Securities Act File No.
----------
As filed with the Securities and Exchange Commission on February 9, 2004
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
IDEX Mutual Funds
(Name and Address of Agent for Service)
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).
IDEX Mutual Funds
570 Carillon Parkway
St. Petersburg, Florida 33716
888/233-4339
March 10, 2004
Dear Shareholder:
Your Board of Trustees has called a special meeting of shareholders of IDEX PBHG
Mid Cap Growth ("Acquired Fund"), to be held at 3:00 p.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 of Trustees of IDEX (the "Board") has approved a reorganization of the
Acquired Fund into IDEX Transamerica Growth Opportunities ("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.
Pilgrim Baxter & Associates, Ltd. serves as sub-adviser to the Acquired Fund,
and Transamerica Investment Management, LLC serves as sub-adviser to the
Acquiring Fund. 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. On March 1, 2004, Acquiring Fund will be renamed TA IDEX
Transamerica Growth Opportunities.
You are asked to vote to approve an Agreement and Plan of Reorganization. The
accompanying document describes the proposed Reorganization and compares the
policies and expenses of the Funds for your evaluation.
After careful consideration, the Board unanimously approved this proposal with
respect to the Acquired Fund and recommends that shareholders vote "FOR" the
proposal.
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 3:00 P.M. ON
APRIL 23, 2004.
ALAMO Direct, 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
IDEX PBHG MID CAP GROWTH
TO BE HELD ON APRIL 23, 2004
To the Shareholders:
A special meeting of shareholders of IDEX PBHG Mid Cap Growth is scheduled for
April 23, 2004 at 3:00 p.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 IDEX PBHG Mid Cap
Growth (the "Acquired Fund") by IDEX Transamerica Growth Opportunities
(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.
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, 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........................................................5
Securities and Investment Techniques........................................5
COMPARISONS OF FEES AND EXPENSES...............................................6
Operating Expenses..........................................................6
Example.....................................................................7
ADDITIONAL INFORMATION ABOUT ACQUIRING FUND....................................9
Investment Adviser and Sub-Adviser..........................................9
Investment Personnel.......................................................10
Performance of the Acquiring Fund..........................................10
INFORMATION ABOUT THE REORGANIZATION..........................................11
The Reorganization Plan....................................................11
Reasons for the Reorganization.............................................11
Board Considerations.......................................................11
Tax Considerations.........................................................12
Expenses of the Reorganization.............................................12
ADDITIONAL INFORMATION ABOUT THE FUNDS........................................12
Form of Organization.......................................................12
Dividends and Other Distributions..........................................12
Capitalization.............................................................12
GENERAL INFORMATION...........................................................13
Solicitation of Proxies....................................................13
Voting Rights..............................................................14
Other Matters to Come Before the Meeting...................................14
Shareholder Proposals......................................................14
Information about the Funds................................................15
MORE INFORMATION REGARDING ACQUIRING FUND.....................................16
APPENDIX A...................................................................A-1
APPENDIX B...................................................................B-1
APPENDIX C...................................................................C-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 IDEX PBHG Mid Cap Growth (the
"Acquired Fund"), a series of IDEX Mutual Funds ("IDEX"), to IDEX Transamerica
Growth Opportunities (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.
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
Prospectus and Statement of Additional Information dated March 1, 2003, each of
which is incorporated herein by reference and is available, without charge, by
calling (888) 233-4339. The IDEX 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 Prospectus and the Reorganization Plan,
a copy of which is attached hereto as Appendix A.
THE PROPOSED REORGANIZATION -- On December 2, 2003, the Board of Trustees of
IDEX 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.
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 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 mutual funds within the same family of
funds that are similar in many respects, 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 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 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
INVESTMENT OBJECTIVE Seeks capital appreciation. Maximize long-term growth.
PRINCIPAL STRATEGIES AND POLICIES The Acquired Fund seeks to achieve its Under normal market conditions, the
investment objective by investing at Acquiring Fund generally invests at
least 80% of the Fund's total assets least 65% of its total assets in a
(under normal market conditions) in a diversified portfolio of equity
portfolio of growth securities, such as securities issued by small and
common stocks, of small and medium medium-sized companies (defined as
sized companies. Those companies those companies whose market
usually have market capitalizations capitalization or annual revenues are
similar to the market capitalizations no more than $5 billion at the time
of the Russell Mid Cap Growth Index at of purchase).
the time of investment.
INVESTMENT ADVISER AEGON/Transamerica Fund Advisers, Inc. AEGON/Transamerica Fund Advisers, Inc.
SUB-ADVISER Pilgrim Baxter & Associates, Ltd. Transamerica Investment Management,
("Pilgrim Baxter") LLC
("TIM")
PORTFOLIO MANAGERS Michael S. Sutton, JD, CFA and Peter J. Christopher J. Bonavico, CFA and
Niedland, CFA Kenneth F. Broad, CFA
COMPARISON OF PRINCIPAL RISKS INVOLVED IN INVESTING IN THE FUNDS -- Because the
Funds have investment objectives and policies that are similar in many respects,
the principal risks of an investment in the Funds also are similar in many
respects, although there are certain differences. Similarities include, among
others:
- - Each Fund primarily 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 fluctuates.
- - Each Fund invests in small or medium sized companies. These companies
present additional risks, in comparison to large companies, because
their earnings may be less predictable, their share price more
volatile, and their securities less liquid that larger, more
established companies.
- - Each Fund may invest in cash or cash equivalent 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:
- - Contrary to the Acquired Fund, the Acquiring Fund invests in
convertible securities, warrants and rights. 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 many 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. Warrants and rights may be considered more
speculative than certain other types of investments because they do not
entitle a holder to the dividends or voting rights for the securities
that may be purchased. They do not represent any rights in the assets
of the issuing company. Also, the value of a warrant or right does not
necessarily change with the value of the underlying securities. A
warrant or right ceases to have value if it is not exercised prior to
the expiration date.
3
INVESTMENT STRATEGIES AND RISKS
PRINCIPAL INVESTMENT STRATEGIES--
The investment strategies, restrictions and risks of the Funds are similar in
many respects, although there are certain differences. There can be no assurance
that either Fund will achieve its stated objective.
ACQUIRED FUND
- - The Acquired Fund's investment sub-adviser, Pilgrim Baxter, seeks to
achieve the Fund's objective by investing the Fund's assets principally
in common stock. Under normal market conditions, the Acquired Fund
invests at least 80% of its total assets in growth securities, such as
common stocks of small and medium sized companies.
- - Companies selected for the Acquired Fund's portfolio have market
capitalizations similar to the market capitalization of the companies
in the Russell Mid Cap Growth Index ("Russell MCG"). More particularly,
Pilgrim Baxter focuses on growth securities issued by companies whose
market capitalizations or annual revenues are between $500 million and
$10 billion. Pilgrim Baxter invests in companies that it believes have
strong business momentum, earnings growth and capital appreciation
potential.
- - Pilgrim Baxter uses its own fundamental research computer models and
proprietary measures of growth and business momentum in managing the
Acquired Fund. Pilgrim Baxter's decision to sell a stock depends on
many factors. Generally speaking, Pilgrim Baxter considers selling a
stock when there is deterioration in its business momentum or a failure
to achieve expected earnings.
ACQUIRING FUND
- - The Acquiring Fund pursues its objective by investing principally in
equity securities, such as common stocks, preferred stocks, rights,
warrants and securities convertible into or exchangeable for common
stocks of small and medium sized companies.
- - Acquiring Fund's sub-adviser, TIM, uses a "bottom up" approach to
investing and builds the Acquiring Fund's portfolio one company at a
time. TIM generally invests at least 65% of the Fund's assets in a
diversified portfolio of equity securities of small to medium sized
companies whose market capitalization or annual revenues are no more
than $5 billion at the time of purchase.
- - TIM selects securities that are issued by U.S. companies which, in its
opinion, show strong potential for steady growth and high barriers to
competition. TIM believes that companies with smaller and medium sized
capitalization levels are less actively followed by security analysts
and may therefore be undervalued, providing strong opportunities for a
rise in value. TIM believes in long-term investment and does not
attempt to time the market. Each company in which the Acquiring Fund
invests passes through a rigorous research process and stands on its
own merits as a premier company.
- - While the Acquiring Fund invests principally in equity securities, the
Fund may, to a lesser extent, invest in debt securities and other
securities or investment strategies in pursuit of its investment
objective. The Acquiring Fund may also invest in rights, warrants, and
convertible securities.
- - 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.
