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PROSPECTUS
[GRAPHIC OMITTED]
MARCH 1, 2001
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved these securities or passed upon the
adequacy or accuracy of this prospectus. Any representation to the contrary is
a criminal offense.
IDEX JANUS GLOBAL IS NOT AVAILABLE FOR NEW INVESTORS.
IDEX MUTUAL FUNDS
Fellow IDEX Investors, March 1, 2001
During the past year, many of us have learned an uncomfortable but valuable
lesson about focusing on long-term goals rather than short-term gyrations. If
nothing else, a turbulent market reminds us that investing takes patience.
With the long term in mind, IDEX made a series of moves in 2000 designed to
help investors even better meet their financial needs. Across the year we added
eight new fund options to the line-up, and you'll see in this prospectus three
more new names: IDEX American Century International, IDEX American Century
Income & Growth, and IDEX Isabelle Small Cap Value. All together, the IDEX fund
family is reaching a wider range of investors than ever before.
On a less pleasing note, IDEX Janus Global was closed to new investors.
Limiting the size of the fund was necessary, we thought, to protect the
interests of its shareholders. While we'll miss this spectacularly successful
option, we're quite proud of the remaining global and international funds in
the IDEX list. Please take a careful look at the options we've recently added
in this area.
Another event we believe was in the best interest of shareholders was a proxy
vote changing the sub-adviser and objective of IDEX C.A.S.E. Growth. The new
sub-adviser, Jennison Associates LLC, a subsidiary of The Prudential Insurance
Company of America, has more than 30 years of professional investment
experience.
Also of note...
. Our Notice of Privacy Policy (featured on the back cover), which describes
the steps we take to safeguard your personal information.
. Several fund name changes that more clearly identify their money management
firm; IDEX JCC Growth, for example, is now IDEX Janus Growth.
. And the announcement we will stop issuing stock certificates, a move that
will reduce shareholder costs.
In addition to a full range of investment options and top-shelf money
management, investors need quality information. To that end, we redesigned our
quarterly and year-end statements. The new version, unveiled after the fourth
quarter of 2000, has already earned the DALBAR Communication Seal. DALBAR, an
independent financial services research firm, awards the Seal to honor
excellence in financial communications. This recognition acknowledges our
commitment to provide information that's relevant, clear, and concise.
Although we can't predict what the market will do in the near future, we intend
to remain on a long-term path of providing you with the best investment options
and services to help you achieve your goals. If you have any questions, please
contact your financial professional or IDEX Customer Service at 1-888-233-4339.
Sincerely,
/s/ Patrick S. Baird /s/ John R. Kenney
Patrick S. Baird John R. Kenney,
President Chairman and Chief Executive Officer
THIS PAGE IS NOT PART OF THE PROSPECTUS
---------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
IDEX MUTUAL FUNDS
TABLE OF CONTENTS
ALL ABOUT THE IDEX FUNDS:
. GROWTH FUNDS
Great Companies -- America(SM)............ 2
Goldman Sachs Growth ..................... 4
Janus Growth ............................. 6
Jennison Equity Opportunity .............. 8
NWQ Value Equity ......................... 10
Salomon All Cap .......................... 12
Transamerica Equity ...................... 14
. AGGRESSIVE GROWTH FUNDS
Alger Aggressive Growth .................. 16
Great Companies -- Technology(SM)......... 18
Isabelle Small Cap Value ................. 20
Janus Capital Appreciation ............... 22
Munder Net50 ............................. 24
Pilgrim Baxter Mid Cap Growth ............ 26
Pilgrim Baxter Technology ................ 28
Transamerica Small Company ............... 30
T. Rowe Price Small Cap .................. 32
. INTERNATIONAL/GLOBAL FUNDS
American Century International ........... 34
Gabelli Global Growth .................... 36
GE International Equity .................. 38
Great Companies -- Global/2/.............. 40
*Janus Global ............................ 42
*(NOTE: CLOSED TO NEW INVESTORS)
. GROWTH & INCOME FUNDS
American Century Income & Growth ......... 44
GE U.S. Equity ........................... 46
Janus Growth & Income .................... 48
T. Rowe Price Dividend Growth ............ 50
. BALANCED FUNDS
Dean Asset Allocation .................... 52
Janus Balanced ........................... 54
LKCM Strategic Total Return .............. 56
. FIXED INCOME FUNDS
AEGON Income Plus ........................ 58
Federated Tax Exempt ..................... 60
Janus Flexible Income .................... 62
EXPLANATION OF STRATEGIES AND RISKS ......... 64
HOW THE IDEX FUNDS ARE MANAGED AND
ORGANIZED ................................ 69
SHAREHOLDER INFORMATION ..................... 76
. Opening an Account ........................ 76
. How to Sell Shares ........................ 76
. How to Exchange Shares .................... 76
. Other Account Information ................. 77
PERFORMANCE INFORMATION ..................... 85
. Yield ..................................... 85
. Total Return .............................. 85
. Similar Sub-Adviser Performance ........... 85
DISTRIBUTION ARRANGEMENTS ................... 88
FINANCIAL HIGHLIGHTS ........................ 90
NOTES TO FINANCIAL HIGHLIGHTS ............... 106
APPENDIX A .................................. A-1
IDEX Mutual Funds ("Fund") consists of 31 individual funds. Each fund invests in
a range of securities, such as stocks and/or bonds. Please read this prospectus
carefully before you invest or send money. It has been written to provide
information and assist you in making an informed decision. If you would like
additional information, please request a copy of the Statement of Additional
Information (SAI) (see back cover).
In addition, we suggest you contact your financial professional or an IDEX
customer service representative, who will assist you.
TO HELP YOU UNDERSTAND...
In this prospectus, you'll see symbols like the ones below. These are
"icons," graphic road signs that let you know at a glance the subject of
the nearby paragraphs. The icons serve as tools for your convenience as you
read this prospectus.
[GRAPHIC] The target directs you to a fund's goal or objective.
[GRAPHIC] The chess piece indicates discussion about a fund's strategies.
[GRAPHIC] The warning sign indicates the risks of investing in a fund.
[GRAPHIC] The graph indicates investment performance.
[GRAPHIC] The dollar sign indicates fees and expenses you may incur.
[GRAPHIC] The question mark provides additional information about the Fund or
may direct you to sources for further information.
AN INVESTMENT IN THE FUND IS NOT A DEPOSIT OF A BANK AND IS NOT INSURED OR
GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER GOVERNMENT
AGENCY.
IDEX GREAT COMPANIES -- AMERICA(SM)
SUMMARY OF RISKS AND RETURNS
[GRAPHIC] OBJECTIVE
THE OBJECTIVE OF IDEX GREAT COMPANIES -- AMERICA(SM) IS LONG-TERM GROWTH OF
CAPITAL.
[GRAPHIC] PRINCIPAL STRATEGIES AND POLICIES
The fund's sub-adviser, Great Companies, L.L.C. (Great Companies), seeks to
achieve this objective by investing principally in:
. large-cap stocks
The fund seeks to invest in common stocks of large, established, United States
based companies. Stocks for this fund are selected by Great Companies from a
group of companies that it has identified, in its opinion, as being "great
companies."
To be considered a "great company" candidate by the sub-adviser, the
sub-adviser will initially determine if a company meets certain of the
following criteria: be highly regarded by management experts; be publicly
traded; be incorporated in the United States; have been in business for at
least 50 years and survived the founder; have a market cap in excess of $15
billion; be a global company (at least 40% of its revenues outside the U.S.);
be engaged in what the sub-adviser considers to be "terrific businesses"; have
a "protective barrier" such as superior brand franchises; consider employees to
be a company's most valuable asset; have, in the sub-adviser's opinion, "world
class management"; and be an innovation-driven company that, in the
sub-adviser's opinion, can convert changes into opportunities. Each company's
common stock (and its predecessors) must have outperformed the Standard &
Poor's 500 Composite Stock Index (S&P 500) over the ten-year period ended
December 29, 2000. The sub-adviser will use the S&P 500 as the performance
benchmark for the fund.
To determine which "great company" in which the fund should invest, Great
Companies uses Intrinsic Value investing. Intrinsic Value is the discounted
value of the estimated amount of cash that can be taken out of a business
during its remaining life. It is an estimate rather than a precise figure, and
changes when interest rates move or when forecasts of future cash flows are
revised. Please see page 67 for a complete description of Intrinsic Value
investing.
[GRAPHIC] PRINCIPAL RISKS
The fund is subject to the following principal investment risks:
. STOCKS
While stocks have historically outperformed other investments over the long
term, they tend to go up and down more dramatically over the shorter term.
These price movements may result from factors affecting individual companies,
industries or the securities market as a whole.
Because the stocks the fund holds fluctuate in price, the value of your
investment in the fund will go up and down.
. ESTABLISHED COMPANY STOCKS
Because companies in which this fund invests must have been in existence for at
least a 50-year period, certain sector stocks, which would otherwise present
attractive investment opportunities, will not be selected for the fund.
. PROPRIETARY RESEARCH
Proprietary forms of research may not be effective and may cause overall
returns to be lower than if other forms of research are used.
THIS FUND IS NON-DIVERSIFIED.
YOU MAY LOSE MONEY IF YOU INVEST IN THIS FUND.
These and other risks are fully described in the section entitled "Explanation
of Strategies and Risks," beginning on page 64.
WHAT IS A NON-DIVERSIFIED FUND?
A "non-diversified" fund has the ability to take larger positions in a
smaller number of issuers. To the extent a fund invests in a greater
portion of its assets in the securities of a smaller number of issuers, it
may be more susceptible to any single economic, political or regulatory
occurrence than a widely diversified fund and may be subject to a greater
loss with respect to its portfolio securities. However, to meet federal
tax requirements, at the close of each quarter the fund may not have more
than 25% of its total assets invested in any one issuer, and, with respect
to 50% of its total assets, not more than 5% of its total assets in one
issuer.
. INVESTOR PROFILE
The fund may be appropriate for investors who seek long-term growth of capital
and who can tolerate fluctuations inherent in stock investing.
2
[GRAPHIC] PAST PERFORMANCE
Because the fund commenced operations in July 2000, no historical performance
information is presented here. Performance information will be presented for
the fund after it has been in operation for one complete calendar year.
[GRAPHIC] FEES AND EXPENSES
This table describes the fees and expenses that you may pay if you buy and hold
shares of the fund.
===============================================================================
SHAREHOLDER FEES (fees paid directly from your investment)
CLASS OF SHARES
A B C M
- -----------------------------------------------------------------------------
Maximum sales charge (load)
imposed on purchases
(AS A % OF OFFERING PRICE) 5.50% None None 1.00%
Maximum deferred sales
charge (load) None(a) 5.00% None 1.00%(b)
(AS A PERCENTAGE OF PURCHASE PRICE OR
REDEMPTION PROCEEDS, WHICHEVER IS LOWER)
===============================================================================
ANNUAL FUND OPERATING EXPENSES (expenses that are deducted from fund assets)
% OF AVERAGE DAILY NET ASSETS CLASS OF SHARES
A B C M
---------------------------------------------------------------
Management fees 0.80% 0.80% 0.80% 0.80%
Distribution and service
(12b-1) fees 0.35% 1.00% 1.00% 0.90%
Other expenses (c) 2.23% 2.23% 2.23% 2.23%
-----------------------------------
TOTAL ANNUAL FUND
OPERATING EXPENSES 3.38% 4.03% 4.03% 3.93%
EXPENSE REDUCTION (D) 1.83% 1.83% 1.83% 1.83%
----------------------------------
NET OPERATING EXPENSES 1.55% 2.20% 2.20% 2.10%
- ---------------------------------------------------------------
(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) Purchases of Class M shares are subject to a 1% contingent deferred sales
charge if redeemed within 18 months of purchase.
(c) Because the fund commenced operations in July 2000, the "Other expenses"
are estimates.
(d) Contractual arrangement with Idex Management, Inc. through 4/30/02, for
expenses that exceed 1.20%, excluding 12b-1 fees.
A $10 semi-annual fee is imposed on accounts open for over 2 years that are
below a minimum balance due to redemptions. See page 77.
===============================================================================
EXAMPLE
This example is here to help you compare the cost of investing in this fund
with that of other mutual funds. It shows the cumulative expenses you would pay
if you invested $10,000 and held your shares for various time periods, with a
5% annual return and fund operating expenses remaining the same. This return is
for illustration purposes and is not guaranteed. Actual costs may be higher or
lower.
If the shares are redeemed at the end of each period:
SHARE CLASS 1 YEAR 3 YEARS
- -----------------------------------
A $699 $1,371
B* $723 $1,360
C $223 $1,060
M $410 $1,120
- ---------------------------------
If the shares are not redeemed:
SHARE CLASS 1 YEAR 3 YEARS
- -----------------------------------
A $699 $1,371
B* $223 $1,060
C $223 $1,060
M $311 $1,120
- ---------------------------------
* EXAMPLES FOR CLASS B SHARES ASSUME THEY WILL CONVERT TO CLASS A SHARES EIGHT
YEARS AFTER YOU PURCHASE THEM.
