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Securities Act File No. __________
As filed with the Securities and Exchange Commission on February 9, 2004
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-14
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [X]
Pre-Effective Amendment No. [ ]
Post-Effective Amendment No. [ ]
IDEX Mutual Funds
(Exact Name of Registrant as Specified in Charter)
570 Carillon Parkway
St. Petersburg, Florida 33716
(Address of Principal Executive Offices) (Zip Code)
(800) 851-9777
(Registrant's Area Code and Telephone Number)
John K. Carter, Esq.
570 Carillon Parkway
St. Petersburg, Florida 33716
Approximate Date of Proposed Public Offering: As soon as practicable after this
Registration Statement becomes effective.
It is proposed that this filing will become effective on March 10, 2004 pursuant
to Rule 488 under the Securities Act of 1933.
No filing fee is required because an indefinite number of shares has previously
been registered pursuant to Rule 24f-2 under the Investment Company Act of 1940,
as amended.
Pursuant to Rule 429 under the Securities Act of 1933, this registration
statement relates to shares of beneficial interest previously registered on Form
N-1A (File No. 33-02659).
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IDEX Mutual Funds
570 Carillon Parkway
St. Petersburg, Florida 33716
888/233-4339
March 10, 2004
Dear Shareholder:
The Board of Trustees ("Board") has called a special meeting of shareholders of
TA IDEX Janus Growth & Income (the "Acquired Fund"), to be held at 10:00 a.m.,
local time, on April 23, 2004, at the offices of IDEX Mutual Funds ("IDEX"), 570
Carillon Parkway, St. Petersburg, Florida 33716, or any adjournment(s) thereof
(the "Special Meeting"). The Board has called the Special Meeting so that
shareholders can vote on a proposed Agreement and Plan of Reorganization
regarding the Acquiring Fund, as discussed below.
The Board has approved the reorganization of the Acquired Fund into TA IDEX
Janus Balanced (the "Acquiring Fund"), also a series of IDEX (the
"Reorganization"). AEGON/Transamerica Fund Advisers, Inc. serves as investment
adviser to both the Acquired and the Acquiring Funds, and the Acquired Fund has
investment objectives and policies that are similar in many respects to those of
the Acquiring Fund. The Reorganization is expected to result in operating
expenses that are lower for shareholders of the Acquired Fund. Upon completion
of the Reorganization, it is anticipated that Transamerica Investment
Management, LLC ("TIM") will assume the sub-advisory functions of the Acquiring
Fund and the Acquiring Fund will be renamed TAIDEX Transamerica Balanced. There
is no guarantee, however, that TIM will serve as sub-adviser to the Acquiring
Fund or that Acquiring Fund will be renamed as indicated above, as TIM's service
as sub-adviser will require the approval of the Acquiring Fund's shareholders.
After careful consideration, the Board unanimously approved this proposal with
respect to the Acquired Fund and recommends that shareholders vote "FOR" the
proposal. Accordingly, you are asked to approve an Agreement and Plan of
Reorganization relating to the proposed Reorganization.
A Proxy Statement/Prospectus that describes the Reorganization is enclosed. We
urge you to vote your shares by completing and returning the enclosed proxy
card, in the envelope provided, or vote by Internet, facsimile or telephone, at
your earliest convenience.
YOUR VOTE IS IMPORTANT REGARDLESS OF THE NUMBER OF SHARES YOU OWN. IN ORDER TO
AVOID THE ADDED COST OF FOLLOW-UP SOLICITATIONS AND POSSIBLE ADJOURNMENTS,
PLEASE TAKE A FEW MINUTES TO READ THE PROXY STATEMENT/PROSPECTUS AND CAST YOUR
VOTE. IT IS IMPORTANT THAT YOUR VOTE BE RECEIVED NO LATER THAN 10:00 A.M. ON
APRIL 23, 2004.
ALAMO Direct ("ALAMO"), a professional solicitation firm, will assist you in the
voting process. As the date of the Special Meeting approaches, you may receive a
telephone call from ALAMO reminding you to exercise your right to vote.
We appreciate your participation and prompt response in this matter and thank
you for your continued support.
Sincerely,
Brian C. Scott
President and Chief Executive Officer
IDEX MUTUAL FUNDS
570 Carillon Parkway
St. Petersburg, Florida 33716
(888) 233-4339
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS OF
TA IDEX JANUS GROWTH & INCOME
TO BE HELD ON APRIL 23, 2004
To the Shareholders:
A special meeting of shareholders of TA IDEX Janus Growth & Income is scheduled
for April 23, 2004 at 10:00 a.m., local time, at 570 Carillon Parkway, St.
Petersburg, Florida 33716, or as adjourned from time-to-time (the "Special
Meeting").
At the Special Meeting, you will be asked to consider the following proposals:
1. To approve an Agreement and Plan of Reorganization providing for the
acquisition of all of the assets and liabilities of TA IDEX Janus Growth &
Income (the "Acquiring Fund") by TA IDEX Janus Balanced (the "Acquiring
Fund") solely in exchange for shares of the Acquiring Fund, followed by the
complete liquidation of the Acquired Fund; and
2. To transact such other business, that may properly come before the Special
Meeting, or any adjournment thereof.
Shareholders of record at the close of business on February 27, 2004 are
entitled to notice of, and to vote at, the Special Meeting. Your attention is
called to the accompanying Proxy Statement/Prospectus. You are cordially invited
to attend the Special Meeting. Shareholders who do not expect to attend the
Special Meeting in person are requested to complete, date, and sign the enclosed
proxy card and return it promptly in the envelope provided for that purpose.
Your proxy card also provides instructions for voting via telephone, facsimile
or the Internet, so you may choose to take advantage of these voting options.
Proxies may be revoked at any time by executing and submitting a revised proxy,
by giving written notice of revocation to IDEX Mutual Funds, or by voting in
person at the Special Meeting.
By Order of the Board of Trustees
John K. Carter
Senior Vice President, Secretary &
General Counsel
March 10, 2004
TABLE OF CONTENTS
INTRODUCTION............................................................................................ 1
SUMMARY................................................................................................. 2
The Proposed Reorganization.......................................................................... 2
Comparison of Investment Objectives, Strategies and Management....................................... 2
Comparison of Principal Risks Involved in Investing in the Funds..................................... 3
INVESTMENT STRATEGIES AND RISKS......................................................................... 4
Principal Investment Strategies...................................................................... 4
Comparison of Portfolio Characteristics.............................................................. 5
Relative Performance................................................................................. 6
Securities and Investment Techniques................................................................. 6
COMPARISONS OF FEES AND EXPENSES........................................................................ 7
Operating Expenses................................................................................... 7
Example.............................................................................................. 8
ADDITIONAL INFORMATION ABOUT ACQUIRING FUND............................................................. 10
Investment Adviser and Sub-Adviser................................................................... 10
Investment Personnel................................................................................. 11
Performance of the Acquiring Fund.................................................................... 11
INFORMATION ABOUT THE REORGANIZATION.................................................................... 12
The Reorganization Plan.............................................................................. 12
Reasons for the Reorganization....................................................................... 13
Board Considerations................................................................................. 13
Tax Considerations................................................................................... 13
Expenses of the Reorganization....................................................................... 14
ADDITIONAL INFORMATION ABOUT THE FUNDS.................................................................. 14
Form of Organization................................................................................. 14
Dividends and Other Distributions.................................................................... 14
Capitalization....................................................................................... 15
GENERAL INFORMATION..................................................................................... 15
Solicitation of Proxies.............................................................................. 15
Voting Rights........................................................................................ 16
Other Matters to Come Before the Meeting............................................................. 16
Shareholder Proposals................................................................................ 16
Information about the Funds.......................................................................... 17
MORE INFORMATION REGARDING ACQUIRING FUND............................................................... 18
APPENDIX A.............................................................................................. A-1
APPENDIX B.............................................................................................. B-1
PROXY STATEMENT/PROSPECTUS
IDEX MUTUAL FUNDS
570 CARILLON PARKWAY
ST. PETERSBURG, FLORIDA 33716
(888) 233-4339
INTRODUCTION
This Proxy Statement/Prospectus provides you with information about the proposed
transfer of all of the assets and liabilities of TA IDEX Janus Growth & Income
(the "Acquired Fund"), a series of IDEX Mutual Funds ("IDEX"), to TA IDEX Janus
Balanced (the "Acquiring Fund"), also a series of IDEX Mutual Funds, solely in
exchange for shares of the Acquiring Fund (the "Reorganization"). Following the
transfer of its assets and liabilities to the Acquiring Fund in exchange for
shares of the Acquiring Fund, the Acquired Fund will distribute to you your
portion of the shares of the Acquiring Fund it receives in the Reorganization.
You will receive Class A, B, C, L or M shares of the Acquiring Fund having an
aggregate value equal to the aggregate value of that class of shares of the
Acquired Fund held by you immediately prior to the Reorganization. Following the
Reorganization, the Acquired Fund will liquidate.
This Proxy Statement/Prospectus solicits your vote in connection with a special
meeting of shareholders, to be held on April 23, 2004, at which Acquired Fund
shareholders will vote on the Agreement and Plan of Reorganization
("Reorganization Plan") through which these transactions will be accomplished.
Because you, as a shareholder of the Acquired Fund, are being asked to approve a
transaction that will result in your holding shares of the Acquiring Fund, this
document also serves as a prospectus for the Acquiring Fund, whose investment
objective is to maximize long-term growth.
You also should be aware that upon the completion of the Reorganization, it is
anticipated that Transamerica Investment Management, LLC ("TIM") will assume the
sub-advisory functions of the Acquiring Fund and the Acquiring Fund will be
renamed TA IDEX Transamerica Balanced. There is no guarantee, however, that TIM
will serve as sub-adviser to the Acquiring Fund or that the Acquiring Fund will
be renamed as indicated above, as TIM's service as sub-adviser will require the
approval of the Acquiring Fund's shareholders.
This Proxy Statement/Prospectus, which you should retain for future reference,
contains important information about the Acquiring Fund that you should know
before investing. A Statement of Additional Information ("SAI") dated March 10,
2004 relating to this Proxy Statement/Prospectus and containing additional
information about the Reorganization and the parties thereto, has been filed
with the U.S. Securities and Exchange Commission ("SEC") and is incorporated
herein by reference. For a more detailed discussion of the investment
objectives, policies, restrictions and risks of each of the Funds, see the IDEX
Mutual Funds Prospectus and Statement of Additional Information dated March 1,
2004, each of which is incorporated herein by reference and is available,
without charge, by calling (888) 233-4339. The IDEX Mutual Funds annual report
relating to the Funds, dated October 31, 2003 is incorporated herein by
reference, and is available, without charge, by calling (888) 233-4339.
You may also obtain proxy materials, reports and other information filed by
either Fund from the SEC's Public Reference Section (1-202-942-8090) in
Washington, D.C., or from the SEC's internet website at www.sec.gov. Copies of
materials may also be obtained, after paying a duplicating fee, by electronic
request at the following e-mail address: publicinfo@sec.gov, or by writing the
SEC's Public Reference Branch, Office of Consumer Affairs and Information
Services, Securities and Exchange Commission, Washington, D.C. 20549-0102.
The SEC has not approved or disapproved these securities, or determined that
this Proxy Statement/Prospectus is truthful or complete. Any representation to
the contrary is a criminal offense.
Date: March 10, 2004
1
SUMMARY
You should read this entire Proxy Statement/Prospectus carefully. For additional
information, you should consult the IDEX Mutual Funds Prospectus and the
Reorganization Plan, a copy of which is attached hereto as Appendix A.
THE PROPOSED REORGANIZATION -- On September 9, 2003, the Board of Trustees of
IDEX Mutual Funds approved the Reorganization Plan with respect to each of the
Funds. Subject to approval of the Acquired Fund shareholders, the Reorganization
Plan provides for:
- - the transfer of all of the assets of the Acquired Fund to the Acquiring
Fund, in exchange for shares of the Acquiring Fund;
- - the assumption by the Acquiring Fund of all of the liabilities of the
Acquired Fund;
- - the distribution of shares of the Acquiring Fund to the shareholders of the
Acquired Fund; and
- - the complete liquidation of the Acquired Fund as a series of IDEX Mutual
Funds.
The Reorganization is expected to be effective immediately after the close of
business on April 30, 2004, or on a later date as the parties may agree (the
"Closing"). As a result of the Reorganization, each shareholder of the Acquired
Fund will become a shareholder of the Acquiring Fund. Each shareholder will
hold, immediately after the Closing, shares of the same class of the Acquiring
Fund having an aggregate value equal to the aggregate value of the same class of
shares of the Acquired Fund held by that shareholder as of the close of business
on the day of the Closing.
The Reorganization is intended to eliminate duplication of costs and other
inefficiencies arising from having two similar mutual funds within the same
family of funds, as well as to assist in achieving economies of scale.
Shareholders in the Acquired Fund are expected to benefit from the larger asset
base and the termination of this duplication that will result from the
Reorganization.
Approval of the Reorganization Plan with respect to the Acquired Fund requires
the affirmative vote of a majority of the outstanding voting securities of the
Acquired Fund. In the event that the shareholders of the Acquired Fund do not
approve the Reorganization, the Acquired Fund will continue to operate as a
separate entity, and the IDEX Mutual Funds Board of Trustees will determine what
further action, if any, to take.
AFTER CAREFUL CONSIDERATION, THE BOARD OF TRUSTEES OF IDEX MUTUAL FUNDS
UNANIMOUSLY APPROVED THE PROPOSED REORGANIZATION. THE BOARD OF TRUSTEES
RECOMMENDS THAT YOU VOTE "FOR" THE PROPOSED REORGANIZATION.
In considering whether to approve the Reorganization, you should note that:
- - As described below, the Acquired Fund has investment objectives and
policies that are similar in many respects to the investment objectives and
policies of the Acquiring Fund.
- - The Funds have the same Investment Adviser, AEGON/Transamerica Fund
Advisers, Inc. (the "Investment Adviser"), 570 Carillon Parkway, St.
Petersburg, Florida 33716.
- - The proposed Reorganization offers potential reductions in total operating
expenses for shareholders of each of the Funds.
- - The purchase and redemption provisions for the Funds are the same. For
additional information on purchase and redemption provisions see
"Comparison of Fees and Expenses" and "More Information Regarding the
Acquiring Fund."
- - The Funds expect that the Reorganization will be considered a tax-free
reorganization within the meaning of section 368(a)(1) of the Internal
Revenue Code of 1986 (the "Code"). As such, shareholders of either Fund
will not recognize gain or loss as a result of the Reorganization. See
"Information About the Reorganization - Tax Considerations."
COMPARISON OF INVESTMENT OBJECTIVES, STRATEGIES AND MANAGEMENT - The investment
objectives and principal investment strategies of the Funds are similar in many
respects. The Funds' principal investment strategies and policies are described
in more detail below. There can be no assurance that either Fund will achieve
its stated objective.
2
ACQUIRED FUND ACQUIRING FUND
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INVESTMENT OBJECTIVE Long-term capital growth and current Long-term capital growth, consistent
income. with preservation of capital and
balanced by current income.
PRINCIPAL STRATEGIES AND POLICIES The Acquired Fund seeks to achieve its The Acquiring Fund seeks to achieve
investment objective by investing its investment objective by investing
principally in equity securities. principally in 40% to 60% in
Under normal market conditions, the securities selected primarily for
Acquired Fund invests up to 75% of its growth potential, such as common
total assets in equity securities stocks, and 40% to 60% in securities
selected primarily for their growth selected primarily for income
potential, and at least 25% of assets potential, both equity and debt.
in securities that the fund manager
believes have income potential.
INVESTMENT ADVISER AEGON/Transamerica Fund Advisers, Inc. AEGON/Transamerica Fund Advisers, Inc.
SUB-ADVISER Janus Capital Management LLC Janus Capital Management LLC
PORTFOLIO MANAGERS David J. Corkins Karen L. Reidy
COMPARISON OF PRINCIPAL RISKS INVOLVED IN INVESTING IN THE FUNDS -- Because the
Funds have similar investment objectives and policies, the principal risks of an
investment in the Funds are similar, although there are certain differences.
Similarities include, among others:
- - Each Fund invests in equity securities such as common stock. This type of
investment involves risks. While equity securities 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 securities a Fund holds fluctuate
in price, the value of your investments in a Fund will go up and down.
- - For each Fund the manager uses a "bottom-up" approach to security
selection. The manager looks at companies individually, in light of broad
market factors.
- - Each Fund may invest in cash or cash equivalents for temporary defensive
purposes when adverse market conditions exist (which is inconsistent with
the Funds' principal investment strategies). Under these circumstances, the
Funds may be unable to achieve their investment objective.
Differences include, among others:
- - The Acquired Fund may invest without limit in foreign equity and debt
securities. Investments in foreign securities (including American
Depository receipts (ADRs), Global Depository Receipts (GDRs) and European
Depository Receipts (EDRs)) involve risks relating to political, social and
economic developments abroad, as well as risks resulting from the
difference between the regulations to which U.S. and foreign issuer markets
are subject. These risks include: currency speculation, currency trading
costs, different accounting and reporting practices, less information
available to the public, less (or different) regulation of securities
markets, more complex business negotiations, less liquidity, more
fluctuations in prices, delays in settling foreign securities transactions,
higher costs for holding shares (custodial fees), higher transaction costs,
vulnerability to seizure and taxes, political instability and small
markets, different market trading days, and forward foreign currency
contracts for hedging.
- - The Acquired Fund may invest in warrants, preferred stocks or convertible
securities selected primarily for their growth potential.
3
INVESTMENT STRATEGIES AND RISKS
PRINCIPAL INVESTMENT STRATEGIES --
The investment strategies, restrictions and risks of the Funds are similar,
although there are certain differences. There can be no assurance that any Fund
will achieve its stated objective.
ACQUIRED FUND
- - The Acquired Fund pursues its objective by investing principally in equity
securities.
- - Under normal market conditions, the Acquired Fund invests up to 75% of its
assets in equity securities selected primarily for their growth potential,
and at least 25% of its assets in securities that the manager believes have
income potential. Equity securities may make up part of this income
component if they currently pay dividends of the fund manager believes they
have potential for increasing or commencing dividend payments. The income
component of the Acquired Fund may include fixed income securities. Stocks
selected for the Acquired Fund include those of both domestic and foreign
issuers.
- - Unless otherwise limited by its specific investment policies, the Acquired
Fund may also invest without limit in foreign equity and debt securities.
- - The Acquired Fund may invest up to 35% of its net assets in
high-yield/high-risk bonds. These bonds are rated below investment grade by
the primary rating agencies.
- - The Acquired Fund's sub-adviser, Janus Capital Management LLC ("Janus"),
located at 100 Fillmore Street, Denver, Colorado 80206-4928, employs a
research oriented, "bottom-up" approach to security selection in addition
to considering economic factors such as the effect of interest rates on the
Acquired Fund's investments. If Janus is unable to find such investments,
the Acquired Fund's assets may be in cash or other similar investments.
- - Janus may, on behalf of the Fund, invest in warrants, preferred stocks or
convertible securities selected primarily for their growth potential, or
other securities and investment strategies in pursuit of the Acquired
Fund's investment objective.
- - The Acquired Fund may take a temporary defensive position when the
securities trading markets or the economy are experiencing excessive
volatility or a prolonged general decline, or other adverse conditions
exist. During this time, the Fund may invest up to 100% of its assets in
money market instruments and cash equivalents. Under these circumstances,
the Acquired Fund may be unable to achieve its investment objective.
ACQUIRING FUND
- - The Acquiring Fund pursues its objective by investing principally in
40%-60% of its assets in equity securities selected primarily for growth
potential and 40%-60% in securities selected primarily for income
potential, both equity and debt.
- - The Acquiring Fund's sub-adviser, Janus, will normally invest at least 25%
of the Fund's assets in fixed-income securities.
- - Janus' basic strategy for the Acquiring Fund is to maintain a growth
component and an income component. Normally, Janus selects 40% to 60% of
the Acquiring Fund's assets primarily for their growth potential, and the
remaining 40% to 60% are chosen primarily for their income potential. These
securities may include securities of foreign issuers.