4
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
Net Assets (thousands) $219,503 $68,032
Number of Holdings 22 97
Portfolio Turnover Rate 97% 229%
As a percentage of net assets:
Common Stocks 89.0% 98.3%
Security Lending Collateral 11.1% 19.3%
Liabilities in excess of other assets (0.1)% (17.6)%
100.0% 100.0%
TOP 10 HOLDINGS (AS A % OF NET ASSETS)
ACQUIRING FUND
SkillSoft PLC - ADR 6.3%
ServiceMaster Company (The) 5.2%
DeVRY Inc 5.2%
Techne Corporation 5.2%
Expeditors International of Washington, Inc. 4.8%
GTECH Holdings Corporation 4.8%
Weight Watchers International, Inc. 4.6%
EOG Resources, Inc. 4.6%
C.H. Robinson Worldwide, Inc. 4.6%
Financial Federal Corporation 4.5%
ACQUIRED FUND
Career Education Corporation 2.8%
Symantec Corporation 2.7%
Corporate Executive Board Company (The) 2.5%
Adobe Systems Incorporated 2.5%
Marvell Technology Group Ltd. 2.3%
Corinthian Colleges, Inc. 2.1%
New York Community Bancorp, Inc. 2.1%
PeopleSoft, Inc. 2.0%
Cray Inc. 1.9%
Cognizant Technology Solutions Corporation 1.9%
RELATIVE PERFORMANCE -- The following table shows the average annual total
return for Class A shares of each Fund and its comparative index. Average annual
total return is shown for each calendar year since 2001 in the case of the
Acquiring Fund (which commenced operation in 2000) and since 2000 in the case of
the Acquired Fund (which commenced operation in 1999). The indexes have 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.
CALENDAR YEAR/ RUSSELL 2500 GROWTH
PERIOD ENDED ACQUIRED FUND RUSSELL MCG ACQUIRING FUND INDEX
------------ ------------- ----------- -------------- -------------------
12/31/00 (17.30)% (11.75)% N/A N/A
12/31/01 (37.29)% (20.15)% (17.69)% (10.83)%
12/31/02 (30.48)% (27.41)% (13.69)% (29.09)%
12/31/03 25.70% (42.71)% 30.61% 46.31%
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 (BOTH FUNDS). While stocks have historically outperformed other
investments over the long term, they tend to go up and down more dramatically
over the shorter term. These price movements may result from factors affecting
individual companies, industries or the securities market as a whole. Because
the stocks a Fund holds fluctuate in price,
5
the value of your investments in a Fund will go up and down.
SMALL AND MEDIUM SIZED COMPANIES (BOTH FUNDS). Investing in small and
medium-sized companies involves greater risk than is customarily associated with
investing in more established companies. Stocks of such companies may be subject
to more abrupt or erratic price movements than larger company securities. Small
companies often have limited product lines, markets, or financial resources, and
their management may lack depth and experience. Such companies usually do not
pay significant dividends that could cushion returns in a falling market.
CONVERTIBLE SECURITIES (ACQUIRING 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.
WARRANTS AND RIGHTS (ACQUIRING FUND). Warrants and rights may be considered more
speculative than certain other types of investments because they do not entitle
a holder to the dividends or voting rights for the securities that may be
purchased. They do not represent any rights in the assets of the issuing
company. Also, the value of a warrant or right does not necessarily change with
the value of the underlying securities. A warrant or right ceases to have value
if it is not exercised prior to the expiration date.
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
will allow shareholders of the Acquired Fund to realize economies of scale and
lower expenses. While the Reorganization will not affect the management fee
payable with respect to the Acquiring Fund (as a percentage of the Fund's
average daily net assets), the Investment Adviser may be deemed to have a
material interest in the proposed Reorganization because (1) its affiliate, TIM,
as sub-adviser to the Acquiring Fund, will be receiving the sub-advisory fee
payable for the Acquired Fund instead of Pilgrim Baxter, the current sub-adviser
to the Acquired Fund, and (2) because of the larger asset base of the combined
fund, the Investment Manager may have lower obligations under its current
expense limitation arrangements. For further information on the fees and
expenses of the Acquiring Fund, see "More Information Regarding the Acquiring
Fund."
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.
6
ANNUAL FUND OPERATING EXPENSES (as a percentage of each Fund's average daily net
assets)
DISTRIBUTION & TOTAL ANNUAL
MANAGEMENT SERVICE (12B-1) FUND OPERATING EXPENSE NET OPERATING
FEES FEES OTHER EXPENSES EXPENSES REDUCTION(1) EXPENSES
----------- -------------- -------------- -------------- ----------- -------------
ACQUIRING FUND
Class A shares 0.80% 0.35% 1.06% 2.21% 0.46% 1.75%
Class B shares 0.80% 1.00% 1.07% 2.87% 0.46% 2.41%
Class C shares 0.80% 1.00% 1.07% 2.87% 0.46% 2.41%
Class L shares 0.80% 1.00% 1.09% 2.89% 0.47% 2.42%
Class M shares 0.80% 0.90% 1.07% 2.77% 0.46% 2.31%
ACQUIRED FUND
Class A shares 0.80% 0.35% 2.23% 3.38% 1.63% 1.75%
Class B shares 0.80% 1.00% 2.23% 4.03% 1.63% 2.40%
Class C shares 0.80% 1.00% 2.23% 4.03% 1.63% 2.40%
Class L shares 0.80% 1.00% 2.23% 4.03% 1.63% 2.40%
Class M shares 0.80% 0.90% 2.23% 3.93% 1.63% 2.30%
PRO FORMA -
ACQUIRING FUND
INCLUDING ACQUIRED
FUND
Class A shares 0.80% 0.35% 1.37% 2.52% 0.77% 1.75%
Class B shares 0.80% 1.00% 1.37% 3.17% 0.77% 2.40%
Class C shares 0.80% 1.00% 1.37% 3.17% 0.77% 2.40%
Class L shares 0.80% 1.00% 1.37% 3.17% 0.77% 2.40%
Class M shares 0.80% 0.90% 1.37% 3.07% 0.77% 2.30%
1. Through a contractual arrangement with each Fund, the Investment Adviser has
agreed to limit the expenses of each Fund through 2/28/2005 for expenses (other
than distribution and service fees (12b-1) fees) that exceed 1.40% for each
Fund.
EXAMPLE -- This example is intended to help you compare the cost of investing in
each Fund 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.
7
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
ACQUIRING FUND
Class A shares $ 718 $1,161 $1,630 $2,920
Class B shares $ 744 $1,146 $1,573 $3,005
Class C shares $ 244 $ 846 $1,473 $3,162
Class L shares $ 445 $ 851 $1,482 $3,181
Class M shares $ 431 $ 908 $1,509 $3,135
ACQUIRED FUND
Class A shares $ 718 $1,388 $2,081 $3,912
Class B shares $ 743 $1,378 $2,029 $3,992
Class C shares $ 243 $1,078 $1,929 $4,131
Class L shares $ 443 $1,078 $1,929 $4,131
Class M shares $ 430 $1,138 $1,964 $4,105
PRO FORMA - ACQUIRING FUND INCLUDING
ACQUIRED FUND
Class A shares $ 718 $1,222 $1,751 $3,194
Class B shares $ 743 $1,206 $1,692 $3,272
Class C shares $ 243 $ 906 $1,592 $3,423
Class L shares $ 443 $ 906 $1,592 $3,423
Class M shares $ 430 $ 967 $1,628 $3,396
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 $ 718 $1,161 $1,630 $2,920
Class B shares $ 244 $ 846 $1,473 $3,005
Class C shares $ 244 $ 846 $1,473 $3,162
Class L shares $ 245 $ 851 $1,482 $3,181
Class M shares $ 332 $ 908 $1,509 $3,135
ACQUIRED FUND
Class A shares $ 718 $1,388 $2,081 $3,912
Class B shares $ 243 $1,078 $1,929 $3,992
Class C shares $ 243 $1,078 $1,929 $4,131
Class L shares $ 243 $1,078 $1,929 $4,131
Class M shares $ 331 $1,138 $1,964 $4,105
PRO FORMA - ACQUIRING FUND INCLUDING
ACQUIRED FUND
Class A shares $ 718 $1,222 $1,751 $3,194
Class B shares $ 243 $ 906 $1,592 $3,272
Class C shares $ 243 $ 906 $1,592 $3,423
Class L shares $ 243 $ 906 $1,592 $3,423
Class M shares $ 331 $ 967 $1,628 $3,396
8
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 the 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 after purchase, and
1% if redeemed during the next 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 THE 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 currently pays an investment advisory fee monthly at the annual
rate of 0.80% of the first $500 million of the Fund's average daily net assets
and 0.70% of net assets over $500 million. In turn, the Investment Adviser has
entered into a sub-advisory agreement with TIM to provide investment advisory
services to the Acquiring Fund. Pursuant to this agreement, TIM 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 TIM 50% of the fees received by the Investment Adviser, less 50% of
any amount it has reimbursed pursuant to the Acquiring Fund's expense limitation
arrangement. After the merger, the Investment Advisory fee will be 0.80% of the
first $250 million of the Fund's average daily net assets; 0.75% of assets over
$250 million up to $500 million; and 0.70% of assets over $500 million. Tim will
receive 0.40% of the first $250 million of the Fund's average daily net assets
and 0.35% of assets over $250 million, less 50% of any amount reimbursed
pursuant to any expense limitation agreement.
9
INVESTMENT PERSONNEL -- The following individuals have responsibility for the
day-to-day management of the Acquiring Fund:
- - CHRISTOPHER J. BONAVICO, CFA, (Lead Portfolio Manager) is Vice
President and fund manager of TIM, and manager of Transamerica Premier
Aggressive Growth Fund and Transamerica Premier Small Company Fund
since 1999. He has also managed other Transamerica Premier funds. Mr.