3
IDEX GOLDMAN SACHS GROWTH
SUMMARY OF RISKS AND RETURNS
[GRAPHIC] OBJECTIVE
The Investment Objective of IDEX Goldman Sachs Growth is to seek long-term
growth of capital.
[GRAPHIC] PRINCIPAL STRATEGIES AND POLICIES
The fund's sub-adviser, Goldman Sachs Asset Management (GSAM), seeks to achieve
this objective by investing principally in:
. stocks
This fund, under normal circumstances, invests at least 90% of total assets in
a diversified portfolio of common stocks that are considered by GSAM to have
long-term capital appreciation potential.
Stocks for this fund are selected based on their prospects for above-average
growth. GSAM will select securities of growth companies trading, in GSAM's
opinion, at a reasonable price relative to other industries, competitors and
historical price/earnings multiples.
In order to determine whether a security could have favorable growth prospects,
GSAM ordinarily looks for one or more of the following characteristics in
relation to the security's prevailing price:
. prospects for above-average sales and earnings growth per share
. high return on invested capital
. free cash flow generation
. sound balance sheet, financial and accounting policies, and overall financial
strength
. strong competitive advantages
. effective research, product development, and marketing
. pricing flexibility
. strength of management
. general operating characteristics that will enable the company to compete
successfully in its marketplace
The fund generally will invest in companies whose earnings are believed to be
in a relatively strong growth trend, or, to a lesser extent, in companies in
which significant further growth is not anticipated but whose market value per
share is thought to be undervalued.
GSAM may sell fund securities when its expectations regarding growth change.
GSAM may take a temporary defensive position when the securities trading
markets or the economy are experiencing excessive volatility or a prolonged
general decline, or when other adverse conditions exist (which is inconsistent
with the fund's principal investment strategies). Under these circumstances,
the fund will be unable to achieve its investment objective.
While the fund invests principally in publicly traded U.S. securities, GSAM may
invest up to 10% in the aggregate in foreign equity securities (including
securities of issuers in emerging countries and securities quoted in foreign
currencies), or, to a lesser extent, in other securities and investment
strategies in pursuit of its investment objective, which are explained
beginning on page 64 and in the SAI.
[GRAPHIC] PRINCIPAL RISKS
The fund is subject to the following principal investment risks:
. STOCKS
While stocks have historically outperformed other investments over the long
term, they tend to go up and down more dramatically over the shorter term.
These price movements may result from factors affecting individual companies,
industries or the securities market as a whole.
Because the stocks the fund holds fluctuate in price, the value of your
investment in the fund will go up and down.
YOU MAY LOSE MONEY IF YOU INVEST IN THIS FUND.
These and other risks are fully described in the section entitled "Explanation
of Strategies and Risks," beginning on page 64.
. INVESTOR PROFILE
This fund may be appropriate for investors who seek long-term growth of capital
and who can tolerate fluctuations inherent in stock investing.
4
[GRAPHIC] PAST PERFORMANCE
The bar chart and the table below show the fund's annual returns and its
long-term performance. The bar chart and table indicate the risks of investing
in the fund by showing you how the fund's performance has varied from year to
year. The bar chart does not reflect the impact of sales charges, which lower
the fund's return. The table, which includes applicable sales charges, compares
how the fund's average annual returns for different calendar periods compare to
the returns of the Standard & Poor's 500 Composite Stock Index (S&P 500), a
widely recognized unmanaged index of stock performance. The bar chart and table
assume reinvestment of dividends and capital gains distributions. As with all
mutual funds, past performance is not a prediction of future results.
- --------------------------------------------------------------------------------
YEAR-BY-YEAR TOTAL RETURN as of 12/31 each year (%)
CLASS A SHARES
--------------
(8.22)
- --------------------------------------------------------------------------------
2000
- --------------------------------------------------------------------------------
CLASS A SHARES: QUARTER ENDED RETURN
------------- --------
Best Quarter: 3/31/00 1.98%
Worst Quarter: 12/31/00 (7.78)%
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS AS OF 12/31/00
SINCE
ONE YEAR INCEPTION
----------- ----------
A Shares (13.27)% 5.16%
- ------------------------------------------
B Shares (13.49)% 5.67%
- ------------------------------------------
C Shares (8.94)% 0.86%
- ------------------------------------------
M Shares (10.64)% 7.26%
- ------------------------------------------
S&P 500* (9.11)% 4.81%
- ------------------------------------------
* SINCE INCEPTION (3/01/99); SINCE INCEPTION OF CLASS C SHARES
(11/01/99) - (2.67)%.
[GRAPHIC] FEES AND EXPENSES
This table describes the fees and expenses that you may pay if you buy and hold
shares of the fund.
===============================================================================
SHAREHOLDER FEES (fees paid directly from your investment)
CLASS OF SHARES
A B C M
- -----------------------------------------------------------------------------
Maximum sales charge (load)
imposed on purchases
(as a % of offering price) 5.50% None None 1.00%
Maximum deferred sales
charge (load) None(a) 5.00% None 1.00%(b)
(as a percentage of purchase price or
redemption proceeds, whichever is lower)
===============================================================================
ANNUAL FUND OPERATING EXPENSES (expenses that are deducted from fund assets)(d)
% of average daily net assets
CLASS OF SHARES
A B C M
------- ------- ------- ----
Management fees 0.80% 0.80% 0.80% 0.80%
Distribution and service
(12b-1) fees 0.35% 1.00% 1.00% 0.90%
Other expenses 1.38% 1.38% 1.38% 1.38%
----------------------------------
TOTAL ANNUAL FUND
OPERATING EXPENSES 2.53% 3.18% 3.18% 3.08%
EXPENSE REDUCTION (C) 0.98% 0.98% 0.98% 0.98%
----------------------------------
NET OPERATING EXPENSES 1.55% 2.20% 2.20% 2.10%
- ---------------------------------------------------------------
(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) Purchases of Class M shares are subject to a 1% contingent deferred sales
charge if redeemed within 18 months of purchase.
(c) Contractual arrangement with Idex Management, Inc. through 11/30/01, for
expenses that exceed 1.20%, and for the period 12/01/01 through 4/30/02
for expenses that exceed 1.40%, excluding 12b-1 fees.
(d) Annual fund operating expenses are estimated based on the fund's expenses
for the fiscal year ended 10/31/00.
A $10 semi-annual fee is imposed on accounts open for over 2 years that are
below a minimum balance due to redemptions. See page 77.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
EXAMPLE*
This example is here to help you compare the cost of investing in this fund
with that of other mutual funds. It shows the cumulative expenses you would pay
if you invested $10,000 and held your shares for various time periods, with a
5% annual return and fund operating expenses remaining the same. This return is
for illustration purposes and is not guaranteed. Actual costs may be higher or
lower.
If the shares are redeemed at the end of each period:
SHARE CLASS 1 YEAR 3 YEARS 5 YEARS 10 YEARS
- ------------------------------------------------------------
A $699 $1,206 $1,738 $3,188
B** $723 $1,189 $1,679 $3,267
C $223 $ 889 $1,579 $3,418
M $410 $ 951 $1,615 $3,391
- ------------------------------------------------------------
If the shares are not redeemed:
SHARE CLASS 1 YEAR 3 YEARS 5 YEARS 10 YEARS
- ------------------------------------------------------------
A $699 $1,206 $1,738 $3,188
B** $223 $ 889 $1,579 $3,267
C $223 $ 889 $1,579 $3,418
M $311 $ 951 $1,615 $3,391
- ---------------------------------------------------------
* THE TABLE REFLECTS THE EXPENSE CAP INCREASE ON 12/01/01.
** EXAMPLES FOR CLASS B SHARES ASSUME THEY WILL CONVERT TO CLASS A SHARES EIGHT
YEARS AFTER YOU PURCHASE THEM.
For information regarding a similar sub-adviser fund, please see page 85.
5
IDEX JANUS GROWTH (FORMERLY IDEX JCC GROWTH)
SUMMARY OF RISKS AND RETURNS
[GRAPHIC] OBJECTIVE
THE OBJECTIVE OF IDEX JANUS GROWTH IS GROWTH OF CAPITAL.
[GRAPHIC] PRINCIPAL STRATEGIES AND POLICIES
The fund's sub-adviser, Janus Capital Corporation (Janus), seeks to achieve
this objective by investing principally in:
. common stocks listed on national exchanges or on NASDAQ which the fund's
manager believes have a good potential for capital growth, some of which
may be of foreign issuers
The fund's main strategy is to invest almost all of its assets in common stocks
at times when the fund's manager believes the market environment favors such
investing.
The fund's manager builds the fund one company at a time, emphasizing growth of
capital by investing in companies the fund's manager believes to have the
greatest earnings growth potential.
While investments are focused on earnings growth, the fund's manager also
searches for companies that it believes are trading at reasonable prices
relative to their future earnings growth. To locate these opportunities, the
fund's manager subjects each company to a rigorous "bottom up" fundamental
analysis, carefully researching each potential investment before and after it
is incorporated into the fund.
Although themes may emerge in the fund, securities are generally selected
without regard to any defined industry sector or other similarly defined
selection procedure. Realization of income is not a significant investment
consideration for the fund, and any income realized on the fund's investments
is incidental to its objective.
The fund's manager may sell stocks when its expectations regarding earnings
growth change, there is an earnings surprise, or the earnings change.
While the fund invests principally in common stocks, the fund's manager may, to
a lesser extent, invest in futures and foreign securities, or other securities
and investment strategies in pursuit of its investment objective, which are
explained beginning on page 64 and in the SAI.
WHAT IS A "BOTTOM UP" ANALYSIS?
When a sub-adviser uses a "bottom up" approach, it looks primarily at
individual companies against the context of broad market factors. It seeks
to identify individual companies with earnings growth potential that may
not be recognized by the market at large.
[GRAPHIC] PRINCIPAL RISKS
The fund is subject to the following principal investment risks:
. STOCKS
While stocks have historically outperformed other investments over the long
term, they tend to go up and down more dramatically over the shorter term.
These price movements may result from factors affecting individual companies,
industries or the securities markets as a whole.
Because the stocks the fund holds fluctuate in price, the value of your
investment in the fund will go up and down.
. FOREIGN STOCKS
Investments in foreign securities (including American Depositary Receipts
(ADRs), Global Depositary Receipts (GDRs) and European Depositary Receipts
(EDRs)) involve risks relating to political, social and economic developments
abroad, as well as risks resulting from the differences between the regulations
to which U.S. and foreign issuer markets are subject. These risks include:
. changes in currency values
. currency speculation
. currency trading costs
. different accounting and reporting practices
. less information available to the public
. less (or different) regulation of securities markets
. more complex business negotiations
. less liquidity
. more fluctuations in prices
. delays in settling foreign securities transactions
. higher costs for holding shares (custodial fees)
. higher transaction costs
. vulnerability to seizure and taxes
. political instability and small markets
. different market trading days
. forward foreign currency contracts for hedging
YOU MAY LOSE MONEY IF YOU INVEST IN THIS FUND.
These and other risks are fully described in the section entitled "Explanation
of Strategies and Risks," beginning on page 64.
. INVESTOR PROFILE
This fund may be appropriate for investors who want capital growth in a broadly
diversified stock portfolio, and who can tolerate significant fluctuations in
the value of their investment.
6
[GRAPHIC] PAST PERFORMANCE
The bar chart and the table below show the fund's annual returns and its
long-term performance. The bar chart and table indicate the risks of investing
in the fund by showing you how the fund's performance has varied from year to
year. The bar chart does not reflect the impact of sales charges, which lower
the fund's return. The table, which includes applicable sales charges, compares
how the fund's average annual returns for different calendar periods compare to
the returns of the Standard & Poor's 500 Composite Stock Index (S&P 500), a
widely recognized unmanaged index of stock performance. The bar chart and table
assume reinvestment of dividends and capital gains distributions. As with all
mutual funds, past performance is not a prediction of future results.
- --------------------------------------------------------------------------------
YEAR-BY-YEAR TOTAL RETURN as of 12/31 each year (%)
CLASS A SHARES
--------------
1991 58.82
1992 1.17
1993 3.81
1994 (8.47)
1995 47.12
1996 17.06
1997 15.82
1998 63.98
1999 58.46
2000 (28.22)
- --------------------------------------------------------------------------------
CLASS A SHARES: QUARTER ENDED RETURN
--------------- --------
Best Quarter: 12/31/99 31.77%
Worst Quarter: 12/31/00 (26.37)%
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS AS OF 12/31/00
SINCE
ONE YEAR 5 YEARS 10 YEARS INCEPTION
- -----------------------------------------------------------------------
A Shares (32.16)% 19.24% 18.39% 17.30%
- -----------------------------------------------------------------------
B Shares (32.52)% 20.17% -- 20.08%
- -----------------------------------------------------------------------
C Shares (28.97)% -- -- (11.51)%
- -----------------------------------------------------------------------
M Shares (30.27)% 20.00% -- 17.90%
- -----------------------------------------------------------------------
T Shares (33.95)% 18.80% 18.49% 17.60%
- -----------------------------------------------------------------------
S&P 500* (9.11)% 18.33% 17.46% 15.46%
- -----------------------------------------------------------------------
* SINCE INCEPTION OF CLASS A SHARES (5/08/86). SINCE INCEPTION OF CLASS B
SHARES (10/01/95) - 16.77%; CLASS C SHARES (11/01/99) - (2.67)%; CLASS M SHARES
(10/01/93) - 15.69%; AND CLASS T SHARES (6/04/85) - 13.26%.
