
give any person, firm or corporation, other than the parties
hereto and their respective successors and assigns, any rights
or remedies under or by reason of this Agreement.
IN WITNESS WHEREOF, the Acquiring Fund and the Fund have caused this Agreement
and Plan of Reorganization to be executed and attested on its behalf by its duly
authorized representatives as of the date first above written.
IDEX Mutual Funds on behalf of:
IDEX INTERNATIONAL EQUTY
By: /s/ JOHN R. KENNEY
-------------------------------------
John R. Kenney
Chairman and Chief Executive Officer
ATTEST: /s/ John K. Carter, Esq.
__________________________
John K. Carter, Esq.
Secretary
IDEX Mutual Funds on behalf of:
IDEX AMERICAN CENTURY INTERNATIONAL
By: /s/ JOHN R. KENNEY
-------------------------------------
John R. Kenney
Chairman and Chief Executive Officer
ATTEST: /s/ John K. Carter, Esq.
__________________________
John K. Carter, Esq.
Secretary
10
PART B
STATEMENT OF ADDITIONAL INFORMATION
Relating to the Acquisition by
IDEX GE U.S. Equity (the "Acquiring Fund")
A Series of IDEX Mutual Funds ("IDEX")
570 Carillon Parkway
St. Petersburg, Florida 33716
1-888-233-4339
Of The Assets of
IDEX AMERICAN CENTURY INCOME & GROWTH
A Series of IDEX
Dated: December 13, 2001
This Statement of Additional Information, which is not a prospectus, supplements
and should be read in connection with the Prospectus/Proxy Statement dated
December 13, 2001, relating specifically to the proposed transfer of all of the
assets and liabilities of IDEX American Century Income & Growth (the "Fund") in
exchange for shares of IDEX G.E. US Equity (the "Acquiring Fund"). The transfer
is to occur pursuant to an Agreement and Plan of Reorganization. Each of the
following documents accompanies this Statement of Additional Information and is
incorporated herein by reference.
1. The IDEX Prospectus and Statement of Additional Information
dated March 1, 2001.
2. The IDEX Annual Report dated October 31, 2001.
3. The IDEX Semi-Annual Report dated April 30, 2001
GENERAL INFORMATION
This Statement of Additional Information relates to the proposed transfer of
substantially all of the assets and liabilities of IDEX American Century Income
& Growth (the "Fund") to IDEX GE U.S. Equity (the "Acquiring Fund"), in exchange
for like shares of IDEX GE U.S. Equity (the "Reorganization"). The aggregate net
asset value of each share issued will have an aggregate net asset value equal to
the aggregate net asset value of the shares of IDEX GE U.S. Equity that were
outstanding immediately before the effective time of the Reorganization.
After the transfer of substantially all of its assets and liabilities
in exchange for the Acquiring Fund, the Fund will distribute such shares to its
shareholders in liquidation of the Fund. Each shareholder owning shares of the
Fund at the effective time of the Reorganization will receive shares of the same
Class from the Acquiring Fund of equal value, and will receive any unpaid
dividends or distributions that were declared before the effective time of the
Reorganization on shares of the Fund. The Acquiring Fund will establish an
account for each former shareholder of the Fund reflecting the appropriate
number of shares distributed to such shareholder. These accounts will be
substantially identical to the accounts maintained by the Fund for each
shareholder. Upon completion of the Reorganization with respect to the Fund, all
outstanding shares of the Fund will have been redeemed and cancelled in exchange
for shares distributed by the Acquiring Fund, and the Fund will wind up its
affairs and be terminated as a series of IDEX under Massachusetts law.
For further information about the transaction, see the Proxy
Statement/Prospectus.
PRO FORMA FINANCIAL STATEMENTS (UNAUDITED)
1
The unaudited pro forma information attached to this Statement of
Additional Information as Exhibit A gives effect to the proposed transfer of
substantially all of the assets and liabilities of the Fund to the Acquiring
Fund as if such transfer had occurred as of December 31, 2000. In addition, the
pro forma combined statements have been prepared based upon the fee and expense
structure of the Acquiring Fund. The pro forma financial information should be
read in conjunction with the historical financial statements and notes thereto
of the Fund and the Acquiring Fund (which commenced operations April 2001),
incorporated herein by reference in this Statement of Additional Information.
The proposed transfer of the assets and liabilities of the Fund to the Acquiring
Fund will be accounted for as a tax-free reorganization.
2
EXHIBIT A
Pro Forma Information
(unaudited)
PRO FORMA SCHEDULE OF INVESTMENTS (Unaudited)
April 30, 2001
IDEX American
Century Income
& Growth IDEX GE U.S. Equity Pro Forma Fund
Description % of TNA Shares Value Shares Value Shares Value
- -----------------------------------------------------------------------------------------------------------------------------------
COMMON STOCKS 97.9%
Basic Materials 2.7%
Chemicals 0.5%
Dow Chemical Company 1,026 $ 34,320 $ 1,026 $ 34,320
E.I. du Pont de Nemours
and Company 997 45,054 997 45,054
Eastman Chemical Company 66 3,514 66 3,514
FMC Corp. * 30 2,150 30 2,150
Lyondell Chemical Company 180 2,828 180 2,828
Rohm and Haas Company 599 20,588 599 20,588
-------------------------------------------------------------------------------
Total Chemicals 8,492 99,962 108,453
-------------------------------------------------------------------------------
Forest Products 0.8%
Weyerhaeuser Company 85 4,805 2,732 154,440 2,817 159,245
-------------------------------------------------------------------------------
Total Forest Products 4,805 154,440 159,245
-------------------------------------------------------------------------------
Mining - Diversified 0.0%
Inco, Ltd. * 105 1,905 105 1,905
-------------------------------------------------------------------------------
Total Mining - Diversified 1,905 - 1,905
-------------------------------------------------------------------------------
Paper Products 1.0%
Bowater, Inc. 20 970 769 37,297 789 38,267
International Paper
Company 25 980 1,139 44,626 1,164 45,606
Kimberly-Clark Corp. 1,871 111,137 1,871 111,137
-------------------------------------------------------------------------------
Total Paper Products 1,950 193,060 195,009
-------------------------------------------------------------------------------
Precious Metals 0.4%
Alcoa, Inc. 854 35,356 854 35,356
Barrick Gold Corp. 3,267 53,709 3,267 53,709
-------------------------------------------------------------------------------
Total Precious Metals - 89,065 89,065
-------------------------------------------------------------------------------
Total Basic Materials 17,151 536,527 553,678
-------------------------------------------------------------------------------
Consumer, Cyclical 13.0%
Advertising 1.0%
Catalina Marketing Corp.* 3,178 111,103 3,178 111,103
Interpublic Group of
Companies, Inc. 2,734 92,819 2,734 92,819
Omnicom Group, Inc. 15 1,318 15 1,318
TMP Worldwide, Inc. * 10 482 10 482
-------------------------------------------------------------------------------
Total Advertising 1,800 203,922 205,722
-------------------------------------------------------------------------------
Airlines 0.6%
AMR Corp. * 5 191 1,634 62,272 1,639 62,462
Continental Airlines,
Inc. * 741 38,087 741 38,087
Delta Air Lines, Inc. 5 220 285 12,549 290 12,769
-------------------------------------------------------------------------------
Total Airlines 411 112,908 113,318
-------------------------------------------------------------------------------
Auto Manufacturers 0.0%
Ford Motor Company 260 7,665 260 7,665
-------------------------------------------------------------------------------
Total Auto Manufacturers 7,665 - 7,665
-------------------------------------------------------------------------------
Auto Parts and Equipment 0.0%
Cooper Tire & Rubber
Company 54 650 54 650
Johnson Controls, Inc. 15 1,086 15 1,086
Lear Corp. * 34 1,224 34 1,224
-------------------------------------------------------------------------------
Total Auto Parts and
Equipment 2,960 - 2,960
-------------------------------------------------------------------------------
Broadcasting 1.8%
AOL Time Warner, Inc. * 325 16,413 325 16,413
Comcast Corp. Class A * 130 5,708 6,200 272,242 6,330 277,950
Viacom, Inc. Class B * 1,563 81,370 1,563 81,370