Bonavico joined TIM in 1993.
- - KENNETH F. BROAD, CFA (Secondary Portfolio Manager) is Assistant Vice
President and portfolio manager, TIM, and co-manager of a TIM corporate
account. He has been co-manager of Transamerica Small Company fund
since 2001. Prior to joining TIM in 2000, he was Vice President,
Portfolio Manager and analyst, Franklin Templeton Investments,
1994-2000 Chief Investment Officer of Transamerica.
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 Russell 2500 Growth 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. The
Fund's past performance (before and after taxes) is not an indication of how the
Fund will perform in the future.
ACQUIRING FUND
One year total return as of 12/31/03:
[CHART]
During the period shown in the chart, the Acquiring Fund's best quarterly
performance was 47.85% for the quarter ended 12/31/1999; and the Fund's worst
quarterly performance was (34.23)% for the quarter ended 3/31/2001.
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.
December 31, 2003 One Year Since Inception March 1, 2000
- ----------------- -------- -----------------------------
Acquiring Fund
Return before taxes 23.42% (12.89)%
Return after taxes on distributions** 23.42% (12.89)%
Return after taxes on distributions and sale of fund 15.23% (10.61)%
shares**
Russell 2500(1) 46.31% (11.67)%
* 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) The Russell 2500 Growth Index ("Russell 2500") is a widely recognized
unmanaged index of stock performance composed of stocks of companies
with high forecasted growth values.
For a discussion by the Investment Adviser regarding the performance of the
Acquiring Fund for the period ended October 31, 2003, see Appendix B to this
Proxy Statement/Prospectus. Additional information about the Acquiring Fund is
included in the section, "More Information Regarding the Acquiring Fund."
10
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 and 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 and
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 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 would create a larger
Acquiring Fund, which should benefit shareholders of the Funds by spreading
costs across a larger, combined asset base, and which may 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 for
consideration and approval at a meeting held on December 2, 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,
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,, 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 in terms of expense;
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
currently invests;
3. the Investment Adviser's undertaking to limit the expenses of the
Acquiring Fund to 1.40% of its average daily net assets effective
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;
11
5. the relative investment performance and comparable 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
Funds that are similar in many respects; 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 in that its
costs to administer both Funds may be reduced if the Reorganization is approved.
THE BOARD OF TRUSTEES OF IDEX 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 Code.
Accordingly, pursuant to this treatment, neither the Acquired Fund nor the
Acquiring Fund is expected to recognize any gain or loss for federal 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, a Massachusetts
business trust that was formed by a Declaration of Trust dated January 7, 1986.
IDEX is governed by a Board of Trustees. The IDEX Board of Trustees consists of
eleven individuals, nine of whom are not "interested persons" as defined in the
Investment Company Act of 1940 (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
and under state law.
DISTRIBUTOR -- AFSG Securities Corporation ("AFSG" or the "Distributor"), whose
address is 4333 Edgewood Road NE, Cedar Rapids, Iowa 52499, is the principal
distributor for the Funds.
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.
CAPITALIZATION -- The following table shows 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:
12
SHARES
NET ASSETS NET ASSET VALUE OUTSTANDING
(THOUSANDS) PER SHARE (THOUSANDS)
----------- -------------- -----------
ACQUIRING FUND
Class A Shares $147,340 $ 5.95 24,754
Class B Shares $ 52,492 $ 5.79 9,069
Class C Shares $ 9,598 $ 5.79 1,658
Class L Shares $ 483 $ 5.79 83
Class M Shares $ 9,590 $ 5.81 1,650
ACQUIRED FUND
Class A Shares $ 22,508 $ 9.23 2,439
Class B Shares $ 32,976 $ 8.91 3,700
Class C Shares $ 7,000 $ 8.91 785
Class L Shares $ 871 $ 8.91 98
Class M Shares $ 4,677 $ 8.96 522
PRO FORMA - ACQUIRING
FUND INCLUDING ACQUIRED FUND
Class A Shares $169,848 $ 5.95 28,537
Class B Shares $ 85,468 $ 5.79 14,764
Class C Shares $ 16,598 $ 5.79 2,867
Class L Shares $ 1,354 $ 5.79 234
Class M Shares $ 14,267 $ 5.81 2,455
(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. 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 $_____, 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.
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
13
or by facsimile. Should shareholders 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. (Shareholders of the Acquired Fund whose shares are held by
nominees, such as brokers, can vote their proxies by contacting their respective
nominee.) 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.
Appendix C hereto lists the persons that, as of the Record Date, 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 a shareholder
meeting or to be submitted to shareholders of IDEX.
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
14
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 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
15
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.
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.
16
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.
17
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.
18
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.
19
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.
20
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.
21
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.
22
HOW TO BUY SHARES TO OPEN A NEW ACCOUNT (FIRST-TIME IDEX
By Mail INVESTORS) 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.
23
TO RECEIVE PAYMENT BY HOW TO REQUEST YOUR REDEMPTION
Direct Deposit-- ACH Call IDEX Customer Service (1-888-233-IDEX
(only for accounts that (4339)) to verify that this feature is in
are not qualified place on your account. Maximum amount per
retirement plans) 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 Call IDEX Customer Service (1-888-233-IDEX
funds transfer-federal (4339)) to be sure this feature is in place
funds bank wire) 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 next banking day after your
request. IDEX charges $10 for this service.
Your bank may charge a fee as well.
Check to the address of record WRITTEN REQUEST:
Send a letter requesting a withdrawal to
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 Sell
Shares").
TELEPHONE OR INTERNET REQUEST:
If your request is not required to be in
writing (see "How To Sell Shares"), you may
call IDEX Customer Service (1-888-233-IDEX
(4339)) and make your request using the
automated IDEX InTouch(SM) system
(1-888-233-IDEX (4339)), by
person-to-person, or by accessing your
account on the internet. Maximum amount per
day is the lesser of your available balance
or $50,000.
If 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 You can establish a Systematic Withdrawal
(by direct deposit-ACH or check) Plan (SWP) either at the time you open your
account or at a later date. Call IDEX
Customer Service (1-888-233-IDEX (4339)) for
assistance. You must have a minimum balance
of $10,000 in your 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.
24
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.
25
CLASS C SHARES - CLASS M 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
Transamerica Deferred No deferred 12b-1 12b-1
Conservative sales charge of sales distribution distribution - No 12b-1
High-Yield Bond, 5.00% or charge and service and service distribution
IDEX Pimco Total less on fees of fees of and
Return, IDEX shares you - 12b-1 1.00%* 0.90%* service
PIMCO Real sell within distribution (except for fees
Return TIPS, 6 years and service - Deferred the IDEX
IDEX (see fees of sales charge of Federated - Sales
Transamerica deferred 1.00%* 2.00% if Tax Exempt, charge
Convertible sales you sell whose 12b-1 percentage
Securities and charge - No within 12 distribution can be
IDEX Federated table) conversion to months of and service reduced in
Tax Exempt which Class A purchase, fee is the same
is 4.75%) or - 12b-1 shares; and 1.00% 0.60%) four ways
less distribution expenses do if you sell as Class A
and service not within the - Deferred Shares
fees of decrease 2nd 12 sales charge of (see Class
1.00%* months of 1.00% if A Share
- - no initial sales purchase you sell Quantity
charge for IDEX within 18 Discounts
Transamerica - Automatic months of Table)
Money Market conversion purchase
to Class A
shares
- - Discounts of after 8
sales charge for years, - Automatic
larger reducing conversion
investments (see future to Class A
Class A Share annual Shares
Quantity expenses after 10
Discount Table) 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.
26
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.
27
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 % OF SALES CHARGE AS % OF
AMOUNT OF PURCHASE 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 % OF SALES CHARGE AS % OF
AMOUNT OF PURCHASE 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.
28
- 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 TIM, 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. TIM and the Distributor are affiliates 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
29
and IDEX are affiliates and both are 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.
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.
FINANCIAL HIGHLIGHTS FOR ACQUIRING FUND
For a Share 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 without charge.