[GRAPHIC] FEES AND EXPENSES
The following table describes the fees and expenses that you may pay if you buy
and hold shares of the fund.
================================================================================
SHAREHOLDER FEES (fees paid directly from your investment)
CLASS OF SHARES
A B C M T*
- --------------------------------------------------------------------------------
Maximum sales charge
(load) imposed on
purchases
(AS A % OF OFFERING
PRICE) 5.50% None None 1.00% 8.50%
Maximum deferred
sales charge (load) None(a) 5.00% None 1.00%(b) None(a)
(AS A PERCENTAGE OF PURCHASE PRICE OR
REDEMPTION PROCEEDS, WHICHEVER IS LOWER)
================================================================================
ANNUAL FUND OPERATING EXPENSES (expenses that are deducted from fund assets) (d)
% OF AVERAGE DAILY NET ASSETS CLASS OF SHARES
A B C M T*
- ---------------------------------------------------------------------------
Management fees 0.88% 0.88% 0.88% 0.88% 0.88%
Distribution and service
(12b-1) fees 0.35% 1.00% 1.00% 0.90% 0.00%
Other expenses 0.19% 0.19% 0.19% 0.19% 0.19%
---------------------------------------------
TOTAL ANNUAL FUND
OPERATING EXPENSES 1.42% 2.07% 2.07% 1.97% 1.07%
EXPENSE REDUCTION (C) 0.03% 0.03% 0.03% 0.03% 0.03%
---------------------------------------------
NET OPERATING EXPENSES 1.39% 2.04% 2.04% 1.94% 1.04%
- ---------------------------------------------------------------------------
(a) Certain purchases of Class A or Class T shares in amounts of $1 million or
more are subject to a 1% contingent deferred sales charge for 24 months
after purchase.
(b) Purchases of Class M shares are subject to a 1% contingent deferred sales
charge if redeemed within 18 months of purchase.
(c) Contractual arrangement with Idex Management, Inc. through 4/30/02 for
expenses that exceed 1.50%, excluding 12b-1 fees.
(d) Annual fund operating expenses are estimated based on the fund's expenses
for the fiscal year ended 10/31/00.
A $10 semi-annual fee is imposed on accounts open for over 2 years that are
below a minimum balance due to redemptions. See page 77.
*Not available to new investors.
================================================================================
EXAMPLE
This example is here to help you compare the cost of investing in this fund
with that of other mutual funds. It shows the cumulative expenses you would pay
if you invested $10,000 and held your shares for various time periods, with a
5% annual return and fund operating expenses remaining the same. This return is
for illustration purposes and is not guaranteed. Actual costs may be higher or
lower.
If the shares are redeemed at the end of each period:
SHARE CLASS 1 YEAR 3 YEARS 5 YEARS 10 YEARS
- -----------------------------------------------------------
A $684 $ 972 $1,281 $2,156
B* $707 $ 946 $1,211 $2,231
C $207 $ 646 $1,111 $2,398
M $394 $ 709 $1,149 $2,370
T $947 $1,159 $1,387 $2,042
- -----------------------------------------------------------
If the shares are not redeemed:
SHARE CLASS 1 YEAR 3 YEARS 5 YEARS 10 YEARS
- -----------------------------------------------------------
A $684 $ 972 $1,281 $2,156
B* $207 $ 646 $1,111 $2,231
C $207 $ 646 $1,111 $2,398
M $295 $ 709 $1,149 $2,370
T $947 $1,159 $1,387 $2,042
- -----------------------------------------------------------
* EXAMPLES FOR CLASS B SHARES ASSUME THEY WILL CONVERT TO CLASS A SHARES EIGHT
YEARS AFTER YOU PURCHASE THEM.
7
IDEX JENNISON EQUITY OPPORTUNITY (FORMERLY IDEX C.A.S.E. GROWTH)
SUMMARY OF RISKS AND RETURNS
[GRAPHIC] OBJECTIVE
THE OBJECTIVE OF IDEX JENNISON EQUITY OPPORTUNITY IS TO SEEK LONG-TERM GROWTH
OF CAPITAL.
[GRAPHIC] PRINCIPAL STRATEGIES AND POLICIES
The fund's sub-adviser, Jennison Associates LLC, (Jennison), intends to achieve
this objective by primarily investing fund assets in:
. common stocks
In seeking its investment objective, Jennison will invest at least 65% of the
fund's total assets in common stocks of established companies that, in
Jennison's opinion, are under-valued in the market. Jennison attempts to
identify stocks that have good fundamental prospects but are selling at, what
it believes is, a depressed valuation level relative to those prospects.
Jennison will seek to moderate equity risk from time to time by holding cash
reserves and engaging in short sales "against the box." The "short against the
box" technique most commonly is used when an investor is selling a stock that
has increased in value substantially and wants to defer paying a heavy capital
gains tax. The investor borrows shares of the same stock, and sells those
shares, thus temporarily deferring the gains. The investor typically will not
owe capital gains taxes on the sale until he or she closes out the position
(use shares that are owned to return the borrowed shares).
Although Jennison will focus on the domestic market, it may also invest in
stocks of foreign companies. If Jennison invests in emerging market countries,
the risks are greater than those of investing in developed foreign markets. The
economic structures in emerging market countries are less diverse and mature
than those of developed countries, and their political systems are generally
less stable. Since emerging market countries may have less developed legal
structures, small securities markets and low trading volumes, a fund may be
required to establish special custody or other arrangements before investment.
Jennison describes its investment strategy as an "opportunistic" approach in
making investment decisions. When deciding which stocks to buy, Jennison
emphasizes both projected earnings growth and, in its opinion, attractive
valuations. This means characteristics of the stocks they purchase (growth or
value, and mid cap or large cap) can change depending on where Jennison
believes the best trade-off between earnings growth and attractive valuation
may be at any given time.
While Jennison will invest primarily in equity securities, they may also invest
in equity-related securities such as preferred stocks and convertible
securities, and in fixed-income securities. Jennison may also use derivative
securities in implementing its strategy. (A derivative is commonly defined as a
financial instrument whose performance is derived (related), at least in part,
from the performance of an underlying asset (such as a security or an index of
securities)). These financial instruments include futures, options on
securities, options on futures, forward contracts, swap agreements and
structured notes. Use of derivatives may result in greater losses and adverse
tax consequences to the fund. Jennison may invest in other securities and
utilize other investment strategies in pursuit of its investment strategies
which are explained beginning on page 64 and in the SAI.
Prior to December 1, 2000, this fund was managed by C.A.S.E. Management, Inc.
[GRAPHIC] PRINCIPAL RISKS
The fund is subject to the following principal investment risks:
. STOCKS
While stocks have historically outperformed other investments over the long
term, they tend to go up and down more dramatically over the shorter term.
These price movements may result from factors affecting individual companies,
industries, or the securities market as a whole.
Because the stocks the fund holds fluctuate in price, the value of your
investment in the fund will go up and down.
. FOREIGN STOCKS
Investments in foreign securities (including American Depositary Receipts
(ADRs), Global Depositary Receipts (GDRs) and European Depositary Receipts
(EDRs)) involve risks relating to political, social and economic developments
abroad, as well as risks resulting from the differences between the regulations
to which U.S. and foreign issuer markets are subject. These risks include:
. changes in currency values
. currency speculation
. currency trading costs
. different accounting and reporting practices
. less information available to the public
. less (or different) regulation of securities markets
. more complex business negotiations
. less liquidity
. more fluctuations in prices
. delays in settling foreign securities transactions
. higher costs for holding shares (custodial fees)
. higher transaction costs
. vulnerability to seizure and taxes
. political instability and small markets
. different market trading days
. forward foreign currency contracts for hedging
YOU MAY LOSE MONEY IF YOU INVEST IN THIS FUND.
These and other risks are fully described in the section entitled "Explanation
of Strategies and Risks," beginning on page 64.
. INVESTOR PROFILE
The fund may be appropriate for investors who seek long-term growth of capital
and who can tolerate fluctuations inherent in stock investing.
8
[GRAPHIC] PAST PERFORMANCE (A)
The bar chart and the table below show the fund's annual returns and its
long-term performance. The bar chart and table indicate the risks of investing
in the fund by showing you how the fund's performance has varied from year to
year. The bar chart does not reflect the impact of sales charges, which lower
the fund's return. The table, which includes applicable sales charges, compares
how the fund's average annual returns for different calendar periods compare to
the returns of the Standard & Poor's 500 Composite Stock Index (S&P 500) and
the Wilshire 5000 Total Market Index (Wilshire 5000), widely recognized
unmanaged indexes of stock performance. The bar chart and table assume
reinvestment of dividends and capital gains distributions. As with all mutual
funds, past performance is not a prediction of future results.
- --------------------------------------------------------------------------------
YEAR-BY-YEAR TOTAL RETURN as of 12/31 each year (%)
CLASS A SHARES
--------------
21.11 (5.34) 29.33 (28.56)
---------------------------------------------
1997 1998 1999 2000
- --------------------------------------------------------------------------------
CLASS A SHARES: QUARTER ENDED RETURN
------------- ------
Best Quarter: 12/31/98 24.98%
Worst Quarter: 9/30/98 (24.42)%
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS AS OF 12/31/00
SINCE
ONE YEAR 5 YEARS INCEPTION
------------- --------- ----------
A Shares (32.49)% -- 1.96%
- --------------------------------------------------------
B Shares (32.59)% -- 2.35%
- --------------------------------------------------------
C Shares (29.04)% -- (19.99)%
- --------------------------------------------------------
M Shares (30.39)% -- 2.42%
- --------------------------------------------------------
S&P 500* (9.11)% -- 17.86%
- --------------------------------------------------------
Wilshire 5000* 10.73% -- 16.40%
- --------------------------------------------------------
* SINCE INCEPTION (2/01/96). SINCE INCEPTION OF CLASS C SHARES
(11/01/99) - (2.67)% (S&P 500); (4.87)% (WILSHIRE 5000).
(A) PRIOR TO DECEMBER 1, 2000, THIS FUND WAS MANAGED BY C.A.S.E. MANAGEMENT,
INC.
[GRAPHIC] FEES AND EXPENSES
The following table describes the fees and expenses that you may pay if you buy
and hold shares of the fund.
================================================================================
SHAREHOLDER FEES (fees paid directly from your investment)
CLASS OF SHARES
A B C M
- --------------------------------------------------------------------------
Maximum sales charge (load)
imposed on purchases
(AS A % OF OFFERING PRICE) 5.50% None None 1.00%
Maximum deferred sales
charge (load) None(a) 5.00% None 1.00%(b)
(AS A PERCENTAGE OF PURCHASE PRICE OR
REDEMPTION PROCEEDS, WHICHEVER IS LOWER)
================================================================================
ANNUAL FUND OPERATING EXPENSES (expenses that are deducted from fund assets)
(d)
% OF AVERAGE DAILY NET ASSETS
CLASS OF SHARES
A B C M
- --------------------------------------------------------------
Management fees 0.80% 0.80% 0.80% 0.80%
Distribution and service
(12b-1) fees 0.35% 1.00% 1.00% 0.90%
Other expenses 1.51% 1.51% 1.51% 1.51%
----------------------------------
TOTAL ANNUAL FUND
OPERATING EXPENSES 2.66% 3.31% 3.31% 3.21%
EXPENSE REDUCTION (C) 1.11% 1.11% 1.11% 1.11%
----------------------------------
NET OPERATING EXPENSES 1.55% 2.20% 2.20% 2.10%
- --------------------------------------------------------------
(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) Purchases of Class M shares are subject to a 1% contingent deferred sales
charge if redeemed within 18 months of purchase.
(c) Contractual arrangement with Idex Management, Inc.
through 11/30/01, for expenses that exceed 1.20%, and for the period
12/01/01 through 4/30/02 for expenses that exceed 1.40%, excluding 12b-1
fees.
(d) Annual fund operating expenses are estimated based on the fund's expenses
for the fiscal year ended 10/31/00.
A $10 semi-annual fee is imposed on accounts open for over 2 years that are
below a minimum balance due to redemptions. See page 77.
================================================================================
EXAMPLE*
This example is here to help you compare the cost of investing in this fund
with that of other mutual funds. It shows the cumulative expenses you would pay
if you invested $10,000 and held your shares for various time periods, with a
5% annual return and fund operating expenses remaining the same. This return is
for illustration purposes and is not guaranteed. Actual costs may be higher or
lower.