-------------------------------------------------------------------------------
Total Broadcasting 22,121 353,612 375,733
-------------------------------------------------------------------------------
3
IDEX American
Century Income
& Growth IDEX GE U.S. Equity Pro Forma Fund
Description % of TNA Shares Value Shares Value Shares Value
- -----------------------------------------------------------------------------------------------------------------------------------
Consumer Electronics 0.0%
RadioShack Corp. 15 459 15 459
Whirlpool Corp. 5 279 5 279
-------------------------------------------------------------------------------
Total Consumer Electronics 738 - 738
-------------------------------------------------------------------------------
Entertainment 1.3%
Carnival Corp. 70 1,855 2,614 69,271 2,684 71,126
Eastman Kodak Company 5 218 5 218
International Game
Technology * 20 1,119 20 1,119
The Walt Disney Company 390 11,797 6,296 190,454 6,686 202,251
-------------------------------------------------------------------------------
Total Entertainment 14,988 259,725 274,713
-------------------------------------------------------------------------------
Lodging 0.0%
Starwood Hotels &
Resorts Worldwide, Inc. 15 541 15 541
-------------------------------------------------------------------------------
Total Lodging 541 - 541
-------------------------------------------------------------------------------
Footwear 0.0%
Reebok International,
Ltd. * 16 410 16 410
-------------------------------------------------------------------------------
Total Footwear 410 - 410
-------------------------------------------------------------------------------
Home Construction 0.0%
Centex Corp. 10 431 10 431
KB Home 37 1,118 37 1,118
Pulte Corp. 10 468 10 468
The Stanley Works 40 1,450 40 1,450
-------------------------------------------------------------------------------
Total Home Construction 3,467 - 3,467
-------------------------------------------------------------------------------
Home Furnishings 0.0%
Newell Rubbermaid, Inc. 10 270 10 270
Pier 1 Imports, Inc. 81 899 81 899
-------------------------------------------------------------------------------
Total Home Furnishings 1,169 - 1,169
-------------------------------------------------------------------------------
Publishing 0.7%
Gannett Company, Inc. 14 904 2,109 136,136 2,123 137,040
-------------------------------------------------------------------------------
Total Publishing 904 136,136 137,040
-------------------------------------------------------------------------------
Recreation Products - Other 0.0%
Brunswick Corp. 115 2,307 115 2,307
-------------------------------------------------------------------------------
Total Recreation Products
- Other 2,307 - 2,307
-------------------------------------------------------------------------------
Restaurants 0.4%
McDonald's Corp. 2,956 81,290 2,956 81,290
Darden Restaurants, Inc. 60 1,638 60 1,638
Tricon Global
Restaurants, Inc. * 30 1,345 30 1,345
-------------------------------------------------------------------------------
Total Restaurants 2,983 81,290 84,273
-------------------------------------------------------------------------------
Retailers - Apparel 0.0%
Federated Department
Stores, Inc. * 90 3,868 90 3,868
The Talbots, Inc. 20 837 20 837
-------------------------------------------------------------------------------
Total Retailers - Apparel 4,705 - 4,705
-------------------------------------------------------------------------------
Retailers - Broadline 2.2%
May Department Stores
Company 120 4,470 120 4,470
Sears, Roebuck & Company 295 10,871 295 10,871
Target Corp. 6,074 233,545 6,074 233,545
Wal-Mart Stores, Inc. 185 9,572 3,534 182,849 3,719 192,421
-------------------------------------------------------------------------------
Total Retailers - Broadline 24,913 416,394 441,307
-------------------------------------------------------------------------------
Retailers - Drug Based 2.8%
Cardinal Health, Inc. 15 1,011 6,478 436,618 6,493 437,629
CVS Corp. 10 590 2,391 140,949 2,401 141,539
-------------------------------------------------------------------------------
Total Retailers - Drug 1,601 577,567 579,168
-------------------------------------------------------------------------------
4
IDEX American
Century Income
& Growth IDEX GE U.S. Equity Pro Forma Fund
Description % of TNA Shares Value Shares Value Shares Value
- -----------------------------------------------------------------------------------------------------------------------------------
Retailers - Specialty
AutoZone, Inc. * 2.0% 5 157 5 157
Best Buy Company, Inc. * 35 1,927 35 1,927
Circuit City Stores, Inc. 50 753 50 753
Home Depot, Inc. 15 706 3,178 149,684 3,193 150,390
Lowe's Companies, Inc. 5 315 3,095 194,985 3,100 195,300
Michaels Stores, Inc. * 16 540 16 540
Pitney Bowes, Inc. 10 381 1,604 61,064 1,614 61,445
Tiffany & Company 15 486 15 486
Zale Corp. * 28 934 28 934
-------------------------------------------------------------------------------
Total Retailers - Specialty 6,198 405,733 411,931
-------------------------------------------------------------------------------
Total Consumer, Cyclical 99,880 2,547,287 2,647,167
-------------------------------------------------------------------------------
Consumer, Non-Cyclical 15.9%
Banks 0.0%
Greater Bay Bancorp 17 464 17 464
-------------------------------------------------------------------------------
Total Banks 464 - 464
-------------------------------------------------------------------------------
Beverages 1.6%
Anheuser-Busch
Companies, Inc. 1,337 53,467 1,337 53,467
Pepsi Bottling Group,
Inc. * 35 1,401 35 1,401
PepsiCo, Inc. 105 4,600 4,188 183,476 4,293 188,076
The Coca-Cola Company 30 1,385 1,975 91,225 2,005 92,610
-------------------------------------------------------------------------------
Total Beverages 7,386 328,168 335,554
-------------------------------------------------------------------------------
Consumer Services 0.3%
Convergys Corp. * 1,369 49,969 1,369 49,969
FedEx Corp. * 10 421 10 421
Galileo International,
Inc. 16 391 16 391
Metris Companies, Inc. 80 2,400 80 2,400
UnitedGlobalCom, Inc. * 163 2,612 163 2,612
Viad Corp. 120 2,983 120 2,983
-------------------------------------------------------------------------------
Total Consumer Services 6,195 52,581 58,776
-------------------------------------------------------------------------------
Cosmetics 0.3%
Alberto-Culver Company 5 204 5 204
Avon Products, Inc. 20 846 484 20,483 504 21,329
The Gillette Company 1,282 36,357 1,282 36,357
-------------------------------------------------------------------------------
Total Cosmetics 1,050 56,840 57,890
-------------------------------------------------------------------------------
Food - Other 1.2%
Archer-Daniels-Midland
Company 275 3,275 275 3,275
ConAgra Foods, Inc. 245 5,098 245 5,098
General Mills, Inc. 2,752 108,456 2,752 108,456
H.J. Heinz Company 855 33,473 855 33,473
Hormel Foods Corp. 20 412 20 412
Kellogg Company 30 765 30 765
Ralston Purina Company 3,119 94,786 3,119 94,786
SUPERVALU, Inc. 145 1,982 145 1,982
Unilever NV ADR 60 3,367 60 3,367
-------------------------------------------------------------------------------
Total Food - Other 14,900 236,716 251,616
-------------------------------------------------------------------------------
Food Retailers 0.0%
Safeway, Inc. * 40 2,172 40 2,172
SYSCO Corp. 10 281 10 281
-------------------------------------------------------------------------------
Total Food Retailers 2,453 - 2,453
-------------------------------------------------------------------------------
Healthcare 0.2%
Health Net, Inc. * 15 323 15 323
Oxford Health Plans,
Inc. * 91 2,830 91 2,830
Sybron Dental
Specialties, Inc. * 698 13,960 698 13,960
UnitedHealth Group, Inc. 242 15,846 242 15,846
Wellpoint Health
Networks, Inc. * 25 2,456 25 2,456
-------------------------------------------------------------------------------
Total Healthcare 5,610 29,806 35,416
-------------------------------------------------------------------------------
5
IDEX American
Century Income
& Growth IDEX GE U.S. Equity Pro Forma Fund
Description % of TNA Shares Value Shares Value Shares Value
- -----------------------------------------------------------------------------------------------------------------------------------
Household Products 0.6%
Church & Dwight Company,
Inc. 14 336 14 336
Colgate-Palmolive Company 365 20,385 365 20,385
Energizer Holdings, Inc.