- - Janus uses a "bottom up" approach to investing. Janus looks mostly for
income producing securities that meet its investment criteria one at a
time. Janus looks primarily at individual companies against the context of
broad market factors. Janus seeks to identify individual companies with
earnings growth potential that may not be recognized by the market at
large.
- - The Acquiring Fund may invest up to 35% of its assets in
high-yield/high-risk bonds. These bonds are rated below investment grade by
the primary rating agencies.
- - The Acquiring Fund may shift assets between the growth and income portions
of its portfolio, based on Janus' analysis of the market and conditions in
the economy. If Janus believes that at a particular time growth investments
4
will provide better returns than the yields from income-producing
investments, the Acquiring Fund may put a greater emphasis on growth. The
reverse may also take place.
- - Janus may sell the Acquiring Fund securities when its expectations
regarding earnings growth potential change.
- - The Acquiring Fund may also invest in cash or cash equivalents for
temporary defensive purposes when market conditions warrant (which is
inconsistent with the Fund's principal investment strategies). To the
extent it invests in these securities, the Fund may not be able to achieve
its investment objective.
- - The Acquiring Fund may, invest in futures and foreign securities, or other
securities and investment strategies in pursuit of its investment
objectives.
COMPARISON OF PORTFOLIO CHARACTERISTICS -- The following tables compare certain
characteristics of the portfolios of the Funds as of October 31, 2003:
ACQUIRING FUND ACQUIRED FUND
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Net Assets (thousands) $361,826 $33,493
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Number of Holdings 225 88
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Portfolio Turnover Rate 69% 87%
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As a percentage of net assets:
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U.S. Government Obligations 7.0% 0.0%
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U.S. Government Agency Obligations 7.4% 0.0%
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Corporate Debt Securities 26.0% 0.6%
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Convertible Bonds 0.2% 0.1%
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Convertible Preferred Stocks 0.0% 0.9%
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Preferred Stocks 0.0% 1.1%
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Common Stocks 55.9% 94.7%
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Security Lending Collateral 13.1% 12.6%
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Liabilities in excess of other assets (9.6)% (10.0)%
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100.0% 100.0%
TOP 10 HOLDINGS (AS A % OF NET ASSETS)
ACQUIRING FUND ACQUIRED FUND
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Citigroup, Inc. 2.2% Citigroup, Inc. 4.6%
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Tyco International Ltd. 1.9% Comcast Corp. - Special Class A 4.0%
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3M Company 1.6% Exxon Mobil Corp. 3.3%
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Wal-Mart Stores, Inc. 1.5% Tyco International Ltd. 3.3%
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Gannett Co., Inc. 1.5% Microsoft Corp. 2.7%
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Roche Holding AG 1.4% Procter & Gamble Company (The) 2.4%
- -------------------------------------------------------------------------------------------------------
Procter & Gamble Company (The) 1.4% Liberty Media Corp. - Class A 2.3%
- -------------------------------------------------------------------------------------------------------
Time Warner Inc. 1.4% Fannie Mae 2.3%
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Marriott International, Inc. - Class A 1.4% General Electric Company 2.2%
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Texas Instruments Incorporated 1.3% Maxim Integrated Products 2.2%
5
RELATIVE PERFORMANCE -- The following table shows the average annual total
return for Class A shares of each Fund and their common comparative index.
Average annual total return is shown for each calendar year since 1995 in the
case of the Acquiring Fund (which commenced operation in 1994) and since 2001 in
the case of the Acquired Fund (which commenced operation in 2000). The Index has
an inherent performance advantage over the Funds, since an index incurs no
operating expenses. An investor cannot invest in an index. Total return is
calculated assuming reinvestment of all dividends and capital gain distributions
at net asset value and excluding the deduction of any sales charges. Fee waivers
and/or reimbursements reduced expenses of the Funds and in the absence of such
waivers and/or reimbursements, the performance quoted would be reduced.
CALENDAR YEAR/ PERIOD ENDED ACQUIRED FUND ACQUIRING FUND S&P 500 COMPOSITE STOCK PRICE(1)
- --------------------------------------------------------------------------------------------------------
12/31/95 N/A 25.20% 37.53%
- -----------------------------------------------------------------------------------------
12/31/96 N/A 16.60% 22.95%
- -----------------------------------------------------------------------------------------
12/31/97 N/A 21.17% 33.35%
- -----------------------------------------------------------------------------------------
12/31/98 N/A 30.78% 28.58%
- -----------------------------------------------------------------------------------------
12/31/99 N/A 23.55% 21.04%
- -----------------------------------------------------------------------------------------
12/31/00 N/A (3.39)% (9.10)%
- -----------------------------------------------------------------------------------------
12/31/01 (10.58)% (5.83)% (11.88)%
- -----------------------------------------------------------------------------------------
12/31/02 (19.65)% (7.22)% (22.09)%
- -----------------------------------------------------------------------------------------
12/31/03 23.37% 12.91% 28.67%
1. The S&P 500 is composed of 500 selected common stocks that represent
approximately two-thirds of the total market value of all U.S. common stocks.
SECURITIES AND INVESTMENT TECHNIQUES -- The following is a summary of the
principal types of securities in which the Funds may invest and strategies they
may employ in pursuit of their investment objectives. As with any security, an
investment in a Fund involves certain risks, including loss of principal. The
Funds are subject to varying degrees of financial, market and credit risk. An
investment in the Funds is not a deposit of a bank and is not insured by the
Federal Deposit Insurance Corporation or any other government agency. The
following discussion addresses the principal investments of, and the primary
risks of investing in, the Funds. However, the fact that a particular risk is
not identified does not mean that a Fund is prohibited from investing its assets
in investments that give rise to that risk.
STOCKS. While stocks have historically outperformed other investments over the
long term, their prices 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 investments in a Fund will go
up and down.
FIXED-INCOME SECURITIES. The value of these securities may change daily based on
changes in the interest rates, and other market conditions and factors. The
risks of investing in fixed-income securities include, among others:
- changes in interest rates may affect the value of the
securities, as the value tends to move inversely with interest
rates;
- the length of time to maturity may cause fluctuations in the
value of the security;
- issuers defaulting on their obligations to pay; and
- dependency on the ability of the issuer to meet interest or
principal payments.
HIGH-YIELD/HIGH-RISK SECURITIES. The risks of investing in these securities are
similar to those of investing in other fixed income securities. It involves,
however, additional risks, including:
- greater sensitivity to interest rate movements;
- greater vulnerability to economic changes;
- decline in market value in event of default;
- less liquidity; and
6
- greater chance of default than higher rated debt securities.
FOREIGN STOCKS (ACQUIRED FUND). Investments in foreign securities (including
American Depository receipts (ADRs), Global Depository Receipts (GDRs) and
European Depository Receipts (EDRs)) involve risks relating to political, social
and economic developments abroad, as well as risks resulting from the difference
between the regulations to which U.S. and foreign issuer markets are subject.
These risks include:
- changes in currency values;
- currency speculation;
- currency trading costs;
- different accounting and reporting practices;
- less information available to the public;
- less (or different) regulation of securities markets;
- more complex business negotiations;
- less liquidity;
- more fluctuations in prices;
- delays in settling foreign securities transactions;
- higher costs for holding shares (custodial fees)
- higher transaction costs;
- vulnerability to seizure and taxes;
- political instability and small markets; and
- different market trading days.
CONVERTIBLE SECURITIES (ACQUIRED FUND). Convertible securities may include
corporate notes or preferred stock, but ordinarily are a long-term debt
obligation of the issuer convertible at a stated exchange rate into common stock
of the issuer. As with all debt securities, the market value of convertible
securities tends to decline as interest rates increase and conversely, to
increase as interest rates decline. Convertible securities generally offer lower
interest or dividend yields than non-convertible securities of similar quality.
However, when the market price of the common stock underlying a convertible
security exceeds the conversion price, the price of the convertible security
tends to reflect the value of the underlying common stock. As the market price
of the underlying common stock declines, the convertible security tends to trade
increasingly on a yield basis, and thus may not depreciate to the same extent as
the underlying stock.
COMPARISONS OF FEES AND EXPENSES
The following describes and compares the fees and expenses that you may pay if
you buy and hold shares of the Funds. It is expected that combining the Funds
would allow shareholders of the Acquired Fund to realize economies of scale and
lower expenses. For further information on the fees and expenses of the
Acquiring Fund, see "More Information Regarding the Acquiring Fund." Because
consummation of the Reorganization will relieve the Investment Adviser of its
obligation to pay sub-advisory fees to Janus under the sub-advisory agreement
applicable to the Acquired Fund (which sub-advisory fees are higher at current
asset levels than the sub-advisory fees payable to Janus under the current
sub-advisory agreement applicable to the Acquiring Fund), the Investment Adviser
may be deemed to have a material interest in the proposed Reorganization.
OPERATING EXPENSES -- The current expenses of each Fund and estimated pro forma
expenses giving effect to the proposed Reorganization are shown in the table
below. Expenses for the Funds are based on the operating expenses incurred for
the fiscal year ended October 31, 2003. Pro forma fees and expenses show
estimated fees and expenses of the Acquiring Fund after giving effect to the
proposed Reorganization as of October 31, 2003. Pro forma numbers are estimated
in good faith and are hypothetical.
7
ANNUAL FUND OPERATING EXPENSES (as a percentage of each Fund's average daily net
assets)
DISTRIBUTION & TOTAL ANNUAL FUND EXPENSE NET OPERATING
MANAGEMENT FEES SERVICE (12b-1) FEES OTHER EXPENSES OPERATING EXPENSES REDUCTION(1) EXPENSES
- ----------------------------------------------------------------------------------------------------------------------------------
ACQUIRING FUND
- -----------------------------------------------------------------------------------------------------------------------------
Class A shares 0.96% 0.35% 0.42% 1.73% 0.00% 1.73%
- -----------------------------------------------------------------------------------------------------------------------------
Class B shares 0.96% 1.00% 0.41% 2.37% 0.00% 2.37%
- -----------------------------------------------------------------------------------------------------------------------------
Class C shares 0.96% 1.00% 0.41% 2.37% 0.00% 2.37%
- -----------------------------------------------------------------------------------------------------------------------------
Class L shares 0.96% 1.00% 0.43% 2.39% 0.01% 2.38%
- -----------------------------------------------------------------------------------------------------------------------------
Class M shares 0.96% 0.90% 0.41% 2.27% 0.00% 2.27%
- -----------------------------------------------------------------------------------------------------------------------------
ACQUIRED FUND
- -----------------------------------------------------------------------------------------------------------------------------
Class A shares 1.00% 0.35% 0.80% 2.15% 0.20% 1.95%
- -----------------------------------------------------------------------------------------------------------------------------
Class B shares 1.00% 1.00% 0.80% 2.80% 0.20% 2.60%
- -----------------------------------------------------------------------------------------------------------------------------
Class C shares 1.00% 1.00% 0.80% 2.80% 0.20% 2.60%
- -----------------------------------------------------------------------------------------------------------------------------
Class L shares 1.00% 1.00% 0.80% 2.80% 0.20% 2.60%
- -----------------------------------------------------------------------------------------------------------------------------
Class M shares 1.00% 0.90% 0.80% 2.70% 0.20% 2.50%
- -----------------------------------------------------------------------------------------------------------------------------
PRO FORMA -
ACQUIRING FUND
INCLUDING ACQUIRED
FUND
- -----------------------------------------------------------------------------------------------------------------------------
Class A shares 0.96% 0.35% 0.42% 1.73% 0.00% 1.73%
- -----------------------------------------------------------------------------------------------------------------------------
Class B shares 0.96% 1.00% 0.41% 2.37% 0.00% 2.37%
- -----------------------------------------------------------------------------------------------------------------------------
Class C shares 0.96% 1.00% 0.41% 2.37% 0.00% 2.37%
- -----------------------------------------------------------------------------------------------------------------------------
Class L shares 0.96% 1.00% 0.42% 2.38% 0.00% 2.38%
- -----------------------------------------------------------------------------------------------------------------------------
Class M shares 0.96% 0.90% 0.41% 2.27% 0.00% 2.27%
1. Through a contractual arrangement with the Fund, the Investment Adviser has
agreed to limit the expenses of the Funds through 2/28/05 to the extent that
total Fund operating expenses (other than distribution and service (12b-1) fees)
exceed 1.60% for the Acquired Fund and 1.50% for the Acquiring Fund. Upon
effectiveness of the Reorganization, the expense cap will be 1.50%.
EXAMPLE -- This example is intended to help you compare the cost of investing in
the Funds and in the combined Funds on a pro forma basis. Your actual costs may
be higher or lower. The example assumes that you invest $10,000 in each Fund and
in the surviving Fund after the Reorganization for the time periods indicated.
The Example also assumes that your investment has a 5% return each year and that
the Fund's operating expenses remain the same. The 5% return is an assumption
and is not intended to portray past or future investment results. Based on the
above assumptions, you would pay the following expenses if you redeemed your
shares at the end of each period shown.
8
1 YEAR 3 YEARS 5 YEARS 10 YEARS
- ----------------------------------------------------------------------------------------------------------------
ACQUIRING FUND
- ----------------------------------------------------------------------------------------------------------------
Class A shares $716 $1,065 $1,437 $2,479
- ----------------------------------------------------------------------------------------------------------------
Class B shares $740 $1,039 $1,365 $2,547
- ----------------------------------------------------------------------------------------------------------------
Class C shares $240 $ 739 $1,265 $2,706
- ----------------------------------------------------------------------------------------------------------------
Class L shares $441 $ 745 $1,275 $2,726
- ----------------------------------------------------------------------------------------------------------------
Class M shares $427 $ 802 $1,303 $2,679
- ----------------------------------------------------------------------------------------------------------------
ACQUIRED FUND
- ----------------------------------------------------------------------------------------------------------------
Class A shares $737 $1,168 $1,624 $2,881
- ----------------------------------------------------------------------------------------------------------------
Class B shares $763 $1,149 $1,561 $2,959
- ----------------------------------------------------------------------------------------------------------------
Class C shares $263 $ 849 $1,461 $3,114
- ----------------------------------------------------------------------------------------------------------------
Class L shares $463 $ 849 $1,461 $3,114
- ----------------------------------------------------------------------------------------------------------------
Class M shares $450 $ 911 $1,498 $3,087
- ----------------------------------------------------------------------------------------------------------------
PRO FORMA - ACQUIRING FUND INCLUDING
ACQUIRED FUND
- ----------------------------------------------------------------------------------------------------------------
Class A shares $716 $1,065 $1,437 $2,479
- ----------------------------------------------------------------------------------------------------------------
Class B shares $740 $1,039 $1,365 $2,547
- ----------------------------------------------------------------------------------------------------------------
Class C shares $240 $ 739 $1,265 $2,706
- ----------------------------------------------------------------------------------------------------------------
Class L shares $441 $ 742 $1,270 $2,716
- ----------------------------------------------------------------------------------------------------------------
Class M shares $427 $ 802 $1,303 $2,679
You would pay the following expenses if you did not redeem your shares.
1 YEAR 3 YEARS 5 YEARS 10 YEARS
- ----------------------------------------------------------------------------------------------------------------
ACQUIRING FUND
- ----------------------------------------------------------------------------------------------------------------
Class A shares $716 $1,065 $1,437 $2,479
- ----------------------------------------------------------------------------------------------------------------
Class B shares $240 $ 739 $1,265 $2,557
- ----------------------------------------------------------------------------------------------------------------
Class C shares $240 $ 739 $1,265 $2,706
- ----------------------------------------------------------------------------------------------------------------
Class L shares $241 $ 745 $1,275 $2,726
- ----------------------------------------------------------------------------------------------------------------
Class M shares $328 $ 802 $1,303 $2,679
- ----------------------------------------------------------------------------------------------------------------
ACQUIRED FUND
- ----------------------------------------------------------------------------------------------------------------
Class A shares $737 $1,168 $1,624 $2,881
- ----------------------------------------------------------------------------------------------------------------
Class B shares $263 $ 849 $1,461 $2,959
- ----------------------------------------------------------------------------------------------------------------
Class C shares $263 $ 849 $1,461 $3,114
- ----------------------------------------------------------------------------------------------------------------
Class L shares $263 $ 849 $1,461 $3,114
- ----------------------------------------------------------------------------------------------------------------
Class M shares $351 $ 911 $1,498 $3,087
- ----------------------------------------------------------------------------------------------------------------
PRO FORMA - ACQUIRING FUND INCLUDING
ACQUIRED FUND
- ----------------------------------------------------------------------------------------------------------------
Class A shares $716 $1,065 $1,437 $2,479
- ----------------------------------------------------------------------------------------------------------------
Class B shares $240 $ 739 $1,265 $2,547
- ----------------------------------------------------------------------------------------------------------------
Class C shares $240 $ 739 $1,265 $2,706
- ----------------------------------------------------------------------------------------------------------------
Class L shares $241 $ 742 $1,270 $2,716
- ----------------------------------------------------------------------------------------------------------------
Class M shares $328 $ 802 $1,303 $2,679
9
GENERAL INFORMATION
Class A and Class M shares of the Acquired Fund issued to a shareholder in
connection with the Reorganization will not be subject to any initial sales
charge. Class B, Class L and Class M shares of the Acquiring Fund issued to a
shareholder in connection with the Reorganization will be subject to the same
contingent deferred sales charge, if any, applicable to the corresponding class
of shares of the Acquired Fund held by that shareholder immediately prior to the
Reorganization.
In addition, the period that the shareholder held shares of the Acquired Fund
would be included in holding period of the Acquiring Fund's shares for purposes
of calculating any contingent deferred sales charge. Similarly, Class B shares
of the Acquiring Fund issued to a shareholder in connection with the
Reorganization will convert to Class A shares eight years after the date that
the corresponding Class B shares of the Acquired Fund were purchased by
shareholders. Likewise, Class M shares of the Acquiring Fund issued to a
shareholder in connection with the reorganization will convert to Class A shares
ten years after the date that the corresponding Class M shares of the Acquired
Fund were purchased by shareholders.
Purchases of shares of the Acquiring Fund after the Reorganization will be
subject to the charges described in the table below. This is the same structure
that is currently in effect for the Acquired Fund.
TRANSACTION FEES ON NEW INVESTMENTS (FEES ARE PAID DIRECTLY FROM YOUR
INVESTMENT):
SHAREHOLDER FEES (fees paid directly from your investment) (Acquired Fund and
Acquiring Fund)
CLASS OF SHARES
---------------------------------------------------------------------------
A B C(b) L M(b)
- ------------------------------------------------------------------------------------------------------------------------------------
Maximum sales charge (load) imposed on purchases 5.50% None None None 1.00%
(as a percentage of offering price)
Maximum deferred sales charge (load) None(a) 5.00%(c) None 2.00%(d) 1.00%(e)
(as a percentage of offering price or redemption
proceeds, whichever is lower)
(a) 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.
(b) Class C and Class M shares currently are closed to new investors.
(c) Purchases of Class B shares are subject to a declining contingent deferred
sales charge if redeemed during the first six years of purchase (5%-1st
year; 4% - 2nd year, 3% - 3rd year; 2% - 4th year; and 1% - 5th and 6th
years).
(d) Purchases of Class L shares are subject to a 2% contingent deferred sales
charge if redeemed during the first 12 months of purchase and 1% if
redeemed during the second 12 months.
(e) Purchases of Class M Shares are subject to a 1% contingent deferred sales
charge if redeemed within 18 months of purchase.
ADDITIONAL INFORMATION ABOUT ACQUIRING FUND
INVESTMENT ADVISER AND SUB-ADVISER -- The Investment Adviser has overall
responsibility for the management of the Acquiring Fund. For such services, the
Acquiring Fund pays an investment advisory fee monthly at the annual rate of
1.00% of the first $250 million of the Acquiring Fund's average daily net
assets; 0.90% of the next $500 million of the Fund's average daily net assets;
0.80% of the next $750 million of the Fund's average daily net assets up to $1.5
billion; and 0.70% of average daily net assets over $1.5 billion.