If the shares are redeemed at the end of each period:
SHARE CLASS 1 YEAR 3 YEARS 5 YEARS 10 YEARS
- -----------------------------------------------------------
A $699 $1,231 $1,789 $3,301
B** $723 $1,215 $1,731 $3,380
C $223 $ 915 $1,631 $3,529
M $410 $ 977 $1,667 $3,502
- --------------------------------------------------------------------------------
If the shares are not redeemed:
SHARE CLASS 1 YEAR 3 YEARS 5 YEARS 10 YEARS
- -----------------------------------------------------------
A $699 $1,231 $1,789 $3,301
B** $223 $ 915 $1,631 $3,380
C $223 $ 915 $1,631 $3,529
M $311 $ 977 $1,667 $3,502
- --------------------------------------------------------------------------------
* THE TABLE REFLECTS THE EXPENSE CAP INCREASE ON 12/01/01.
** EXAMPLES FOR CLASS B SHARES ASSUME THEY WILL CONVERT TO CLASS A SHARES EIGHT
YEARS AFTER YOU PURCHASE THEM.
For information regarding a similar sub-adviser fund, please see page 85.
9
IDEX NWQ VALUE EQUITY
SUMMARY OF RISKS AND RETURNS
[GRAPHIC] OBJECTIVE
The Objective of IDEX NWQ Value Equity is Maximum Consistent Total Return With
Minimum Risk to Principal.
[GRAPHIC]
PRINCIPAL STRATEGIES
AND POLICIES
The fund's sub-adviser, NWQ Investment Management Company, Inc. (NWQ), employs
a value-oriented approach to investing.
The fund seeks to achieve its objective by investing principally in:
. common stocks
Value investing involves buying stocks that are out of favor and/or undervalued
in comparison to their peers and/or their prospects for growth. Generally,
value stock valuation levels are lower than growth stocks.
NWQ will use statistical measures to look for above-average stock valuations,
screening for below-average price-to-earnings and price-to-book ratios,
above-average dividend yields and strong financial stability.
NWQ also identifies those market sectors believed to benefit from long-term
positive fundamentals, and focuses on the companies within these sectors which
represent above-average statistical value and are undervalued when purchased.
Under normal market conditions, 65% of the fund's assets will be invested in
equity securities.
The fund consists primarily of mid-capitalization to large capitalization
companies. (The range for mid-capitalization companies is $1.5 - $10 billion,
and over $10 billion for large capitalization companies.) When making a
security selection NWQ:
. uses earnings averaged over both strong and weak periods in evaluating
cyclical companies
. focuses on quality of earnings
. invests in relative value
. focuses in industries and sectors that have strong long-term fundamentals
NWQ may sell the fund's securities when the stocks become overvalued or the
stocks lose their strong fundamentals.
While the fund invests principally in common stocks, NWQ may, to a lesser
extent, invest in money market and short term instruments (Treasury bills), or
other securities and investment strategies in pursuit of its investment
objective, which are explained beginning on page 64 and in the SAI.
[GRAPHIC]
PRINCIPAL RISKS
The fund is subject to the following principal investment risks:
. Stocks
While stocks have historically outperformed other investments over the long
term, they tend to go up and down more dramatically over the shorter term.
These price movements may result from factors affecting individual companies,
industries, or the securities market as a whole.
Because the stocks the fund holds fluctuate in price, the value of your
investment in the fund will go up and down.
. MEDIUM-SIZED COMPANIES
These companies present additional risks because their earnings are less
predictable, their share price more volatile, and their securities less liquid
than larger more established companies.
Undervalued stocks may not realize their perceived value for extended periods
of time. Value stocks may respond differently to market and other developments
than other types of stocks. Value-oriented funds will typically underperform
when growth investing is in favor.
You May Lose Money If You Invest in This Fund.
These and other risks are fully described in the section entitled "Explanation
of Strategies and Risks," beginning on page 64.
. INVESTOR PROFILE
This fund may be appropriate for investors who seek both capital preservation
and long-term capital appreciation.
10
[GRAPHIC] PAST PERFORMANCE
The bar chart and the table below show the fund's annual returns and its
long-term performance. The bar chart and table indicate the risks of investing
in the fund by showing you how the fund's performance has varied from year to
year. The bar chart does not reflect the impact of sales charges, which lower
the fund's return. The table, which includes applicable sales charges, compares
how the fund's average annual returns for different calendar periods compare to
the returns of the Standard & Poor's 500 Composite Stock Index (S&P 500), a
widely recognized unmanaged index of stock performance. The bar chart and table
assume reinvestment of dividends and capital gains distributions. As with all
mutual funds, past performance is not a prediction of future results.
- --------------------------------------------------------------------------------
YEAR-BY-YEAR TOTAL RETURN As of 12/31 each year (%)
CLASS A SHARES
--------------
(7.24) 8.32 17.30
---------------------------------------------------------
1998 1999 2000
- --------------------------------------------------------------------------------
CLASS A SHARES: QUARTER ENDED RETURN
--------------- ---------
Best Quarter: 6/30/99 14.67%
Worst Quarter: 9/30/98 (18.47)%
- ---------------------------------------------
Average Annual Total Returns as of 12/31/00
SINCE
ONE YEAR INCEPTION
------------- ----------
A Shares 10.84% 7.57%
- -------------------------------------
B Shares 11.65% 8.09%
- -------------------------------------
C Shares 16.65% 17.19%
- -------------------------------------
M Shares 14.58% 8.32%
- -------------------------------------
S&P 500* (9.11)% 15.79%
- -------------------------------------
* SINCE INCEPTION (2/01/97). SINCE INCEPTION OF CLASS C SHARES
(11/01/99) - (2.67)%.
[GRAPHIC] FEES AND EXPENSES
The following table describes the fees and expenses that you may pay if you buy
and hold shares of the fund.
================================================================================
SHAREHOLDER FEES (fees paid directly from your investment)
CLASS OF SHARES
A B C M
- -----------------------------------------------------------------------------
Maximum sales charge (load)
imposed on purchases
(AS A % OF OFFERING PRICE) 5.50% None None 1.00%
Maximum deferred sales
charge (load) None(a) 5.00% None 1.00%(b)
(AS A PERCENTAGE OF PURCHASE PRICE OR
REDEMPTION PROCEEDS, WHICHEVER IS LOWER)
================================================================================
ANNUAL FUND OPERATING EXPENSES (expenses that are deducted from fund assets)
(d)
% OF AVERAGE DAILY NET ASSETS CLASS OF SHARES
A B C M
- ----------------------------------------------------------------
Management fees 0.80% 0.80% 0.80% 0.80%
Distribution and service
(12b-1) fees 0.35% 1.00% 1.00% 0.90%
Other expenses 1.05% 1.05% 1.05% 1.05%
----------------------------------
TOTAL ANNUAL FUND
OPERATING EXPENSES 2.20% 2.85% 2.85% 2.75%
EXPENSE REDUCTION (C) 0.65% 0.65% 0.65% 0.65%
----------------------------------
NET OPERATING EXPENSES 1.55% 2.20% 2.20% 2.10%
- ------------------------- ----------------------------------
(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) Purchases of Class M shares are subject to a 1% contingent deferred sales
charge if redeemed within 18 months of purchase.
(c) Contractual arrangement with Idex Management, Inc. through 4/30/02, for
expenses that exceed 1.20%, excluding 12b-1 fees.
(d) Annual fund operating expenses are estimated based on the fund's expenses
for the fiscal year ended 10/31/00.
A $10 semi-annual fee is imposed on accounts open for over 2 years that are
below a minimum balance due to redemptions. See page 77.
================================================================================
EXAMPLE
This example is here to help you compare the cost of investing in this fund
with that of other mutual funds. It shows the cumulative expenses you would pay
if you invested $10,000 and held your shares for various time periods, with a
5% annual return and fund operating expenses remaining the same. This return is
for illustration purposes and is not guaranteed. Actual costs may be higher or
lower.
If the shares are redeemed at the end of each period:
SHARE CLASS 1 YEAR 3 YEARS 5 YEARS 10 YEARS
- ------------------------------------------------------------
A $699 $1,141 $1,609 $2,897
B* $723 $1,122 $1,546 $2,974
C $223 $ 822 $1,446 $3,129
M $410 $ 884 $1,483 $3,103
- ---------------------------------------------------------
If the shares are not redeemed:
SHARE CLASS 1 YEAR 3 YEARS 5 YEARS 10 YEARS
- ------------------------------------------------------------
A $699 $1,141 $1,609 $2,897
B* $223 $ 822 $1,446 $2,974
C $223 $ 822 $1,446 $3,129
M $311 $ 884 $1,483 $3,103
- ---------------------------------------------------------
* EXAMPLES FOR CLASS B SHARES ASSUME THEY WILL CONVERT TO CLASS A SHARES EIGHT
YEARS AFTER YOU PURCHASE THEM.
11
IDEX SALOMON ALL CAP
SUMMARY OF RISKS AND RETURNS
[GRAPHIC] OBJECTIVE
THE INVESTMENT OBJECTIVE OF IDEX SALOMON ALL CAP IS TO SEEK CAPITAL
APPRECIATION.
[GRAPHIC] PRINCIPAL STRATEGIES AND POLICIES
The fund's sub-adviser, Salomon Brothers Asset Management Inc (SaBAM), seeks to
achieve this objective by investing fund assets principally in:
. common stocks
. convertible securities
In seeking capital appreciation, the fund may purchase securities of: seasoned
issuers; small companies; newer companies; and new issues.
SaBAM anticipates that the fund's investments generally will be in securities
of companies which it considers to reflect the following characteristics:
. undervalued share prices
. special situations such as existing or possible changes in management or
management policies, corporate structure or control, capitalization,
regulatory environment, or other circumstances which could be expected to
favor earnings or market price of such company's shares
. growth potential due to technological advances, new methods in marketing or
production, new or unique products or services, changes in demands for
products or services or other significant new developments
SaBAM purchases securities that it believes can be accurately valued, examining
cash flow and management's use of cash. SaBAM looks for securities that it
believes have a catalyst for price appreciation. Only those companies that pass
SaBAM's in-depth analysis and debate are eligible for inclusion in the fund's
portfolio.
SaBAM uses a "bottom up" fundamental research process to select the fund's
securities.
SaBAM may sell the fund's securities when stocks become overvalued and its
expectations regarding earnings growth change.
SaBAM may take a temporary defensive position when the securities trading
markets or the economy are experiencing excessive volatility or a prolonged
general decline, or other adverse conditions exist (which is inconsistent with
the fund's principal investment strategies). Under these circumstances, the
fund will be unable to pursue its investment objective.
While the fund invests principally in common stocks, SaBAM may, to a lesser
extent, invest in cash equivalent or other securities and investment strategies
in pursuit of its investment objective, which are explained beginning on page
64 and in the SAI.
WHAT IS A "BOTTOM UP" ANALYSIS?
When a sub-adviser uses a "bottom up" approach, it looks primarily at
individual companies against the context of broader market factors. It
seeks to identify individual companies with earnings growth potential that
may not be recognized by the market at large.
[GRAPHIC] PRINCIPAL RISKS
The fund is subject to the following principal investment risks:
. STOCKS
While stocks have historically outperformed other investments over the long
term, they tend to go up and down more dramatically over the shorter term.
These price movements may result from factors affecting individual companies,
industries or the securities market as a whole.
Because the fund's holdings may fluctuate in price, the value of your
investment in the fund will go up and down.
. SMALL SIZED OR NEW COMPANIES
These companies present additional risks because their earnings are less
predictable, their share price more volatile, and their securities less liquid
than larger or more established companies.
THIS FUND IS NON-DIVERSIFIED.
YOU MAY LOSE MONEY IF YOU INVEST IN THIS FUND.
These and other risks are fully described in the section entitled "Explanation
of Strategies and Risks," beginning on page 64.
WHAT IS A NON-DIVERSIFIED FUND?
A "non-diversified" fund has the ability to take larger positions in a
smaller number of issuers. To the extent a fund invests a greater portion
of its assets in the securities of a smaller number of issuers, it may be
more susceptible to any single economic, political or regulatory
occurrence than a diversified fund and may be subject to greater loss with
respect to its portfolio securities. However, to meet federal tax
requirements, at the close of each quarter the fund may not have more than
25% of its total assets invested in any one issuer, and, with respect to
50% of its total assets, not more than 5% of its total assets invested in
any one issuer.
. INVESTOR PROFILE
This fund may be appropriate for investors who want long-term growth of capital
and who can tolerate fluctuations in their investments.
12
[GRAPHIC] PAST PERFORMANCE
The bar chart and the table below show the fund's annual returns and its
long-term performance. The bar chart and table indicate the risks of investing
in the fund by showing you how the fund's performance has varied from year to
year. The bar chart does not reflect the impact of sales charges, which lower
the fund's return. The table, which includes applicable sales charges, compares
how the fund's average annual returns for different calendar periods compare to
the returns of the Russell 3000 Index (Russell 3000), a widely recognized
unmanaged index of stock performance. The bar chart and table assume
reinvestment of dividends and capital gains distributions. As with all mutual
funds, past performance is not a prediction of future results.