* 427 10,171 427 10,171
Proctor & Gamble Company 100 6,005 1,426 85,631 1,526 91,636
The Black & Decker Corp. 10 398 10 398
The Clorox Company 65 2,069 65 2,069
Tupperware Corp. 104 2,290 104 2,290
-------------------------------------------------------------------------------
Total Household Products 11,098 116,188 127,286
-------------------------------------------------------------------------------
Medical Supplies 1.9%
Abbott Laboratories, Inc. 2,331 108,112 2,331 108,112
American Home Products
Corp. 980 56,595 980 56,595
American Home Products
Corp. 35 2,021 35 2,021
Apogent Technologies,
Inc. * 2,406 55,338 2,406 55,338
Bausch & Lomb, Inc. 10 427 10 427
Baxter International,
Inc. 10 912 835 76,110 845 77,022
Beckman Coulter, Inc. 5 178 5 178
C.R. Bard, Inc. 30 1,320 30 1,320
Lincare Holdings, Inc. * 1,782 88,868 1,782 88,868
-------------------------------------------------------------------------------
Total Medical Supplies 4,858 385,023 389,881
-------------------------------------------------------------------------------
Pharmaceuticals 9.7%
Bristol-Myers Squibb
Company, Inc. 140 7,840 3,876 217,056 4,016 224,896
Eli Lilly and Company 60 5,100 2,168 184,280 2,228 189,380
Forest Laboratories,
Inc. * 25 1,529 25 1,529
Ivax Corp. * 35 1,402 35 1,402
Johnson & Johnson 180 17,366 4,173 402,611 4,353 419,977
Merck & Company, Inc. 215 16,333 7,484 568,559 7,699 584,892
Pfizer, Inc. 550 23,815 10,841 469,415 11,391 493,230
Schering Plough Corp. 100 3,854 1,282 49,409 1,382 53,263
Watson Pharmaceuticals,
Inc. * 360 17,928 360 17,928
-------------------------------------------------------------------------------
Total Pharmaceuticals 77,239 1,909,258 1,986,497
-------------------------------------------------------------------------------
Total Consumer, Non-Cyclical 131,253 3,114,581 3,245,833
-------------------------------------------------------------------------------
Energy 10.8%
Coal 0.0%
Massey Energy Company 40 900 40 900
-------------------------------------------------------------------------------
Total Coal 900 - 900
-------------------------------------------------------------------------------
Oil Companies - Major 7.3%
Amerada Hess Corp. 50 4,375 50 4,375
Anadarko Petroleum Corp. 1,069 69,079 1,069 69,079
BP Amoco PLC ADR 1,069 57,812 1,069 57,812
Burlington Resources,
Inc. 1,945 91,823 1,945 91,823
Chevron Corp. 125 12,070 653 63,054 778 75,124
Conoco, Inc. Class B 3,564 108,417 3,564 108,417
El Paso Corp. 2,860 196,768 2,860 196,768
Exxon Mobil Corp. 235 20,821 7,029 622,769 7,264 643,590
Kerr-McGee Corp. 165 11,822 165 11,822
Occidental Petroleum
Corp. 475 14,307 475 14,307
Phillips Petroleum
Company 15 894 15 894
Royal Dutch Petroleum
Company NYRS 110 6,548 1,574 93,700 1,684 100,249
Texaco, Inc. 570 41,200 570 41,200
Unocal Corp. 1,841 70,253 1,841 70,253
USX-Marathon Group 70 2,237 70 2,237
-------------------------------------------------------------------------------
Total Oil Companies - Major 73,075 1,414,874 1,487,949
-------------------------------------------------------------------------------
Oil Companies - Secondary 0.9%
Baker Hughes, Inc. 10 393 3,029 119,009 3,039 119,402
Devon Energy Corp. 1,188 70,104 1,188 70,104
-------------------------------------------------------------------------------
Total Oil Companies - Secondary 393 189,113 189,506
-------------------------------------------------------------------------------
Oil Drilling 1.4%
Nabors Industries, Inc. * 3,225 192,275 3,225 192,275
Noble Drilling Corp. * 25 1,213 25 1,213
6
IDEX American
Century Income
& Growth IDEX GE U.S. Equity Pro Forma Fund
Description % of TNA Shares Value Shares Value Shares Value
- -----------------------------------------------------------------------------------------------------------------------------------
Transocean Sedco Forex,
Inc. 1,812 98,355 1,812 98,355
-------------------------------------------------------------------------------
Total Oil Drilling 1,213 290,630 291,842
-------------------------------------------------------------------------------
Oilfield Equipment and
Services 1.1%
Schlumberger, Ltd. 15 995 3,252 215,608 3,267 216,602
Smith International,
Inc. * 20 1,624 20 1,624
Ultramar Diamond
Shamrock Corp. 170 7,669 170 7,669
-------------------------------------------------------------------------------
Total Oilfield Equipment
and Services 10,287 215,608 225,895
-------------------------------------------------------------------------------
Total Energy 85,868 2,110,225 2,196,092
-------------------------------------------------------------------------------
Financial 23.2%
Banks 2.4%
AmSouth Bancorporation 45 772 45 772
Bank of America Corp. 200 11,200 1,782 99,792 1,982 110,992
Bank One Corp. 1,083 40,905 1,083 40,905
City National Corp. 32 1,237 32 1,237
Comerica, Inc. 5 257 5 257
First Tennessee National
Corp. 20 653 20 653
GreenPoint Financial
Corp. 55 2,024 55 2,024
Hibernia Corp. 20 326 20 326
KeyCorp 50 1,159 50 1,159
MBNA Corp. 15 535 15 535
PNC Financial Services
Group, Inc. 15 976 2,673 173,932 2,688 174,908
Silicon Valley
Bancshares * 65 1,629 65 1,629
State Street Corp. 639 66,316 639 66,316
The Bank of New York 30 1,506 712 35,742 742 37,248
U.S. Bancorp 100 2,118 1,994 42,233 2,094 44,351
UnionBanCal Corp. 55 1,680 55 1,680
-------------------------------------------------------------------------------
Total Banks 26,072 458,920 484,992
-------------------------------------------------------------------------------
Diversified 11.6%
American Express Company 4,803 203,839 4,803 203,839
AmeriCredit Corp. * 53 2,457 53 2,457
Berkshire Hathaway, Inc. * 22 50,050 22 50,050
Citigroup, Inc. 580 28,507 15,551 764,332 16,131 792,839
Countrywide Credit
Industries, Inc. 70 2,987 85 3,627 155 6,614
Deluxe Corp. 155 4,028 155 4,028
Equifax, Inc. 6,623 219,023 6,623 219,023
First Data Corp. 70 4,721 7,796 525,762 7,866 530,483
First Union Corp. 85 2,547 85 2,547
FleetBoston Financial
Corp. 320 12,278 3,737 143,389 4,057 155,667
Goldman Sachs Group, Inc. 5 456 944 85,998 949 86,454
Marsh & McLennan
Companies, Inc. 1,598 154,111 1,598 154,111
Mellon Financial Corp. 20 819 20 819
Metlife, Inc. * 50 1,450 50 1,450
Providian Financial Corp. 80 4,264 80 4,264
Radian Group, Inc. 20 1,550 20 1,550
S & P's 500 Depository
Receipts 90 11,242 773 96,555 863 107,797
Washington Mutual, Inc. 45 2,247 45 2,247
Wells Fargo & Company 40 1,879 940 44,152 980 46,031
-------------------------------------------------------------------------------
Total Diversified 81,432 2,290,838 2,372,270
-------------------------------------------------------------------------------
Insurance 4.0%
AFLAC, Inc. 684 21,751 684 21,751
Allstate Corp. 10 418 4,722 197,144 4,732 197,561
American International
Group, Inc. 35 2,863 2,303 188,385 2,338 191,248
Arthur J. Gallagher &
Company 20 504 20 504
Chubb Corp. 712 47,526 712 47,526
CIGNA Corp. 75 8,003 75 8,003
Fidelity National
Financial, Inc. 20 468 1,125 26,336 1,145 26,804
Hartford Financial
Services Group, Inc. 5 310 2,406 149,413 2,411 149,723
Lincoln National Corp. 130 6,001 130 6,001
Loews Corp. 155 10,448 921 62,085 1,076 72,533
MGIC Investment Corp. 442 28,725 442 28,725
Old Republic
International Corp. 100 2,889 100 2,889
PMI Group, Inc. 22 1,415 22 1,415
The St. Paul Companies,
Inc. 1,247 56,240 1,247 56,240
-------------------------------------------------------------------------------
Total Insurance 33,318 777,604 810,922
-------------------------------------------------------------------------------
7
IDEX American
Century Income
& Growth IDEX GE U.S. Equity Pro Forma Fund