In turn, the Investment Adviser has entered into a sub-advisory agreement with
Janus to provide investment advisory services to the Acquiring Fund. Pursuant to
this agreement, Janus furnishes investment advisory, statistical and research
facilities, supervises and arranges for the purchase and sale of securities on
behalf of the Acquiring Fund and provides for the compilation and maintenance of
records pertaining to such investment advisory services, subject to the control
and supervision of IDEX's Board of Trustees and the Investment Adviser. For such
services, the Investment Adviser pays Janus 0.55% of the first $100 million of
average daily net assets; 0.50% of the next $400 million of average daily net
assets; and 0.45% of assets over $500 million, less 50% of any amount
reimbursed pursuant to the fund's expense limitation.
10
INVESTMENT PERSONNEL -- The following individual has responsibility for the
day-to-day management of the Acquiring Fund:
- - KAREN L. REIDY, CFA, Vice President. Ms. Reidy has served as manager of
this Fund since January 2000. Prior to joining Janus in 1995, she was a
manager in both the Mergers and Acquisitions and Audit business units at
PricewaterhouseCoopers LLP.
PROPOSED NEW SUB-ADVISER TO THE ACQUIRING FUND
On or about the date of the Special Meeting, IDEX Mutual Funds also will hold a
special meeting of shareholders of the Acquiring Fund for the purpose of
considering a proposed investment sub-advisory agreement with Transamerica
Investment Management, LLC ("TIM"), which is proposed to replace Janus as
sub-adviser to the Acquiring Fund. If the Acquiring Fund's shareholders select
TIM to serve as the new investment sub-adviser to the Acquiring Fund, it is
anticipated that other changes will be made with respect to the Acquiring Fund;
including, without limitation: a change of the name of the Fund from "TA IDEX
Janus Balanced" to "TA IDEX Transamerica Balanced;" and changes to the Acquiring
Fund's investment policies. It is contemplated, however, that the Acquiring
Fund's investment objective will remain the same.
If TIM assumes sub-advisory services for the Acquiring Fund, the current
investment management agreement between the Acquiring Fund and the Investment
Adviser will be amended to lower the investment management fees payable to the
Investment Adviser. Pursuant to such amendments, the Acquiring Fund will pay the
Investment Adviser 0.85% of the first $250 million of the Acquiring Fund's
average daily net assets; 0.80% of assets over $250 million up to $500 million;
0.75% of assets over $500 million up to $1.5 billion; and 0.65% of assets over
$1.5 billion.
The terms of the proposed sub-advisory agreement between the Investment Adviser
and TIM to provide investment advisory services to the Acquiring Fund are
substantially similar to those of the current investment sub-advisory agreement
between the Investment Adviser and Janus, except for the parties to the
agreement, the effective date and the level of compensation payable by the
Investment Adviser to TIM. Subject to the approval of the shareholders of the
Acquiring Fund, TIM will furnish investment advisory, statistical and research
facilities, will supervise and arrange for the purchase and sale of securities
on behalf of the Acquiring Fund and will provide for the compilation and
maintenance of records pertaining to such investment advisory services, subject
to the control and supervision of IDEX's Board of Trustees and the Investment
Adviser. For such services, the Investment Adviser will pay TIM: 0.35% of the
first $250 million of the Acquiring Fund's average daily net assets; 0.325% of
assets over $250 million up to $500 million; 0.30% of assets over $500 million
up to $1.5 billion; and 0.25% of assets over $1.5 billion
The consummation of the Reorganization is not contingent upon the Acquiring
Fund's shareholders selecting TIM to serve as sub-adviser to the Acquiring Fund.
Thus, if you approve the Reorganization, the Reorganization will be consummated,
whether or not the Acquiring Fund's shareholders approve the proposed
sub-advisory agreement with TIM.
PERFORMANCE OF THE ACQUIRING FUND -- The bar chart and table shown below provide
an indication of the risks of investing in the Acquiring Fund by showing (on a
calendar year basis) changes in the Acquiring Fund's annual total return from
year to year and by showing (on a calendar year basis) how the Acquiring Fund's
average annual returns for one year and since inception, compare to those of a
broad-based securities market index--the S&P 500 Index. Note that an index has
an inherent performance advantage over the Acquiring Fund since it imposes no
sales charges and incurs no operating expenses. An investor cannot invest
directly in an index. The information in the bar chart is based on the
performance of the Class A shares of the Acquiring Fund, although the bar chart
does not reflect the deduction of the sales load on Class A shares. If the bar
chart included the sales load, returns would be less than those shown. Fee
waivers and/or reimbursements reduced expenses of the Acquiring Fund and in the
absence of such waivers and/or reimbursements, the performance quoted would be
reduced. The Fund's past performance (before and after
11
ACQUIRING FUND
One year total return as of 12/31/03 is (%)
[ACQUIRING FUND BAR CHART]
1995 25.20
1996 16.60
1997 21.17
1998 30.78
1999 23.55
2000 (3.39)
2001 (5.83)
2002 (7.22)
2003 12.91
During the period shown in the chart, Acquiring Fund's best quarterly
performance was 18.31% for the quarter ended 12/31/98, and the Fund's worst
quarterly performance was (5.87)% for the quarter ended 3/31/01.
The table below shows the average annual total returns of the Acquiring Fund for
the periods shown. The table, which includes applicable sales charges, compares
how the Acquiring Fund's average annual total returns for different calendar
periods compare to a broad-based securities market index.
Since Inception
December 31, 2003* One Year Five Year December 2, 1994
- ---------------------------------------------------------------------------------------------------------------------
Acquiring Fund
- ----------------------------------------------------------------------------------------------------------------
Return before taxes 6.70% 2.16% 10.95%
- ----------------------------------------------------------------------------------------------------------------
Return after taxes on distributions** 6.28% 1.47% 9.20%
- ----------------------------------------------------------------------------------------------------------------
Return after taxes on distributions and sale of fund 4.33% 1.46% 8.52%
shares**
- ----------------------------------------------------------------------------------------------------------------
S&P 500(1) 28.67% (0.57)% 12.26%
- ----------------------------------------------------------------------------------------------------------------
LBGC(1) 4.67% 6.66% 8.21%
- ----------------------------------------------------------------------------------------------------------------
* Returns reflect the maximum sales load of 5.50% and include the
reinvestment of dividends and capital gains.
** The after tax returns are calculated using the historic highest individual
federal; marginal income tax rates and do not reflect the impact of state
and local taxes.
(1) Standard & Poor's 500 Composite Stock Index (S&P 500) and Lehman Brothers
U.S. Government/Credit Index (LBGC) are widely recognized unmanaged indexes
of market performance.
Additional information about the Acquiring Fund is included in the section,
"More Information Regarding the Acquiring Fund."
INFORMATION ABOUT THE REORGANIZATION
THE REORGANIZATION PLAN -- The Reorganization Plan provides for the transfer of
all of the assets and liabilities of the Acquired Fund to the Acquiring Fund
solely in exchange for Class A, B, C, L or M shares of the Acquiring Fund. The
Acquired Fund will distribute the shares of the Acquiring Fund received in the
exchange to its shareholders, and then the Acquired Fund will be liquidated.
After the Reorganization, each shareholder of the Acquired Fund will own shares
in the Acquiring Fund having an aggregate value equal to the aggregate value of
shares of the Acquired Fund held by that shareholder as of the close of business
on the business day preceding the Closing. Shareholders of Class A, B, C, L or M
shares of the Acquired Fund will receive shares of the corresponding class of
the Acquiring Fund. In the interest of economy and convenience, shares of the
Acquiring Fund will not be represented by physical certificates.
Generally, the liquidation and distribution will be accomplished by opening
accounts on the books of the Acquiring Fund in the names of the shareholders of
the Acquired Fund and transferring to those shareholders' accounts the same
class shares representing such shareholders' interest previously credited to the
account of the Acquired Fund. No sales charges or fees of any kind will be
charged to the shareholders of the Acquired Fund in connection with their
receipt of shares of
12
the Acquiring Fund in the Reorganization.
Until the Closing, shareholders of the Acquired Fund will continue to be able to
redeem their shares. Redemption requests received after the Closing will be
treated as requests received by the Acquiring Fund for the redemption of its
shares received by the shareholder in the Reorganization.
The obligations of the Funds under the Reorganization Plan are subject to
various conditions, including approval of the shareholders of the Acquired Fund.
The Reorganization Plan also requires that the Funds take, or cause to be taken,
all actions, and do or cause to be done, all things reasonably necessary, proper
or advisable to consummate and make effective the transactions contemplated by
the Reorganization Plan. For a complete description of the terms and conditions
of the Reorganization, see the Reorganization Plan at Appendix A, which
qualifies in its entirety the foregoing summary of the Reorganization Plan.
REASONS FOR THE REORGANIZATION -- The Funds have investment objectives,
strategies and risks that are similar in many respects. Because the Acquired
Fund may invest in similar types of securities as the Acquiring Fund, the Funds
are somewhat duplicative. In addition, the Reorganization will create a larger
Acquiring Fund, which should benefit shareholders of the Funds by spreading
costs across a larger asset base, and which will allow shareholders of the
Acquired Fund to continue to participate in a professionally managed portfolio
at a lower level of operating expenses. Also, a larger Acquiring Fund offers the
potential benefit of a more diversified portfolio of securities, may improve
trading efficiency, and may eventually realize economies of scale and lower
operating expenses.
The proposed Reorganization was presented to the Board of Trustees of IDEX
Mutual Funds for consideration and approval at a meeting held on September 9,
2003. For the reasons discussed below, the Trustees, including all of the
Trustees who are not "interested persons" (as defined in the Investment Company
Act of 1940) of IDEX Mutual Funds, determined that the interests of the
shareholders of the respective Funds would not be diluted as a result of the
proposed Reorganization, and that the proposed Reorganization was in the best
interests of each of the Funds and its shareholders.
BOARD CONSIDERATIONS -- The Board of Trustees of IDEX Mutual Funds, in
recommending the proposed transaction, considered a number of factors, including
the following:
1. expense ratios and information regarding fees and expenses of the Acquired
Fund and the Acquiring Fund, which indicate that current shareholders of
the Acquired Fund will benefit from the Reorganization by getting a
comparable investment at a lower cost;
2. the Reorganization would allow shareholders of the Acquired Fund to
continue to participate in a professionally-managed portfolio. As
shareholders of the Acquiring Fund, these shareholders would continue to be
able to exchange into other mutual funds in the large IDEX fund complex
that offer the same class of shares in which a shareholder is currently
invested;
3. the Investment Adviser's undertaking to limit the operating expenses (other
than distribution and service (12b-1) fees) of the Acquiring Fund to 1.50%
of its average daily net assets through February 28, 2005, subject to
possible recoupment or revision in future years.
4. the Reorganization would not dilute the interests of either Funds' current
shareholders;
5. the risks of the Acquiring Fund as compared to the Acquired Fund;
6. the similarity of the Acquiring Fund's investment objectives, policies and
restrictions to those of the Acquired Fund and the fact that the Funds are
somewhat duplicative within the overall group of funds;
7. elimination of duplication of costs and inefficiencies of having two
similar Funds; and
8. the tax-free nature of the Reorganization to each Fund and its
shareholders.
The Board also considered the future potential benefits to IDEX Mutual Funds in
that its costs to administer both Funds may be reduced if the Reorganization is
approved.
THE BOARD OF TRUSTEES OF IDEX MUTUAL FUNDS RECOMMENDS THAT SHAREHOLDERS OF THE
ACQUIRED FUND APPROVE THE REORGANIZATION.
TAX CONSIDERATIONS -- The Reorganization is intended to qualify for Federal
income tax purposes as a tax-free reorganization under Section 368 of the
Internal Revenue Code of 1986, as amended (the "Code"). Accordingly, pursuant to
this treatment, neither the Acquired Fund nor the Acquiring Fund is expected to
recognize any gain or loss for federal
13
income tax purposes from the transactions contemplated by the Reorganization
Plan. As a condition to the closing of the Reorganization, the Funds will
receive an opinion from the law firm of Dechert LLP to the effect that the
Reorganization will qualify as a tax-free reorganization for Federal income tax
purposes. That opinion will be based in part upon certain assumptions and upon
certain representations made by the Funds.
Immediately prior to the Reorganization, the Acquired Fund will pay a dividend
or dividends which, together with all previous dividends, will have the effect
of distributing to the shareholders all of the Acquired Fund's investment
company taxable income for taxable years ending on or prior to the
Reorganization (computed without regard to any deduction for dividends paid) and
all of its net capital gains, if any, realized in taxable years ending on or
prior to the Reorganization (after reduction for any available capital loss
carryforward). Such dividends will be included in the taxable income of the
Acquired Fund's shareholders.
Both Funds have elected and qualified to be taxed as regulated investment
companies under Section 851-855 of the Code, and after the Reorganization, the
Acquiring Fund intends to continue to operate so as to qualify as a regulated
investment company. Following the distribution if the same class of shares to
shareholders, IDEX will terminate the Acquired Fund as a series of IDEX.
EXPENSES OF THE REORGANIZATION -- The Investment Adviser will bear the expenses
relating to the Reorganization, including but not limited to the costs of the
proxy solicitation. The costs of the Reorganization include, but are not limited
to, costs associated with preparation of the Acquiring Fund's registration
statement, printing and distributing the Acquiring Fund's prospectus and the
Acquired Fund's proxy materials, legal fees, accounting fees, securities
registration fees, and expenses of holding the shareholders' meeting.
ADDITIONAL INFORMATION ABOUT THE FUNDS
FORM OF ORGANIZATION -- Each of the Funds is a series of IDEX Mutual Funds, a
Massachusetts business trust that was formed by a Declaration of Trust dated
January 7, 1986. IDEX Mutual Funds is governed by a Board of Trustees. The IDEX
Board of Trustees consists of ten individuals, eight of whom are not "interested
persons" as defined in the Investment Company Act of 1940, as amended (the "1940
Act"). The Trustees are responsible for the overall supervision of the operation
of each Fund and perform the various duties imposed on the Trustees of
investment companies in the 1940 Act.
DISTRIBUTOR AND ADMINISTRATOR -- AFSG Securities Corporation (the
"Distributor"), whose address is 4333 Edgewood Road NE, Cedar Rapids, Iowa
52499, is the principal distributor for the Funds. AEGON/Transamerica Fund
Services, Inc. serves as the Funds' administrator.
DIVIDENDS AND OTHER DISTRIBUTIONS -- Each Fund pays dividends from net
investment income, and distributes net capital gains, if any, at least annually.
Dividends and distributions of each Fund are automatically reinvested in
additional shares of the respective class of that Fund, unless the shareholder
elects to receive distributions in cash.
If the Reorganization Plan is approved by shareholders of the Acquired Fund,
then as soon as practicable before the Closing, the Acquired Fund will pay its
shareholders a cash distribution of all undistributed net investment income and
undistributed realized net capital gains.
14
CAPITALIZATION -- The following table shows on an unaudited basis the
capitalization of each Fund as of October 31, 2003 and on a pro forma basis as
of October 31, 2003, giving effect to the Reorganization:
SHARES OUTSTANDING
NET ASSETS (THOUSANDS) NET ASSET VALUE PER SHARE (THOUSANDS)
- ----------------------------------------------------------------------------------------------------------------------------------
ACQUIRING FUND
- ----------------------------------------------------------------------------------------------------------------------------------
Class A Shares $ 89,335 $17.43 5,126
- ----------------------------------------------------------------------------------------------------------------------------------
Class B Shares $199,472 $17.39 11,474
- ----------------------------------------------------------------------------------------------------------------------------------
Class C Shares $ 29,591 $17.39 1,702
- ----------------------------------------------------------------------------------------------------------------------------------
Class L Shares $ 4,354 $17.39 250
- ----------------------------------------------------------------------------------------------------------------------------------
Class M Shares $ 39,074 $17.39 2,247
- ----------------------------------------------------------------------------------------------------------------------------------
ACQUIRED FUND
- ----------------------------------------------------------------------------------------------------------------------------------
Class A Shares $ 6,556 $ 8.32 788
- ----------------------------------------------------------------------------------------------------------------------------------
Class B Shares $ 20,130 $ 8.15 2,470
- ----------------------------------------------------------------------------------------------------------------------------------
Class C Shares $ 3,110 $ 8.15 382
- ----------------------------------------------------------------------------------------------------------------------------------
Class L Shares $ 1,515 $ 8.15 186
- ----------------------------------------------------------------------------------------------------------------------------------
Class M Shares $ 2,182 $ 8.17 267
- ----------------------------------------------------------------------------------------------------------------------------------
PRO FORMA - ACQUIRING FUND INCLUDING ACQUIRED FUND
- ----------------------------------------------------------------------------------------------------------------------------------
Class A Shares $ 95,891 $17.43 5,502
- ----------------------------------------------------------------------------------------------------------------------------------
Class B Shares $219,602 $17.39 12,631
- ----------------------------------------------------------------------------------------------------------------------------------
Class C Shares $ 32,701 $17.39 1,881
- ----------------------------------------------------------------------------------------------------------------------------------
Class L Shares $ 5,869 $17.39 338
- ----------------------------------------------------------------------------------------------------------------------------------
Class M Shares $ 41,256 $17.39 2,372
- ----------
(1) The net assets of the Acquired Fund will be converted to shares based on the
Acquiring Fund's net asset value per share.
GENERAL INFORMATION
SOLICITATION OF PROXIES -- Proxies are being solicited at the request of the
IDEX Board of Trustees. Solicitation of proxies is being made primarily by the
mailing of this Notice and Proxy Statement/Prospectus with its enclosures on or
about March 12, 2004. (Shareholders of the Acquired Fund whose shares are held
by nominees, such as brokers, can vote their proxies by contacting their
respective nominee.) In addition to the solicitation of proxies by mail,
employees of IDEX and its affiliates, without additional compensation, may
solicit proxies in person or by telephone, telegraph, facsimile, or oral
communication. The Funds have retained ALAMO Direct (the "Solicitor"), a
professional proxy solicitation firm, to assist with any necessary solicitation
of proxies. Shareholders of the Acquired Fund may receive a telephone call from
the Solicitor asking the shareholder to vote. The estimated costs for the
services of the Solicitor are estimated to be approximately $20,093, plus
applicable postage.
In all cases where a proxy is solicited by telephone, the Solicitor is required
to ask the person to provide identifying registration data, including full name
and address, and, if known, the number of shares owned. If the shareholder is a
corporation or other entity, the Solicitor will ask for the title of the person
and for confirmation that the person is authorized to direct the voting of the
shares. The Solicitor will advise the shareholder that the shareholder can vote
his or her shares over the telephone and will ask if the shareholder would like
to cast a vote. Although the Solicitor's representative is permitted to answer
questions about the process, he or she is not permitted to recommend to the
shareholder how to vote, other than to read any recommendations set forth in the
Proxy Statement/Prospectus. The Solicitor will then record the shareholder's
instructions on the Proxy Card. Within 72 hours, the shareholder will be sent a
confirmation of his or her vote asking the shareholder to call the Solicitor
immediately if his or her instructions are not correctly reflected in the
confirmation.
15
If a shareholder wishes to participate in the Special Meeting, but does not wish
to give a proxy by telephone, the shareholder may still submit the proxy
originally sent with the Proxy Statement/Prospectus, attend in person, vote
online or by facsimile. Should shareholder require additional information
regarding the proxy or require replacement of the proxy, they may contact IDEX
Customer Service toll-free at (888) 233-4339.
A shareholder may revoke the accompanying proxy 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 who attends the Special Meeting of the
Acquired Fund shareholders in person may vote by ballot at the Special Meeting,
thereby canceling any proxy previously given. However, attendance at the Special
Meeting, by itself, will not revoke a previously tendered proxy. The persons
named in the accompanying proxy will vote as directed by the proxy, but in the
absence of voting directions in any proxy that is signed and returned, they
intend to vote "FOR" the Reorganization proposal, and may vote in their
discretion with respect to other matters not now known to the IDEX Board of
Trustees that may be presented at the Special Meeting.
VOTING RIGHTS -- Only shareholders of the Acquired Fund at the close of business
on February 27, 2004 (the "Record Date") are entitled to vote (with respect to
their shares owned as of that Record Date) at the Special Meeting or any
adjournment thereof. At the close of business on Record Date, there were _______
shares of the Acquired Fund issued and outstanding and entitled to vote. Shares
of the Funds entitle their holders to one vote per share as to any matter on
which the holder is entitled to vote, and each fractional share shall be
entitled to a proportionate fractional vote.