- --------------------------------------------------------------------------------
YEAR-BY-YEAR TOTAL RETURN as of 12/31 each year (%)
CLASS A SHARES
--------------
16.88
- --------------------------------------------------------------------------------
2000
- --------------------------------------------------------------------------------
CLASS A SHARES: QUARTER ENDED RETURN
--------------- --------
Best Quarter: 3/31/00 12.71%
Worst Quarter: 12/31/00 (0.12)%
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS AS OF 12/31/00
SINCE
ONE YEAR INCEPTION
- ------------------------------------------
A Shares 10.45% 21.93%
- ------------------------------------------
B Shares 11.15% 23.21%
- ------------------------------------------
C Shares 16.15% 24.62%
- ------------------------------------------
M Shares 14.10% 24.45%
- ------------------------------------------
Russell 3000* (7.46)% 6.48%
- --------------------------------------------------------------------------------
* SINCE INCEPTION (3/01/99); SINCE INCEPTION OF CLASS C SHARES
(11/01/99) - 1.02%.
[GRAPHIC] FEES AND EXPENSES
This table describes the fees and expenses that you may pay if you buy and hold
shares of the fund.
================================================================================
SHAREHOLDER FEES (fees paid directly from your investment)
CLASS OF SHARES
A B C M
--------- ------- ------ ---------------
Maximum sales charge (load)
imposed on purchases
(AS A % OF OFFERING PRICE) 5.50% None None 1.00%
Maximum deferred sales
charge (load) None(a) 5.00% None 1.00%(b)
================================================================================
(AS A PERCENTAGE OF PURCHASE PRICE OR
REDEMPTION PROCEEDS, WHICHEVER IS LOWER)
================================================================================
ANNUAL FUND OPERATING EXPENSES (expenses that are deducted from fund assets)(d)
% OF AVERAGE DAILY NET ASSETS CLASS OF SHARES
A B C M
- -----------------------------------------------------------------
Management fees 0.80% 0.80% 0.80% 0.80%
Distribution and service
(12b-1) fees 0.35% 1.00% 1.00% 0.90%
Other expenses 1.26% 1.26% 1.26% 1.26%
- -----------------------------------------------------------------
TOTAL ANNUAL FUND
OPERATING EXPENSES 2.41% 3.06% 3.06% 2.96%
EXPENSE REDUCTION (C) 0.86% 0.86% 0.86% 0.86%
- -----------------------------------------------------------------
NET OPERATING EXPENSES 1.55% 2.20% 2.20% 2.10%
- -----------------------------------------------------------------
(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) Purchases of Class M shares are subject to a 1% contingent deferred sales
charge if redeemed within 18 months of purchase.
(c) Contractual arrangement with Idex Management, Inc. through 4/30/02, for
expenses that exceed 1.20%, excluding 12b-1 fees.
(d) Annual fund operating expenses are estimated based on the fund's expenses
for the fiscal year ended 10/31/00.
A $10 semi-annual fee is imposed on accounts open for over 2 years that are
below a minimum balance due to redemptions. See page 77.
================================================================================
EXAMPLE
This example is here to help you compare the cost of investing in this fund
with that of other mutual funds. It shows the cumulative expenses you would pay
if you invested $10,000 and held your shares for various time periods, with a
5% annual return and fund operating expenses remaining the same. This return is
for illustration purposes and is not guaranteed. Actual costs may be higher or
lower.
If the shares are redeemed at the end of each period:
SHARE CLASS 1 YEAR 3 YEARS 5 YEARS 10 YEARS
- -------------------------------------------------------------
A $699 $1,182 $1,691 $3,083
B* $723 $1,164 $1,631 $3,162
C $223 $ 864 $1,531 $3,314
M $410 $ 926 $1,567 $3,287
- -------------------------------------------------------------
If the shares are not redeemed:
SHARE CLASS 1 YEAR 3 YEARS 5 YEARS 10 YEARS
- -------------------------------------------------------------
A $699 $1,182 $1,691 $3,083
B* $223 $ 864 $1,531 $3,162
C $223 $ 864 $1,531 $3,314
M $311 $ 926 $1,567 $3,287
- -------------------------------------------------------------
* EXAMPLES FOR CLASS B SHARES ASSUME THEY WILL CONVERT TO CLASS A SHARES EIGHT
YEARS AFTER YOU PURCHASE THEM.
For information regarding a similar sub-adviser fund, please see page 85.
13
IDEX TRANSAMERICA EQUITY
SUMMARY OF RISKS AND RETURNS
[GRAPHIC] OBJECTIVE
THE OBJECTIVE OF IDEX TRANSAMERICA EQUITY IS TO MAXIMIZE LONG-TERM GROWTH.
[GRAPHIC] PRINCIPAL STRATEGIES
AND POLICIES
The fund's sub-adviser, Transamerica Investment Management, LLC (TIM), uses a
"bottom up" approach to investing and builds the fund's portfolio one company
at a time by investing fund assets principally in:
. common stocks
TIM generally invests at least 65% of the fund's assets in a diversified
portfolio of domestic common stocks.
TIM buys securities of premier growth companies it feels are under-valued in
the stock market. Premier companies, in the opinion of TIM, have many or all of
the following features:
. shareholder-oriented management
. dominance in market share
. cost production advantages
. leading brands
. self-financed growth
. attractive reinvestment opportunities
While TIM invests principally in domestic common stocks, the fund may, to a
lesser extent, invest in other securities or investment strategies in pursuit
of its investment objective, which are explained beginning on page 64 and in
the SAI.
TIM may also invest in cash or cash equivalents for temporary defensive
purposes when market conditions warrant (which is inconsistent with the fund's
principal investment strategies). To the extent it invests in these securities,
the fund may not be able to achieve its investment objective.
[GRAPHIC] PRINCIPAL RISKS
The fund is subject to the following principal investment risks:
. STOCKS
While stocks have historically outperformed other investments over the long
term, they tend to go up and down more dramatically over the shorter term.
These price movements may result from factors affecting individual companies,
industries, or the securities market as a whole.
Because the stocks the fund holds fluctuate in price, the value of your
investment in the fund will go up and down.
. STOCK SELECTION ANALYSIS
The criteria used by TIM to evaluate securities and companies to include in the
fund's portfolio may not be effective and may cause overall returns to be lower
than if other evaluation methods are used.
YOU MAY LOSE MONEY IF YOU INVEST IN THIS FUND.
These and other risks are fully described in the section entitled "Explanation
of Strategies and Risks," beginning on page 64.
WHAT IS A "BOTTOM UP" ANALYSIS?
When a sub-adviser uses a "bottom up" approach, it looks primarily at
individual companies against the context of broad market factors. It seeks
to identify individual companies with earnings growth potential that may
not be recognized by the market at large.
. INVESTOR PROFILE
This fund may be appropriate for long-term investors who have the perspective,
patience and financial ability to take on above-average price volatility in
pursuit of long-term capital growth.
14
[GRAPHIC] PAST PERFORMANCE
Because the fund commenced operations in March 2000, no historical performance
information is presented here. Performance information will be presented for
the fund after it has been in operation for one complete calendar year.
[GRAPHIC] FEES AND EXPENSES
This table describes the fees and expenses that you may pay if you buy and hold
shares of the fund.
================================================================================
SHAREHOLDER FEES (fees paid directly from your investment)
CLASS OF SHARES
A B C M
- ----------------------------------------------------------------------------
Maximum sales charge (load)
imposed on purchases
(AS A % OF OFFERING PRICE) 5.50% None None 1.00%
Maximum deferred sales
charge (load) None(a) 5.00% None 1.00%(b)
(AS A PERCENTAGE OF PURCHASE PRICE OR
REDEMPTION PROCEEDS, WHICHEVER IS LOWER)
================================================================================
ANNUAL FUND OPERATING EXPENSES (expenses that are deducted from fund assets)
% OF AVERAGE DAILY NET ASSETS CLASS OF SHARES
A B C M
- -----------------------------------------------------------------
Management fees 0.80% 0.80% 0.80% 0.80%
Distribution and service
(12b-1) fees 0.35% 1.00% 1.00% 0.90%
Other expenses (c) 4.95% 4.95% 4.95% 4.95%
----------------------------------
TOTAL ANNUAL FUND
OPERATING EXPENSES 6.10% 6.75% 6.75% 6.65%
EXPENSE REDUCTION (D) 4.55% 4.55% 4.55% 4.55%
----------------------------------
NET OPERATING EXPENSES 1.55% 2.20% 2.20% 2.10%
- ---------------------------------------------------------------
(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) Purchases of Class M shares are subject to a 1% contingent deferred sales
charge if redeemed within 18 months of purchase.
(c) Because the fund commenced operations in March 2000, the "Other expenses"
are estimates.
(d) Contractual arrangement with Idex Management, Inc. through 11/30/01, for
expenses that exceed 1.20%, and for the period 12/01/01 through 4/30/02,
for expenses that exceed 1.40%, excluding 12b-1 fees.
A $10 semi-annual fee is imposed on accounts open for over 2 years that are
below a minimum balance due to redemptions. See page 77.
================================================================================
EXAMPLE*
This example is here to help you compare the cost of investing in this fund
with that of other mutual funds. It shows the cumulative expenses you would pay
if you invested $10,000 and held your shares for various time periods, with a
5% annual return and fund operating expenses remaining the same. This return is
for illustration purposes and is not guaranteed. Actual costs may be higher or
lower.
If the shares are redeemed at the end of each period:
SHARE CLASS 1 YEAR 3 YEARS
- ----------------------------------
A $699 $1,879
B** $723 $1,887
C $223 $1,587
M $410 $1,644
- ----------------------------------
If the shares are not redeemed:
SHARE CLASS 1 YEAR 3 YEARS
- ----------------------------------
A $699 $1,879
B** $223 $1,587
C $223 $1,587
M $311 $1,644
- ----------------------------------
* THE TABLE REFLECTS THE EXPENSE CAP INCREASE ON 12/01/01.
** EXAMPLES FOR CLASS B SHARES ASSUME THEY WILL CONVERT TO CLASS A SHARES EIGHT
YEARS AFTER YOU PURCHASE THEM.
For information regarding a similar sub-adviser fund, please see page 85.
15
IDEX ALGER AGGRESSIVE GROWTH
SUMMARY OF RISKS AND RETURNS
[GRAPHIC] OBJECTIVE
THE OBJECTIVE OF IDEX ALGER AGGRESSIVE GROWTH IS LONG-TERM CAPITAL
APPRECIATION.
[GRAPHIC] PRINCIPAL STRATEGIES AND POLICIES
The fund's sub-adviser, Fred Alger Management, Inc. (Alger), seeks to achieve
the fund's objective by investing fund assets principally in:
. equity securities such as common or preferred stocks
. convertible securities (convertible securities can be exchanged for, or
converted into, common stock of such companies)
Under normal market conditions, the fund invests at least 85% of its assets in
common stocks. Alger invests in companies of any size that the fund manager
considers to be rapidly growing. A research oriented, "bottom-up" approach to
security selection is emphasized. Alger may also invest in rights, warrants,
options and futures.
When selecting stocks for the fund, Alger considers the following factors:
. insiders' activity
. market style leadership (market dominance of a particular company)
. institutional activity
. relative strength price change (price performance relative to an index)
. price-to-declining U.S. dollar
. earnings to projected change
. quarterly earnings per-share growth rate
Alger selects convertible securities for the fund that can be converted, or
exchanged, for stock of the issuer. Convertible securities are often rated
below investment grade (I.E., considered to be "junk bonds"), or not rated
because they fall below debt obligations and just above common stock in order
of preference or priority on the issuer's balance sheet. Alger invests in
convertible securities which are rated at or above investment grade.
Alger may take a temporary defensive position when the securities trading
markets or the economy are experiencing excessive volatility or a prolonged
general decline, or other adverse conditions exist (which is inconsistent with
the fund's principal investment strategies). During this time, the fund may
invest up to 100% of its assets in money market instruments and cash
equivalents. Under these circumstances, the fund will be unable to achieve its
investment objective.
Alger may sell a security in order to buy shares of another company expected to
have greater potential for growth or to meet redemptions.
While the fund invests principally in equity and convertible securities, Alger
may, to a lesser extent, invest in ADRs, money market instruments, repurchase
agreements, or other securities and investment strategies in pursuit of its
investment objective, which are explained beginning on page 64 and in the SAI.
[GRAPHIC] PRINCIPAL RISKS
The fund is subject to the following principal investment risks:
. STOCKS
While stocks have historically outperformed other investments over the long
term, they tend to go up and down more dramatically over the shorter term.
These price movements may result from factors affecting individual companies,
industries or the securities market as a whole.
Because the stocks the fund holds fluctuate in price, the value of your
investment in the fund will go up and down.
. INVESTING AGGRESSIVELY
. The value of developing-company stocks may be very volatile, and can drop
significantly in a short period of time.
. Rights, options and futures contracts may not be exercised and may expire
worthless.
. Warrants and rights may be less liquid than stocks.
. CONVERTIBLE SECURITIES
Convertible securities may include corporate notes or preferred stock, but
ordinarily are a long-term debt obligation of the issuer convertible at a
stated exchange rate into common stock of the issuer. As with all debt
securities, the market value of convertible securities tends to decline as
interest rates increase and, conversely, to increase as interest rates decline.