Description % of TNA Shares Value Shares Value Shares Value
- -----------------------------------------------------------------------------------------------------------------------------------
Real Estate 0.0%
CarrAmerica Realty Corp. 25 719 25 719
Lennar Corp. 88 3,852 88 3,852
-------------------------------------------------------------------------------
Total Real Estate 4,571 - 4,571
-------------------------------------------------------------------------------
Securities Brokers 2.8%
Bear Stearns Companies,
Inc. 20 1,006 20 1,006
J.P. Morgan & Company 5,346 256,501 5,346 256,501
Lehman Brothers
Holdings, Inc. 65 4,729 1,871 136,115 1,936 140,844
Merrill Lynch & Company,
Inc. 55 3,393 55 3,393
Morgan Stanley, Dean
Witter, Discover & Co. 110 6,907 2,538 159,361 2,648 166,268
-------------------------------------------------------------------------------
Total Securities Brokers 16,035 551,977 568,012
-------------------------------------------------------------------------------
United States Government
Agencies 2.4%
Federal Home Loan
Mortgage Corp. 30 1,974 1,277 84,027 1,307 86,001
Federal National
Mortgage Association 125 10,033 5,025 403,306 5,150 413,339
-------------------------------------------------------------------------------
Total United States
Government Agencies 12,007 487,333 499,339
-------------------------------------------------------------------------------
Total Financial 173,433 4,566,673 4,740,106
-------------------------------------------------------------------------------
Independent 0.3%
Conglomerate 0.3%
Fortune Brands, Inc. 20 623 20 623
Philip Morris Companies,
Inc. 155 7,767 1,194 59,831 1,349 67,598
R.J. Reynolds Tobacco
Holdings, Inc. 10 586 10 586
-------------------------------------------------------------------------------
Total Conglomerate 8,976 59,831 68,807
-------------------------------------------------------------------------------
Total Independent 8,976 59,831 68,807
-------------------------------------------------------------------------------
Industrial 0.3%
Building Materials
Martin Marietta
Materials, Inc. 1,247 57,325 1,247 57,325
-------------------------------------------------------------------------------
Total Building Materials - 57,325 57,325
-------------------------------------------------------------------------------
Containers and Packaging 0.0%
Ball Corp. 37 1,702 37 1,702
Westvaco Corp. 145 3,825 145 3,825
-------------------------------------------------------------------------------
Total Containers and
Packaging 5,527 - 5,527
-------------------------------------------------------------------------------
Electronic Components and
Equipment 1.5%
Amphenol Corp. Class A * 18 758 18 758
Arrow Electronics, Inc. * 10 280 10 280
Emerson Electric Company 5 333 1,936 129,034 1,941 129,368
ITT Industries, Inc. 100 4,407 100 4,407
L-3 Communications
Holdings, Inc. * 10 773 10 773
Molex, Inc. 5,628 178,408 5,628 178,408
Solectron Corp. * 35 891 35 891
Tektronix, Inc. * 45 1,089 45 1,089
Thermo Electron Corp. * 20 527 20 527
-------------------------------------------------------------------------------
Total Electronic
Components and Equipment 9,058 307,442 316,500
-------------------------------------------------------------------------------
Heavy Construction 0.2%
Caterpillar, Inc. 20 1,004 20 1,004
Deere & Company 15 616 1,140 46,820 1,155 47,436
Ingersoll-Rand Company 10 470 10 470
-------------------------------------------------------------------------------
Total Heavy Construction 2,090 46,820 48,910
-------------------------------------------------------------------------------
Diversified 3.5%
Canadian Pacific, Ltd. 3,416 133,805 3,416 133,805
Cooper Industries, Inc. 35 1,308 35 1,308
Corning, Inc. 75 1,648 75 1,648
Dover Corp. 6,044 236,139 6,044 236,139
Eaton Corp. 832 61,244 832 61,244
General Electric Company 605 29,360 605 29,360
Minnesota Mining &
Manufacturing Company 1,478 175,897 1,478 175,897
Pall Corp. 85 1,995 85 1,995
Parker Hannifin Corp. 1,188 55,384 1,188 55,384
Tyco International, Ltd. 280 14,944 280 14,944
-------------------------------------------------------------------------------
Total Diversified 49,254 662,468 711,722
-------------------------------------------------------------------------------
Other Industrial Services 0.0%
Manpower, Inc. 15 485 15 485
-------------------------------------------------------------------------------
Total Other Industrial
Services 485 - 485
-------------------------------------------------------------------------------
8
PRO FORMA SCHEDULE OF INVESTMENTS (Unaudited)
April 30, 2001
IDEX American
Century Income
& Growth IDEX GE U.S. Equity Pro Forma Fund
Description % of TNA Shares Value Shares Value Shares Value
- -----------------------------------------------------------------------------------------------------------------------------------
Pollution Control 0.3%
Waste Management, Inc. 2,718 66,346 2,718 66,346
-------------------------------------------------------------------------------
Total Pollution Control - 66,346 66,346
-------------------------------------------------------------------------------
Railroads 0.5%
Burlington Northern Santa Fe, Inc. 20 588 3,537 103,988 3,557 104,576
Union Pacific Corp. 10 569 10 569
-------------------------------------------------------------------------------
Total Railroads 1,157 103,988 105,145
-------------------------------------------------------------------------------
Semiconductors 0.0%
Avnet, Inc. 19 485 19 485
-------------------------------------------------------------------------------
Total Semiconductors 485 - 485
-------------------------------------------------------------------------------
Total Industrial 68,056 1,244,389 1,312,444
-------------------------------------------------------------------------------
Technology 22.4%
Advanced Medical Devices 0.3%
DENTSPLY International, Inc. 798 31,266 798 31,266
Medtronic, Inc. 889 39,649 889 39,649
Agilent Technologies, Inc. * 10 390 10 390
-------------------------------------------------------------------------------
Total Advanced Medical Devices 390 70,915 71,305
-------------------------------------------------------------------------------
Aerospace/Defense 3.2%
General Dynamics Corp. 40 3,083 1,188 91,571 1,228 94,654
Northrop Grumman Corp. 55 4,964 55 4,964
The Boeing Company 210 12,978 3,586 221,615 3,796 234,593
United Technologies Corp. 4,116 321,377 4,116 321,377
-------------------------------------------------------------------------------
Total Aerospace/Defense 21,025 634,563 655,588
-------------------------------------------------------------------------------
Biotechnology 0.3%
CYTYC Corp. * 26 612 26 612
Pharmacia Corp. 50 2,613 1,277 66,736 1,327 69,349
-------------------------------------------------------------------------------
Total Biotechnology 3,225 66,736 69,961
-------------------------------------------------------------------------------
Communications 5.9%
Adelphia Communications Corp. * 217 7,890 217 7,890
AT&T Corp. 135 3,008 1,509 33,621 1,644 36,628
AT&T Corp. Liberty Media Class A * 17,046 272,736 17,046 272,736
Cisco Systems, Inc. * 395 6,707 2,108 35,794 2,503 42,501
Engelhard Corp. 85 2,185 85 2,185
Global Crossing, Ltd. * 100 1,253 100 1,253
Juniper Networks, Inc. * 10 590 10 590
Motorola, Inc. 1,424 22,143 1,424 22,143
Nextel Communications, Inc. Class A * 40 650 1,254 20,378 1,294 21,028
Nortel Networks Corp. ADR 145 2,219 145 2,219
QUALCOMM, Inc. * 55 3,155 55 3,155
Qwest Communications International,
Inc. * 135 5,522 2,435 99,592 2,570 105,113