INVESTMENT OPERATIONS DISTRIBUTIONS
YEAR OR NET ASSET ---------------------------------------------- ------------------------------------------
PERIOD VALUE, NET NET REALIZED FROM NET FROM NET
ENDED BEGINNING INVESTMENT AND UNREALIZED TOTAL INVESTMENT REALIZED TOTAL
(D)(G) OF PERIOD INCOME (LOSS) GAIN (LOSS) OPERATIONS INCOME CAPITAL GAINS DISTRIBUTIONS
--------------------------------------------------------------------------------------------------------------------------------
Class A 10/31/2003 $ 4.81 $(0.06) $1.20 $ 1.14 $ -- $ -- $ --
10/31/2002 4.81 (0.06) 0.06 -- -- -- --
10/31/2001 8.70 (0.07) (3.82) (3.89) -- -- --
10/31/2000 10.00 (0.02) (1.28) (1.30) -- -- --
--------------------------------------------------------------------------------------------------------------------------------
Class B 10/31/2003 4.70 (0.09) 1.18 1.09 -- -- --
10/31/2002 4.73 (0.11) 0.08 (0.03) -- -- --
10/31/2001 8.66 (0.10) (3.83) (3.93) -- -- --
10/31/2000 10.00 (0.06) (1.28) (1.34) -- -- --
--------------------------------------------------------------------------------------------------------------------------------
Class C 10/31/2003 4.70 (0.09) 1.18 1.09 -- -- --
10/31/2002 4.74 (0.10) 0.06 (0.04) -- -- --
10/31/2001 8.66 (0.11) (3.81) (3.92) -- -- --
10/31/2000 10.00 (0.06) (1.28) (1.34) -- -- --
--------------------------------------------------------------------------------------------------------------------------------
Class L 10/31/2003 4.62 (0.09) 1.26 1.17 -- -- --
--------------------------------------------------------------------------------------------------------------------------------
Class M 10/31/2003 4.72 (0.09) 1.18 1.09 -- -- --
10/31/2002 4.75 (0.10) 0.07 (0.03) -- -- --
10/31/2001 8.67 (0.10) (3.82) (3.92) -- -- --
10/31/2000 10.00 (0.05) (1.28) (1.33) -- -- --
30
RATIOS/SUPPLEMENTAL DATA
----------------------------------------------------------------
RATIO OF EXPENSES TO
AVERAGE NET ASSETS (A)
NET ASSETS, ---------------------- NET INVESTMENT
YEAR OR NET ASSET END OF INCOME (LOSS)
PERIOD VALUE, END TOTAL PERIOD TO AVERAGE PORTFOLIO
ENDED(G) OF PERIOD RETURN(C) (000'S) NET(E) TOTAL(F) NET ASSETS (A) TURNOVER RATE (B)
- ------------------------------------------------------------------------------------------------------------------------------------
Class A 10/31/2003 $5.95 23.70% $147,340 1.75% 2.21% (1.11)% 97%
10/31/2002 4.81 0.05 12,687 1.74 2.53 (1.35) 32
10/31/2001 4.81 (44.76) 3,807 1.55 2.83 (1.11) 59
10/31/2000 8.70 (12.96) 3,726 1.55 4.54 (1.23) 19
- ------------------------------------------------------------------------------------------------------------------------------------
Class B 10/31/2003 5.79 23.19 52,492 2.41 2.87 (1.76) 97
10/31/2002 4.70 (0.70) 5,897 2.39 3.18 (2.00) 32
10/31/2001 4.73 (45.35) 4,513 2.20 3.48 (1.76) 59
10/31/2000 8.66 (13.39) 4,366 2.20 5.19 (1.88) 19
- ------------------------------------------------------------------------------------------------------------------------------------
Class C 10/31/2003 5.79 23.19 9,598 2.41 2.87 (1.76) 97
10/31/2002 4.70 (0.70) 1,569 2.39 3.18 (2.00) 32
10/31/2001 4.74 (45.35) 1,530 2.20 3.48 (1.76) 59
10/31/2000 8.66 (13.39) 1,704 2.20 5.19 (1.88) 19
- ------------------------------------------------------------------------------------------------------------------------------------
Class L 10/31/2003 5.79 25.32 483 2.42 2.89 (1.78) 97
- ------------------------------------------------------------------------------------------------------------------------------------
Class M 10/31/2003 5.81 23.09 9,590 2.31 2.77 (1.66) 97
10/31/2002 4.72 (0.52) 909 2.29 3.08 (1.90) 32
10/31/2001 4.75 (45.26) 1,174 2.10 3.38 (1.66) 59
10/31/2000 8.67 (13.33) 2,090 2.10 5.09 (1.78) 19
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 not annualized.
(d) Per share information is calculated based on average number of shares
outstanding for the periods ending 10/31/2001, 10/31/2002 and
10/31/2003.
(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) IDEX Transamerica Growth Opportunities ("the Acquiring Fund") commenced
operations on March 1, 2000. The inception date for the Fund's offering
of share Class L was November 11, 2002..
31
APPENDIX A
AGREEMENT & PLAN OF REORGANIZATION
THIS AGREEMENT & PLAN OF REORGANIZATION (the "Plan") is made as of the 2nd day
of December 2003 by IDEX Mutual Funds (the "Company") with its principal place
of business at 570 Carillon Parkway, St. Petersburg, Florida 33716, on behalf of
IDEX Transamerica Growth Opportunities (the "Acquiring Fund") and IDEX PBHG Mid
Cap Growth (the "Acquired Fund"), separate series of the Company.
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 Company 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 Company 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 Company 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 Company, 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 Company 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").
32
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 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 Company'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 Company'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.
33
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 Company
or at such other time and/or place as the parties will agree.
3.2 The Company 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.
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 Company, 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 Company, on behalf of Acquired Fund, represents and
warrants to Acquiring Fund as follows:
(a) Acquired Fund is duly organized as a series of the
Company, which is a business trust duly organized and
validly existing under the laws of the state of
Massachusetts, with power under the Company'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 Company 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;
34
(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 Company, 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 Company, 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
Company's Declaration of Trust or Bylaws or of any
agreement, indenture, instrument, contract, lease or
other undertaking to which the Company, 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 Company, 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 Company, 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
Company, 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;
(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,
35
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 Company 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 Company, 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 Company, on behalf of Acquiring Fund, represents and
warrants to Acquired Fund as follows:
(a) Acquiring Fund is duly organized as a series of the
Company, which is a business trust duly organized and
validly existing under the laws of the State of
Massachusetts, with power under the Company'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 Company 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;
(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
36
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 Company, 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
Company'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 Company, 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 Company 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
37
have outstanding any options, warrants or other
rights to 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 Company 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 Company;
(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 Company 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 Company 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.
38
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 Company, 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
Company, on behalf of Acquiring Fund, may reasonably deem
necessary or desirable in order to vest in and confirm (a) the
Company, on behalf of Acquiring Fund's, title to and
possession of Acquiring Fund's shares to be delivered
hereunder, and (b) the Company, 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 Company, on behalf of Acquired Fund, to
consummate the transactions provided for herein shall be subject, at
the Company's election, to the performance by the Company, 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 Company, on behalf
of Acquiring Fund, and the Company 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 Company, 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
Company, 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 Company, on behalf of Acquiring Fund, to
complete the transactions provided for herein shall be subject, at the
Company'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 Company, 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 Company, 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
Company, on behalf of Acquired Fund, on or before the Closing
Date;
7.3 The Company, 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;
39
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 Company, 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 Company'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, Company, on behalf of Acquiring Fund
or Acquired Fund, may not waive the conditions set forth in
this paragraph 8.1;
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 Company 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 Company
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 Company. Notwithstanding anything herein
to the contrary, the Company may not waive the condition set
forth in this paragraph 8.5.
9. BROKERAGE FEES AND EXPENSES
9.1 The Company, 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.
40
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 Company;
provided, however, that following any meeting of the shareholders
called by the Company, 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.
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
Company personally, but shall bind only property of Acquired
Fund, as provided in the Declaration of Trust of the Company.
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 Company, 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
41
APPENDIX B
IDEX TRANSAMERICA GROWTH OPPORTUNITIES
MARKET ENVIRONMENT
The twelve months ended October 31, 2003, were an uneven period for U.S. equity
markets. Following a mild recovery in November 2002, markets plummeted until
March 2003, then rebounded vigorously. While the mid-year decline can be
attributed largely to apprehension about the war in Iraq, the gains that
proceeded and followed that dip were triggered primarily by anticipation of a
robust economic recovery. Stocks in economically sensitive industries--for
example, metals and mining, semiconductors, airlines and wireless
telecommunications--were the biggest beneficiaries of this tide of optimism.
PERFORMANCE
For the year ended October 31, 2003, IDEX Transamerica Growth Opportunities
underperformed its primary and secondary benchmarks, the Russell 2500 Growth
Index and the Russell 2000 Value Index, which returned 44.76% and 43.37%,
respectively. We attribute the relative underperformance to a lack of cyclical
stocks in the portfolio; with rare exception, companies in the traditionally
cyclical industries, that have led the market since March, do not meet our
investment criteria.
STRATEGY REVIEW
Our ideal candidate for investment is a quality company benefiting from a
positive long-term secular trend. Seasoned management, high returns on capital,
strong free cash flow reinvested to enhance shareholder value, and sustainable
competitive advantages are also essential. The portfolio's largest contributor
to performance, SkillSoft PLC ("SkillSoft"), provides an excellent example.
Skillsoft is the top competitor among online education and training companies.