To become effective, the proposed Reorganization must be approved by a "vote of
the majority of the outstanding voting securities" of the Acquired Fund, as
defined in the 1940 Act. The "vote of a majority of the outstanding voting
securities" means the lesser of the vote of (i) 67% or more of the shares of the
Acquired Fund entitled to vote thereon present at the Special Meeting if the
holders of more than 50% of such outstanding shares are present in person or
represented by proxy; or (ii) more than 50% of such outstanding shares of the
Acquired Fund entitled to vote thereon.
The Acquired Fund must have a quorum to conduct its business at the Special
Meeting. The holders of a majority of outstanding shares present in person or by
proxy shall constitute a quorum. In the absence of a quorum, a majority of
outstanding shares entitled to vote, present in person or by proxy, may adjourn
the meeting from time to time until a quorum is present.
If a shareholder abstains from voting as to any matter, or if a broker returns a
"non-vote" proxy, indicating a lack of authority to vote on a matter, the shares
represented by the abstention or non-vote will be deemed present at the Special
Meeting for purposes of determining a quorum. However, abstentions and broker
non-votes will not be deemed represented at the Special Meeting for purposes of
calculating the vote on any matter. As a result, an abstention or broker
non-vote will have the same effect as a vote against the Reorganization. Prior
to the Special Meeting, IDEX expects that broker-dealer firms holding their
shares of the Funds in "street name" for their customers will request voting
instructions from their customers and beneficial owners.
Security Ownership. To the knowledge of IDEX, as of February 27, 2004, no
Trustee of IDEX beneficially owned 1% or more of the outstanding shares of
either Fund, and the officers and Trustees of IDEX beneficially owned, as a
group, less than 1% of the shares of either Fund.
To the knowledge of IDEX, as of February 27, 2004, no persons owned beneficially
or of record 5% or more of the outstanding shares of the Acquired Fund.
OTHER MATTERS TO COME BEFORE THE MEETING -- The Funds do not know of any matters
to be presented at the meeting other than those described in this Proxy
Statement/Prospectus. If other business should properly come before the meeting,
the proxy holders will vote thereon in accordance with their best judgment.
SHAREHOLDER PROPOSALS -- IDEX is not required to hold regular annual meetings
and, in order to minimize their costs, does not intend to hold meetings of
shareholders unless so required by applicable law, regulation, regulatory policy
or if otherwise deemed advisable by IDEX management. Therefore it is not
practicable to specify a date by which shareholder proposals must be received in
order to be incorporated in an upcoming proxy statement for an annual Special
Meeting or to be submitted to shareholders of IDEX.
16
Shareholders wishing to submit proposals should send their written proposals to
the address set forth on the cover of this Proxy Statement/Prospectus a
reasonable time prior to the date of a meeting of shareholders to be considered
for inclusion in the proxy materials for a meeting. Timely submission of a
proposal does not, however, necessarily mean that the proposal will be included.
Persons named as proxies for any subsequent shareholder meeting will vote in
their discretion with respect to proposals submitted on an untimely basis.
INFORMATION ABOUT THE FUNDS -- IDEX Mutual Funds is subject to the informational
requirements of the Securities Exchange Act and certain other federal securities
statutes, and files reports and other information with the SEC. Proxy materials,
reports and other information filed by the Funds can be inspected and copied at
the Public Reference Facilities maintained by the SEC at 450 Fifth Street, NW,
Washington, DC 20549. The SEC maintains an Internet World Wide Web site (at
http://www.sec.gov) which contains other information about the Funds.
IN ORDER THAT THE PRESENCE OF A QUORUM AT THE MEETINGS MAY BE ASSURED, PROMPT
EXECUTION AND RETURN OF THE ENCLOSED PROXY IS REQUESTED. A SELF-ADDRESSED,
POSTAGE-PAID ENVELOPE IS ENCLOSED FOR YOUR CONVENIENCE.
John K. Carter, Esq.
Senior Vice President,
Secretary & General Counsel
March 10, 2004
17
MORE INFORMATION REGARDING THE ACQUIRING FUND
SHAREHOLDER INFORMATION
This Proxy Statement/Prospectus relates to the separate classes of shares of the
Acquiring Fund: Class A, Class B, Class C, Class L and Class M, each of which
represents an identical interest in the Acquiring Fund's investment portfolio,
but is offered with different sales charges and distribution fee (Rule 12b-1)
arrangements. As described below and elsewhere in this Proxy
Statement/Prospectus, the contingent deferred sales load structure and
conversion characteristics of the Acquiring Fund shares issued to you in the
Reorganization will be the same as those that applied to the Acquired Fund
shares held by you immediately prior to the Reorganization, and the period that
you held the Acquired Fund shares will be included in the holding period of the
Acquiring Fund shares for purposes of calculating contingent deferred sales
charges and determining conversion rights. Purchases of the shares of the
Acquiring Fund after the Reorganization will be subject to the sales load
structure and conversion rights discussed below.
Shares of the Acquiring Fund will be available through broker/dealers, banks,
and other financial intermediaries that have an agreement with the Distributor.
A broker/dealer or other financial intermediary may charge fees in connection
with an investment in the Acquiring Fund.
PLEASE NOTE: CLASS C AND CLASS M SHARES ARE CLOSED TO NEW INVESTORS.
OPENING AN ACCOUNT
If you are opening a fund account through a registered representative, he or she
can assist you with all phases of your investment.
If you are investing through an authorized dealer, the dealer is responsible for
opening your account and providing your taxpayer ID number. If you already have
an IDEX account, you do not need additional documentation.
IDEX or its agents may reject a request for purchase of shares at any time,
including any purchase under the exchange privilege.
NEW ACCOUNT APPLICATION
Fill out the New Account Application form which is included in this prospectus.
IRAs and other retirement accounts require a different application, which you
can request by calling 1-888-233-IDEX (4339) or visiting www.idexfunds.com. You
can avoid future inconvenience by signing up for any services you think you may
later use.
Note: On your application, be sure to include your social security number or
taxpayer identification number. If you don't, your account may be subject to
backup withholding, or be closed.
There are many ways that you can pay for your shares. The minimum initial
purchase per fund and per class is $1,000. There is a $50 minimum on additional
purchases. Purchases through regular investment plans, like the Automatic
Investment Plan, have no minimum to open an account, but you must invest at
least $50 monthly per fund.
The Securities and Exchange Commission (SEC) is taking an active interest in
money laundering because money laundering presents a serious risk to the
soundness of financial markets, opens financial service firms to criminal
liability, and can ruin the reputation of implicated firms. IDEX will not accept
money orders, traveler's checks, credit card convenience checks or cash.
Cashiers checks may be accepted, subject to approval by AEGON/Transamerica
Investor Services, Inc. (ATIS). Prior to September 26, 2002, ATIS was named Idex
Investor Services, Inc.
18
SHARE TRANSACTIONS
Depending on privileges established on your account, you may buy, sell or
exchange shares in several ways. You may do so in writing, by phone request or
you may access your account through the internet. You may make payments, or
receive payment for your redemptions, via an electronic funds transfer or by
check.
HOW TO SELL SHARES
Your request to sell your shares and receive payment may be subject to:
- the privileges or features established on your account such as a
systematic withdrawal plan (SWP) or telephone transactions
- the type of account you have, and if there is more than one owner
- the dollar amount you are requesting; redemptions over $50,000 must be
in writing and those redemptions greater than $100,000 require a
written request with a signature guarantee
- a written request or signature guarantee may be required if there have
been recent changes made to your account (such as an address change)
or other such circumstances. A signature guarantee assures that a
signature is genuine so that you are protected from unauthorized
account transactions. Financial institutions such as banks, savings
and loan associations, trust companies, credit unions, broker-dealers,
and member firms of a national securities exchange may guarantee your
signature. Notarization is not an acceptable substitute.
There are several ways to request redemption of your shares:
- in writing (by mail or fax)
- by internet access to your account(s) at www.idexfunds.com
- by telephone request using our touch-tone automated system, IDEX
InTouch(SM), or by a person-to-person verbal request
The proceeds of your redemption may be paid by check, or by direct deposit to
your bank account subject to any restrictions that may be applicable. Purchases
will be held at IDEX until your funds have cleared or up to 15 calendar days
before they are eligible for redemption. Certain exceptions may apply.
Shares will normally be redeemed for cash, although each fund retains the right
to redeem its shares in kind under unusual circumstances in order to protect the
interests of shareholders by the delivery of securities selected from its assets
at its discretion. Please see the SAI for more details.
CHECKWRITING SERVICE. (For Class A and Class C shares of IDEX Transamerica Money
Market only). If you would like to use the checkwriting service, mark the
appropriate box on the application or authorization form. The fund will send you
checks when it receives these properly completed documents. Checks must be
written for at least $250 and investments made by check or ACH must have been in
your account for at least 15 days before you can write checks against them. A
service fee of $10 applies for those checks written under $250. When the check
is presented for payment, the fund will redeem a sufficient number of full and
fractional shares in your account at that day's net asset value to cover the
amount of the check. Checks presented against your account in an amount that
exceeds your available balance will be returned for "insufficient funds" and
your account will incur a $20 service fee. Due to dividends accruing on your
account it is not possible to determine your account's value in advance so you
should not write a check for the entire value or try to close your account by
writing a check. A stop payment on a check may be requested for a $20 service
fee. If you request that a checkbook to be delivered overnight, you will incur a
$20 service fee. The payment of funds is authorized by the signature(s)
appearing on the IDEX application or authorization form. Each signatory
guarantees the genuineness of the other signatures.
19
The use of checks is subject to the rules of the IDEX designated bank for its
checkwriting service. IDEX has chosen UMB Bank n.a. as its designated bank for
this service. UMB Bank, n.a. or its bank affiliate (the "Bank") is appointed
agent by the person(s) signing the IDEX application or authorization form (the
"Investor(s)") and, as agent, is authorized and directed upon presentment of
checks to the Bank to transmit such checks to IDEX as requests to redeem shares
registered in the name of the Investor(s) in the amounts of such checks.
This checkwriting service is subject to the applicable terms and restrictions,
including charges, set forth in this prospectus. The Investor(s) agrees that
he/she is subject to the rules, regulations, and laws governing check collection
including the Uniform Commercial Code as enacted in the State of Missouri,
pertaining to this checkwriting service, as amended from time to time. The Bank
and/or IDEX has the right not to honor checks presented to it and the right to
change, modify or terminate this checkwriting service at any time.
The checkwriting service is not available for tax-qualified retirement plans or
Class B, Class L or Class M shares of IDEX Transamerica Money Market.
HOW TO EXCHANGE SHARES
You can exchange $1,000 or more of one fund for shares in the same class of
another fund. Any CDSC will be calculated from the date you bought your original
shares. This means your new shares will be the same age as your old shares, so
your sales charge will not increase because of the exchange. The minimum
exchange to a new account is $1,000 unless an automatic investment plan is
established on the new account.
Prior to making exchanges into a fund that you do not own, read this prospectus
carefully. You can request share exchanges over the telephone unless you have
declined the privilege on your application. You can also exchange shares of the
same class automatically at regular intervals, from one fund to another.
SPECIAL SITUATIONS FOR EXCHANGING SHARES
- Class T shares may be exchanged for only Class A shares of any IDEX
fund, other than IDEX Janus Growth. Class A shares of all IDEX funds
are subject to distribution and service (12b-1) fees.
- You may not exchange other classes of shares of the IDEX funds for
Class T shares.
- IDEX reserves the right to modify or terminate the exchange privilege
at any time upon 60 days written notice.
MARKET TIMING/EXCESSIVE TRADING
IDEX DOES NOT PERMIT MARKET TIMING OR EXCESSIVE TRADING AND HAS ADOPTED SPECIAL
POLICIES TO DISCOURAGE THIS ACTIVITY. IF YOU WISH TO ENGAGE IN SUCH PRACTICES,
WE REQUEST YOU DO NOT ATTEMPT TO PURCHASE SHARES OF ANY OF THE FUNDS.
Some investors try to profit from various short-term or frequent trading
strategies known as market timing; for example, switching money into mutual
funds when they expect prices to rise and taking money out when they expect
prices to fall, or switching from one fund to another and then back again after
a short period of time. As money is shifted in and out, a fund incurs expenses
for buying and selling securities. Excessive purchases, redemptions or exchanges
of Fund shares disrupt portfolio management, hurt fund performance and drive
fund expenses higher. These costs are borne by all shareholders, including the
long-term investors who do not generate these costs.
The exchange privilege is not intended as a vehicle for short-term or excessive
trading. Each fund may limit or terminate your exchange privileges or may not
accept future investments from you if you engage in excessive trading. In
determining excessive trading, we consider frequent purchases and redemptions
having similar effects as exchanges to be excessive trading. Four or more
exchanges in a quarter (3 months) will be considered excessive trading, although
each fund reserves the right to impose restrictions even if there are less
frequent transactions.
20
Specifically, each fund reserves the right to reject any request to purchase or
exchange shares that it determines may be disruptive to efficient fund
management and harmful to existing shareholders. Such a request could be
rejected because of the timing of the investment or because a history of
excessive trading by the shareholder or accounts under common control.
OTHER ACCOUNT INFORMATION
MINIMUM PURCHASES
- Initial Investment Per Fund and Per Class: $1,000;
- Subsequent Purchases: $50.
If your check, draft or electronic transfer is returned unpaid by your bank, the
Fund may charge a $15 fee.
PRICING OF SHARES
Each fund's price (NAV) is calculated on each day the New York Stock Exchange
(NYSE) is open for business.
The NAV of fund shares is not determined on days the NYSE is closed (generally
New Year's Day, Martin Luther King Day, President's Day, Good Friday, Memorial
Day, Independence Day, Labor Day, Thanksgiving and Christmas). The NAV of each
class is calculated by dividing its assets less liabilities by the number of its
shares outstanding.
If IDEX receives your request in good order by regular closing time of the NYSE
(usually 4 p.m. New York time), you will pay or receive that day's NAV plus any
applicable sales charges. If later, it will be priced based on the next day's
NAV. Share prices may change when a fund holds shares in companies traded on
foreign exchanges that are open on days the NYSE is closed.
In determining NAV, each fund's portfolio investments are valued at market
value. Investments for which quotations are not readily available are valued at
fair value determined in good faith under the supervision of the Board of
Trustees.
MINIMUM ACCOUNT BALANCE
Due to the proportionately higher cost of maintaining customer accounts with
balances below the stated minimums for each class of shares, IDEX reserves the
right to close such accounts. However, IDEX will provide a 60-day notification
to you prior to assessing a minimum account fee, or closing any account. The
following describes the fees assessed to accounts with low balances:
No fees will be charged on:
- accounts opened within the preceding 24 months
- accounts with an active monthly Automatic Investment Plan ($50 minimum
per fund)
- accounts owned by individuals which, when combined by social security
number, have a balance of $5,000 or more
- accounts in which the balance of all accounts for that household
exceeds $5000
If your balance is below $1,000 $25.00 (annualized) until balance
reaches $1,000 or if the balance
falls below $25.00 the account will
be liquidated, as a fee.
21
TELEPHONE TRANSACTIONS
IDEX and ATIS are not liable for complying with telephone instructions which are
deemed by them to be genuine. IDEX and ATIS will employ reasonable procedures to
help ensure telephone instructions are genuine. In situations where IDEX or ATIS
reasonably believe they were acting on genuine telephone instructions, you bear
the risk of loss. These procedures may include requiring personal
identification, providing written confirmation of transactions, and tape
recording conversations. IDEX has the right to modify the telephone redemption
privilege at any time.
Telephone redemption with payment by check is not allowed within 10 days of a
change of registration/ address. Call IDEX Customer Service (1-888-233-IDEX
(4339)) or see the SAI for details. You may redeem up to $50,000 worth of shares
by phone and get your money by direct deposit to a pre-authorized bank account.
No fee is charged.
PROFESSIONAL FEES
Your financial professional may charge a fee for his or her services. This fee
will be in addition to any fees charged by IDEX. Your financial professional
will answer any questions that you may have regarding such fees.
REDEMPTIONS TRANSACTIONS PAID BY BANK WIRE
In most cases, IDEX can send your redemption money via a federal funds bank
wire. IDEX charges a $10 fee for this service, in addition to any fee your bank
may charge. For more details, call IDEX Customer Service (1-888-233-IDEX (4339))
or see the SAI.
EMPLOYEE SPONSORED ACCOUNTS
If you participate in an employer sponsored plan and wish to make an allocation
change to your current fund selection, you or your Financial Advisor must notify
IDEX by phone or in writing. Please also remember to inform your employer of the
change(s) to your fund allocation. Documentation received from your employer
will be used to properly allocate your contributions. This documentation will
supersede all other prior instructions received from you or your Financial
Advisor. (Note: If you perform a partial or complete exchange to a new fund
selection, your current fund allocation will remain unchanged for future
contributions unless specified otherwise.)
REINVESTMENT PRIVILEGE
Within a 90 day period after you sell your shares, you have the right to
"reinvest" your money in any fund of the same class. You will not incur a new
sales charge if you use this privilege within the allotted time frame. Any CDSC
you paid on your shares will be credited to your account. You may reinvest the
proceeds of a Class B share sale (less the CDSC) in Class A shares without
paying the up-front sales charge. Send your written request to IDEX along with
your check for your reinvestment privileges.
STATEMENTS AND REPORTS
IDEX will send you a confirmation statement after every transaction that affects
your account balance or registration. Please review the confirmation statement
carefully and promptly notify IDEX in writing of any error or you will be deemed
to have ratified the transaction as reported to you. If you are enrolled in the
Automatic Investment Plan and invest on a monthly basis, you will receive a
quarterly confirmation. Information about the tax status of income dividends and
capital gains distributions will be mailed to shareholders early each year.
Financial reports for the funds, which include a list of the holdings, will be
mailed twice a year to all shareholders.
A Historical Statement may be ordered for transactions of prior years.
22
SHARE CERTIFICATES
IDEX does not issue share certificates. If you are redeeming or exchanging
shares represented by certificates previously issued by IDEX, you must return
the certificates with your written redemption or exchange request. For your
protection, send your certificates by registered mail, but do not endorse them.
PERSONAL SECURITIES TRADING
IDEX permits "Access Persons" as defined by Rule 17j-1 under the 1940 Act to
engage in personal securities transactions, subject to the terms of the Code of
Ethics and Insider Trading Policy that has been adopted by the Board of Trustees
of IDEX. Access Persons must use the guidelines established by this Policy for
all personal securities transactions and are subject to certain prohibitions on
personal trading. The IDEX sub-advisers, pursuant to Rule 17j-1 and other
applicable laws, and pursuant to the terms of the Policy, must adopt and enforce
their own Code of Ethics and Insider Trading Policies appropriate to their
particular business needs. Each sub-adviser must report to the Board of Trustees
on a quarterly basis with respect to the administration and enforcement of such
Policy, including any violations thereof which may potentially affect IDEX.
DISTRIBUTIONS AND TAXES
Each of the funds intends to elect and qualify as a regulated investment company
under the Internal Revenue Code. As a regulated investment company, a fund will
not be subject to federal income tax on ordinary income and capital gains, if
any, that it distributes to its shareholders.
TAXES ON DISTRIBUTIONS FROM IDEX
The following summary does not apply to:
- qualified retirement accounts
- tax-exempt investors; or
- exempt-interest distributions from IDEX Federated Tax Exempt
Fund distributions are taxable to you as ordinary income to the extent they are
attributable to a fund's net investment income, certain net realized foreign
exchange gains, and net short-term capital gains. They are taxable to you as
long-term capital gain (at the federal maximum rate of 20%) to the extent they
are attributable to the fund's excess of net long-term capital gains over net
short-term capital losses. The tax status of any distribution is the same
regardless of how long you have been a shareholder of the fund and whether you
elect to reinvest distributions or receive cash. Certain distributions paid by a
fund in January may be taxable to shareholders as if they were received on the
prior December 31. The tax status of dividends and distributions for each
calendar year will be detailed in your annual tax statement or tax forms from
IDEX.