SBC Communications, Inc. 300 12,375 6,920 285,450 7,220 297,825
Scientific-Atlanta, Inc. 82 4,734 82 4,734
Tellabs, Inc. * 2,079 72,994 2,079 72,994
Verizon Communications 290 15,970 2,673 147,202 2,963 163,172
Vodafone Group PLC ADR 3,609 109,280 3,609 109,280
WorldCom, Inc. * 150 2,738 1,424 25,988 1,574 28,726
XO Communications, Inc. * 535 2,102 535 2,102
-------------------------------------------------------------------------------
Total Communications 61,105 1,135,168 1,196,273
-------------------------------------------------------------------------------
Computers 4.0%
Compaq Computer Corp. 95 1,663 8,081 141,418 8,176 143,080
Computer Sciences Corp. * 570 20,309 570 20,309
Dell Computer Corp. * 180 4,732 7,235 190,208 7,415 194,940
EMC Corp. * 158 6,257 2,153 85,259 2,311 91,516
Hewlett-Packard Company 25 711 1,709 48,587 1,734 49,298
International Business
Machines Corp. 115 13,241 1,782 205,179 1,897 218,421
Paychex, Inc. 10 346 10 346
Pixar, Inc. * 8 261 8 261
Sun Microsystems, Inc. * 190 3,253 3,929 67,264 4,119 70,517
Unisys Corp. * 1,521 18,313 1,521 18,313
VeriSign, Inc. * 10 513 10 513
-------------------------------------------------------------------------------
Total Computers 30,976 776,537 807,513
-------------------------------------------------------------------------------
9
PRO FORMA SCHEDULE OF INVESTMENTS (Unaudited)
April 30, 2001
IDEX American
Century Income
& Growth IDEX GE U.S. Equity Pro Forma Fund
Description % of TNA Shares Value Shares Value Shares Value
- -----------------------------------------------------------------------------------------------------------------------------------
Diversified 0.6%
Applera Corp.- Applied
Biosystems Group 513 16,447 513 16,447
Gemstar-TV Guide
International, Inc. * 246 10,214 246 10,214
JDS Uniphase Corp. * 35 748 35 748
NTL, Inc. * 3,468 100,884 3,468 100,884
PerkinElmer, Inc. 10 669 10 669
Tech Data Corp. * 40 1,394 40 1,394
-------------------------------------------------------------------------------
Total Diversified 2,812 127,545 130,357
-------------------------------------------------------------------------------
Industrial 0.0%
Hubbel, Inc. Class B 317 8,756 317 8,756
C&D Technologies, Inc. 34 1,206 34 1,206
-------------------------------------------------------------------------------
Total Industrial 1,206 8,756 9,962
-------------------------------------------------------------------------------
Semiconductors 3.2%
Advanced Micro Devices,
Inc. * 50 1,550 50 1,550
Analog Devices, Inc. * 25 1,183 3,347 158,347 3,372 159,529
Applied Materials, Inc. * 67 3,658 1,901 103,795 1,968 107,453
Intel Corp. 355 10,973 6,920 213,897 7,275 224,870
Intergrated Device
Technology, Inc. * 80 3,134 80 3,134
International Rectifier
Corp. * 69 3,830 69 3,830
KLA-Tencor Corp. * 5 275 5 275
Lam Research Corp. * 24 710 24 710
Linear Technology Corp. 70 3,363 70 3,363
Micron Technology, Inc. * 15 681 15 681
Novellus Systems, Inc. * 17 937 17 937
Rockwell International
Corp. 45 2,026 45 2,026
Sanmina Corp. * 70 2,040 70 2,040
Texas Instruments, Inc. 11 426 3,544 137,153 3,555 137,579
TriQuint Semiconductor,
Inc. * 15 435 15 435
-------------------------------------------------------------------------------
Total Semiconductors 35,220 613,191 648,411
-------------------------------------------------------------------------------
Software 4.9%
Adobe Systems, Inc. 30 1,348 30 1,348
Automatic Data
Processing, Inc. 5 271 3,193 173,220 3,198 173,492
Electronic Data Systems
Corp. 90 5,805 90 5,805
Intuit, Inc. * 2,420 77,537 2,420 77,537
Mentor Graphics Corp. * 87 2,289 87 2,289
Microsoft Corp. * 305 20,664 9,712 657,988 10,017 678,652
Oracle Corp. * 253 4,088 1,464 23,658 1,717 27,747
PeopleSoft, Inc. * 655 24,261 655 24,261
Siebel Systems, Inc. * 15 684 15 684
Sybase, Inc. * 78 1,228 78 1,228
VERITAS Software Corp. * 15 894 15 894
-------------------------------------------------------------------------------
Total Software 37,271 956,664 993,935
-------------------------------------------------------------------------------
Total Technology 193,230 4,390,076 4,583,306
-------------------------------------------------------------------------------
Utilities 3.2%
Electric 2.4%
ALLETE 40 975 40 975
Ameren Corp. 30 1,259 30 1,259
Calpine Corp. * 15 855 869 49,524 884 50,379
CMS Energy Corp. 40 1,252 40 1,252
Dominion Resources, Inc. 1,559 106,776 1,559 106,776
Duke Energy Corp. 3,178 148,603 3,178 148,603
Entergy Corp. 170 6,885 170 6,885
Exelon Corp. 5 345 1,708 117,937 1,713 118,283
GPU, Inc. 25 833 25 833
PPL Corp. 40 2,200 40 2,200
Puget Energy, Inc. 41 973 41 973
Sempra Energy 95 2,629 95 2,629
TXU Corp. 95 4,176 95 4,176
UtiliCorp United, Inc. 25 882 25 882
Xcel Energy, Inc. 1,595 49,764 1,595 49,764
-------------------------------------------------------------------------------
Total Electric 23,264 472,605 495,869
-------------------------------------------------------------------------------
Gas 0.1%
Keyspan Corp. 85 3,375 85 3,375
Nicor, Inc. 41 1,607 41 1,607
Peoples Energy Corp. 20 795 20 795
Reliant Energy, Inc. 210 10,405 210 10,405
-------------------------------------------------------------------------------
Total Gas 16,181 - 16,181
-------------------------------------------------------------------------------
10
IDEX American
Century Income
& Growth IDEX GE U.S. Equity Pro Forma Fund
- -----------------------------------------------------------------------------------------------------------------------------------
Description % of TNA Shares Value Shares Value Shares Value
- -----------------------------------------------------------------------------------------------------------------------------------
Telephone 0.7%
BellSouth Corp. 250 10,490 250 10,490
Sprint Corp. FON Group 135 2,886 2,673 57,149 2,808 60,035
Sprint Corp. PCS Group * 2,985 76,506 2,985 76,506
Telephone and Data
Systems, Inc. 5 525 5 525
-------------------------------------------------------------------------------
Total Telephone 13,901 133,654 147,556
-------------------------------------------------------------------------------
Total Utilities 53,347 606,259 659,606
-------------------------------------------------------------------------------
------------ -------------- --------------
Total Common Stock 831,202 19,175,849 20,007,040
------------ -------------- --------------
Total Common Stock cost 751,662 19,074,780 19,826,442
------------ -------------- --------------
SHORT TERM SECURITIES 2.4%
------------ ---------- ------------
Time Deposit 2.4% Principal Principal Principal
------------ ---------- ------------
State Street Bank
Eurodollar Time Deposit
3.000% 5-1-2001 (cost
$429,425) $429,425 429,425 429,425 429,425
3.000% 5-1-2001 (cost
$63,377) $63,377 63,377 63,377 63,377
------------ -------------- --------------
Total Short-Term Securities 63,377 429,425 492,802
------------ -------------- --------------
------------ ---------- ------------
% of TNA % of TNA % of TNA
------------------------------------------------------------------------------------
Total Investments (% of net
assets, total amount) 97.7% $894,579 100.5% $19,605,274 100.4% $20,499,853
------------ -------------- --------------
Total investments cost $815,039 $19,504,205 $20,319,244
------------ -------------- --------------
------------ -------------- --------------
Other net assets
(liabilities) 2.3% 21,484 -0.5% (95,397) -0.4% (73,913)
------------ -------------- --------------
Net Assets (100.0%) $916,063 $19,509,877 $20,425,940
------------ -------------- --------------
* security is non-income producing.