Its management team is conservative and very focused on executing its business
plan. They have done an admirable job of consolidating their position in the
training industry, which is rapidly moving in their direction (i.e., online
delivery).Having said that, we should also point out that, during this period,
SkillSoft performed far beyond what its pure fundamentals would have dictated;
like many other technology-related stocks, it benefited from the rising tide of
investor sentiment that went hand-in-glove with expectations of a healthier U.S.
economy. Other strong contributors to results included consumer electronics
retailer RadioShack Corporation "RadioShack"), a long-time holding, and XM
Satellite Radio Holdings Inc. ("XM Satellite") and GTECH Holdings Corporation
("GTECH"), both newcomers to the portfolio. In recent years, RadioShack has
focused on improving returns from its existing stores rather than expanding. It
is now generating considerable excess cash flow and returning the excess to
shareholders. XM Satellite presents a good example of the kind of company we
like to discover early in its development. For just $10 a month, subscribers
receive high-quality signals for more than 100 radio channels. The company has
limited competition. That advantage, along with an improving balance sheet,
caught investors' attention this year, resulting in an increase in its' stock
price. GTECH provides software, networks and professional services for
transaction processing, with an emphasis on the lottery industry. With a growing
number of states turning to lotteries to supplement revenues, GTECH has
experienced considerable growth. Our one major disappointment during the period
was Investment Technology Group, Inc. ("ITG"), a purveyor of third-party
securities-trading technology. In retrospect it is clear that we overestimated
the company's ability to take market share from its competitors. Although we
continue to believe in the quality of its management, we exited the stock.
OUTLOOK
We are pleased with the market's recent progress, but we doubt that it is a
harbinger of a strong, broad-based and sustained rebound for equities. We
believe we can continue to expect modest,
42
as compared to hearty, economic expansion, a situation that could challenge
cyclical industries and companies. In addition, many companies that have ridden
high of late, including a large number of technology companies, may be
negatively impacted by new regulations from the Financial Accounting Standards
Board ("FASB"). By January 2005, companies that compensate employees with equity
must begin to account for that expense. Given the tepid state of the economy and
the potential impact of these new regulations, we continue to prefer uniquely
positioned businesses that treat equity-based compensation appropriately and are
positioned in solid areas of growth.
Christopher J. Bonavico
Kenneth F. Broad
Co-Fund Managers
Transamerica Investment Management, LLC
IDEX Transamerica Growth Opportunities
....SEEKS TO MAXIMIZE LONG-TERM GROWTH.
IDEX Mutual Funds Annual Report 2003
IDEX Transamerica Growth Opportunities 1
AVERAGE ANNUAL TOTAL RETURN FOR PERIODS ENDED 10/31/03
1 Year From Inception Inception Date
------ -------------- --------------
Class A (NAV) 23.70% -13.19% 3/1/00
Class A (POP) 16.90% -14.51% 3/1/00
Russell 2500(1) 44.76% -12.99% 3/1/00
Russell 2000(1) 43.37% - 1.08% 3/1/00
Class B (NAV) 23.19% -13.83% 3/1/00
Class B (POP) 18.19% -14.30% 3/1/00
Class C (NAV) 23.19% -13.83% 3/1/00
Class L (NAV) - 25.32% 11/11/02
Class L (POP) - 23.32% 11/11/02
Class M (NAV) 23.09% -13.75% 3/1/00
Class M (POP) 20.86% -13.98% 3/1/00
NOTES
(1) The Russell 2500 Growth (Russell 2500) Index and the Russell 2000 (Russell
2000) are unmanaged indexes 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.
For reporting periods through October 31, 2002, the .ne ahs selected the Russell
2000 Index as its benchmark measure; however, the Russell 2500 Growth is more
appropriate for comparisons to the fund. 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 reflect the deduction of taxes that would be
paid on fund distributions or the redemption of fund shares. Investment return
and principal value will fluctuate 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 reflect 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 reflect any sales charges. Class C and M shares are not
available to new investors.
Investing in small cap stocks generally involves greater risk and volatility,
therefore an investment in the fund may not be appropriate for everyone.
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 specific contents regarding the investment objectives and policies of
this fund.
43
APPENDIX C
As of February 27, 2004, the following persons owned beneficially or of record
5% or more of the outstanding shares of the Acquired Fund:
-------------------------- ----------- ------------------------------- -------------------------------
NAME AND ADDRESS CLASS % OF THE ACQUIRED FUND BEFORE % OF THE ACQUIRING FUND AFTER
REORGANIZATION REORGANIZATION
-------------------------- ----------- ------------------------------- -------------------------------
-------------------------- ----------- ------------------------------- -------------------------------
-------------------------- ----------- ------------------------------- -------------------------------
-------------------------- ----------- ------------------------------- -------------------------------
45
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
IDEX PBHG Mid Cap Growth (the "Acquired Fund") IDEX Transamerica Growth Opportunities (the "Acquiring 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, 2003.
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, 2003).
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.
46
REORGANIZATION BETWEEN IDEX PBHG MID CAP GROWTH AND IDEX TRANSAMERICA GROWTH
OPPORTUNITIES
PRO FORMA SCHEDULE OF INVESTMENTS
AT OCTOBER 31, 2003
(ALL AMOUNTS EXCEPT SHARE AMOUNTS IN THOUSANDS)
(UNAUDITED)
IDEX PBHG IDEX TRANSAMERICA
MID CAP GROWTH GROWTH OPPORTUNITIES PRO FORMA FUND
--------------------- --------------------- ---------------------
SHARES VALUE SHARES VALUE SHARES VALUE
------ ------- ------- ------- ------- -------
COMMON STOCKS
APPAREL & ACCESSORY STORES
Chico's FAS, Inc. (a) (b) 23,000 $ 863 -- $ -- 23,000 $ 863
Christopher & Banks Corporation 24,000 701 -- -- 24,000 701
Hot Topic, Inc. (a) (b) 15,500 445 -- -- 15,500 445
Pacific Sunwear of California, Inc. (a) (b) 25,500 589 -- -- 25,500 589
Ross Stores, Inc. 10,000 500 -- -- 10,000 500
AUTOMOTIVE
Gentex Corporation (b) -- -- 250,000 9,762 250,000 9,762
AUTOMOTIVE DEALERS & SERVICE STATIONS
O'Reilly Automotive, Inc. (a) 17,500 758 -- -- 17,500 758
BUSINESS CREDIT INSTITUTIONS
Financial Federal Corporation (a) (b) -- -- 297,500 9,981 297,500 9,981
BUSINESS SERVICES
Ask Jeeves, Inc. (a) (b) 20,000 383 -- -- 20,000 383
eBay Inc. (a) 630 35 -- -- 630 35
Fair, Isaac and Company, Incorporated 4,500 287 -- -- 4,500 287
Getty Images, Inc. (a) 400 18 -- -- 400 18
Moody's Corporation -- -- 115,000 6,650 115,000 6,650
COMMUNICATION
Global Payments Inc. -- -- 175,000 7,289 175,000 7,289
XM Satellite Radio Holdings Inc. (a) (b) -- -- 290,000 5,875 290,000 5,875
COMMUNICATIONS EQUIPMENT
ADTRAN, Inc. 10,000 680 -- -- 10,000 680
Nokia Oyj - ADR 800 14 -- -- 800 14
QUALCOMM Incorporated 300 14 -- -- 300 14
COMPUTER & DATA PROCESSING SERVICES
Adobe Systems Incorporated 38,500 1,688 -- -- 38,500 1,688
Anteon International Corporation (a) (b) 18,000 615 -- -- 18,000 615
BARRA, Inc. (a) -- -- 185,000 7,030 185,000 7,030
CACI International Inc. - Class A (a) 14,000 693 -- -- 14,000 693
Citrix Systems, Inc. (a) 18,000 455 -- -- 18,000 455
Cognizant Technology Solutions
Corporation (a) 28,500 1,294 -- -- 28,500 1,294
Cognos Incorporated (a) 37,000 1,275 -- -- 37,000 1,275
Fiserv, Inc. (a) 14,500 512 -- -- 14,500 512
GTECH Holdings Corporation -- -- 235,000 10,500 235,000 10,500
Microsoft Corporation 1,800 47 -- -- 1,800 47
Network Associates, Inc. (a) 27,500 383 -- -- 27,500 383
Oracle Corporation (a) 2,400 29 -- -- 2,400 29
PeopleSoft, Inc. (a) 65,000 1,349 -- -- 65,000 1,349
Siebel Systems, Inc. (a) 44,000 554 -- -- 44,000 554
SkillSoft PLC - ADR (a) -- -- 1,725,000 13,766 1,725,000 13,766
The notes to the pro forma financial statements are an integral part of this
report.