Convertible securities generally offer lower interest or dividend yields than
non-convertible securities of similar quality. However, when the market price
of the common stock underlying a convertible security exceeds the conversion
price, the price of the convertible security tends to reflect the value of the
underlying common stock. As the market price of the underlying common stock
declines, the convertible security tends to trade increasingly on a yield
basis, and thus may not depreciate to the same extent as the underlying stock.
YOU MAY LOSE MONEY IF YOU INVEST IN THIS FUND.
These and other risks are fully described in the section entitled "Explanation
of Strategies and Risks," beginning on page 64.
. INVESTOR PROFILE
This fund may be appropriate for investors who seek capital growth
aggressively, and who can tolerate wide swings in the value of their
investment.
16
[GRAPHIC] PAST PERFORMANCE
The bar chart and the table below show the fund's annual returns and its
long-term performance. The bar chart and table indicate the risks of investing
in the fund by showing you how the fund's performance has varied from year to
year. The bar chart does not reflect the impact of sales charges, which lower
the fund's return. The table, which includes applicable sales charges, compares
how the fund's average annual returns for different calendar periods compare to
the returns of the Standard & Poor's 500 Composite Stock Index (S&P 500), a
widely recognized unmanaged index of market performance. The bar chart and
table assume reinvestment of dividends and capital gains distributions. As with
all mutual funds, past performance is not a prediction of future results.
- --------------------------------------------------------------------------------
[GRAPHIC OMITTED]
Year-by-year total return as of 12/31 each year (%)
CLASS A SHARES
--------------
55.00 5.99 23.27 48.92 69.14 (32.48)
- --------------------------------------------------------------------------------
1995 1996 1997 1998 1999 2000
- --------------------------------------------------------------------------------
QUARTER ENDED RETURN
Class a Shares: --------------- ---------
Best Quarter: 12/31/99 43.38%
Worst Quarter: 12/31/00 (22.94)%
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS AS OF 12/31/00
SINCE
ONE YEAR 5 YEARS INCEPTION
------------- ----------- -------------
A Shares (36.20)% 17.07% 23.16%
- -----------------------------------------------------
B Shares (36.51)% 16.81% 13.83%
- -----------------------------------------------------
C Shares (33.17)% -- (9.17)%
- -----------------------------------------------------
M Shares (34.40)% 17.75% 23.67%
- -----------------------------------------------------
S&P 500* (9.11)% 18.33% 21.31%
- -----------------------------------------------------
* SINCE INCEPTION OF CLASS A SHARES, AND CLASS M SHARES (12/02/94). SINCE
INCEPTION OF CLASS B SHARES (10/01/95 - 16.77%. SINCE INCEPTION OF CLASS C
SHARES (11/01/99) - (2.67)%.
[GRAPHIC] FEES AND EXPENSES
The following table describes the fees and expenses that you may pay if you buy
and hold shares of the fund.
================================================================================
SHAREHOLDER FEES (fees paid directly from your investment)
CLASS OF SHARES
A B C M
----- ----- ----- -----
Maximum sales charge (load)
imposed on purchases
(AS A % OF OFFERING PRICE) 5.50% None None 1.00%
Maximum deferred sales
charge (load) None(a) 5.00% None 1.00%(b)
(AS A PERCENTAGE OF PURCHASE PRICE OR
REDEMPTION PROCEEDS, WHICHEVER IS LOWER)
================================================================================
ANNUAL FUND OPERATING EXPENSES (expenses that are deducted from fund assets)
(d)
% OF AVERAGE DAILY NET ASSETS
CLASS OF SHARES
A B C M
- --------------------------------------------------------------
Management fees 0.80% 0.80% 0.80% 0.80%
Distribution and service
(12b-1) fees 0.35% 1.00% 1.00% 0.90%
Other expenses 0.62% 0.62% 0.62% 0.62%
----------------------------------
TOTAL ANNUAL FUND
OPERATING EXPENSES 1.77% 2.42% 2.42% 2.32%
EXPENSE REDUCTION (C) 0.22% 0.22% 0.22% 0.22%
----------------------------------
NET OPERATING EXPENSES 1.55% 2.20% 2.20% 2.10%
- --------------------------------------------------------------
(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) Purchases of Class M shares are subject to a 1% contingent deferred sales
charge if redeemed within 18 months of purchase.
(c) Contractual arrangement with Idex Management, Inc. through 4/30/02, for
expenses that exceed 1.20%, excluding 12b-1 fees.
(d) Annual fund operating expenses are estimated based on the fund's expenses
for the fiscal year ended 10/31/00.
A $10 semi-annual fee is imposed on accounts open for over 2 years that are
below a minimum balance due to redemptions. See page 77.
================================================================================
EXAMPLE
This example is here to help you compare the cost of investing in this fund
with that of other mutual funds. It shows the cumulative expenses you would pay
if you invested $10,000 and held your shares for various time periods, with a
5% annual return and fund operating expenses remaining the same. This return is
for illustration purposes and is not guaranteed. Actual costs may be higher or
lower.
If the shares are redeemed at the end of each period:
SHARE CLASS 1 YEAR 3 YEARS 5 YEARS 10 YEARS
- ------------------------------------------------------------
A $699 $1,056 $1,437 $2,502
B* $723 $1,034 $1,371 $2,579
C $223 $ 734 $1,271 $2,740
M $410 $ 796 $1,308 $2,713
- ------------------------------------------------------------
If the shares are not redeemed:
SHARE CLASS 1 YEAR 3 YEARS 5 YEARS 10 YEARS
- ------------------------------------------------------------
A $699 $1,056 $1,437 $2,502
B* $223 $ 734 $1,271 $2,579
C $223 $ 734 $1,271 $2,740
M $311 $ 796 $1,308 $2,713
- ------------------------------------------------------------
* EXAMPLES FOR CLASS B SHARES ASSUME THEY WILL CONVERT TO CLASS A SHARES EIGHT
YEARS AFTER YOU PURCHASE THEM.
17
IDEX GREAT COMPANIES -- TECHNOLOGY(SM)
SUMMARY OF RISKS AND RETURNS
[GRAPHIC] OBJECTIVE
THE OBJECTIVE OF IDEX GREAT COMPANIES -- TECHNOLOGY(SM) IS LONG-TERM GROWTH OF
CAPITAL.
[GRAPHIC] PRINCIPAL STRATEGIES AND POLICIES
The fund's sub-adviser, Great Companies, L.L.C. (Great Companies), seeks to
achieve this objective by investing in:
. common stocks of companies that offer technology, communications, capital
goods or related products and services
Great Companies generally invests at least 65% of the fund's assets in such
stocks.
The fund seeks to invest in stocks of large, established, United States based
companies that rely extensively on technology or communications in their
product development or operations, and have benefited from technological or
communications in their operating history. Stocks for this fund are selected by
Great Companies from a group of companies that it has identified, in its
opinion, as being "great companies."
To be considered a "great company" candidate by the sub-adviser, the
sub-adviser will initially determine if a company meets certain of the
following criteria: be highly regarded by management experts; be publicly
traded; be incorporated in the United States; have been in business for 15
years or more; have a market cap in excess of $15 billion; be a global company
(at least 30% of its revenues outside the U.S.); be engaged in what the
sub-adviser considers to be "terrific technology businesses"; have a
"protective barrier" such as superior brand franchises; consider employees to
be a company's most valuable asset; have, in the sub-adviser's opinion, "world
class management"; and be an innovation-driven company that, in the
sub-adviser's opinion, can convert changes into opportunities. Each company's
common stock (and its predecessors) must have outperformed the S&P 500 over the
ten-year period ended December 31, 1998. The sub-adviser will use the NASDAQ
Composite Index as the performance benchmark for the fund.
To determine which "great company" in which the fund should invest, Great
Companies uses Intrinsic Value investing. Intrinsic Value is the discounted
value of the estimated amount of cash that can be taken out of a business
during its remaining life. It is an estimate rather than a precise figure, and
changes when interest rates move or when forecasts of future cash flows are
revised. Please see page 67 for a complete description of Intrinsic Value
investing.
[GRAPHIC] PRINCIPAL RISKS
The fund is subject to the following principal investment risks:
. STOCKS
While stocks have historically outperformed other investments over the long
term, they tend to go up and down more dramatically over the shorter term.
These price movements may result from factors affecting individual companies,
industries or the securities market as a whole.
Because the stocks the fund holds fluctuate in price, the value of your
investment in the fund will go up and down.
. ESTABLISHED COMPANY STOCKS
Because companies in which this fund invests must have been in existence for at
least 15 years, certain sector stocks, which would otherwise present attractive
investment opportunities, will not be selected for the fund.
. TECHNOLOGY STOCKS
Securities of technology companies are strongly affected by worldwide
scientific and technological developments and governmental policies, and,
therefore, are generally more volatile than securities of companies not
dependent upon or associated with technological issues. The entire value of the
fund may decrease if the technology industry suffers a loss.
. PROPRIETARY RESEARCH
Proprietary forms of research may not be effective and may cause overall
returns to be lower than if other forms of research are used.
THIS FUND IS NON-DIVERSIFIED.
YOU MAY LOSE MONEY IF YOU INVEST IN THIS FUND.
These and other risks are fully described in the section entitled "Explanation
of Strategies and Risks," beginning on page 64.
WHAT IS A NON-DIVERSIFIED FUND?
A "non-diversified" fund has the ability to take larger positions in a
smaller number of issuers. To the extent a fund invests in a greater
portion of its assets in the securities of a smaller number of issuers, it
may be more susceptible to any single economic, political or regulatory
occurrence than a widely diversified fund and may be subject to a greater
loss with respect to its portfolio securities. However, to meet federal
tax requirements, at the close of each quarter the fund may not have more
than 25% of its total assets invested in any one issuer, and, with respect
to 50% of its total assets, not more than 5% of its total assets in one
issuer.
. INVESTOR PROFILE
The fund may be appropriate for investors who seek long-term growth of capital
and who can tolerate fluctuations inherent in stock investing.
18
[GRAPHIC] PAST PERFORMANCE
Because the fund commenced operations in July 2000, no historical performance
information is presented here. Performance information will be presented for
the fund after it has been in operation for one complete calendar year.
[GRAPHIC] FEES AND EXPENSES
This table describes the fees and expenses that you may pay if you buy and hold
shares of the fund.
================================================================================
SHAREHOLDER FEES (fees paid directly from your investment)
CLASS OF SHARES
A B C M
--------- ------- ------ ---------------
Maximum sales charge (load)
imposed on purchases
(AS A % OF OFFERING PRICE) 5.50% None None 1.00%
Maximum deferred sales
charge (load) None(a) 5.00% None 1.00%(b)
(AS A PERCENTAGE OF PURCHASE PRICE OR
REDEMPTION PROCEEDS, WHICHEVER IS LOWER)
================================================================================
ANNUAL FUND OPERATING EXPENSES (expenses that are deducted from fund assets)
% OF AVERAGE DAILY NET ASSETS
CLASS OF SHARES
A B C M
- ----------------------------------------------------------------
Management fees 0.80% 0.80% 0.80% 0.80%
Distribution and service
(12b-1) fees 0.35% 1.00% 1.00% 0.90%
Other expenses (c) 4.40% 4.40% 4.40% 4.40%
-----------------------------------
TOTAL ANNUAL FUND
OPERATING EXPENSES 5.55% 6.20% 6.20% 6.10%
EXPENSE REDUCTION (D) 4.00% 4.00% 4.00% 4.00%
-----------------------------------
NET OPERATING EXPENSES 1.55% 2.20% 2.20% 2.10%
- ----------------------------------------------------------------
(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) Purchases of Class M shares are subject to a 1% contingent deferred sales
charge if redeemed within 18 months of purchase.
(c) Because the fund commenced operations in July 2000, the "Other expenses"
are estimates.
(d) Contractual arrangement with Idex Management, Inc. through 4/30/02, for
expenses that exceed 1.20%, excluding 12b-1 fees.
A $10 semi-annual fee is imposed on accounts open for over 2 years that are
below a minimum balance due to redemptions. See page 77.
================================================================================
EXAMPLE
This example is here to help you compare the cost of investing in this fund
with that of other mutual funds. It shows the cumulative expenses you would pay
if you invested $10,000 and held your shares for various time periods, with a
5% annual return and fund operating expenses remaining the same. This return is
for illustration purposes and is not guaranteed. Actual costs may be higher or
lower.
If the shares are redeemed at the end of each period:
SHARE CLASS 1 YEAR 3 YEARS
- -----------------------------------
A $699 $1,778
B* $723 $1,783
C $223 $1,483
M $410 $1,540
- -----------------------------------
If the shares are not redeemed:
SHARE CLASS 1 YEAR 3 YEARS
- -----------------------------------
A $699 $1,778
B* $223 $1,483
C $223 $1,483
M $311 $1,540
- -----------------------------------
* EXAMPLES FOR CLASS B SHARES ASSUME THEY WILL CONVERT TO CLASS A SHARES EIGHT
YEARS AFTER YOU PURCHASE THEM.