See accompanying notes to unaudited pro forma financial statements.
11
PRO FORMA STATEMENT OF ASSETS AND LIABILITIES (Unaudited)
April 30, 2001
All numbers (except per share amounts) in thousands
IDEX
American
Century
Income & IDEX GE U.S. Pro Froma
Growth EQUITY Adjustments Fund
-----------------------------------------------
ASSETS:
Investment securities, at market value $ 895 $19,605 $ - $ 20,500
Cash - 16 - 16
Receivables:
Investment securities sold 1 691 - 692
Shares of beneficial interest sold 22 51 - 73
Interest - - - -
Dividends - 14 - 14
Due from investment adviser 2 11 - 13
Forward foreign currency contracts - - - -
Other - - - -
-------------------------------------------
Total Assets 920 20,388 - 21,308
-------------------------------------------
LIABILITIES:
Accounts payable:
Investment securities purchased 1 842 - 843
Shares of beneficial interest redeemed - - - -
Accrued liabilities:
Management and advisory fees - - - -
Distribution fees - 12 - 12
Transfer agent fees and expenses - - - -
Forward foreign currency contracts - - - -
Other 3 24 - 27
-------------------------------------------
Total Liabilities 4 878 - 882
-------------------------------------------
Net Assets $ 916 $19,510 $ - $ 20,426
===========================================
NET ASSETS CONSIST OF:
Shares of beneficial interest, unlimited shares authorized 837 19,990 - 20,827
Undistributed net investment income (loss) or (distribution
in excess of net investment income) - (55) - (55)
Undistributed net realized gain (loss) from investments and
foreign currency transactions - (526) - (526)
Net unrealized appreciation (depreciation) of investments
and translation of foreign denominated assets/liabilities 79 101 - 180
Net Assets $ 916 $19,510 $ - $ 20,827
-------------------------------------------
Investment securities, at cost $ 815 $19,504 $ - $ 20,319
-------------------------------------------
Net Assets: Class A $ 229 $ 5,085 $ - $ 5,314
Net Assets: Class B 300 10,237 - 10,537
Net Assets: Class C 247 2,738 - 2,985
Net Assets: Class M 140 1,450 - 1,590
-------------------------------------------
$ 916 $19,510 $ - $ 20,426
===========================================
Outstanding Shares: Class A 21 499 1 521
Outstanding Shares: Class B 27 1,011 3 1,041
Outstanding Shares: Class C 22 271 2 295
Outstanding Shares: Class M 13 143 1 157
Net Asset Value: Class A $11.16 $ 10.20 $ 10.20
Net Asset Value: Class B $11.16 $ 10.12 $ 10.12
Net Asset Value: Class C $11.16 $ 10.12 $ 10.12
Net Asset Value: Class M $11.16 $ 10.13 $ 10.12
Offering Price: Class A $11.81 $ 10.79 $ 10.79
Offering Price: Class M $11.27 $ 10.23 $ 10.23
Amounts shown as " - " represent amounts that are zero or those that round to
less than $1,000.
See accompanying notes to unaudited pro forma financial statements.
PRO FORMA STATEMENT OF OPERATIONS (Unaudited)
For the month ended April 30, 2001
All numbers (except per share amounts) in thousands
IDEX
American
Century
Income & IDEX GE U.S. Pro Forma
Growth EQUITY Adjustments Fund
----------------------------------------------
<s>
Investment Income:
Interest $ - $ 1 $ - $ 1
Dividends 1 13 - 14
Less withholding taxes on foreign dividends - - - -
---------------------------------------------
1 14 - 15
---------------------------------------------
Expenses:
Management and advisory fees - 12 2 14
Transfer agent fees and expenses 1 6 - 7
Custody and accounting fees and expenses - 10 (1) 9
Registration fees 2 - - 2
Trustees fees and expenses - - - -
Audit fees and expenses - 1 - 1
Other - 6 - 6
Distribution and service fees:
Class A - 1 - 1
Class B - 8 - 8
Class C - 2 - 2
Class M - 1 - 1
---------------------------------------------
Gross Expenses 3 47 1 51
Less fee waivers and reimbursements by the investment adviser (2) (17) 5 (14)
---------------------------------------------
Net Expenses 1 30 6 37
---------------------------------------------
Net Investment Income (Loss) - (16) (6) (22)
---------------------------------------------
Realized Gain (Loss) on Investments, Futures/Options Contracts and
Foreign Currency Transactions:
Net realized gain (loss) during the period on:
Investments - (110) - (110)
Futures/options contracts - (32) - (32)
Foreign currency transactions - - - -
---------------------------------------------
- (142) - (142)
---------------------------------------------
Unrealized Gain (Loss) on Investments, Futures/Options Contracts and
Foreign Currency Transactions:
Net unrealized appreciation (depreciation) during the period on:
Investments 79 1,291 - 1,370
Futures/options contracts - - - -
Translation of assets and liabilities denominated in foreign currency - - - -
---------------------------------------------
79 1,291 - 1,370
---------------------------------------------
Net Gain (Loss) on Investments, Futures/Options Contracts
and Foreign Currency Transactions 79 1,149 - 1,228
---------------------------------------------
Net Increase (Decrease) in Net Assets Resulting from Operations $79 $1,133 $(6) $1,206
=============================================
Amounts shown as " - " represent amounts that are zero or those that round to
less than $1,000.
See accompanying notes to unaudited pro forma financial statements.
AMERICAN CENTURY INCOME & GROWTH - MERGER ADJUSTMENTS
Adjustments are not made to Statement of Assets and Liabilities as this
statement is prepared assuming the merger takes
place April 30, 2001.
Adjustments to the Statement of Operations need be considered since the
statement is presented assuming the merger takes place on the first day of the
most recent published financial statement period then ended for the accounting
survivor, which is believed to be American Century since, even though its assets
are smaller than the GE fund with which it is merging, other factors that sway
the interpretation include: American Century is the "surviving" sub-adviser,
along with their investment style, policies, management, as well as fee and
expense structure. As an aside not affecting the proforma financial statements,
Since GE is the larger fund and it's shareholders will own more than 50% of the
combined fund, GE is the presumed tax survivor.
ADJUSTMENTS:
1) MANAGEMENT FEES
GEUSE mgt fees are 0.80% on first $500M of net assets,
whereas ACI&G is 0.90% 1st $100M which is enough to cover pro forma combined net
assets.
Average Net Assets GE one month ended 4/30/01: EXP'S REIMBT NET ANNUALIZED
18,113,766 51,427 (21,864) 29,563 1.986%
Average Net Assets ACI one month ended 4/30/01: 720,349
3,651 (2,372) 1,279 2.160%
Total 18,834,115 55,078 (24,236) 30,842 1.992%
---------------------------------------------------
0.90%
- --------------------------------------------------------------------------
169,507 PROFORMA ACTUAL DIFF
One month amount: 13,932 12,000 $ 1,932
2) CUSTODY/ACCOUNTING
One fund is eliminated which reduces the monthly per fund minimum though basis
points chrg would remain same; monthly per portf min of $2,300 goes away,
however due to proration among complex net assets, effect is less therefore
reduce an est. $1000. $ (1,000)
========
3) AUDIT
Would reduce however 1 month not significant enough to reduce by $1,000.
4) REGISTRATION FEES
Registration fees-would be reduced over time (excl.any one time fees to effect
the reorg) but not significant enough to post an amount.
5) OTHER
Transfer agent assumed to change little as presume low redundancy in funds.
Transfer agent, printing, legal, etc. ignores likely one time increase for
merger related costs.
6) EXPENSE REIMBURSEMENT
Higher cap should allow for the fund to absorb increase and reimbursement goes down due to higher cap.