47
REORGANIZATION BETWEEN IDEX PBHG MID CAP GROWTH AND IDEX TRANSAMERICA GROWTH
OPPORTUNITIES
PRO FORMA SCHEDULE OF INVESTMENTS
AT OCTOBER 31, 2003
(ALL AMOUNTS EXCEPT SHARE AMOUNTS IN THOUSANDS)
(UNAUDITED)
IDEX PBHG IDEX TRANSAMERICA
MID CAP GROWTH GROWTH OPPORTUNITIES PRO FORMA FUND
-------------------- ---------------------- ----------------------
SHARES VALUE SHARES VALUE SHARES VALUE
------ ------- --------- ------- --------- -------
Symantec Corporation (a) 28,000 $ 1,866 -- $ -- 28,000 $ 1,866
Take-Two Interactive Software, Inc. (a) (b) 16,000 633 -- -- 16,000 633
Yahoo! Inc. (a) 3,600 157 -- -- 3,600 157
COMPUTER & OFFICE EQUIPMENT
Cisco Systems, Inc. (a) 4,400 92 -- -- 4,400 92
Cray Inc. (a) 101,900 1,326 -- -- 101,900 1,326
Dell Computer Corporation (a) 1,000 36 -- -- 1,000 36
Emulex Corporation (a) (b) 31,200 884 -- -- 31,200 884
Foundry Networks, Inc. (a) 39,000 907 -- -- 39,000 907
Network Appliance, Inc. (a) (b) 32,500 802 -- -- 32,500 802
SanDisk Corporation (a) (b) 8,500 685 -- -- 8,500 685
CONSTRUCTION
Chicago Bridge & Iron Company NV - NY Shares 20,500 559 -- -- 20,500 559
Jacobs Engineering Group Inc. (a) 10,500 486 -- -- 10,500 486
DRUG STORES & PROPRIETARY STORES
Omnicare, Inc. 22,500 863 -- -- 22,500 863
EDUCATIONAL SERVICES
Apollo Group, Inc. - Class A (a) 5,100 324 -- -- 5,100 324
Career Education Corporation (a) 34,964 1,872 -- -- 34,964 1,872
Corinthian Colleges, Inc. (a) 23,401 1,449 -- -- 23,401 1,449
DeVRY Inc. (a) -- -- 470,000 11,407 470,000 11,407
University of Phoenix Online (a) 13,700 942 -- -- 13,700 942
ELECTRONIC & OTHER ELECTRIC EQUIPMENT
Gemstar-TV Guide International, Inc. (a) -- -- 1,195,000 5,605 1,195,000 5,605
Wilson Greatbatch Technologies, Inc. (a) 5,600 211 -- -- 5,600 211
ELECTRONIC COMPONENTS & ACCESSORIES
AMIS Holdings, Inc. (a) 27,900 562 -- -- 27,900 562
Broadcom Corporation - Class A (a) (b) 38,400 1,227 -- -- 38,400 1,227
Cypress Semiconductor Corporation (a) (b) 34,000 730 -- -- 34,000 730
Intersil Corporation - Class A 20,500 529 -- -- 20,500 529
Jabil Circuit, Inc. (a) 22,000 613 -- -- 22,000 613
Linear Technology Corporation 18,000 767 -- -- 18,000 767
Marvell Technology Group Ltd. (a) (b) 36,000 1,579 -- -- 36,000 1,579
Maxim Integrated Products 6,500 323 -- -- 6,500 323
Microchip Technology Incorporated 26,500 867 -- -- 26,500 867
OmniVision Technologies, Inc. (a) (b) 10,000 568 -- -- 10,000 568
QLogic Corporation (a) (b) 22,900 1,284 -- -- 22,900 1,284
Silicon Laboratories Inc. (a) 18,000 972 -- -- 18,000 972
Vishay Intertechnology, Inc. (a) 33,500 628 -- -- 33,500 628
ENVIRONMENTAL SERVICES
Stericycle, Inc. (a) 15,300 707 -- -- 15,300 707
The notes to the pro forma financial statements are an integral part of this
report.
48
REORGANIZATION BETWEEN IDEX PBHG MID CAP GROWTH AND IDEX TRANSAMERICA GROWTH
OPPORTUNITIES
PRO FORMA SCHEDULE OF INVESTMENTS
AT OCTOBER 31, 2003
(ALL AMOUNTS EXCEPT SHARE AMOUNTS IN THOUSANDS)
(UNAUDITED)
IDEX PBHG IDEX TRANSAMERICA
MID CAP GROWTH GROWTH OPPORTUNITIES PRO FORMA FUND
------------------- ---------------------- ----------------------
SHARES VALUE SHARES VALUE SHARES VALUE
------ ------- --------- ------- --------- -------
FURNITURE & HOME FURNISHINGS STORES
Cost Plus, Inc. (a) 18,500 $ 849 -- $ -- 18,500 $ 849
Williams-Sonoma, Inc. (a) 20,500 724 -- -- 20,500 724
HEALTH SERVICES
Caremark Rx, Inc. (a) (b) 12,200 306 -- -- 12,200 306
Lincare Holdings Inc. (a) 16,500 643 -- -- 16,500 643
Odyssey HealthCare, Inc. (a) 23,650 656 -- -- 23,650 656
Select Medical Corporation (a) 19,000 638 -- -- 19,000 638
INDUSTRIAL MACHINERY & EQUIPMENT
FMC Technologies, Inc. (a) 21,300 428 -- -- 21,300 428
Graco Inc. -- -- 50,000 1,905 50,000 1,905
Lam Research Corporation (a) (b) 21,500 618 -- -- 21,500 618
Varian Semiconductor Equipment
Associates, Inc. (a) 16,000 774 -- -- 16,000 774
Zebra Technologies Corporation - Class A (a) 16,950 965 -- -- 16,950 965
INSTRUMENTS & RELATED PRODUCTS
Avid Technology, Inc. (a) (b) 15,000 776 -- -- 15,000 776
Cognex Corporation 20,500 550 -- -- 20,500 550
LEATHER & LEATHER PRODUCTS
Coach, Inc. (a) 32,200 1,142 -- -- 32,200 1,142
MANAGEMENT SERVICES
Corporate Executive Board Company (The) (a) (b) 33,500 1,709 -- -- 33,500 1,709
ServiceMaster Company (The) -- -- 1,000,000 11,470 1,000,000 11,470
MEDICAL INSTRUMENTS & SUPPLIES
DENTSPLY International Inc. 15,200 672 -- -- 15,200 672
ResMed Inc. (a) (b) 22,000 919 -- -- 22,000 919
Respironics, Inc. (a) 9,100 379 -- -- 9,100 379
Varian Medical Systems, Inc. (a) 19,000 1,215 -- -- 19,000 1,215
OIL & GAS EXTRACTION
EOG Resources, Inc. -- -- 240,000 10,114 240,000 10,114
PAPER & ALLIED PRODUCTS
Pactiv Corporation (a) -- -- 200,000 4,410 200,000 4,410
PAPERBOARD CONTAINERS & BOXES
Packaging Corporation of America (a) -- -- 495,000 9,751 495,000 9,751
PERSONAL SERVICES
Weight Watchers International, Inc. (a) (b) -- -- 275,000 10,148 275,000 10,148
The notes to the pro forma financial statements are an integral part of this
report.
49
REORGANIZATION BETWEEN IDEX PBHG MID CAP GROWTH AND IDEX TRANSAMERICA GROWTH
OPPORTUNITIES
PRO FORMA SCHEDULE OF INVESTMENTS
AT OCTOBER 31, 2003
(ALL AMOUNTS EXCEPT SHARE AMOUNTS IN THOUSANDS)
(UNAUDITED)
IDEX PBHG IDEX TRANSAMERICA
MID CAP GROWTH GROWTH OPPORTUNITIES PRO FORMA FUND
------------------- -------------------- --------------------
SHARES VALUE SHARES VALUE SHARES VALUE
------ ------- ------- ------- ------- -------
PHARMACEUTICALS
American Pharmaceutical Partners, Inc. (a) (b) 5,250 $ 128 -- $ -- 5,250 $ 128
Celgene Corporation (a) 19,500 813 -- -- 19,500 813
Invitrogen Corporation (a) 11,500 731 -- -- 11,500 731
Martek Biosciences Corp. (a) (b) 5,000 242 -- -- 5,000 242
Medicines Company (The) (a) 8,000 213 -- -- 8,000 213
Taro Pharmaceutical Industries Ltd. (a) 11,000 707 -- -- 11,000 707
Techne Corporation (a) 15,000 522 325,000 11,320 340,000 11,842
RADIO, TELEVISION & COMPUTER STORES
RadioShack Corporation -- -- 325,000 9,746 325,000 9,746
RESEARCH & TESTING SERVICES
Affymetrix, Inc. (a) (b) 20,500 525 -- -- 20,500 525
Gen-Probe Incorporated (a) 7,200 193 -- -- 7,200 193
RESTAURANTS
Applebee's International, Inc. 17,500 656 -- -- 17,500 656
Cheesecake Factory Incorporated (The) (a) 11,500 459 -- -- 11,500 459
IHOP Corp. -- -- 246,300 9,138 246,300 9,138
RETAIL TRADE
Amazon.com, Inc. (a) 200 11 -- -- 200 11
CDW Corporation 16,000 961 -- -- 16,000 961
PETCO Animal Supplies, Inc. (a) 19,000 630 -- -- 19,000 630
PETsMART, Inc. 20,500 525 -- -- 20,500 525
Schein (Henry), Inc. (a) 11,500 714 -- -- 11,500 714
Staples, Inc. (a) (b) 25,500 684 -- -- 25,500 684
Tiffany & Co. (b) 18,000 854 -- -- 18,000 854
SAVINGS INSTITUTIONS
New York Community Bancorp, Inc. (b) 39,533 1,431 -- -- 39,533 1,431
SECURITY & COMMODITY BROKERS
BlackRock, Inc. -- -- 175,000 8,986 175,000 8,986
TRANSPORTATION & PUBLIC UTILITIES
C.H. Robinson Worldwide, Inc. -- -- 255,000 9,991 255,000 9,991
Expeditors International of Washington, Inc. -- -- 280,000 10,511 280,000 10,511
VARIETY STORES
Dollar Tree Stores, Inc. (a) 16,500 630 -- -- 16,500 630
Family Dollar Stores, Inc. 22,800 994 -- -- 22,800 994
WHOLESALE TRADE NONDURABLE GOODS
Tractor Supply Company (a) 16,200 679 -- -- 16,200 679
------- -------- --------
TOTAL COMMON STOCKS
(cost: $ 210,539) $66,896 $195,355 $262,251
------- -------- --------
The notes to the pro forma financial statements are an integral part of this
report.