TAXES ON THE SALE OF SHARES
Any sale or exchange or redemption of fund shares may generate tax liability
(unless you are a tax-exempt investor or your investment is in a qualified
retirement or other tax- advantaged account). You will generally recognize
taxable gain or loss on a sale, exchange or redemption of your shares based upon
the difference between your cost (basis) in the shares and the amount you
receive for them. Any loss recognized on shares held for six months or less will
be treated as long-term capital loss to the extent of any capital gain dividends
that were received with respect to the shares.
If you receive an exempt-interest dividend on shares that are held by you for
six months or less, any loss on the sale or exchange of the shares will be
disallowed to the extent of such dividend amount.
23
WITHHOLDING TAXES
IDEX will be required to withhold 30% of any reportable income payments made to
a shareholder (which may include dividends, capital gain distributions, and
share redemption proceeds) if the shareholder has not provided IDEX with an
accurate taxpayer identification number in the manner required by IRS
regulations.
Please note that starting January 1, 2004, the withholding amount will change to
29%.
UNCASHED CHECKS ISSUED ON YOUR ACCOUNT
If any check we issue related to your account is returned by the Post Office as
undeliverable, or remains outstanding (uncashed) for six months, we reserve the
right to reinvest check proceeds back into your open account at the net asset
value next calculated after reinvestment. If applicable, we will also change
your account distribution option from CASH to REINVEST. Interest does not accrue
on amounts represented by uncashed checks.
MINIMUM DIVIDEND CHECK AMOUNTS
To control costs associated with issuing and administering dividend checks, we
reserve the right to not issue checks under a specified amount. For accounts
with the CASH BY CHECK dividend distribution option, if the dividend payment
total is less than $10, the distribution will be reinvested into the account and
no check will be issued, though the account option for future distributions will
remain unchanged, subject to the preceding paragraph.
NON-RESIDENT ALIEN WITHHOLDING
If you are a non-U.S. investor, your financial professional should determine
whether Fund shares may be sold in your jurisdiction. Shareholders that are not
U.S. persons under the Internal Revenue Code are subject to different tax rules.
Dividends, capital gains and redemptions may be subject to non-resident alien
withholding.
Additionally, a valid IRS W-8 form is required if you are not a U.S. citizen or
resident alien. Documentary evidence may also be required if a U.S. address is
indicated or if your permanent address is not the same as your mailing address.
Please see the instructions on one of the new series of IRS W-8 forms.
OTHER TAX INFORMATION
This tax discussion is for general information only. In addition to federal
income taxes, you may be subject to state, local or foreign taxes on payments
received from IDEX. More information is provided in the SAI. You should also
consult your own tax advisor for information regarding all tax consequences
applicable to your investments in IDEX.
INVESTMENT POLICY CHANGES
IDEX Transamerica Equity, IDEX Jennison Equity Opportunity, IDEX PBHG Mid Cap
Growth, IDEX Isabelle Small Cap Value, IDEX T. Rowe Price Small Cap, IDEX Great
Companies -- Technology(SM), IDEX T. Rowe Health Sciences, IDEX PIMCO Real
Return TIPS, IDEX Janus Flexible Income, IDEX Transamerica Conservative
High-Yield Bond, IDEX Transamerica Convertible Securities, and IDEX Federated
Tax Exempt, as part of each fund's investment policy, invest at least 80% of its
assets (defined as net assets plus the amount of any borrowing for investment
purposes) in certain securities as indicated in this prospectus. Shareholders
will be provided with at least 60 days' prior written notice of any changes in
the 80% investment policy. Such notice will comply with the conditions set forth
in any applicable SEC rules then in effect.
24
HOW TO BUY SHARES TO OPEN A NEW ACCOUNT (FIRST-TIME IDEX INVESTORS)
By Mail Send your completed application and check payable to:
AEGON/Transamerica Investor Services, Inc., P.O. Box 9015,
Clearwater, Florida 33758-9015;
For Overnight Delivery: 570 Carillon Parkway, St.
Petersburg, Florida 33716
Through an Authorized Dealer The dealer is responsible for opening your account and
providing IDEX with your Taxpayer ID Number. The minimum order
from an authorized dealer is $1,000 for all funds.
By Automatic Investment Plan Send your completed application, along with a check for your
initial investment (if any), payable to AEGON/Transamerica
Investor Services, Inc., P.O. Box 9015, Clearwater, Florida
33758-9015.
TO ADD TO YOUR EXISTING ACCOUNT
By Check Make your check payable to AEGON/Transamerica Investor
Services, Inc. and mail it to: P.O. Box 9015, Clearwater, FL
33758-9015; or, for overnight delivery: 570 Carillon Parkway,
St. Petersburg, FL 33716. Third party checks, or checks
endorsed to IDEX, will not be accepted. All checks must be
made payable to AEGON/Transamerica Investor Services, Inc.
IDEX will not accept money orders, traveler's checks, credit
card convenience checks or cash. Cashiers checks may be
accepted, subject to approval by ATIS. NOTE: IDEX is also
unable to process check conversion transactions.
By Automatic Investment Plan With an Automatic Investment Plan (AIP), a level dollar amount
is invested monthly and payment is deducted electronically
from your bank account. Your bank may require a 10-day
pre-note. Call or write IDEX Customer Service to establish an
AIP.
By Telephone The electronic funds transfer privilege must be established in
advance, when you open your account, or by adding this feature
to your existing account. Select "Electronic Bank Link" on the
Application or write to IDEX. Funds can then be transferred
electronically from your bank to IDEX. Call IDEX Customer
Service to invest by phone, either through our automated IDEX
InTouch(SM) system (1-888-233-IDEX (4339)), or by speaking
directly with your representative. Your bank may require a
10-day pre-note. Shares will be purchased via electronic funds
when the money is received by IDEX, usually 2-4 business days
after the request.
Through Authorized Dealers If your dealer has already established your account for you,
no additional documentation is needed. Call your dealer to
place your order. The dealer's bank may charge you for a wire
transfer. (IDEX currently does not charge for this service.)
IDEX must receive your payment within three business days
after your order is accepted.
By the Internet You may request a transfer of funds from your bank account to
IDEX. Visit our website at www.idexfunds.com. Payment will be
transferred from your bank account electronically. Shares will
be purchased via electronic funds when the money is received
by IDEX, usually 2-4 business days after the request. Please
contact IDEX at www.idexfunds.com.
By Payroll Deduction You may have money transferred regularly from your payroll to
your IDEX account. Please instruct your employer's payroll
department to do so. Call IDEX Customer Service
(1-888-233-IDEX (4339)) to establish this deduction.
By Wire Transfer Request that your bank wire funds to IDEX. You must have an
existing account to make a payment by wire transfer. Ask your
bank to send your payment to: Bank of America, NA, Tampa, FL,
ABA# 063100277, Credit: AEGON/Transamerica Investor Services
Acct #: 3601194554, Ref: Shareholder name, IDEX fund and
account numbers.
25
TO RECEIVE PAYMENT BY HOW TO REQUEST YOUR REDEMPTION
Direct Deposit -- ACH (only for Call IDEX Customer Service (1-888-233-IDEX (4339)) to verify
accounts that are not qualified that this feature is in place on your account. Maximum amount
retirement plans) per day is the lesser of your balance or $50,000. Request an
"ACH redemption" in writing, by phone (automated IDEX
InTouch(SM) system (1-888-233-IDEX (4339)) or person-to-person),
or by internet access to your account. Payment should usually
be received by your bank account 3-5 banking days after your
request. IDEX does not charge for this payment option. Certain
IRAs and Qualified Plans may not be eligible for ACH
redemptions.
Direct Deposit (electronic funds Call IDEX Customer Service (1-888-233-IDEX (4339)) to be sure
transfer-federal funds bank wire) this feature is in place on your account. Maximum amount per
day is the lesser of your available balance or $50,000 (with a
minimum of $1,000). Request an "Expedited Wire Redemption" in
writing, or by phone (person-to-person request). Payment
should be received by your bank account the nex banking day
after your request. IDEX charges $10 for this service. Your
bank may charge fee as well.
Check to the address of record WRITTEN REQUEST:
Send a letter requesting a withdrawal to IDEX and include any
share certificates you may have. Specify the fund, account
number, and dollar amount or number of shares you wish to
redeem. Mail to: AEGON/Transamerica Investor Services, Inc.,
P.O. Box 9015, Clearwater, FL 33758-9015. Attention:
Redemptions. Be sure to include all account owners' signatures
and any additional documents, as well as a signature
guarantee(s) if required (see "How To Sel Shares").
TELEPHONE OR INTERNET REQUEST:
If your request is not required to be in writing (see "How To
Sell Shares"), you may call IDEX Customer Service
(1-888-233-IDEX (4339)) and make your request using the
automated IDEX InTouch(SM) system (1-888-233-IDEX (4339)), by
person-to-person, or by accessing your account on the
internet. Maximum amount per day is the lesser of your
available balance or $50,000.
If you request that a withdrawal check to be delivered
overnight, a $20 overnight fee will be assessed; for Saturday
delivery, a $30 overnight fee will be assessed.
For your protection, if an address change was made in the last
10 days, IDEX requires a redemption request in writing, signed
and signature guaranteed by all shareholders.
Check to another party/address This request must be in writing, regardless of amount, with
all account owners' signatures guaranteed. Mail to:
AEGON/Transamerica Investor Services, Inc., P.O. Box 9015,
Clearwater, FL 33758-9015. Attention: Redemptions.
Periodic automatic payment (by You can establish a Systematic Withdrawal Plan (SWP) either at
direct the time you open your deposit-ACH or check) account or at a
later date. Call IDEX Customer Service (1-888-233-IDEX (4339))
for assistance. You must have a minimum balance of $10,000 in
your fund.
By Exchange You may request an exchange in writing, by phone (automated
IDEX InTouch(SM) system (1-888-233-IDEX (4339)) or
person-to-person), or by accessing your account through the
internet.
Through an Authorized Dealer You may redeem your shares through an authorized dealer. (They
may impose a service charge.) Contact your Registered
Representative or call IDEX Customer Service (1-888-233-IDEX
(4339)) for assistance.
NOTE: Purchases must be held at IDEX until the funds have cleared or up to 15
calendar days before they are eligible for redemption. Certain
exceptions may apply.
CHOOSING A SHARE CLASS
IDEX offers five share classes, each with its own sales charge and expense
structure. (An additional class, Class T, is offered through IDEX Janus Growth,
but Class T shares are not available to new investors.) The Class M shares have
an initial sales charge of 1.00% and a contingent deferred sales charge (CDSC)
of 1.00% if you redeem within 18 months of purchase. The sales charge and CDSC
only apply to shares purchased after February 28, 1999.
26
IDEX began offering the current Class C share on November 1, 1999. This new
Class C share has no initial or deferred sales charges. All shares that were
designated as Class C shares prior to March 1, 1999, which then converted to
Class M shares on that date, will continue as Class M shares. Effective November
11, 2002, Class C and Class M shares were closed to new investors.
IDEX also began offering Class L shares on November 11, 2002. Class L shares
have no initial sales charge and a contingent deferred sales charge of 2.00% if
you redeem within the first 12 months of purchase and 1.00% if you redeem in the
second 12 months.
The amount of your investment and the amount of time that you plan to hold your
shares will determine which class of shares you should choose. You should make
this decision carefully because all of your future investments in your account
will be in the same share class that you designate when you open your account.
Your financial professional can help you choose the share class that makes the
best sense for you.
If you are investing a large amount and plan to hold your shares for a long
period, Class A, Class L or Class M shares may make the most sense for you. If
you are investing a lesser amount, you may want to consider Class B shares (if
you plan to invest for a period of at least 6 years) or Class C shares (if you
plan to invest for a period of less than 6 years).
IDEX may, at any time and in its sole discretion, add, delete, or change the
sales charges for any share class.
CLASS A SHARES -- FRONT LOAD
With Class A shares, you pay an initial sales charge only when you buy shares.
(The offering price includes the sales charge.) NOTE: You do not pay an initial
sales charge on Class A IDEX Transamerica Money Market purchases.
If you are investing $1 million or more (either as a lump sum or through any of
the methods described in this prospectus), you can purchase Class A shares
without any sales charge. However, if you redeem any of those shares within the
first 24 months after buying them, you will pay a 1.00% CDSC, unless they were
purchased through a 401k plan.
Also, for 401k plans only, IDEX will treat Class A share purchases in an amount
of less than $1 million that are sponsored by employers with 100 or more
eligible employees as if such purchases were equal to an amount more than $1
million.
27
CLASS M SHARES -
CLASS C SHARES - (CLOSED TO NEW CLASS L SHARES - (CLOSED TO NEWCLASS T SHARES -
CLASS A SHARES - CLASS B SHARES - INVESTORS) LEVEL AND INVESTORS)(CLOSED TO NEW
FRONT LOAD BACK LOAD LEVEL LOAD BACK LOAD LEVEL LOADINVESTORS)
- - Initial sales No up-front No up-front No up-front Initial Initial
charge of 5.50% sales sales sales sales charge of sales charge of
(except for IDEX charge charge charge 1.00% 8.50% or
Janus Flexible less
Income, IDEX Deferred No deferred 12b-1 12b-1
Transamerica sales charge of sales distribution distribution - No 12b-1
Conservative 5.00% or charge and service and service distribution
High-Yield Bond, less on fees of fees of and
IDEX PIMCO Total shares you - 12b-1 1.00%* 0.90%* service
Return, IDEX sell within distribution (except for fees
PIMCO Real 6 years and service - Deferred the IDEX
Return TIPS, (see fees of sales charge of Federated - Sales
IDEX deferred 1.00%* 2.00% if Tax Exempt, charge
Transamerica sales you sell whose 12b-1 percentage
Convertible charge - No within 12 distribution can be
Securities and table) conversion to months of and service reduced in
IDEX Federated Class A purchase, fee is the same
Tax Exempt which - 12b-1 shares; and 1.00% 0.60%) four ways
is 4.75%) or distribution expenses do if you sell as Class A
less and service not within the - Deferred Shares
fees of decrease 2nd 12 sales charge of (see Class
- - no initial sales 1.00%* months of 1.00% if A Share
charge for IDEX purchase you sell Quantity
Transamerica - Automatic within 18 Discounts
Money Market conversion months of Table)
to Class A purchase
- - Discounts of shares
sales charge for after 8 - Automatic
larger years, conversion
investments (see reducing to Class A
Class A Share future Shares
Quantity annual after 10
Discount Table) expenses years,
reducing
- - 12b-1 future
distribution and annual
service fees of expenses
0.35%*
- - Lower annual
expenses than
Class B, C or M
shares due to lower 12b-1
distribution and
service fees
* See the asset allocation funds for additional information regarding 12b-1
fees.
28
CLASS B SHARES -- BACK LOAD
Class B shares are sold in amounts up to $250,000 per fund. With Class B shares,
you pay no initial sales charge when you invest, but you are charged a CDSC when
you sell shares you have held for six years or less, as described in the table
below.
Class B shares automatically convert to Class A shares after 8 years, lowering
annual expenses from that time on.
CONTINGENT DEFERRED SALES CHARGE - CLASS B SHARES
YEAR AFTER PURCHASING AS A % OF DOLLAR AMOUNT (SUBJECT TO CHANGE)
- --------------------- -------------------------------------------
First 5%
Second 4%
Third 3%
Fourth 2%
Fifth 1%
Sixth 1%
Seventh and Later 0%
CLASS C SHARES -- LEVEL LOAD
(Closed to new investors)
With Class C shares, you pay no initial sales charge or CDSC. There are 12b-1
distribution and service fees of up to 1.00% per year. (Except for the asset
allocation funds.)
CLASS L SHARES -- LEVEL LOAD
With Class L shares, you pay no initial sales charge. You will pay a 2% CDSC if
shares are redeemed during the first 12 months, and a 1.00% CDSC if redeemed
during the second 12 months.
AFSG may enter into agreements with brokers and dealers whereby such shares may
be subject to a CDSC for one year only, not the twenty-four month period
otherwise applicable to Class L shares.
CLASS M SHARES -- LEVEL LOAD
(Closed to new investors)
Class M shares are sold in amounts up to $1 million. With Class M shares, you
pay an initial sales charge of 1.00% based on offering price. (The offering
price includes the sales charge.) There are 12b-1 distribution and service fees
of 0.90% per year. If you redeem within 18 months from the date of purchase, you
will incur a CDSC of 1.00%.
Class M shares purchased on or after November 1, 1999 automatically convert to
Class A shares after 10 years, lowering annual expenses from that time on.
CONTINGENT DEFERRED SALES CHARGE
Your shares may be subject to a CDSC. Dividends and capital gains are not
subject to the sales charge. There is no charge on any increase in the value of
your shares. To ensure that you pay the lowest CDSC possible, the Fund will
always use the shares with the lowest CDSC to fill your redemption requests. If
your shares are worth less than when you bought them, the charge will be
assessed on their current, lower value. In some cases, the sales charge may be
waived.
29
CLASS A SALES CHARGE REDUCTIONS
You can lower the sales charge percentage in four ways:
- Substantial investments receive lower sales charge rates. Please see
the SAI for details on these reductions.
- The "rights of accumulation" allows you, your spouse and minor
children to include existing Class A shares (or Class T shares of IDEX
Janus Growth) as part of your current investments for sales charge
purposes. Certain qualified groups are also eligible for rights of
accumulation.
- A "letter of intent" allows you to count all Class A share investments
in an IDEX fund over the next 13 months, as if you were making them
all at once, to qualify for reduced sales charges.
- By investing as part of a qualified group.
CLASS A SHARE QUANTITY DISCOUNTS
(ALL FUNDS EXCEPT IDEX JANUS FLEXIBLE INCOME, IDEX TRANSAMERICA CONSERVATIVE
HIGH-YIELD BOND,
IDEX PIMCO TOTAL RETURN, IDEX PIMCO REAL RETURN TIPS, IDEX TRANSAMERICA
CONVERTIBLE SECURITIES,
IDEX FEDERATED TAX EXEMPT AND IDEX TRANSAMERICA MONEY MARKET)
SALES CHARGE AS % SALES CHARGE AS % OF
AMOUNT OF PURCHASE OF OFFERING PRICE AMOUNT INVESTED
------------------ ----------------- ---------------
Under $50,000 5.50% 5.82%
$50,000 to under $100,000 4.75% 4.99%
$100,000 to under $250,000 3.50% 3.63%
$250,000 to under $500,000 2.75% 2.83%
$500,000 to under $1,000,000 2.00% 2.04%
$1,000,000 and over 0.00% 0.00%
CLASS A SHARE QUANTITY DISCOUNTS
(IDEX JANUS FLEXIBLE INCOME, IDEX TRANSAMERICA CONVERTIBLE SECURITIES, IDEX
PIMCO TOTAL RETURN,
IDEX PIMCO REAL RETURN TIPS, IDEX TRANSAMERICA CONSERVATIVE HIGH-YIELD BOND &
IDEX FEDERATED TAX EXEMPT)
SALES CHARGE AS % SALES CHARGE AS % OF
AMOUNT OF PURCHASE OF OFFERING PRICE AMOUNT INVESTED
------------------ ----------------- ---------------
Under $50,000 4.75% 4.99%
$50,000 to under $100,000 4.00% 4.17%
$100,000 to under $250,000 3.50% 3.63%
$250,000 to under $500,000 2.25% 2.30%
$500,000 to under $1,000,000 1.25% 1.27%
$1,000,000 and over 0.00% 0.00%
WAIVERS OF SALES CHARGES
WAIVER OF CLASS A AND CLASS T SALES CHARGES
Class A and Class T shares may be purchased without a sales charge by:
- Current or former IDEX trustees, directors, officers, full-time
employees or sales representatives of IDEX, ATFA, any of the
sub-advisers or any of their affiliates
- Directors, officers, full-time employees and sales representatives of
dealers having a sales agreement with ATFA.
30
- Any trust, pension, profit-sharing or other benefit plan for any of
the foregoing persons.
- "Wrap" accounts for the benefit of clients of certain broker-dealers,
financial institutions or financial planners, who have entered into
arrangements with IDEX or AFSG.
Persons eligible to buy Class A and Class T shares at NAV may not impose a
sales charge when they re-sell those shares.