Combined expenses (gross) $ 55,078
Estimated expense (reductions)/increases 1,000
--------
Adjusted proforma gross 56,078
Max based on combined ANA and ACI cap + est 12b-1 37,152
--------
Proforma reimbursement (18,926)
Actual reimbursement combined (24,236)
--------
Reduction (increase) in reimbursement $ 5,310
--------
Total expense effects: $ 6,242 increase (decrease)
========
AMERICAN CENTURY INC & GROWTH-OTHER N-14 FINANCIAL INFO
PROFORMA EXPENSE RATIOS
INFORMATION FROM ADJUSTMENTS SHEET
GEUSE mgt fees are 0.80% on first $500M of net assets, whereas ACI&G is 0.90%
1st $100M which is enough to cover pro forma combined net assets.
Average Net Assets GE one month ended 4/30/01: EXP'S REIMBT NET ANNUALIZED
18,113,766 51,427 (21,864) 29,563 1.986%
Average Net Assets ACI one month ended 4/30/01:
720,349 3,651 (2,372) 1,279 2.160%
55,078 (24,236) 30,842 1.992%
Total 18,834,115
---------------------------------------------------------
0.90%
- ----------------------------------------------------------
169,507
One month amount: 13,932
DATA PER 4/30/01 SAR: CLASS A CLASS B CLASS C CLASS M
(Net) exp ratio excluding credits 1.85% 2.50% 2.50% 2.40%
Gross exp ratio 5.97% 6.62% 6.62% 6.52%
(Net) exp ratio including credits 1.85% 2.50% 2.50% 2.40%
Expense reduction (diff bet gross & net) -4.12% -4.12% -4.12% -4.12%
Other exp (Gross - mgt fee - 12b-1) 4.62% 4.62% 4.62% 4.62%
Net expense change for proforma stmt of ops: $ 6,242
Avg NAs 720,349
-----------
0.867% 1 mo
10.54% annualized
(ACI's exp structure)
PROFORMA COMBINED EXPENSE RATIOS: CLASS A CLASS B CLASS C CLASS M
Management Fee 0.90% 0.90% 0.90% 0.90%
12-1 fee 0.35% 1.00% 1.00% 0.90%
Other expenses 15.16% 15.16% 15.16% 15.16%
---------------------------------------------------------------
Total 16.41% 17.06% 17.06% 16.96%
Expense reduction -14.46% -14.46% -14.46% -14.46%
---------------------------------------------------------------
1.95% 2.60% 2.60% 2.50%
================================================================
Expense example info-- see sep excel file
(GE US Eq as legal survivor)
CAPITALIZATION
Pro Forma
Fund Acquiring Fund Acquiring Fund
----------------------------------------------------
Total net assets:
Class A $ 229,247 $ 5,085,183 $ 5,314,430
----------------------------------------------------
Class B 300,091 10,236,587 10,536,678
----------------------------------------------------
Class C 247,231 2,738,522 2,985,752
----------------------------------------------------
Class M 139,495 1,449,585 1,589,080
----------------------------------------------------
Total $ 916,063 $19,509,877 $20,425,940
====================================================
Net asset value per share:
Class A $ 11.16 $ 10.20 $ 10.20
----------------------------------------------------
Class B $ 11.16 $ 10.12 $ 10.12
----------------------------------------------------
Class C $ 11.16 $ 10.12 $ 10.12
----------------------------------------------------
Class M $ 11.16 $ 10.13 $ 10.13
====================================================
Shares outstanding:
Class A 20,541 498,515 520,988
----------------------------------------------------
Class B 26,901 1,010,931 1,041,174
----------------------------------------------------
Class C 22,163 270,447 295,035
----------------------------------------------------
Class M 12,504 142,994 156,869
----------------------------------------------------
Total 82,109 1,922,887 2,014,065
====================================================
Pro Forma Notes to Financial Statements
for Reorganization between
IDEX American Century Income & Growth and IDEX GE U.S. Equity
April 30, 2001
(unaudited)
1. General Information and Basis for Combination/Presentation
The accompanying unaudited pro forma financial statements are presented to show
the effect of the proposed transaction whereby IDEX GE U.S. Equity (the
"Acquiring Fund") would acquire substantially all of the assets and assume
substantially all the liabilities of IDEX American Century Income & Growth (the
"Fund") in exchange for Class A, B, C and M shares of the Acquiring Fund (in
like proportion to the shares of the Fund) as described elsewhere in this proxy
statement/prospectus. The Acquiring Fund will, in connection with the
reorganization, subsequently change its name to IDEX American Century Income &
Growth.
Under the terms of the Agreement and Plan of Reorganization, the exchange of
assets of the Fund for Class A, B, C and M shares of the Acquiring Fund will be
treated as a tax-free reorganization and accordingly will be accounted for as a
tax-free reorganization. The acquisition would be accomplished by an acquisition
of the net assets of the Fund in exchange for Class A, B, C and M shares of the
Acquiring Fund at net asset value. The unaudited pro forma schedule of
investments and the unaudited pro forma statement of assets and liabilities have
been prepared as though the acquisition had been effective on April 30, 2001.
The unaudited pro forma statement of operations has been prepared as though the
acquisition had been effective April 2, 2001, the date of commencement of
operations of the Fund, which management believes to be the survivor for
financial statement purposes.
The accompanying pro forma financial statements should be read in conjunction
with the financial statements and schedules of investments of the Fund and the
Acquiring Fund, which are included in the IDEX Mutual Funds semiannual and
annual reports dated April 30, 2001 and October 31, 2000, respectively.
2. Organization and Significant Accounting Policies
The Fund, a separate series of IDEX Mutual Funds, ("IDEX"), a Massachusetts
business trust, is registered under the Investment Company Act of 1940, as
amended, as an open-end management investment company.
The significant accounting policies consistently followed by the Fund are:
Multiple class operations and expenses: The Fund currently offers for sale
four classes of shares, each with a public offering price that reflects
different sales charges, if any, and expense levels. Income, non-class
specific expenses and realized and unrealized gains and losses are allocated
daily to each class based upon a simultaneous equation methodology as
permitted under Rule 18f-3 of the 1940 Act. Each fund of IDEX bears its own
specific expenses as well as a portion of general common expenses.
Security valuations: Fund investments traded on an exchange are stated at the
last reported sales price on the day of valuation on the exchange where the
security is principally traded. Securities traded in the over-
16
the-counter market and listed securities for which no sale was reported on
that date are valued at the last quoted bid price. Debt securities are valued
by independent pricing services; however, those that mature in sixty days or
less are valued at amortized cost, which approximates market. Other securities
for which quotations are not readily available are valued at fair value
determined in such a manner as the adviser and sub-advisers, under the
supervision of the Board of Trustees and the IDEX Valuation Committee,
determine in good faith.
Security transactions and related investment income: Security transactions are
accounted for on the trade date. Security gains and losses are calculated on
the specific identification basis. Dividend income is recorded on the ex-
dividend date or, in the case of foreign securities, as soon as a fund is
informed of the ex-dividend date. Interest income, adjusted for discounts and
premiums, is recorded on the accrual basis commencing on the settlement date.
Foreign currency denominated investments: The accounting records of the Fund
are maintained in U.S. dollars. Securities and other assets and liabilities
denominated in foreign currencies are translated into U.S. dollars at the
closing exchange rate each day. The cost of foreign securities is translated
at the exchange rate in effect when the investment was acquired. The Fund
combines fluctuations from currency exchange rates and fluctuations in market
value when computing net realized and unrealized gains or losses from
investments. Net foreign currency gains and losses resulting from changes in
exchange rates include: 1) foreign currency fluctuations between trade date
and settlement date of investment security transactions; 2) gains and losses
on forward foreign currency contracts; and 3) the difference between the
receivable amounts of interest and dividends recorded in the accounting
records in U.S. dollars and the amounts actually received. Foreign currency
denominated assets may involve risks not typically associated with domestic
transactions, including unanticipated movements in exchange currency rates,
the degree of government supervision and regulation of security markets, and
the possibility of political or economic instability.
Federal taxes: No provisions for Federal income or excise taxes have been made
as the fund intends to distribute substantially all net income and realized
gains to shareholders and otherwise qualify as regulated investment companies
under the Internal Revenue Code.