19
IDEX ISABELLE SMALL CAP VALUE
SUMMARY OF RISKS AND RETURNS
[GRAPHIC] OBJECTIVE
THE OBJECTIVE OF IDEX ISABELLE SMALL CAP VALUE IS TO SEEK CAPITAL APPRECIATION
BY INVESTING ITS ASSETS PRIMARILY IN RELATIVELY UNDERVALUED COMMON STOCKS OF
DOMESTIC SMALL COMPANIES.
[GRAPHIC] PRINCIPAL STRATEGIES AND POLICIES
The fund's sub-adviser, Ironwood Capital Management, LLC (Ironwood), seeks to
achieve this objective by investing principally in:
. stocks of small cap companies
The fund manager seeks to combine the risk-averse nature of value investing
with the superior long-term capital appreciation potential of small company
stocks. The fund, under normal conditions, invests at least 80% of its assets
in companies that have market capitalizations of less than $1.5 billion at the
time of purchase. Market capitalization is the stock price multiplied by the
total number of shares outstanding.
It is the manager's intention to be fully invested in small cap securities at
all times.
Using a bottom-up approach with fundamental analysis, Ironwood analyzes a
company's recent valuation, price/
earnings ratio and tangible assets, such as cash, real estate and equipment, to
determine whether it presents the best value in terms of current price, cash
flow, and current and forecasted earnings.
Ironwood believes that this approach helps to identify companies whose market
value is substantially below true economic value. These companies are often
neglected, overlooked or out-of-favor in the market. As a result, their current
stock prices may not reflect the companies' long-term economic value.
Frequently, these companies exhibit one or more of the following traits:
. a company in transition, or in the process of being turned around
. the company has a new product or innovation to offer the marketplace
. the company is positioned to benefit from internal changes, such as a shift
in management, or external catalysts, such as a cyclical turnaround of a
depressed business or industry.
In selecting these securities, Ironwood conducts an in-depth research and
analysis of each company. Ironwood looks at: potential cash flow; quality and
commitment of management; overall financial strength; and existing assets.
Ironwood often conducts in-person visits or discussions with management as
well.
Ironwood may sell a security when it achieves Ironwood's defined target price.
A security may also be sold if any of the following occur: a disruptive change
in management; the company is unable to operate under its financial burdens;
the cycle fails to materialize; a company's product or technology cannot be
commercialized; or the investment time horizon of 2 to 3 years is exceeded.
From time to time to supplement or enhance the fund's principal investment
strategies in an effort to achieve the fund's investment objectives, the fund
manager may invest to a lesser extent in convertible and debt securities,
foreign securities, rights and warrants, illiquid and restricted securities,
below investment-grade debt securities, commonly referred to as "junk bonds,"
repurchase agreements, when issued and delayed delivery securities, hedging
transactions, short sales "against the box," lending portfolio securities,
borrowing money or other securities and investment strategies in pursuit of the
fund's investment objective, which are explained beginning on page 64 and in
the SAI.
[GRAPHIC] PRINCIPAL RISKS
The fund is subject to the following principal investment risks:
. STOCKS
While stocks have historically outperformed other investments over the long
term, they tend to go up and down more dramatically over the shorter term.
These price movements may result from factors affecting individual companies,
industries or the securities markets as a whole.
Because the stocks the fund holds fluctuate in price, the value of your
investment in the fund will go up and down.
. MANAGEMENT RISK
Your investment in the fund varies with the success and failure of Ironwood's
value-oriented investment strategies and Ironwood's research, analysis and
selection of portfolio securities. If Ironwood's investment strategies do not
produce the expected results, your investment could be diminished or even lost.
. SMALL-SIZED OR NEW COMPANIES
These companies present additional risks because their earnings are less
predictable, their share price more volatile, and their securities less liquid
than larger or more established companies.
YOU MAY LOSE MONEY IF YOU INVEST IN THIS FUND.
These and other risks are fully described in the section entitled "Explanation
of Strategies and Risks," beginning on page 64.
. INVESTOR PROFILE
The fund may be appropriate for long-term investors who are able to tolerate
the volatility that exists with investing in small company stocks.
20
[GRAPHIC] PAST PERFORMANCE
Because the fund will commence operations in April 2001, no historical
performance information is presented here. Performance information will be
presented for the fund after it has been in operation for one complete calendar
year.
[GRAPHIC] FEES AND EXPENSES
This table describes the fees and expenses that you may pay if you buy and hold
shares of the fund.
================================================================================
SHAREHOLDER FEES (fees paid directly from your investment)
CLASS OF SHARES
A B C M
- --------------------------------------------------------------------------------
Maximum sales charge (load)
imposed on purchases
(AS A % OF OFFERING PRICE) 5.50% None None 1.00%
Maximum deferred sales
charge (load) None(a) 5.00% None 1.00%(b)
(AS A PERCENTAGE OF PURCHASE PRICE OR
REDEMPTION PROCEEDS, WHICHEVER IS LOWER)
================================================================================
ANNUAL FUND OPERATING EXPENSES (expenses that are deducted from fund assets)
% OF AVERAGE DAILY NET ASSETS
CLASS OF SHARES
A B C M
- ----------------------------------------------------------------
Management fees 0.90% 0.90% 0.90% 0.90%
Distribution and service
(12b-1) fees 0.35% 1.00% 1.00% 0.90%
Other expenses (c) 2.70% 2.70% 2.70% 2.70%
------------------------------------
TOTAL ANNUAL FUND
OPERATING EXPENSES 3.95% 4.60% 4.60% 4.50%
EXPENSE REDUCTION (D) 2.30% 2.30% 2.30% 2.30%
------------------------------------
NET OPERATING EXPENSES 1.65% 2.30% 2.30% 2.20%
- ----------------------------------------------------------------
(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) Purchases of Class M shares are subject to a 1% contingent deferred sales
charge if redeemed within 18 months of purchase.
(c) Because the fund will commence operations in April 2001, the "Other
expenses" are estimates.
(d) Contractual arrangement with Idex Management, Inc. through 4/30/02, for
expenses that exceed 1.50%, excluding 12b-1 fees.
A $10 semi-annual fee is imposed on accounts open for over 2 years that are
below a minimum balance due to redemptions. See page 77.
================================================================================
EXAMPLE
This example is here to help you compare the cost of investing in this fund
with that of other mutual funds. It shows the cumulative expenses you would pay
if you invested $10,000 and held your shares for various time periods, with a
5% annual return and fund operating expenses remaining the same. This return is
for illustration purposes and is not guaranteed. Actual costs may be higher or
lower.
If the shares are redeemed at the end of each period:
SHARE CLASS 1 YEAR 3 YEARS
- ----------------------------------
A $709 $1,488
B* $733 $1,482
C $233 $1,182
M $420 $ 782
- ----------------------------------
If the shares are not redeemed:
SHARE CLASS 1 YEAR 3 YEARS
- -----------------------------------
A $709 $1,488
B* $233 $1,182
C $233 $1,182
M $321 $ 782
- -----------------------------------
* EXAMPLES FOR CLASS B SHARES ASSUME THEY WILL CONVERT TO CLASS A SHARES EIGHT
YEARS AFTER YOU PURCHASE THEM.
For information regarding a similar sub-adviser fund, please see page 85.
21
IDEX JANUS CAPITAL APPRECIATION (FORMERLY IDEX JCC CAPITAL APPRECIATION)
[GRAPHIC] OBJECTIVE
THE OBJECTIVE OF IDEX JANUS CAPITAL APPRECIATION IS LONG-TERM GROWTH OF
CAPITAL.
[GRAPHIC] PRINCIPAL STRATEGIES
AND POLICIES
The fund's sub-adviser, Janus Capital Corporation (Janus), seeks to achieve the
fund's objective by investing principally in:
. common stocks of medium-sized companies
Medium-sized companies are those whose market capitalizations, at the time of
purchase, fall within the range of the S&P Mid Cap 400 Index. As of December,
2000, this range was $102 million to $13.2 billion.
This fund invests in industries and stocks of companies that the fund's manager
believes are experiencing favorable demand for their products and services, and
are operating in favorable competitive and regulatory environments.
The fund's manager uses a "bottom up" approach when choosing securities for the
fund's portfolio. The fund's manager makes this assessment by looking at
companies one at a time, regardless of size, country of organization, place of
principal business activity, or other similar selection criteria.
Although themes may emerge in the fund, stocks are usually selected without
regard to any defined industry sector or other similarly defined selection
procedure. Though income is not an objective of the fund, some holdings might
produce incidental income.
The fund's manager may sell the fund's securities when its expectations
regarding growth potential change.
While the fund invests principally in common stocks of medium-sized companies,
the fund manager may, to a lesser extent, invest in stocks of smaller to larger
companies, including some foreign companies, or other securities and investment
strategies in pursuit of the fund's investment objective, which are explained
beginning on page 64 and in the SAI.
WHAT IS A "BOTTOM UP" ANALYSIS?
When a sub-adviser uses a "bottom up" approach, it looks primarily at
individual companies against the context of broad market factors. It seeks
to identify individual companies with earnings growth potential that may
not be recognized by the market at large.
[GRAPHIC] PRINCIPAL RISKS
The fund is subject to the following principal investment risks:
. STOCKS
While stocks have historically outperformed other investments over the long
term, they tend to go up and down more dramatically over the shorter term.
These price movements may result from factors affecting individual companies,
industries or the securities market as a whole.
Because the stocks the fund holds fluctuate in price, the value of your
investment in the fund will go up and down.
. MEDIUM-SIZED COMPANIES
These companies present additional risks because their earnings are less
predictable, their share prices more volatile, and their securities less liquid
than larger, more established companies.
THIS FUND IS NON-DIVERSIFIED.
YOU MAY LOSE MONEY IF YOU INVEST IN THIS FUND.
These and other risks are fully described in the section entitled "Explanation
of Strategies and Risks," beginning on page 64.
WHAT IS A NON-DIVERSIFIED FUND?
A "non-diversified" fund has the ability to take larger positions in a
smaller number of issuers. To the extent a fund invests a greater portion
of its assets in the securities of a smaller number of issuers, it may be
more susceptible to any single economic, political or regulatory
occurrence than a diversified fund and may be subject to greater loss with
respect to its portfolio securities. However, to meet federal tax
requirements, at the close of each quarter the fund may not have more than
25% of its total assets invested in any one issuer, and, with respect to
50% of its total assets, not more than 5% of its total assets invested in
any one issuer.
. INVESTOR PROFILE
This fund may be appropriate for investors who want capital growth and who can
stand the risks associated with common stock investments.
22
[GRAPHIC] PAST PERFORMANCE
The bar chart and the table below show the fund's annual returns and its
long-term performance. The bar chart and table indicate the risks of investing
in the fund by showing you how the fund's performance has varied from year to
year. The bar chart does not reflect the impact of sales charges, which lower
the fund's return. The table, which includes applicable sales charges, compares
how the fund's average annual returns for different calendar periods compare to
the returns of the Standard & Poor's MidCap 400 Index (S&P 400), a widely
recognized unmanaged index of stock performance. The bar chart and table assume
reinvestment of dividends and capital gains distributions. As with all mutual
funds, past performance is not a prediction of future results.
- --------------------------------------------------------------------------------
YEAR-BY-YEAR TOTAL RETURN as of 12/31 each year (%)
CLASS A SHARES
--------------
36.62 13.00 12.18 31.32 119.22 (37.72)
1995 1996 1997 1998 1999 2000
- --------------------------------------------------------------------------------
CLASS A SHARES: QUARTER ENDED RETURN
--------------- ---------
Best Quarter: 12/31/99 56.94%
Worst Quarter: 12/31/00 (31.67)%
- ----------------- -------- ------
AVERAGE ANNUAL TOTAL RETURNS AS OF 12/31/00
SINCE
ONE YEAR 5 YEARS INCEPTION
- ---------------------------------------------------------------
A Shares (41.14)% 16.52% 20.26%
- ---------------------------------------------------------------
B Shares (41.49)% 17.21% 17.42%
- ---------------------------------------------------------------
C Shares (38.41)% -- (13.75)%
- ---------------------------------------------------------------
M Shares (39.53)% 17.08% 20.64%
- ---------------------------------------------------------------
S&P MidCap 400* 17.51% 20.36% 21.89%
- ---------------------------------------------------------------
* SINCE INCEPTION OF CLASS A, AND CLASS M SHARES (12/02/94). SINCE INCEPTION OF
CLASS B SHARES (10/01/95) - 19.68%. SINCE INCEPTION OF CLASS C SHARES
(11/01/99) - 24.46%.
[GRAPHIC] FEES AND EXPENSES
The following table describes the fees and expenses that you may pay if you buy
and hold shares of the fund.