WAIVER OF CLASS A, CLASS B, CLASS L, CLASS M, AND CLASS T REDEMPTION CHARGES
You will not be assessed a sales charge for shares if you sell in the
following situations
- Following the death of the shareholder on redemptions from the
deceased person's account only. If this deceased person's account is
re-registered to another name, sales charges would continue to apply
to this new account.
- Following the total disability of the shareholder (as determined by
the Social Security Administration -- applies only to shares held at
the time the disability is determined).
- On redemptions made under the Fund's systematic withdrawal plan (may
not exceed 12% of the account value on the day the systematic
withdrawal plan was established). NOTE: The amount redeemed under this
waiver does not need to be under a systematic withdrawal plan. If it
is not under a systematic withdrawal plan, it is limited to one
redemption per calendar year up to 12% of your account balance at the
time of redemption.
- If you redeem your shares and reinvest the proceeds in the same class
of any fund within 90 days of redeeming, the sales charge on the first
redemption is waived.
MANAGEMENT OF THE FUND
INVESTMENT ADVISER -- The Investment Adviser serves as the investment adviser
for the Acquiring Fund. The investment adviser hired Janus, as sub-adviser, to
furnish investment advice and recommendations. The investment adviser also
monitors the sub-adviser's buying and selling of securities and administration
of the Fund.
The Investment Adviser is directly owned by Western Reserve Life Assurance Co.
of Ohio (78%) (Western Reserve) and AUSA Holding Company (22%) (AUSA), both of
which are indirect wholly-owned subsidiaries of AEGON N.V. Great Companies is a
30% owned indirect subsidiary of AUSA. AUSA is wholly-owned by Transamerica
Holding Company, which is wholly-owned by AEGON USA, Inc. (AEGON USA), a
financial services holding company whose primary emphasis is on life and health
insurance, and annuity and investment products. AEGON USA is a wholly-owned
indirect subsidiary of AEGON N.V., a Netherlands corporation and publicly traded
international insurance group. The Distributor is an affiliate of ATFA and the
Fund.
AEGON/Transamerica Series Fund, Inc. (ATSF) received an Order from the
Securities and Exchange Commission (Release IC-23379 dated August 5, 1998) that
permits ATSF and its investment adviser, the Investment Adviser, subject to
certain conditions, and without the approval of shareholders to:
(1) employ a new unaffiliated sub-adviser for a fund pursuant to the terms of a
new investment sub-advisory agreement, either as a replacement for an existing
sub-adviser or as an additional sub-adviser;
(2) materially change the terms of any sub-advisory agreement; and
(3) continue the employment of an existing sub-adviser on sub-advisory contract
terms where a contract has been assigned because of a change of control of the
sub-adviser. In such circumstances, shareholders would receive notice and
information about the new sub-adviser within ninety (90) days after the hiring
of any new sub-adviser.
The Order was issued to ATSF and is applicable to all open-end management
investment companies advised by the Investment Adviser, or a person controlling,
controlled by, or under common control with the Investment Adviser. ATSF
31
and IDEX are both advised by the Investment Adviser; thus the Order includes
both ATSF and IDEX. IDEX will also refer to this Order for any of the
transactions listed above.
DISTRIBUTION ARRANGEMENT -- IDEX has an Underwriting Agreement with the
Distributor. The Distributor is an affiliate of the Investment Adviser and IDEX.
Under this agreement, the Distributor underwrites and distributes all classes of
fund shares and bears the expenses of offering these shares to the public. The
funds pay the Distributor, or its agent, fees for its services. Of the
distribution and service fees it receives for Class A and B shares, the
Distributor, or its agent, reallows or pays to brokers or dealers who sold them
0.25% of the average daily net assets of those shares. In the case of Class C, L
or M shares, the Distributor, or its agent, reallows its entire fee to those
sellers.
DISTRIBUTION PLANS AND 12b-1 FEES -- The Acquiring Fund has adopted a
Distribution Plan pursuant to Rule 12b-1 under the 1940 Act ("12b-1 Plan"),
applicable to Class A, Class B, Class C, Class L and Class M shares. The
Distributor receives the sales fees or loads imposed on these shares (up to
5.50% of the offering price, which includes the sales load) and re-allows a
portion of those fees to the sellers of the shares. The Distributor also
receives service and distribution fees under the 12b-1 Plans as follows:
Distribution of Class A Shares. For these shares, the Acquiring Fund may pay the
Distributor a distribution fee of up to 0.35% annually which includes a service
fee of 0.25%. Fees are based on the average daily net assets of Class A shares.
However, if the service fees rise, the distribution fee is lowered so that the
total fees payable don't exceed 0.35% annually.
Distribution of Class B Shares. For these shares, the Fund may pay the
Distributor an annual distribution fee of up to 1.00%, which includes an annual
service fee of 0.25%.
Distribution of Class C Shares. For these shares, the Fund may pay the
Distributor an annual distribution fee of up to 1.00%, which includes a service
fee of 0.25%.
Distribution of Class L Shares. For these shares, the Fund may pay the
Distributor an annual distribution fee of up to 1.00%, which includes a service
fee of 0.25%.
Distribution of Class M Shares. For these shares, the Fund may pay the
Distributor an annual distribution fee of up to 0.90%, which includes a service
fee of 0.25%.
Because the Fund has a 12b-1 Plan, even though Class B and Class C shares do not
carry an up-front sales load, the higher distribution and service fees payable
by those shares may, over time, be higher than the total fees paid by owners of
Class A and Class M shares.
DISTRIBUTIONS AND DIVIDENDS
The Acquiring Fund pays dividends from net investment income, and distributes
net capital gains, if any, at least annually. Dividends and distributions are
automatically reinvested in additional shares of the respective class of the
Acquiring Fund, unless the shareholder requests cash. There are no fees or sales
charges on reinvestments.
32
FINANCIAL HIGHLIGHTS FOR ACQUIRING FUND
For a Share of Beneficial Interest Outstanding Throughout Each Period
The Acquiring Fund. The financial highlights table is intended to help you
understand the Acquiring Fund's financial performance for its shares for each
period shown. Certain information reflects financial results for a single Fund
share. The total returns in the table represent the rate that an investor would
have earned (or lost) on an investment in the Fund assuming reinvestment of all
dividends and distributions. This information through October 31, 2003 has been
derived from financial statements audited by PricewaterhouseCoopers LLP, whose
report, along with the IDEX financial statements, are included in the IDEX
Annual Report, which is available upon request.
INVESTMENT OPERATIONS DISTRIBUTIONS
NET ASSET ------------------------------------------- ----------------------------------------
FOR THE VALUE, NET NET REALIZED FROM NET FROM NET
PERIOD BEGINNING INVESTMENT AND UNREALIZED TOTAL INVESTMENT REALIZED TOTAL
ENDED(d)(g) OF PERIOD INCOME (LOSS) GAIN (LOSS) OPERATIONS INCOME GAINS DISTRIBUTIONS
----------- --------- ------------- ----------- ---------- ------ ----- -------------
Class A 10/31/2003 $16.23 $0.19 $ 1.21 $ 1.40 $(0.20) $ - $(0.20)
10/31/2002 17.31 0.29 (1.09) (0.80) (0.28) - (0.28)
10/31/2001 19.75 0.37 (2.18) (1.81) (0.35) (0.28) (0.63)
10/31/2000 18.96 0.25 1.03 1.28 (0.24) (0.25) (0.49)
10/31/1999 14.75 0.19 4.27 4.46 (0.17) (0.08) (0.25)
- ---------------------------------------------------------------------------------------------------------------------------
Class B 10/31/2003 16.22 0.08 1.18 1.26 (0.09) - (0.09)
10/31/2002 17.30 0.18 (1.09) (0.91) (0.17) - (0.17)
10/31/2001 19.73 0.25 (2.17) (1.92) (0.23) (0.28) (0.51)
10/31/2000 18.95 0.21 1.03 1.24 (0.21) (0.25) (0.46)
10/31/1999 14.74 0.08 4.27 4.35 (0.06) (0.08) (0.14)
- ---------------------------------------------------------------------------------------------------------------------------
Class C 10/31/2003 16.22 0.08 1.18 1.26 (0.09) - (0.09)
10/31/2002 17.30 0.18 (1.09) (0.91) (0.17) - (0.17)
10/31/2001 19.73 0.26 (2.18) (1.92) (0.23) (0.28) (0.51)
10/31/2000 18.95 0.21 1.03 1.24 (0.21) (0.25) (0.46)
- ---------------------------------------------------------------------------------------------------------------------------
Class L 10/31/2003 16.22 0.08 1.18 1.26 (0.09) - (0.09)
- ---------------------------------------------------------------------------------------------------------------------------
Class M 10/31/2003 16.22 0.10 1.18 1.28 (0.11) - (0.11)
10/31/2002 17.30 0.19 (1.09) (0.90) (0.18) - (0.18)
10/31/2001 19.73 0.28 (2.18) (1.90) (0.25) (0.28) (0.53)
10/31/2000 18.95 0.23 1.03 1.26 (0.23) (0.25) (0.48)
10/31/1999 14.74 0.10 4.27 4.37 (0.08) (0.08) (0.16)
33
RATIOS/SUPPLEMENTAL DATA
----------------------------------------------------------
RATIO OF EXPENSES TO
AVERAGE NET ASSETS (a) NET INVESTMENT
FOR THE NET ASSET NET ASSETS, ---------------------- INCOME (LOSS) TO
PERIOD VALUE, END OF TOTAL END OF AVERAGE PORTFOLIO
ENDED(g) PERIOD RETURN (c) PERIOD (000'S) NET(e) TOTAL(f) NET ASSETS (a) TURNOVER RATE (h)
-------- ------ ---------- -------------- ------ -------- -------------- -----------------
Class A 10/31/2003 $17.43 8.71% $ 89,335 1.73% 1.73% 1.13% 69%
10/31/2002 16.23 (4.72) 100,923 1.68 1.70 1.70 87%
10/31/2001 17.31 (9.35) 126,369 1.64 1.66 1.96 114%
10/31/2000 19.75 7.23 133,445 1.67 1.69 1.73 71%
10/31/1999 18.96 30.43 67,749 1.81 1.82 1.28 60%
- -------------------------------------------------------------------------------------------------------------------------
Class B 10/31/2003 17.39 7.84 199,472 2.37 2.37 0.48 69%
10/31/2002 16.22 (5.31) 214,019 2.33 2.35 1.05 87%
10/31/2001 17.30 (9.93) 243,387 2.29 2.31 1.31 114%
10/31/2000 19.73 6.58 229,160 2.32 2.34 1.08 71%
10/31/1999 18.95 29.64 92,833 2.46 2.47 0.63 60%
- -------------------------------------------------------------------------------------------------------------------------
Class C 10/31/2003 17.39 7.84 29,591 2.37 2.37 0.48 69%
10/31/2002 16.22 (5.31) 39,636 2.33 2.35 1.05 87%
10/31/2001 17.30 (9.93) 47,399 2.29 2.31 1.31 114%
10/31/2000 19.73 6.58 42,447 2.32 2.34 1.08 71%
- -------------------------------------------------------------------------------------------------------------------------
Class L 10/31/2003 17.39 7.84 4,354 2.38 2.39 0.48 69%
- -------------------------------------------------------------------------------------------------------------------------
Class M 10/31/2003 17.39 7.95 39,074 2.27 2.27 0.58 69%
10/31/2002 16.22 (5.23) 50,414 2.23 2.25 1.15 87%
10/31/2001 17.30 (9.84) 64,641 2.19 2.21 1.41 114%
10/31/2000 19.73 6.68 66,249 2.22 2.24 1.18 71%
10/31/1999 18.95 29.76 34,122 2.36 2.37 0.73 60%
Notes to Financial Highlights
(a) Annualized.
(b) Not annualized for periods of less than one year.
(c) Total Return has been calculated for the applicable period without
deduction of a sales load, if any, on an initial purchase. Periods of less
than one year are not annualized.
(d) Per share information is calculated based on average number of shares
outstanding for the periods ending 10/31/01, 10/31/02, (d) and 10/31/03
(e) Ratio of Net Expenses to Average Net Assets is net of fee waivers and
reimbursements by the investment adviser, if any.
(f) Ratio of Total Expenses to Average Net Assets includes all expenses before
fee waivers and reimbursements by the investment adviser.
(g) The inception date for the Acquiring Fund's offering of share Classes C and
L are as follows:
Class C - November 1, 1999
Class L - November 11, 2002.
34
APPENDIX A
AGREEMENT & PLAN OF REORGANIZATION
THIS AGREEMENT & PLAN OF REORGANIZATION (the "Plan") is made as of the 9th day
of September 2003 by IDEX Mutual Funds (the "Trust") with its principal place of
business at 570 Carillon Parkway, St. Petersburg, Florida 33716, on behalf of
IDEX Janus Balanced (the "Acquiring Fund") and IDEX Janus Growth & Income (the
"Acquired Fund"), separate series of the Trust.
This Plan is intended to be, and is adopted as a plan of reorganization and
liquidation within the meaning of Section 368(a)(1) 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 Acquired
Fund to Acquiring Fund in exchange solely for Class A, Class B, Class C, Class L
and Class M voting shares of beneficial interest of Acquiring Fund (the
"Acquiring Fund Shares"), the assumption by Acquiring Fund of all liabilities of
Acquired Fund, and the distribution of Acquiring Fund Shares to the shareholders
of Acquired Fund in complete liquidation of Acquired Fund as provided herein,
all upon the terms and conditions hereinafter set forth in this Plan.
WHEREAS, the Trust is an open-end, registered investment management company and
Acquired Fund owns securities which generally are assets of the character in
which Acquiring Fund is permitted to invest.
WHEREAS, the Trustees of the Trust have determined that the exchange of all of
the assets of Acquired Fund for Acquiring Fund Shares, and the assumption of all
liabilities of Acquired Fund by Acquiring Fund, is in the best interests of
Acquiring Fund and its shareholders, and that the interests of the existing
shareholders of Acquiring Fund would not be diluted as a result of this
transaction.
WHEREAS, the Trustees of the Trust have determined, with respect to Acquired
Fund, that the exchange of all of the assets of Acquired Fund for Acquiring Fund
Shares, and the assumption of all liabilities of Acquired Fund by Acquiring
Fund, is in the best interests of Acquired Fund and its shareholders, and that
the interests of the existing shareholders of Acquiring Fund would not be
diluted as a result of this transaction.
NOW, THEREFORE, in consideration of the premises and of the covenants and
agreements hereinafter set forth, the Trust, on behalf of Acquiring Fund and
Acquired Fund separately, hereby covenants and agrees to the following terms and
conditions:
1. TRANSFER OF ASSETS OF ACQUIRED FUND TO ACQUIRING FUND IN EXCHANGE FOR
ACQUIRING FUND SHARES, THE ASSUMPTION OF ALL ACQUIRED FUND LIABILITIES AND
THE LIQUIDATION OF ACQUIRED FUND
1.1 Subject to the requisite approval of the shareholders of Acquired Fund
and the other terms and conditions herein set forth and on the basis
of the representations and warranties contained herein, the Trust will
transfer all of Acquired Fund's assets, as set forth in paragraph 1.2,
to Acquiring Fund, and Acquiring Fund agrees in exchange therefore:
(i) to deliver to Acquired Fund the number of full and fractional
Class A, Class B, Class C, Class L and Class M Acquiring Fund Shares
determined by dividing the value of Acquired Fund's net assets with
respect to each class, computed in the manner and as of the time and
date set forth in paragraph 2.1, by the net asset value of one
Acquiring Fund Share of the same class, computed in the manner and as
of the time and date set forth in paragraph 2.2; and (ii) to assume
all liabilities of Acquired Fund. Such transactions shall take place
at the closing provided for in paragraph 3.1 (the "Closing").
1.2 The assets of Acquired Fund to be acquired by Acquiring Fund shall
consist of all assets and property, including, without limitation, all
cash, securities, commodities and futures interests and dividends or
interests receivable that are owned by Acquired Fund and any deferred
or prepaid expenses shown as an asset on the books of Acquired Fund on
the closing date provided for in paragraph 3.1 (the "Closing Date")
(collectively, "Assets").
1.3 Acquired Fund will endeavor to discharge all of its known liabilities
and obligations prior to the Closing Date. Acquiring Fund shall also
assume all of the liabilities of Acquired Fund, whether accrued or
contingent, known or unknown, existing at the Valuation Date. On or as
soon as practicable prior to the Closing Date, Acquired Fund will
declare and pay to its shareholders of record one or more dividends
and/or other distributions that, together with all previous
distributions, shall have the effect of distributing to its
shareholders (i) all of its investment company taxable income and all
of its net realized capital gains, if any, for the period from the
close of its last taxable year to the end of the business day on the
Closing; and (ii) any undistributed investment company taxable income
and net capital gain from any period to the extent not otherwise
distributed.
1.4 Immediately after the transfer of assets provided for in paragraph
1.1, Acquired Fund will distribute to Acquired Fund's shareholders of
record with respect to each class of its shares, determined as of
immediately after the close of business on the Closing Date (the
"Acquired Fund Shareholders"), on a pro rata basis within that class,
Acquiring Fund Shares of
35
the same class received by Acquired Fund pursuant to paragraph 1.1,
and will completely liquidate. Such distribution and liquidation will
be accomplished, with respect to Acquired Fund's shares, by the
transfer of Acquiring Fund Shares then credited to the account of
Acquired Fund on the books of Acquiring Fund to open accounts on the
share records of Acquiring Fund in the names of Acquired Fund
Shareholders. The aggregate net asset value of Class A, Class B, Class
C, Class L and Class M Acquiring Fund Shares to be so credited to
Class A, Class B, Class C, Class L and Class M Acquired Fund
Shareholders shall, with respect to each class, be equal to the
aggregate net asset value of Acquired Fund shares of the corresponding
class owned by such shareholders on the Closing Date. All issued and
outstanding shares of Acquired Fund will simultaneously be canceled on
the books of Acquired Fund, although share certificates representing
interests in shares of each class of Acquired Fund will represent a
number of the same class of Acquiring Fund Shares after the Closing
Date, as determined in accordance with Section 2.3. Acquiring Fund
shall not issue certificates representing Acquiring Fund Shares in
connection with such exchange.
1.5 Ownership of Acquiring Fund Shares will be shown on the books of
Acquiring Fund's transfer agent. Shares of Acquiring Fund will be
issued in the manner described in Acquiring Fund's then-current
prospectus and statement of additional information.
1.6 Any reporting responsibility of Acquired Fund including, but not
limited to, the responsibility for filing of regulatory reports, tax
returns, or other documents with the Securities and Exchange
Commission (the "Commission"), any state securities commission, and
any federal, state or local tax authorities or any other relevant
regulatory authority, is and shall remain the responsibility of
Acquired Fund.
2. VALUATION
2.1 The value of Assets shall be the value of such assets computed as of
immediately after the close of business of the New York Stock Exchange
and after the declaration of any dividends on the Closing Date (such
time and date being hereinafter called the "Valuation Date"), using
the valuation procedures set forth in the then-current prospectus and
statement of additional information, and valuation procedures
established by the Trust's Board of Trustees.
2.2 The net asset value of a Class A, Class B, Class C, Class L or Class M
Acquiring Fund Share shall be the net asset value per share computed
with respect to that class on the Valuation Date as of immediately
after the close of business of the New York Stock Exchange and after
the declaration of any dividends on the Valuation Date, using the
valuation procedures set forth in the then-current prospectus or
statement of additional information with respect to Acquiring Fund,
and valuation procedures established by the Trust's Board of Trustees.
2.3 The number of Class A, Class B, Class C, Class L and Class M Acquiring
Fund Shares to be issued (including fractional shares, if any) in
exchange for Acquired Fund's assets shall be determined by dividing
the value of the net assets with respect to Class A, Class B, Class C,
Class L and Class M shares of Acquired Fund, as the case may be,
determined using the same valuation procedures referred to in
paragraph 2.1, by the net asset value of the corresponding class of
Acquiring Fund Share, determined in accordance with paragraph 2.2.
2.4 All computations of value shall be made by Acquired Fund's designated
record keeping agent, and shall be subject to review by the
independent certified public accountants for IDEX.