Dividend distributions: Distributions to shareholders are recorded on the ex-
dividend date and are determined in accordance with Federal income tax
regulations which may differ from generally accepted accounting principles.
Reclassifications are made to the Fund's components of net assets to reflect
income and gains available for distribution (or available capital loss
carryforwards) under Federal income tax regulations. Certain reclassification
adjustments are made among undistributed net investment income, undistributed
net realized gains and shares of beneficial interest due to different book and
tax accounting for such items as wash sales, foreign currency transactions,
net operating losses and capital loss carryforwards.
3. Pro Forma Adjustments
The accompanying unaudited pro forma schedule of investments and pro forma
statement of assets and liabilities reflect changes as if the reorganization
17
had taken place on April 30, 2001, and the unaudited statement of operations
reflects adjustments to certain expenses to reflect the Funds' operations as if
the reorganization had taken place as of April 2, 2001.
4. Management Agreement and Other Transactions
IDEX Management, Inc. ("IMI"), a subsidiary of AUSA Holding Company, is the
investment adviser of the Fund. The Fund pays IMI a management fee calculated at
an annual rate of 0.90% of the fund's average daily net assets on the first $100
million, 0.85% on the next $150 million, 0.80% on net assets over $250 million.
This fee is calculated daily and paid monthly. IMI and its affiliates also
provide certain administrative services to the Fund.
18
PART C: OTHER INFORMATION
Item 15. Indemnification
Reference is made to the Registrant's Declaration of Trust, and the Registrant's
By-Laws.
Insofar as indemnification for liabilities arising under the Securities Act of
1933, as amended (the "Securities Act"), may be permitted to Trustees, officers
and controlling persons of the Registrant pursuant to the foregoing provisions,
or otherwise, the Registrant understands that in the opinion of the Securities
and Exchange Commission ("SEC") such indemnification is against public policy as
expressed in the Securities Act and is, therefore, unenforceable.
In the event that a claim for indemnification against such liabilities (other
than the payment by the Registrant of expenses incurred or paid by a Trustee,
officer or controlling person of the 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, the 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
Securities Act and will be governed by the final adjudication of such issue.
Item 16. Exhibits
1. Declaration of Trust and all amendments are incorporated
herein by reference to the Registrant's Registration Statement
on Form N-1A (File No. 33-2659 ), as filed with the SEC.
2. (a) Amended and Restated By-Laws are incorporated herein by
reference to the Registrant's Registration Statement on Form
N-1A (File No. 33-2659 ), as filed with the SEC.
3. Not applicable.
4. Form of Agreement and Plan of Reorganization is filed herewith
as Exhibit A.
5. Not Applicable.
6. (a) Form of Investment Advisory Agreements are incorporated
herein by reference to the Registrant's Registration Statement
on Form N-1A (File No. 33-2659), Amendment No. 33 as filed
with the SEC on December 17, 1999 (IDEX GE U.S. Equity) and
Amendment No. 41 as filed with the SEC on December 15, 2000
(IDEX American Century Income & Growth).
(b) Form of Sub-Advisory Agreements are incorporated herein by
reference to the Registrant's Registration Statement on Form
N-1A (File No. 33-2659), ), Amendment No. 33 as filed with the
SEC on December 17, 1999 (IDEX GE U.S. Equity) and Amendment
No. 41 as filed with the SEC on December 15, 2000 (IDEX
American Century Income & Growth).
7. Distribution Agreement is incorporated herein by reference to
the Registrant's Registration Statement on Form N-1A (File
No.33-2659 ), ), Amendment No. 33 as filed with the SEC on
December 17, 1999 (IDEX GE U.S. Equity) and Amendment No. 41
as filed with the SEC on December 15, 2000 (IDEX American
Century Income & Growth).
8. Not. Applicable.
9. Custodian Agreement is incorporated herein by reference to the
Registrant's Registration Statement on Form N-1A (File
No. 33-2659), Amendment No. 25 as filed with the SEC on
January 31, 1997.
10. [Check this one]
11. Opinion and Consent of John Carter, Esq. is filed herewith.
12. Form of opinion of Sutherland Asbill & Brennan LLP with
respect to tax matters is filed herewith.
13. Transfer Agent Agreement, Administrative Services Plan and
Multiple Class Plan are incorporated, herein by reference to
the Registrant's Registration Statement on Form N-1A (File No.
33-2659), Amendment No. _______ as filed with the SEC on
14. Consent of Independent Certified Public Accountants are filed
herewith.
15. Not Applicable.
16. Power of Attorney for the Registrant is incorporated herein by
reference to the Registrant's Registration Statement on Form
N-1A (File No. 33-2659) as filed with the SEC.
17. (a) Form of proxy card is filed herewith.
(b) The Registrant's Annual Report, dated 10/31/00, is
incorporated herein by reference.
1
(c) Prospectus and Statement of Additional Information of
IDEX, dated March 1, 2001, are incorporated herein by
reference to Amendment No. 42 to the Registrant's Registration
Statement on Form N-1A (File No. 33-2659) as filed with the
SEC.
(d) IDEX Annual Report dated October 31, 2000 is incorporated
by reference.
(e) Registrant's Semi-Anual Report dated April 30, 2001 is
incorporated by reference.
Item 17. Undertakings
(1) The undersigned Registrant agrees that prior to any public reoffering
of the securities registered through the use of a prospectus which is a
part of this Registration Statement by any person or party who is
deemed to be an underwriter within the meaning of Rule 145(c) of the
Securities Act, the reoffering prospectus will contain the information
called for by the applicable registration form for reofferings by
persons by persons who may be deemed underwriters, in addition to the
information called for by the other items of the applicable form.
(2) The undersigned Registrant agrees that every prospectus that is filed
under paragraph (1) above will be filed as a part of an amendment is
effective, and that, in determining any liability under the 1933 Act,
each post-effective amendment shall be deemed to be a new registration
statement for the securities offered therein, and the offering of the
securities at the time shall be deemed to be the initial bona fide
offering of them.
2
SIGNATURES
As required by the Securities Act of 1933, this Registration Statement has been
signed on behalf of the Registrant in the City of St. Petersburg and the State
of Florida on the 8th day of November, 2001.
IDEX Mutual Funds
/s/ JOHN R. KENNEY
------------------
John R. Kenney
Chairman, Trustee and Chief Executive Officer
As required by the Securities Act of 1933, this Registration Statement has been
signed by the following persons in the capacities and on the dates indicated.
/s/ JOHN R. KENNEY Chairman, Trustee & CEO November 8, 2001
- ----------------------------
John R. Kenney
/s/ PATRICK S. BAIRD President and Trustee November 8, 2001
- ----------------------------
Patrick S. Baird* (Principal Executive Officer)
/s/ THOMAS R. MORIARTY Senior Vice President November 8, 2001
- ---------------------------- Treasurer and Principal
Thomas R. Moriarty Financial Officer
/s/ CHRISTOPHER G. ROETZER Vice President, Assistant November 8, 2001
- ---------------------------- Treasurer and Principal
Christopher G. Roetzer Accounting Officer
/s/ PETER R. BROWN Vice Chairman & Trustee November 8, 2001
- ----------------------------
Peter R. Brown *
/s/ DANIEL CALABRIA Trustee November 8, 2001
- ----------------------------
Daniel Calabria *
/s/ JAMES L. CHURCHILL Trustee November 8, 2001
- ----------------------------
James L. Churchill *
3
/s/ CHARLES C. HARRIS Trustee November 8, 2001
- ----------------------------
Charles C. Harris*
/s/ WILLIAM W. SHORT, JR. Trustee November 8, 2001
- ----------------------------
William W. Short, Jr. *
/s/ JACK E. ZIMMERMAN Trustee November 8, 2001
- ----------------------------
Jack E. Zimmerman *
/s/ JOHN K. CARTER
- ----------------------------
*Signed by John K. Carter
Attorney in Fact
4
EXHIBIT INDEX
Exhibit No. Description
A* Agreement Plan of Reorganization
11 Opinion and Consent of John K. Carter, Esq.
14 Consent of Independent Certified Public Accountant
17(a) Form of Proxy Card
* See Prospectus/Proxy Statement