50
REORGANIZATION BETWEEN IDEX PBHG MID CAP GROWTH AND IDEX TRANSAMERICA GROWTH
OPPORTUNITIES
PRO FORMA SCHEDULE OF INVESTMENTS
AT OCTOBER 31, 2003
(ALL AMOUNTS EXCEPT SHARE AMOUNTS IN THOUSANDS)
(UNAUDITED)
IDEX PBHG IDEX TRANSAMERICA
MID CAP GROWTH GROWTH OPPORTUNITIES PRO FORMA FUND
---------------------- --------------------- ---------------------
PRINCIPAL VALUE PRINCIPAL VALUE PRINCIPAL VALUE
--------- ----- --------- ----- --------- -----
SECURITY LENDING COLLATERAL
DEBT
BANK NOTES
Canadian Imperial Bank of Commerce
1.12%, due 11/04/2003 .................. $ 570 $ 570 $1,058 $1,058 $1,628 $1,628
Fleet National Bank
1.06%, due 01/21/2004 .................. 799 799 1,482 1,482 2,281 2,281
EURO DOLLAR TERMS
Bank of Montreal
1.03%, due 11/13/2003 .................. 456 456 847 847 1,303 1,303
1.04%, due 11/14/2003 .................. 401 401 744 744 1,145 1,145
Bank of Nova Scotia (The)
1.06%, due 11/12/2003 .................. 228 228 423 423 651 651
Bank of Scotland
1.04%, due 11/14/2003 .................. 456 456 847 847 1,303 1,303
Citigroup, Inc. ............................
1.08%, due 01/05/2004 .................. 685 685 1,270 1,270 1,955 1,955
Credit Agricole Indosuez
1.08%, due 01/06/2004 .................. 502 502 931 931 1,433 1,433
Den Danske Bank
1.04%, due 11/10/2003 .................. 228 228 423 423 651 651
1.08%, due 01/20/2004 .................. 684 684 1,270 1,270 1,954 1,954
Royal Bank of Canada
1.04%, due 11/24/2003 .................. 570 570 1,058 1,058 1,628 1,628
1.06%, due 12/08/2003 .................. 228 228 423 423 651 651
Royal Bank of Scotland Group PLC (The)
1.08%, due 01/15/2004 .................. 684 684 1,270 1,270 1,954 1,954
SouthTrust Bank
1.08%, due 01/16/2004 .................. 684 684 1,270 1,270 1,954 1,954
Wells Fargo & Company
1.04%, due 11/20/2003 .................. 684 684 1,270 1,270 1,954 1,954
PROMISSORY NOTES
Goldman Sachs Group, Inc. (The)
1.15%, due 11/03/2003 .................. 799 799 1,482 1,482 2,281 2,281
REPURCHASE AGREEMENTS (C)
Goldman Sachs Group, Inc. (The)
1.10% Repurchase Agreement
dated 10/31/2003 to be repurchased
at $651 on 11/03/2003 ................... $ 228 $ 228 $ 423 $ 423 $ 651 $ 651
Merrill Lynch & Co., Inc. ..................
1.10% Repurchase Agreement
dated 10/31/2003 to be repurchased
at $7,494 on 11/03/2003 ................. $2,624 $2,624 $4,870 $4,870 $7,494 $7,494
The notes to the pro forma financial statements are an integral part of this
report.
51
REORGANIZATION BETWEEN IDEX PBHG MID CAP GROWTH AND IDEX TRANSAMERICA GROWTH
OPPORTUNITIES
PRO FORMA SCHEDULE OF INVESTMENTS
AT OCTOBER 31, 2003
(ALL AMOUNTS EXCEPT SHARE AMOUNTS IN THOUSANDS)
(UNAUDITED)
IDEX PBHG IDEX TRANSAMERICA
MID CAP GROWTH GROWTH OPPORTUNITIES PRO FORMA FUND
-------------------- ---------------------- -----------------------
SHARES VALUE SHARES VALUE SHARES VALUE
--------- ------- --------- ------- --------- --------
INVESTMENT COMPANIES
MONEY MARKET FUNDS
Merrimac Cash Series Fund - Premium Class
1-day yield of 0.97% ................... 1,596,848 $ 1,597 2,963,496 $ 2,964 4,560,344 $ 4,561
-------- -------- --------
Total Security Lending Collateral
(cost: $37,432 ) .......................... $ 13,107 $ 24,325 $ 37,432
-------- -------- --------
Total Investment Securities
(cost: $247,971 ) ......................... $ 80,003 $219,680 $299,683
======== ======== ========
SUMMARY:
Investments, at value ..................... 117.6% $ 80,003 100.1% $219,680 104.2% $299,683
Liabilities in excess of other assets ..... -17.6% (11,971) -0.1% (177) -4.2% (12,148)
--------- -------- --------- -------- --------- --------
Net assets ................................ 100.0% $ 68,032 100.0% $219,503 100.00% $287,535
========= ======== ========= ======== ========= ========
NOTES TO SCHEDULE OF INVESTMENTS:
(a) No dividends were paid during the preceding twelve months.
(b) At October 31, 2003, all or a portion of this security is on loan. The
market value at October 31, 2003 of all securities on loan is $36,185.
(c) Cash collateral for the Repurchase Agreements, valued at $8,209, that
serve as collateral for securities lending are invested in corporate
bonds with interest rates and maturity dates ranging from 0.00%-10.18%
and 06/01/2004-12/31/2049, respectively.
DEFINITIONS:
ADR American Depositary Receipt
Amounts shown as " -- " represent amounts that are zero or those that round to
less than $1,000.
The notes to the pro forma financial statements are an integral part of this
report.
52
REORGANIZATION BETWEEN IDEX PBHG MID CAP GROWTH AND IDEX TRANSAMERICA GROWTH
OPPORTUNITIES
PRO FORMA STATEMENT OF ASSETS AND LIABILITIES
AT OCTOBER 31, 2003
(ALL AMOUNTS EXCEPT PER SHARE AMOUNTS IN THOUSANDS)
(UNAUDITED)
IDEX IDEX
PBHG Transamerica Consolidated
Mid Cap Growth Pro Forma
Growth Opportunities Adjustments Fund
--------- ------------- ----------- ------------
ASSETS:
Investments in securities, at value (cost: $247,971)
(including $36,185 of securities loaned) $ 80,003 $ 219,680 $ -- $ 299,683
Cash 7,547 24,070 -- 31,617
Receivables:
Investment securities sold 1,086 -- -- 1,086
Shares of beneficial interest sold 103 575 -- 678
Interest 1 5 -- 6
Dividends 3 222 -- 225
Due from investment adviser 39 -- -- 39
Other 17 22 -- 39
--------- --------- ------ ---------
88,799 244,574 -- 333,373
--------- --------- ------ ---------
LIABILITIES:
Investment securities purchased 7,309 -- -- 7,309
Accounts payable and accrued liabilities:
Shares of beneficial interest redeemed 63 228 -- 291
Management and advisory fees -- 99 -- 99
Distribution fees 44 101 -- 145
Transfer agent fees 115 183 -- 298
Payable for securities on loan 13,107 24,325 -- 37,432
Other 129 135 -- 264
--------- --------- ------ ---------
20,767 25,071 -- 45,838
--------- --------- ------ ---------
NET ASSETS $ 68,032 $ 219,503 $ -- $ 287,535
========= ========= ====== =========
NET ASSETS CONSIST OF:
Shares of beneficial interest, unlimited shares authorized $ 172,178 $ 510,083 $ -- $ 682,261
Accumulated net investment income (loss) (4) (13) -- (17)
Accumulated net realized gain (loss) from
investment securities (117,206) (329,214) -- (446,420)
Net unrealized appreciation (depreciation) on
investment securities 13,064 38,647 -- 51,711
--------- --------- ------ ---------
NET ASSETS $ 68,032 $ 219,503 $ -- $ 287,535
========= ========= ====== =========
SHARES OUTSTANDING:
Class A 2,439 24,754 1,344 (a) 28,537
Class B 3,700 9,069 1,995 (a) 14,764
Class C 785 1,658 424 (a) 2,867
Class L 98 83 53 (a) 234
Class M 522 1,650 283 (a) 2,455
NET ASSET VALUE PER SHARE:
Class A $ 9.23 $ 5.95 $ -- $ 5.95
Class B 8.91 5.79 -- 5.79
Class C 8.91 5.79 -- 5.79
Class L 8.91 5.79 -- 5.79
Class M 8.96 5.81 -- 5.81
MAXIMUM OFFERING PRICE PER SHARE (1):
Class A $ 9.77 $ 6.30 $ -- $ 6.30
Class M 9.05 5.87 -- 5.87
(1) Includes the maximum selling commission (represented as a percentage of
offering price) which is reduced on certain levels of sales as set forth in the
Prospectus. Net asset value per share for Classes B, C, and L shares represents
offering price. The redemption price for Classes B, L, and M shares equals net
asset value less any applicable contingent deferred sales charge.