3. CLOSING AND CLOSING DATE
3.1 The Closing Date shall be April 30, 2004, or such other date as the
parties may agree to in writing. All acts taking place at the Closing
shall be deemed to take place simultaneously as of immediately after
the close of business on the Closing Date unless otherwise agreed to
by the parties. The close of business on the Closing Date shall be as
of 4:00 p.m., Eastern time. The Closing shall be held at the offices
of the Trust or at such other time and/or place as the parties will
agree.
3.2 The Trust shall direct Investors Bank & Trust Company, as custodian
for Acquired Fund (the "Custodian"), to deliver, at the Closing, a
certificate of an authorized officer stating that (i) Acquired Fund's
portfolio securities, cash, and any other assets ("Assets") shall have
been delivered in proper form to Acquiring Fund within two business
days prior to or on the Closing Date, and (ii) all necessary taxes in
connection with the delivery of the Assets, including all applicable
federal and state stock transfer stamps, if any, have been paid or
provision for payment has been made. Acquired Fund's portfolio
securities represented by a certificate or other written instrument
shall be transferred and delivered by Acquired Fund as of the Closing
Date for the account of Acquiring Fund duly endorsed in proper form
for transfer in such condition as to constitute good delivery thereof.
Acquired Fund shall direct the Custodian to deliver portfolio
securities and instruments deposited with a securities depository, as
defined in Rule 17f-4 under the Investment Company Act of 1940, as
amended (the "1940 Act") as of the Closing Date by book entry in
accordance with the customary practices of such depositories and the
custodian for Acquiring Fund.
36
3.3 AEGON/Transamerica Investor Services, Inc., as transfer agent for
Acquired Fund (the "Transfer Agent"), shall deliver, on behalf of
Acquired Fund, at the Closing a certificate of an authorized officer
stating that its records contain the names and addresses of Acquired
Fund Shareholders and the number and percentage ownership of
outstanding Class A, Class B, Class C, Class L and Class M shares
owned by each such shareholder immediately prior to the Closing.
3.4 In the event that on the Valuation Date (a) the New York Stock
Exchange or another primary trading market for portfolio securities of
Acquiring Fund or Acquired Fund shall be closed to trading or trading
thereupon shall be restricted, or (b) trading or the reporting of
trading on such Exchange or elsewhere shall be disrupted so that, in
the judgment of the Board of Trustees of the Trust, accurate appraisal
of the value of the net assets of Acquiring Fund or Acquired 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.
4. REPRESENTATIONS AND WARRANTIES
4.1 The Trust, on behalf of Acquired Fund, represents and warrants to
Acquiring Fund as follows:
(a) Acquired Fund is duly organized as a series of the Trust, which
is a business trust duly organized and validly existing under the
laws of the state of Massachusetts, with power under the Trust's
Declaration of Trust to own all of its properties and assets and
to carry on its business as it is now being conducted;
(b) The Trust is a registered open-end investment management company,
and its registration with the Commission as an investment company
under the 1940 Act, and the registration of its shares under the
Securities Act of 1933, as amended ("1933 Act"), are in full
force and effect;
(c) No consent, approval, authorization, or order of any court or
governmental authority is required for the consummation by
Acquired Fund of the transactions contemplated herein, except
such as have been obtained under the 1933 Act, the Securities
Exchange Act of 1934, as amended (the "1934 Act") and the 1940
Act, and such as may be required by state securities laws;
(d) The current prospectus and statement of additional information of
Acquired Fund and each prospectus and statement of additional
information of Acquired Fund used at all times prior to the date
of this Plan conforms or conformed at the time of its use in all
material respects to the applicable requirements of the 1933 Act
and the 1940 Act and the rules and regulations of the Commission
thereunder and does not or did not at the time of its use 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;
(e) On the Closing Date, the Trust, on behalf of Acquired Fund will
have good and marketable title to the Assets to be transferred to
Acquiring Fund pursuant to paragraph 1.2 and full right, power,
and authority to sell, assign, transfer and deliver such assets
hereunder free of any liens or other encumbrances, and upon
delivery and payment for such assets, the Trust, on behalf of
Acquiring Fund, will acquire good and marketable title thereto,
subject to no restrictions on the full transfer thereof,
including such restrictions as might arise under the 1933 Act,
other than as disclosed to Acquiring Fund;
(f) Acquired Fund is not engaged currently, and the execution,
delivery and performance of this Plan will not result, in (i) a
material violation of the Trust's Declaration of Trust or Bylaws
or of any agreement, indenture, instrument, contract, lease or
other undertaking to which the Trust, on behalf of Acquired Fund
is a party or by which it is bound, or (ii) the acceleration of
any obligation, or the imposition of any penalty, under any
agreement, indenture, instrument, contract, lease, judgment or
decree to which the Trust, on behalf of Acquired Fund, is a party
or by which it is bound;
(g) Material contracts or other commitments (other than this Plan)
that will be terminated with liability to it prior to the Closing
Date;
(h) Except as otherwise disclosed in writing to and accepted by the
Trust, on behalf of Acquiring Fund, no litigation or
administrative proceeding or investigation of or before any court
or governmental body is presently pending or, to its knowledge,
threatened against Acquired Fund or any of its properties or
assets that, if adversely determined, would materially and
adversely affect its financial condition or the conduct of its
business. The Trust, on behalf of Acquired 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;
37
(i) The Statement of Assets and Liabilities, including the Schedule
of Investments, at October 31, 2003 of Acquired Fund, and the
Statements of Operations and of Changes in Net Assets and the
Financial Highlights for the periods then ended, have been
audited by PricewaterhouseCoopers LLP, independent certified
public accountants. Such statements are in accordance with
generally accepted accounting principles ("GAAP") consistently
applied, and such statements (copies of which have been furnished
to Acquiring Fund) present fairly, in all material respects, the
financial condition of Acquired Fund as of such date;
(j) Since October 31, 2003 there has been no material adverse change
in Acquired Fund's financial condition, assets, liabilities or
business, other than changes occurring in the ordinary course of
business, or any incurrence by Acquired Fund of indebtedness
maturing more than one year from the date such indebtedness was
incurred, except as otherwise disclosed to and accepted by
Acquiring Fund. For the purposes of this subparagraph (j), a
decline in net asset value per share of Acquired Fund due to
declines in market values of securities in Acquired Fund's
portfolio, the discharge of Acquired Fund liabilities, or the
redemption of Acquired Fund shares by shareholders of Acquired
Fund shall not constitute a material adverse change;
(k) On the Closing Date, all federal and other tax returns and
reports of Acquired Fund required by law to have been filed by
such date (including any extensions) shall have been filed and
are or will be correct in all material respects, and all federal
and other taxes shown as due or required to be shown as due on
said returns and reports shall have been paid or provision shall
have been made for the payment thereof, and to the best of
Acquired Fund's knowledge, no such return is currently under
audit and no assessment has been asserted with respect to such
returns;
(l) For each taxable year of its operation (including the taxable
year ending on the Closing Date), Acquired Fund has met the
requirements of Subchapter M of the Code for qualification as a
regulated investment company and has elected to be treated as
such, has been eligible to and has computed its federal income
tax under Section 852 of the Code, and will have distributed all
of its investment company taxable income and net capital gain (as
defined in the Code) that has accrued through the Closing Date,
and before the Closing Date will have declared dividends
sufficient to distribute all of its investment company taxable
income and net capital gain for the period ending on the Closing
Date;
(m) All issued and outstanding shares of Acquired Fund are, and on
the Closing Date will be, duly and validly issued and
outstanding, fully paid and non-assessable by the Trust and have
been offered and sold in every state and the District of Columbia
in compliance in all material respects with applicable
registration requirements of the 1933 Act and state securities
laws. All of the issued and outstanding shares of Acquired 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, on behalf
of Acquired Fund, as provided in paragraph 3.3. Acquired Fund
does not have outstanding any options, warrants or other rights
to subscribe for or purchase any of the shares of Acquired Fund,
nor is there outstanding any security convertible into any of
Acquired Fund shares;
(n) The execution and performance of this Plan will have been duly
authorized prior to the Closing Date by all necessary action, if
any, on the part of the Trustees of the Trust, on behalf of
Acquired Fund, and, subject to the approval of the shareholders
of Acquired Fund, this Plan will constitute a valid and binding
obligation of Acquired Fund, enforceable in accordance with its
terms, subject, as to enforcement, to bankruptcy, insolvency,
reorganization, moratorium and other laws relating to or
affecting creditors' rights and to general equity principles;
(o) The information to be furnished by Acquired Fund for use in
registration statements, proxy materials and other documents
filed or to be filed with any federal, state or local regulatory
authority (including the National Association of Securities
Dealers, Inc.), which may be necessary in connection with the
transactions contemplated hereby, shall be accurate and complete
in all material respects and shall comply in all material
respects with federal securities and other laws and regulations
thereunder applicable thereto.
4.2 The Trust, on behalf of Acquiring Fund, represents and warrants to
Acquired Fund as follows:
(a) Acquiring Fund is duly organized as a series of the Trust, which
is a business trust duly organized and validly existing under the
laws of the State of Massachusetts, with power under the Trust's
Declaration of Trust to own all of its properties and assets and
to carry on its business as it is now being conducted;
(b) The Trust is a registered open-end investment management company,
and its registration with the Commission as an investment company
under the 1940 Act and the registration of its shares under the
1933 Act, including the shares of Acquiring Fund, are in full
force and effect;
38
(c) No consent, approval, authorization, or order of any court or
governmental authority is required for the consummation by
Acquiring Fund of the transactions contemplated herein, except
such as have been obtained under the 1933 Act, the 1934 Act and
the 1940 Act and such as may be required by state securities
laws;
(d) The current prospectus and statement of additional information of
Acquiring Fund and each prospectus and statement of additional
information of Acquiring Fund used at all times prior to the date
of the Plan conforms or conformed at the time of its use in all
material respects to the applicable requirements of the 1933 Act
and the 1940 Act and the rules and regulations of the Commission
thereunder and does not or did not at the time of its use 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;
(e) On the Closing Date, the Trust, on behalf of Acquiring Fund, will
have good and marketable title to Acquiring Fund's assets, free
of any liens of other encumbrances, except those liens or
encumbrances as to which Acquired Fund has received notice and
necessary documentation at or prior to the Closing;
(f) Acquiring Fund is not engaged currently, and the execution,
delivery and performance of this Plan will not result, in (i) a
material violation of the Trust's Declaration of Trust or Bylaws
or of any agreement, indenture, instrument, contract, lease or
other undertaking to which Acquiring Fund is a party or by which
it is bound, or (ii) the acceleration of any obligation, or the
imposition of any penalty, under any agreement, indenture,
instrument, contract, lease, judgment or decree to which
Acquiring Fund, is a party or by which it is bound;
(g) Except as otherwise disclosed in writing to and accepted by
Acquired Fund, no litigation or administrative proceeding or
investigation of or before any court or governmental body is
presently pending or, to its knowledge, threatened against
Acquiring Fund or any of its properties or assets that, if
adversely determined, would materially and adversely affect its
financial condition or the conduct of its business. The Trust, on
behalf of 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 herein contemplated;
(h) The Statement of Assets and Liabilities, including the Schedule
of Investments, at October 31, 2003 of the Acquiring Fund, and
the Statement of Operations and of Changes in Net Assets and the
Financial Highlights for the periods then ended, have been
audited by PricewaterhouseCoopers LLP, independent certified
public accountants. Such statements are in accordance with GAAP
consistently applied, and such statements (copies of which have
been furnished to Acquired Fund) present fairly, in all material
respects, the financial condition of Acquiring Fund as of such
date;
(i) Since October 31, 2003, there has not been any material adverse
change in Acquiring Fund's financial condition, assets,
liabilities or business, other than changes occurring in the
ordinary course of business, or any incurrence by Acquiring Fund
of indebtedness maturing more than one year from the date such
indebtedness was incurred, except as otherwise disclosed to and
accepted by Acquired Fund. For purposes of this subparagraph (i),
a decline in net asset value per share of Acquiring Fund due to
declines in market values of securities in Acquiring Fund's
portfolio, the discharge of Acquiring Fund liabilities, or the
redemption of Acquiring Fund Shares by shareholders of Acquiring
Fund, shall not constitute a material adverse change;
(j) On the Closing Date, all federal and other tax returns and
reports of Acquiring Fund required by law to have been filed by
such date (including any extensions) shall have been filed and
are or will be correct in all material respects, and all federal
and other taxes shown as due or required to be shown as due on
said returns and reports shall have been paid or provision shall
have been made for the payment thereof, and to the best of
Acquiring Fund's knowledge no such return is currently under
audit and no assessment has been asserted with respect to such
returns;
(k) For each taxable year of its operation, Acquiring Fund has met
the requirements of Subchapter M of the Code for qualification as
a regulated investment company and has elected to be treated as
such, has been eligible to and has computed its federal income
tax under Section 852 of the Code, has distributed all of its
investment company taxable income and net capital gain (as
defined in the Code) for periods ending prior to the Closing
Date, and will do so for the taxable year including the Closing
Date;
(l) All issued and outstanding Acquiring Fund Shares are, and on the
Closing Date will be, duly and validly issued and outstanding,
fully paid and non-assessable by the Trust and have been offered
and sold in every state and the District of Columbia in
compliance in all material respects with applicable registration
requirements of the 1933 Act and state securities laws. Acquiring
Fund does not have outstanding any options, warrants or other
rights to
39
subscribe for or purchase any Acquiring Fund Shares, nor is there
outstanding any security convertible into any Acquiring Fund
Shares;
(m) The execution, delivery and performance of this Plan will have
been fully authorized prior to the Closing Date by all necessary
action, if any, on the part of the Trustees of the Trust on
behalf of Acquiring Fund and this Plan will constitute a valid
and binding obligation of Acquiring Fund, enforceable in
accordance with its terms, subject, as to enforcement, to
bankruptcy, insolvency, reorganization, moratorium and other laws
relating to or affecting creditors' rights and to general equity
principles;
(n) Acquiring Fund Shares to be issued and delivered to Acquired
Fund, for the account of Acquired Fund Shareholders, pursuant to
the terms of this Plan, will on the Closing Date have been duly
authorized and, when so issued and delivered, will be duly and
validly issued Acquiring Fund Shares, and will be fully paid and
non-assessable by the Trust;
(o) The information to be furnished by Acquiring Fund for use in the
registration statements, proxy materials and other documents that
may be necessary in connection with the transactions contemplated
hereby shall be accurate and complete in all material respects
and shall comply in all material respects with federal securities
and other laws and regulations applicable thereto; and
(p) That insofar as it relates to Trust or Acquiring Fund, the
Registration Statement relating to Acquiring Fund Shares issuable
hereunder, and the proxy materials of Acquired Fund to be
included in the Registration Statement, and any amendment or
supplement to the foregoing, will, from the effective date of the
Registration Statement through the date of the meeting of
shareholders of Acquired Fund contemplated therein (i) 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
provided, however, that the representations and warranties in
this subparagraph (p) shall not apply to statements in or
omissions from the Registration Statement made in reliance upon
and in conformity with information that was furnished by Acquired
Fund for use therein, and (ii) comply in all material respects
with the provisions of the 1933 Act, the 1934 Act and the 1940
Act and the rules and regulations thereunder.
5. COVENANTS OF ACQUIRING FUND AND ACQUIRED FUND
5.1 Acquiring Fund and Acquired 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 the
declaration and payment of customary dividends and distributions, and
any other distribution that may be advisable.
5.2 Acquired Fund will call a meeting of shareholders of Acquired Fund to
consider and act upon this Plan and to take all other actions
necessary to obtain approval of the transactions contemplated herein.
5.3 To the extent required by applicable law, the Trust will call a
meeting of the shareholders of Acquired Fund to consider and act upon
this Plan and to take all other action necessary to obtain approval of
the transactions contemplated herein.
5.4 Acquired Fund covenants that the Class A, Class B, Class C, Class L
and Class M Acquiring Fund Shares to be issued hereunder are not being
acquired for the purpose of making any distribution thereof, other
than in accordance with the terms of this Plan.
5.5 Acquired Fund will assist Acquiring Fund in obtaining such information
as Acquiring Fund reasonably requests concerning the beneficial
ownership of Acquired Fund shares.
5.6 Subject to the provisions of this Plan, Acquiring Fund and Acquired
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
Plan.
5.7 As soon as is reasonably practicable after the Closing, Acquired Fund
will make a liquidating distribution to its shareholders consisting of
the Class A, Class B, Class C, Class L and Class M Acquiring Fund
Shares received at the Closing.
5.8 Acquiring Fund and Acquired Fund shall each use its reasonable best
efforts to fulfill or obtain the fulfillment of the conditions
precedent to effect the transactions contemplated by this Plan as
promptly as practicable.
5.9 The Trust, on behalf of Acquired Fund, covenants that it will, from
time to time, as and when reasonably requested by Acquiring Fund,
execute and deliver or cause to be executed and delivered all such
assignments and other instruments, and will take or cause to be taken
such further action as the Trust, on behalf of Acquiring Fund, may
reasonably deem
40
necessary or desirable in order to vest in and confirm (a) the Trust,
on behalf of Acquiring Fund's, title to and possession of Acquiring
Fund's shares to be delivered hereunder, and (b) the Trust, on behalf
of Acquiring Fund's, title to and possession of all of the assets and
otherwise to carry out the intent and purpose of this Plan.
5.10 Acquiring Fund will 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 may be necessary in order to
continue its operations after the Closing Date.
6. CONDITIONS PRECEDENT TO OBLIGATIONS OF ACQUIRED FUND
The obligations of the Trust, on behalf of Acquired Fund, to consummate the
transactions provided for herein shall be subject, at the Trust's election,
to the performance by the Trust, on behalf of Acquiring Fund, of all the
obligations to be performed by it hereunder on or before the Closing Date,
and, in addition thereto, the following further conditions:
6.1 All representations and warranties of the Trust, on behalf of
Acquiring Fund, and the Trust contained in this Plan 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 Plan, as
of the Closing Date, with the same force and effect as if made on and
as of the Closing Date;
6.2 The Trust, on behalf of Acquiring Fund, shall have performed all of
the covenants and complied with all of the provisions required by this
Plan to be performed or complied with by the Trust, on behalf of
Acquiring Fund, on or before the Closing Date; and
6.3 Acquired Fund and Acquiring Fund shall have agreed on the number of
full and fractional Acquiring Fund Shares of each class to be issued
in connection with the Reorganization after such number has been
calculated in accordance with paragraph 1.1.
7. CONDITIONS PRECEDENT TO OBLIGATIONS OF ACQUIRING FUND
The obligations of the Trust, on behalf of Acquiring Fund, to complete the
transactions provided for herein shall be subject, at the Trust's election,
to the performance by Acquired Fund of all of 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 Trust, on behalf of Acquired
Fund, contained in this Plan 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 Plan, as of the Closing Date,
with the same force and effect as if made on and as of the Closing
Date;
7.2 The Trust, on behalf of Acquired Fund, shall have performed all of the
covenants and complied with all of the provisions required by this
Plan to be performed or complied with by the Trust, on behalf of
Acquired Fund, on or before the Closing Date;
7.3 The Trust, on behalf of Acquired Fund and Acquiring Fund, shall have
agreed on the number of full and fractional Acquiring Fund Shares of
each class to be issued in connection with the Reorganization after
such number has been calculated in accordance with paragraph 1.1;
7.4 Acquired Fund shall have declared and paid a distribution or
distributions prior to the Closing that, together with all previous
distributions, shall have the effect of distributing to its
shareholders (i) all of its investment company taxable income and all
of its net realized capital gains, if any, for the period from the
close of its last taxable year to 4:00 p.m. Eastern Time on the
Closing; and (ii) any undistributed investment company taxable income
and net realized capital gains from any period to the extent not
otherwise already distributed.
8. FURTHER CONDITIONS PRECEDENT TO OBLIGATIONS OF ACQUIRING FUND AND ACQUIRED
FUND
If any of the conditions set forth below do not exist on or before the
Closing Date with respect to the Trust, on behalf of Acquired Fund or
Acquiring Fund, the other party to this Plan shall, at its option, not be
required to consummate the transactions contemplated by this Plan:
8.1 The Plan and the transactions contemplated herein shall have been
approved by the requisite vote, if any, of the holders of the
outstanding shares of Acquired Fund in accordance with the provisions
of the Trust's Declaration of Trust, By-Laws, applicable Massachusetts
law and the 1940 Act, and certified copies of the resolutions
evidencing such approval shall have been delivered to Acquiring Fund.