Amounts shown as " -- " represent amounts that are zero or those that round to
less than $1,000.
The notes to the pro forma financial statements are an integral part of this
report.
53
REORGANIZATION BETWEEN IDEX PBHG MID CAP GROWTH AND IDEX TRANSAMERICA GROWTH
OPPORTUNITIES
PRO FORMA STATEMENT OF OPERATIONS
YEAR ENDED OCTOBER 31, 2003
(ALL AMOUNTS IN THOUSANDS)
(UNAUDITED)
IDEX IDEX
PBHG Transamerica Consolidated
Mid Cap Growth Pro Forma
Growth Opportunities Adjustments Fund
--------- ------------- ----------- ------------
INVESTMENT INCOME:
Interest $ 12 $ 55 $ -- $ 67
Dividends 68 685 -- 753
Income from loaned securities--net 31 30 -- 61
--------- --------- ------ ---------
111 770 -- 881
--------- --------- ------ ---------
EXPENSES:
Management and advisory fees 440 957 -- 1,397
Transfer agent fees 813 905 -- 1,718
Printing and shareholder reports 114 130 -- 244
Custody fees 29 22 (24) (b) 27
Administration fees 27 36 (26) (c) 37
Legal fees 3 5 -- 8
Auditing and accounting fees 59 30 (30) (d) 59
Trustees fees 4 9 -- 13
Registration fees 149 98 -- 247
Other 24 22 -- 46
Distribution and service fees:
Class A 66 250 -- 316
Class B 266 346 -- 612
Class C 59 66 -- 125
Class L 2 3 -- 5
Class M 32 59 -- 91
--------- --------- ------ ---------
Total expenses 2,087 2,938 (80) 4,945
Less:
Advisory fee waiver (893) (550) 94 (e) (1,349)
--------- --------- ------ ---------
Net expenses 1,194 2,388 14 3,596
--------- --------- ------ ---------
NET INVESTMENT INCOME (LOSS) (1,083) (1,618) (14) (2,715)
--------- --------- ------ ---------
NET REALIZED AND UNREALIZED GAIN (LOSS):
Realized gain (loss) from investment securities 3,990 (7,453) -- (3,463)
Increase (decrease) in unrealized appreciation
(depreciation) on investment securities 11,464 50,490 -- 61,954
--------- --------- ------ ---------
NET GAIN (LOSS) ON INVESTMENT SECURITIES 15,454 43,037 -- 58,491
--------- --------- ------ ---------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING
FROM OPERATIONS $ 14,371 $ 41,419 $ (14) $ 55,776
========= ========= ====== =========
Amounts shown as " -- " represent amounts that are zero or those that round to
less than $1,000.
The notes to the pro forma financial statements are an integral part of this
report.
54
REORGANIZATION BETWEEN IDEX PBHG MID CAP GROWTH AND IDEX
TRANSAMERICA GROWTH OPPORTUNITIES
PRO FORMA NOTES TO THE FINANCIAL STATEMENTS
At October 31, 2003
(all amounts in thousands)
(unaudited)
NOTE 1 - GENERAL
The accompanying unaudited pro forma financial statements are presented to show
the effect of the proposed transfer of substantially all of the assets of IDEX
PBHG Mid Cap Growth (the "Fund") to IDEX Transamerica Growth Opportunities (the
"Acquiring Fund") in exchange for Class A, B, C, L and M shares of the Acquiring
Fund and the assumption by the Acquiring Fund of substantially all of the
liabilities of the Fund as described elsewhere in this proxy
statement/prospectus.
The "Pro Forma Fund" as identified in these financial statements represents the
combined fund after the merger, with the Acquiring Fund treated as the
accounting survivor for financial reporting purposes. Management believes the
Acquiring Fund to be the accounting survivor because this fund's investment
objective/style, and sub-advisor/fund manager would all remain in tact with the
combined fund. In addition, the Acquiring Fund has considerably more assets than
the Fund.
Under the terms of the Agreement and Plan of Reorganization, the exchange of
assets of the Fund for the Class A, B, C, L and M shares of the Acquiring Fund
will be treated and accounted for as a tax-free reorganization. The acquisition
would be accomplished by an acquisition of the net assets of the Fund in
exchange for the Class A, B, C, L and M shares of the Acquiring Fund at net
asset value. The unaudited pro forma Schedule of Investments and the unaudited
Pro Forma Statement of Assets and Liabilities have been prepared as though the
acquisition had been effective on October 31, 2003. The unaudited pro forma
Statement of Operations has been prepared as though the acquisition had been
effective November 1, 2002 to report operations for the twelve months ended
October 31, 2003.
The accompanying pro forma financial statements should be read in conjunction
with the financial statements of the Fund and the Acquiring Fund, which are
included in their respective annual reports dated October 31, 2003.
NOTE 2 - PRO FORMA ADJUSTMENTS
The Pro Forma adjustments below reflect the impact of the merger.
(a) To adjust shares outstanding of the Pro Forma Fund based on combining
the Fund at the Acquiring Fund's net asset value.
(b) To remove duplicate Custody fees.
(c) To remove duplicate Administration fees.
(d) To remove duplicate Auditing and accounting fees.
(e) To adjust the Reimbursements by the investment advisor as a result of
the proposed stated annual expense limit of the Pro Forma Fund at the
combined average daily net assets of the Fund and the Acquiring Fund.
No adjustments have been made to investments owned on the Schedules of
Investments as the investments of the Pro Forma Fund are not unsuitable nor
violate the investment objectives of the Acquiring Fund.
55
REORGANIZATION BETWEEN IDEX PBHG MID CAP GROWTH AND IDEX
TRANSAMERICA GROWTH OPPORTUNITIES
PRO FORMA NOTES TO THE FINANCIAL STATEMENTS
At October 31, 2003
(all amounts in thousands)
(unaudited)
NOTE 3 - INVESTMENT ADVISORY AND OTHER TRANSACTIONS
AEGON/Transamerica Fund Advisers, Inc. ("ATFA") is the investment adviser for
the Acquiring Fund. AEGON/Transamerica Fund Services, Inc. ("ATFS") is the
Acquiring Fund's administrator. AFSG Securities Corporation ("AFSG") is the
Acquiring Fund's distributor/principal underwriter. AEGON/Transamerica Investor
Services, Inc. ("ATIS") is the Acquiring Fund's transfer agent. ATIS and AFSG
are 100% owned by AUSA Holding Company ("AUSA"). ATFA is a directly owned
subsidiary of Western Reserve Life Assurance Co. of Ohio (78%) ("WRL") and AUSA
(22%). ATFS is a wholly owned subsidiary of WRL. WRL and AUSA are wholly owned
indirect subsidiaries of AEGON NV, a Netherlands corporation. Transamerica
Investment Management, LLC is both a sub-adviser of the acquiring fund and an
affiliate of the fund.
The following schedule reflects the percentage of the Acquiring Fund's assets
owned by affiliated mutual funds (i.e. through the assets allocation funds)
<Table>
<Caption>
Net % of
Assets Net Assets
------ ----------
IDEX Asset Allocation
Conservative Portfolio 10,404 5%
IDEX Asset Allocation Growth 22,156 10%
IDEX Asset Allocation Moderate
Growth 39,549 18%
IDEX Asset Allocation Moderate 29,519 13%
----
46%
</Table>
INVESTMENT ADVISORY FEES
The Acquiring Fund pays management fees to ATFA based on average daily net
assets ("ANA") at the following breakpoints:
0.80% of the first $500 million of ANA
0.70% of ANA over $500 million.
If the reorganization is approved, the Acquiring Fund will pay management fees
to ATFA based on ANA at the following breakpoints:
0.80% of the first $250 million of ANA
0.75% of the next $250 million of ANA
0.70% of ANA over $500 million.
ATFA currently voluntarily waives its advisory fee and will reimburse the
Acquiring Fund to the extent that operating expenses, excluding 12b-1 fees,
exceed the following stated annual limit:
1.40% Expense Limit
If total fund expenses fall below the annual expense limitation agreed to by the
adviser within the succeeding three years, the Acquiring Fund may be required to
pay the advisor a portion or all of the waived advisory fees.
56
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 Proxy
Statement/Prospectus.
(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. 29, as filed with the SEC on
December 15, 1998. (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. 29, as filed with the SEC on
December 15, 1998.
(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. (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 LLP to be filed by post-effective
amendment.
57
(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 for IDEX Mutual Funds, dated March 1, 2003 is
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.
58
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 5h day of February, 2004.
IDEX MUTUAL FUNDS
/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* Trustee, 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
59
Exhibit Index
16.(11) Opinion and Consent of Counsel
16.(14) Consent of Independent Certified Public Accountants
16.(17) Form of Proxy Card
60