Notwithstanding anything herein to the contrary, Trust, on behalf of
Acquiring Fund or Acquired Fund, may not waive the conditions set
forth in this paragraph 8.1;
41
8.2 On the Closing Date, no action, suit or other proceeding shall be
pending or, to its knowledge, threatened 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 Plan 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 deemed
necessary by the Trust 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 Acquiring Fund or Acquired 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; and
8.5 Dechert shall deliver an opinion addressed to the Trust substantially
to the effect that, based upon certain facts, assumptions, and
representations, the transaction contemplated by this Plan shall
constitute a tax-free reorganization for federal income tax purposes,
unless, based on the circumstances existing at the time of the
Closing, Dechert determines that the transaction contemplated by this
Plan does not qualify as such. The delivery of such opinion is
conditioned upon receipt by Dechert of representations it shall
request of the Trust. Notwithstanding anything herein to the contrary,
the Trust may not waive the condition set forth in this paragraph 8.5.
9. BROKERAGE FEES AND EXPENSES
9.1 The Trust, on behalf of Acquiring Fund, represents and warrants to the
other that there are no brokers or finders entitled to receive any
payments in connection with the transactions provided for herein.
9.2 The expenses relating to the proposed Reorganization will be paid by
the Investment Adviser, AEGON/Transamerica Fund Advisers, Inc. The
costs of the Reorganization shall include, but not be limited to,
costs associated with obtaining any necessary order of exemption from
the 1940 Act, preparation of the Registration Statement, printing and
distributing Acquiring Fund's prospectus and Acquired Fund's proxy
materials, legal fees, accounting fees, securities registration fees,
and expenses of holding the shareholders' meeting.
10. ENTIRE AGREEMENT; SURVIVAL OF WARRANTIES
The representations, warranties and covenants contained in this Plan or in
any document delivered pursuant hereto or in connection herewith shall
survive the consummation of the transactions contemplated hereunder. The
covenants to be performed after the Closing and the obligations of each of
Acquired Fund and Acquiring Fund in sections 9.1 and 9.2 shall survive the
Closing.
11. TERMINATION
This Plan and the transactions contemplated hereby may be terminated and
abandoned by resolution of the Board of Trustees, at any time prior to the
Closing Date, if circumstances should develop that, in the opinion of the
Board, make proceeding with the Plan inadvisable.
12. AMENDMENTS
This Plan may be amended, modified or supplemented in such manner as may be
set forth in writing by the authorized officers of the Trust; provided,
however, that following any meeting of the shareholders called by the
Trust, on behalf of Acquired Fund, pursuant to paragraph 5.2 of this Plan,
no such amendment may have the effect of changing the provisions for
determining the number of Class A, Class B, Class C, Class L and Class M
Acquiring Fund Shares to be issued to Acquired Fund Shareholders under this
Plan to the detriment of such shareholders without their further approval.
13. HEADINGS; GOVERNING LAW; ASSIGNMENT; LIMITATION OF LIABILITY
13.1 The Article and paragraph headings contained in this Plan are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Plan.
13.2 This Plan may be executed in any number of counterparts, each of which
shall be deemed to be an original.
13.3 This Plan shall be governed by and construed in accordance with the
laws of the State of Massachusetts without regard to its principles of
conflicts of laws.
42
13.4 This Plan 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 Plan.
13.5 It is expressly agreed that the obligations of the parties hereunder
shall not be binding upon any of the Trustees, shareholders, nominees,
officers, agents, or employees of the Trust personally, but shall bind
only property of Acquired Fund, as provided in the Declaration of
Trust of the Trust. The execution and delivery by such officers shall
not be deemed to have been made by any of them individually or to
impose any liability on any of them personally, but shall bind only
the property of each party.
IN WITNESS WHEREOF, the Trust, on behalf of Acquired Fund and Acquiring Fund,
has caused this Plan to be approved and executed by its President.
IDEX Mutual Funds
By: /s/ Brian C. Scott
Name: Brian C. Scott
Title: President & Chief Executive Officer
43
APPENDIX B
SET FORTH BELOW IS AN EXCERPT FROM THE IDEX ANNUAL REPORT, DATED OCTOBER 31,
2003, REGARDING THE ACQUIRING FUND'S PERFORMANCE:
JANUS BALANCED
MARKET ENVIRONMENT
For the first time since 2000, all three popular U.S. stock market indices ended
the fiscal year with gains. The Dow Jones Industrial Average added 19.50% and
the broad-based Standard and Poor's 500 Composite Stock Index ("S&P 500")
climbed 20.79%. More than doubling those returns, the technology-dominated
NASDAQ Composite Index surged 45.31% for the twelve months. Treasury yields rose
and fell with the headline news and the fortunes of the stock market.
The fiscal year got off to a good start with hopes of a pickup in corporate
profits and a resumption of capital expenditures in the new year. Although the
stock market rallied early in the fiscal year, the rebound was short-lived.
Despite the fact that mortgage interest rates fell to historic lows and the
housing market remained strong, a looming conflict with Iraq worried investors
and consumers alike. Rising unemployment, a persistent lack of new jobs and
soaring oil prices also were causes for concern. After hitting a trough in the
four months leading up to the war, however, both the market and consumer
confidence bounced back sharply when hostilities began in mid-March. Later,
signs that the manufacturing sector was emerging from a two-year slump and a
tax-cut driven increase in consumer spending also helped to lift investors'
spirits. But the health of the economy still was in doubt as job losses mounted.
The Federal Reserve Board acknowledged the mixed picture, cutting its benchmark
federal funds rate to an over 40-year low of 1% in an attempt to spur corporate
investment and hiring. As the fiscal year came to a close, stocks added to their
2003 gains. Feelings of cautious optimism, fueled by an acceleration of
quarterly earnings and a better-than-expected jump in economic growth, prevailed
despite weak job growth and questions about whether the positive momentum could
be sustained.
PERFORMANCE
For the year ended October 31, 2003, IDEX Janus Balanced underperformed its
primary benchmark, the S&P 500, which returned 20.79% and outperformed its
secondary benchmark, the Lehman Brothers U.S. Government/Credit Index ("LB
Index"), which returned 6.17%.
MANAGER'S OVERVIEW
Q. WHICH INDIVIDUAL HOLDINGS HAD THE GREATEST NEGATIVE IMPACT ON THE FUND'S
PERFORMANCE?
Our investment in payroll and tax .ling processor Automatic Data Processing,
Inc. proved to be one of the biggest detractors from our performance during the
last twelve months. Also negatively impacting the Fund were media conglomerate,
Time Warner Inc. (formerly AOL TimeWarner Inc.) and El Paso Corporation, a
leading provider of natural gas services. Other disappointments included
insurance titan American International Group, Inc., and diversified
entertainment company, Viacom, Inc., which traded down during the period.
Q. WHICH HOLDINGS HAD THE GREATEST POSITIVE IMPACT ON THE FUND'S PERFORMANCE?
The Fund's biggest positive contributor during the period was Internet portal,
Yahoo! Inc., which saw its stock price appreciate as earnings increased and
optimism for an economic rebound took hold. Another technology bellwether, Texas
Instruments Incorporated, also posted positive returns and contributed greatly
to the Fund's performance. Financial leader Citigroup Inc., saw its shares trade
significantly higher, as did Best Buy Co., Inc., the specialty retailer.
Rounding out our list of top-five performers over the past year was Marriott
International, Inc., the hotelier giant.
While the equity portion of the Fund made a much more significant contribution
to our absolute performance than the income portion did, we are pleased to note
that our fixed-income investments collectively outpaced the LB Index.
Q. WHICH SECTORS HAD THE GREATEST IMPACT ON THE FUND'S PERFORMANCE?
While maintaining our bottom-up approach to building the portfolio one security
at a time, certain sectors did have a material impact on the Fund. For example,
the sector with the greatest positive impact on our absolute performance was
information technology. However, the Fund's underweight position in technology
compared to the S&P 500 was the primary reason we underperformed the S&P 500, as
this was a particularly strong performing area of the market during the period.
Also contributing to this relative underperformance were weak results posted by
several of our holdings within the consumer discretionary and the consumer
staples sectors, although, on an absolute basis, these two groups contributed
positively to the Fund's results. Meanwhile, sectors that detracted from our
absolute results included telecommunications and utilities, two areas to which
we had only minimal exposure.
Q. HOW WILL YOU MANAGE THE FUND IN THE MONTHS AHEAD?
While we remain cautious about the pace of such a recovery, our company contacts
are becoming slightly more optimistic. As a result, we have focused on
increasing our holdings in companies that we believe have higher-than-average
revenue growth potential and meaningful operating leverage. Additionally, we
have added incrementally to holdings that we believe will benefit from a
cyclical rebound. As always, our focus will be on attractively valued,
well-managed companies that are intently focused on cash flow generation,
managing costs and growing their markets, while paying constant attention to
their balance sheets. We believe this is the best approach to creating
opportunity for our investors, without subjecting them to undue volatility.
Karen L. Reidy
Fund Manager
Janus Capital Management, LLC
IDEX Janus Balanced
....SEEKS LONG-TERM CAPITAL GROWTH.
IDEX Mutual Funds Annual Report 2003
IDEX Janus Balanced 1
AVERAGE ANNUAL TOTAL RETURN FOR PERIODS ENDED 10/31/03
1 Year 5 Years From Inception Inception Date
------ ------- -------------- --------------
Class A (NAV) 8.71% 5.60% 11.45% 12/2/94
Class A (POP) 2.73% 4.41% 10.75% 12/2/94
S&P 5001 20.79% 0.53% 11.75% 12/2/94
LBGC(1) 6.17% 6.57% 8.22% 12/2/94
Class B (NAV) 7.84% 4.91% 10.02% 10/1/95
Class B (POP) 2.84% 4.74% 10.02% 10/1/95
Class C (NAV) 7.84% -0.50% 11/1/99
Class L (NAV) - 7.84% 11/11/02
Class L (POP) - 5.84% 11/11/02
Class M (NAV) 7.95% 5.01% 10.84% 12/2/94
Class M (POP) 5.87% 4.80% 10.72% 12/2/94
NOTES
(1) The Standard & Poor's 500 Composite Stock (S&P 500) Index and Lehman
Brothers U.S. Government/Credit (LBGC) Index are unmanaged indices used as a
general measure of market performance. Calculations assume dividends and capital
gains are reinvested and do not include any managerial expenses. From inception
calculation is based on life of Class A shares. Source: Standard & Poor's
Micropaltr Micropal, Inc. 2003 - 1-800-596-5323 - http://www.micropal.com.
The performance data presented represents past performance, future results may
vary. Performance data does not re.ect the deduction of taxes that would be paid
on fund distributions or the redemption of fund shares. Investment return and
principal value will .uctuate so that an investor's shares, when redeemed, may
be worth more or less than their original cost. Current performance may be lower
or higher than performance quoted.
Public Offering Price (POP) returns include the reinvestment of dividends and
capital gains and re.ect the maximum sales charge of 5.5% for A shares and 1%
for M shares or the maximum applicable contingent deferred sales charge (5% in
the 1st year, decreasing to 0% after 6 years) for Class B shares, (2% in the 1st
year and 1% in the 2nd year) for Class L shares and 1% (during the 1st 18
months) for Class M shares. Class C shares do not impose a sales charge. Net
Asset Value (NAV) returns include the reinvestment of dividends and capital
gains but do not re.ect any sales charges. Class C and M shares are not
available to new investors.
Periods less than 1 year represent total return and are not annualized.
This material must be preceded or accompanied by a current prospectus, which
includes speci.c contents regarding the investment objectives and policies of
this fund.
PART B
IDEX Mutual Funds
Statement of Additional Information
March 10, 2004
Acquisition of the Assets and Liabilities of By and in Exchange for Shares of
TA IDEX Janus Growth & Income (the "Acquired TA IDEX Janus Balanced (the "Acquiring Fund")
Fund") 570 Carillon Parkway, St. Petersburg, Florida 33716
570 Carillon Parkway, St. Petersburg, Florida 33716
This Statement of Additional Information is available to the shareholders of the
Acquired Fund in connection with a proposed transaction whereby all of the
assets and liabilities of the Acquired Fund will be transferred to the Acquiring
Fund in exchange for shares of the Acquiring Fund.
This Statement of Additional Information of the Acquiring Fund consists of this
cover page, pro forma financial statements, and the following documents, each of
which was filed electronically with the Securities and Exchange Commission and
is incorporated by reference herein:
1. The Statement of Additional Information for IDEX Mutual Funds dated March
1, 2004.
2. The Financial Statements of the Acquired Fund and the Acquiring Fund as
included in the IDEX Annual Report for the year ended October 31, 2003,
Registration No. 033-02659 (Annual Report filed on Form N-CSR on January 8,
2004).
This Statement of Additional Information is not a prospectus. A Proxy
Statement/Prospectus dated March 10, 2004 relating to the reorganization of the
Acquired Fund may be obtained, without charge, by writing to IDEX Mutual Funds
at 570 Carillon Parkway, St. Petersburg, Florida 33716 or calling (888)
233-4339. This Statement of Additional Information should be read in conjunction
with the Proxy Statement/Prospectus.
44
PART C
OTHER INFORMATION
Item 15. Indemnification
A policy of insurance covering ATFA, its subsidiaries, AFSG and all of the
registered investment companies advised by ATFA insures the Registrant's
directors and officers and others against liability arising by reason of an
alleged breach of duty caused by any negligent act, error or accidental omission
in the scope of their duties.
Provisions relating to indemnification of the Registrant's Trustees and
employees are included in Registrant's Restatement of Declaration of Trust and
Bylaws, which are incorporated herein by reference.
Insofar as indemnification for liability arising under the Securities Act of
1933 may be permitted to Trustees, officers and controlling persons, or
otherwise, Registrant has been advised that in the opinion of the Commission
such indemnification may be against public policy as expressed in the Act and
may be, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by Registrant of expenses
incurred or paid by a Trustee, officer or controlling person of Registrant in
the successful defense of any action, suit or proceeding) is asserted by such
Trustee, officer or controlling person in connection with the securities being
registered, Registrant will, unless in the opinion of its counsel the matter has
been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
Item 16. Exhibits
(1) Restatement of Declaration of Trust and all amendments are
incorporated herein by reference to the Registrant's Registration
Statement on Form N-1A (File 33-2659), Post-Effective Amendment No.
24, as filed with the SEC on November 15, 1996.
(2) Amended and Restated By-Laws are incorporated herein by reference to
the Registrant's Registration Statement on Form N-1A (File No.
33-2659), Post-Effective Amendment No. 24, as filed with the SEC on
November 15, 1996.
(3) Not Applicable
(4) Plan of Reorganization is filed herewith as Exhibit A to the
Prospectus/Proxy Statement.
(5) See Exhibits 1 and 2.
(6) (a) Investment Advisory Agreement is incorporated herein by reference
to the Registrant's Registration Statement on Form N-1A (File No.
33-2659), Post-Effective Amendment No. 39, as filed with the SEC on
September 15, 2000. (b) Sub-Advisory Agreement is incorporated herein
by reference to the Registrant's Registration Statement on Form N-1A
(File No. 33-2659), Post-Effective Amendment No. 39, as filed with the
SEC on September 15, 2000.
(7) Underwriting Agreement is incorporated herein by reference to the
Registrant's Registration Statement on Form N-1A (File No. 33-2659),
Post-Effective Amendment No. 51, as filed with the SEC on December 13,
2002.
(8) Trustees Deferred Compensation Plan is incorporated herein by
reference to the Registrant's Registration Statement on Form N-1A
(File No. 33-2659), Post-Effective Amendment No. 25, as filed with the
SEC on January 31, 1997.
(9) Custodian Agreement is incorporated herein by reference to the
Registrant's Registration Statement on Form N-1A (File No. 33-2659),
Post-Effective Amendment No. 49, as filed with the SEC on September
12, 2002.
(10) (a) Plans of Distribution under Rule 12b-1 are incorporated by
reference to Registrant's Registration Statement on Form N-1A (File
No. 33-2659), Post-Effective Amendment No. 51, as filed with the SEC
on December 13, 2002.
60
(b) Amended and Restated Plan for Multiple Classes of Shares is
incorporated herein by reference to the Registrant's Registration
Statement on Form N-1A (File No. 33-2659), Post-Effective Amendment
No. 43, as filed with the SEC on December 14, 2001.
(11) Opinion and Consent of Counsel is filed herewith.
(12) Opinion and Consent of Dechert to be filed by post-effective
amendment.
(13) Administrative Services Agreement and Transfer Agent Agreement are
incorporated herein by reference to Post-Effective Amendment Nos. 49
and 24, respectively, to the Registrant's Registration Statement on
Form N-1A (File No 33-2659), as filed with the SEC on September 12,
2002 and November 15, 1996, respectively.
(14) Consent of Independent Certified Public Accountants is filed herewith.
(15) Not Applicable
(16) Powers of Attorney for the Registrant are incorporated herein by
reference to registrant's Registration Statement filed on Form N-14
(File No. 333-101251) as filed with the SEC on November 15, 2002.
(17) (a) Form of proxy card is filed herewith.
(b) The Registrant's Annual Report, dated October 31, 2003 is
incorporated herein by reference.
(c) Prospectus and Statement of Additional Information for IDEX Mutual
Funds, dated March 1, 2004 are incorporated herein by reference.
Item 17. Undertakings
1. The undersigned registrant agrees that prior to any public re-offering 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 17
CFR 230.145(c), the re-offering prospectus will contain the information
called for by the applicable registration form for re-offerings 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 to the
registration statement and will not be used until the 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
that time shall be deemed to be the initial bona fide offering of them.
3. The undersigned registrant undertakes to file a post-effective amendment to
this registration statement upon the closing of the Reorganization
described in this registration statement that contains an opinion of
counsel supporting the tax matters discussed in this registration
statement.
61
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant has duly caused this Registration Statement on Form N-14 to be signed
on its behalf by the undersigned, thereunto duly authorized, in the city of St.
Petersburg and state of Florida on the 6th day of February, 2004.
IDEX MUTUAL FUNDS
By: /s/ John K. Carter
------------------------------------
John K. Carter
Senior Vice President, Secretary and
General Counsel
Pursuant to the requirements of the Securities Act of 1933, as amended, this
Registration Statement has been signed below by the following persons in the
capacities and on the date indicated.
Signature Title Date
--------- ----- ----
/s/ Brian C. Scott
- ---------------------------
Brian C. Scott* President and Chief Executive Officer February 5, 2004
/s/ Kim D. Day
- ---------------------------
Kim D. Day* Vice President, Treasurer and Principal Financial Officer February 5, 2004
/s/ Thomas O'Neill
- ---------------------------
Thomas O'Neill* Trustee February 5, 2004
/s/ Peter R. Brown
- ---------------------------
Peter R. Brown* Chairman February 5, 2004
/s/ Larry N. Norman
- ---------------------------
Larry N. Norman* Trustee February 5, 2004
/s/ Daniel Calabria
- ---------------------------
Daniel Calabria* Trustee February 5, 2004
/s/ Charles C. Harris
- ---------------------------
Charles C. Harris* Trustee February 5, 2004
/s/ William W. Short, Jr.
- ---------------------------
William W. Short, Jr.* Vice-Chairman February 5, 2004
/s/ Jack E. Zimmerman
- ---------------------------
Jack E. Zimmerman* Trustee February 5, 2004
/s/ Leo J. Hill
- ---------------------------
Leo J. Hill* Trustee February 5, 2004
/s/ Janice B. Case
- ---------------------------
Janice B. Case* Trustee February 5, 2004
/s/ Russell A. Kimball, Jr.
- ---------------------------
Russell A. Kimball, Jr.* Trustee February 5, 2004
/s/ John K. Carter
- ---------------------------
* Signed by John K. Carter, as Attorney in-Fact
62
Exhibit Index
16. (11) Opinion and Consent of Counsel
16. (14) Consent of Independent Certified Public Accountants
16. (17) Form of Proxy Card
63