================================================================================
SHAREHOLDER FEES (fees paid directly from your investment)
CLASS OF SHARES
A B C M
- --------------------------------------------------------------------------------
Maximum sales charge (load)
imposed on purchases
(AS A % OF OFFERING PRICE) 5.50% None None 1.00%
Maximum deferred sales
charge (load) None(a) 5.00% None 1.00%(b)
(AS A PERCENTAGE OF PURCHASE PRICE OR
REDEMPTION PROCEEDS, WHICHEVER IS LOWER)
================================================================================
ANNUAL FUND OPERATING EXPENSES (expenses that are deducted from fund assets)(d)
% OF AVERAGE DAILY NET ASSETS
CLASS OF SHARES
A B C M
- ----------------------------------------------------------------
Management fees 1.00% 1.00% 1.00% 1.00%
Distribution and service
(12b-1) fees 0.35% 1.00% 1.00% 0.90%
Other expenses 0.54% 0.54% 0.54% 0.54%
------------------------------------
TOTAL ANNUAL FUND
OPERATING EXPENSES 1.89% 2.54% 2.54% 2.44%
EXPENSE REDUCTION (C) 0.04% 0.04% 0.04% 0.04%
------------------------------------
NET OPERATING EXPENSES 1.85% 2.50% 2.50% 2.40%
- ----------------------------------------------------------------
(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) Purchases of Class M shares are subject to a 1% contingent deferred sales
charge if redeemed within 18 months of purchase.
(c) Contractual arrangement with Idex Management, Inc. through 4/30/02, for
expenses that exceed 1.50%, excluding 12b-1 fees.
(d) Annual fund operating expenses are estimated based on the fund's expenses
for the fiscal year ended 10/31/00.
A $10 semi-annual fee is imposed on accounts open for over 2 years that are
below a minimum balance due to redemptions. See page 77.
================================================================================
EXAMPLE
This example is here to help you compare the cost of investing in this fund
with that of other mutual funds. It shows the cumulative expenses you would pay
if you invested $10,000 and held your shares for various time periods, with a
5% annual return and fund operating expenses remaining the same. This return is
for illustration purposes and is not guaranteed. Actual costs may be higher or
lower.
If shares are redeemed at the end of each period:
SHARE CLASS 1 YEAR 3 YEARS 5 YEARS 10 YEARS
- ------------------------------------------------------------
A $728 $1,108 $1,512 $2,637
B* $753 $1,087 $1,447 $2,714
C $253 $ 787 $1,347 $2,872
M $440 $ 849 $1,384 $2,846
- ------------------------------------------------------------
If the shares are not redeemed:
SHARE CLASS 1 YEAR 3 YEARS 5 YEARS 10 YEARS
- ------------------------------------------------------------
A $728 $1,108 $1,512 $2,637
B* $253 $ 787 $1,347 $2,714
C $253 $ 787 $1,347 $2,872
M $341 $ 849 $1,384 $2,846
- ------------------------------------------------------------
* EXAMPLES FOR CLASS B SHARES ASSUME THEY WILL CONVERT TO CLASS A SHARES EIGHT
YEARS AFTER YOU PURCHASE THEM.
23
IDEX MUNDER NET50
SUMMARY OF RISKS AND RETURNS
[GRAPHIC] OBJECTIVE
THE OBJECTIVE OF IDEX MUNDER NET50 IS TO SEEK TO PROVIDE LONG-TERM CAPITAL
APPRECIATION.
[GRAPHIC] PRINCIPAL STRATEGIES
AND POLICIES
The fund's sub-adviser, Munder Capital Management (Munder) seeks to achieve the
fund's objective by investing principally in:
. stocks of domestic and foreign companies that are engaged in the Internet and
Intranet related businesses
Under normal market conditions, the fund will invest at least 65% of its total
assets in equity securities, and American Depositary Receipts (ADRs) of both
domestic and foreign companies that are engaged in research, design,
development, manufacturing or engaged to a significant extent in the business
of distributing products, processes or services for use with the Internet or
Intranet related businesses. The fund intends to hold approximately 50
different securities, but may hold between 40 and 60 securities at any time. Of
the companies selected, 70-90% are expected to be domestic, while 10-30% are
expected to be foreign.
The Internet is a world-wide network of computers designed to permit users to
share information and transfer data quickly and easily. The World Wide Web
(WWW), which is a means of graphically interfacing with the Internet, is a
hyper-text based publishing medium containing text, graphics, interactive
feedback mechanisms and links within WWW documents and to other WWW documents.
An Intranet is the application of WWW tools and concepts to a company's
internal documents and databases.
There is no limit on the market capitalization of the companies in which the
fund may invest, or in the length of operating history for the companies. The
fund may invest in small companies. Small companies are defined as those with a
market capitalization or annual revenues of no more than $1 billion. The fund
may also invest without limit in initial public offerings (IPOs), although it
is uncertain whether such IPOs will be available for investment by the fund or
what impact, if any, they will have on the fund's performance.
The fund may, to a lesser extent, invest in emerging markets, purchase and sell
options, forward currency exchange contracts and use various investment
techniques or other securities and investment strategies in pursuit of its
investment objective, which are explained beginning on page 64 and in the SAI.
[GRAPHIC OMITTED]
PRINCIPAL RISKS
The fund is subject to the following principal investment risks:
. STOCKS
While stocks have historically outperformed other investments over the long
term, they tend to go up and down more dramatically over the shorter term.
These price movements may result from factors affecting individual companies,
industries or the securities markets as a whole.
Because the stocks the fund holds fluctuate in price, the value of your
investment in the fund will go up and down.
. FOREIGN STOCKS
Investments in foreign securities (including American Depositary Receipts
(ADRs), Global Depositary Receipts (GDRs) and European Depositary Receipts
(EDRs)) involve risks relating to political, social and economic developments
abroad, as well as risks resulting from the differences between the regulations
to which U.S. and foreign issuer markets are subject. These risks include:
. changes in currency values
. currency speculation
. currency trading costs
. different accounting and reporting practices
. less information available to the public
. less (or different) regulation of securities markets
. more complex business negotiations
. less liquidity
. more fluctuations in prices
. delays in settling foreign securities transactions
. higher costs for holding shares (custodial fees)
. higher transaction costs
. vulnerability to seizure and taxes
. political instability and small markets
. different market trading days
. forward foreign currency contracts for hedging
. SECTOR RISK
The fund will invest primarily in companies engaged in Internet and Intranet
related activities. The value of such companies is particularly vulnerable to
rapidly changing technology, extensive government regulation and relatively
high risks of obsolescence caused by scientific and technological advances. The
value of the fund's shares may fluctuate more than shares of a fund investing
in a broader range of industries.
. SMALL-AND MEDIUM-SIZED COMPANIES
These companies present additional risks because their earnings are less
predictable, their share price more volatile, and their securities are less
liquid than larger, more established companies.
YOU MAY LOSE MONEY IF YOU INVEST IN THIS FUND.
These and other risks are fully described in the section entitled "Explanation
of Strategies and Risks," beginning on page 64.
. INVESTOR PROFILE
This fund may be appropriate for long-term investors who seek growth of
capital, are looking for a stock portfolio that is focused on a particular
stock market segment, and are able to tolerate significant fluctuations in the
value of their investment.
24
[GRAPHIC] PAST PERFORMANCE
Because the fund commenced operations in December 2000, no historical
performance information is presented here. Performance information will be
presented for the fund after it has been in operation for one complete calendar
year.
[GRAPHIC] FEES AND EXPENSES
This table describes the fees and expenses that you may pay if you buy and hold
shares of the fund.
================================================================================
SHAREHOLDER FEES (fees paid directly from your investment)
CLASS OF SHARES
A B C M
- --------------------------------------------------------------------------------
Maximum sales charge (load)
imposed on purchases
(AS A % OF OFFERING PRICE) 5.50% None None 1.00%
Maximum deferred sales
charge (load) None(a) 5.00% None 1.00%(b)
(AS A PERCENTAGE OF PURCHASE PRICE OR
REDEMPTION PROCEEDS, WHICHEVER IS LOWER)
================================================================================
ANNUAL FUND OPERATING EXPENSES (expenses that are deducted from fund assets)
% OF AVERAGE DAILY NET ASSETS
CLASS OF SHARES
A B C M
------------------------------------
Management fees 1.00% 1.00% 1.00% 1.00%
Distribution and service
(12b-1) fees 0.35% 1.00% 1.00% 0.90%
Other expenses (c) 2.70% 2.70% 2.70% 2.70%
------------------------------------
TOTAL ANNUAL FUND
OPERATING EXPENSES 4.05% 4.70% 4.70% 4.60%
EXPENSE REDUCTION (D) 2.25% 2.25% 2.25% 2.25%
------------------------------------
NET OPERATING EXPENSES 1.80% 2.45% 2.45% 2.35%
- -----------------------------------------------------------------
(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) Purchases of Class M shares are subject to a 1% contingent deferred sales
charge if redeemed within 18 months of purchase.
(c) Because the fund commenced operations in December 2000, the "Other
expenses" are estimates.
(d) Contractual arrangement with Idex Management, Inc. through 11/30/01, for
expenses that exceed 1.40%, and for the period 12/01/01 through 4/30/02,
for expenses that exceed 1.60%, excluding 12b-1 fees.
A $10 semi-annual fee is imposed on accounts open for over 2 years that are
below a minimum balance due to redemptions. See page 77.
================================================================================
EXAMPLE*
This example is here to help you compare the cost of investing in this fund
with that of other mutual funds. It shows the cumulative expenses you would pay
if you invested $10,000 and held your shares for various time periods, with a
5% annual return and fund operating expenses remaining the same. This return is
for illustration purposes and is not guaranteed. Actual costs may be higher or
lower.
If the shares are redeemed at the end of each period:
SHARE CLASS 1 YEAR 3 YEARS
- -----------------------------------
A $723 $1,520
B** $748 $1,515
C $248 $1,215
M $435 $ 806
- ---------------------------------
If the shares are not redeemed:
SHARE CLASS 1 YEAR 3 YEARS
- -----------------------------------
A $723 $1,520
B** $248 $1,215
C $248 $1,215
M $336 $ 806
- ---------------------------------
* THE TABLE REFLECTS THE EXPENSE CAP INCREASE ON 12/01/01.
** EXAMPLES FOR CLASS B SHARES ASSUME THEY WILL CONVERT TO CLASS A SHARES EIGHT
YEARS AFTER YOU PURCHASE THEM.
25
IDEX PILGRIM BAXTER MID CAP GROWTH
SUMMARY OF RISKS AND RETURNS
[GRAPHIC] OBJECTIVE
THE INVESTMENT OBJECTIVE OF IDEX PILGRIM BAXTER MID CAP GROWTH IS TO SEEK
CAPITAL APPRECIATION.
[GRAPHIC] PRINCIPAL STRATEGIES AND POLICIES
The fund's sub-adviser, Pilgrim Baxter & Associates, Ltd. (Pilgrim Baxter),
seeks to achieve the fund's objective by investing fund assets principally in:
. common stocks of medium capitalization companies
In seeking capital appreciation, Pilgrim Baxter normally invests at least 65%
of the fund's total assets in common stocks, issued by companies with market
capitalizations or average revenues between $500 million and $10 billion. The
fund invests primarily in companies that Pilgrim Baxter believes have strong
business momentum, earnings growth and capital appreciation potential.
Pilgrim Baxter uses its own fundamental research and proprietary measures of
growth and business momentum in determining which stocks to buy and sell.
Pilgrim Baxter's decision to sell a stock depends on many factors. Generally
speaking, Pilgrim Baxter considers selling a security when its anticipated
appreciation is no longer probable, alternate investments offer more superior
appreciation prospects, or the risk of a decline in its market price is too
great.
Pilgrim Baxter may take a temporary defensive position when the securities
trading markets or the economy are experiencing excessive volatility or a
prolonged general decline, or other adverse conditions exist (which is
inconsistent with the fund's principal investment strategies). Under these
circumstances, the fund will be unable to achieve its investment objective.
While the fund invests principally in common stocks of medium-sized companies,
Pilgrim Baxter may, to a lesser extent, elect to invest in options and futures
contracts for hedging and risk management, or in other securities and
investment strategies in pursuit of its investment objective, which are
explained beginning on page 64 and in the SAI.
[GRAPHIC] PRINCIPAL RISKS
The fund is subject to the following principal investment risks:
. STOCKS
While stocks have historically outperformed other investments over the long
term, they tend to go up and down more dramatically over the shorter term.
These price movements may result from factors affecting individual companies,
industries or the securities market as a whole.
Because the stocks the fund may hold fluctuate in price, the value of your
investment in the fund will go up and down.
. MEDIUM-SIZED COMPANIES
These companies present additional risks because their earnings are less
predictable, their share price more volatile, and their securities less liquid
than larger, more established companies.
YOU MAY LOSE MONEY IF YOU INVEST IN THIS FUND.
These and other risks are fully described in the section entitled "Explanation
of Strategies and Risks," beginning on page 64.
. INVESTOR PROFILE
This fund may be appropriate for investors who want long-term growth of capital
26
[GRAPHIC] PAST PERFORMANCE
The bar chart and the table below show the fund's annual returns and its
long-term performance. The bar chart and table indicate the risks of investing
in the fund by showing you how the fund's performance has varied from year to
year. The bar chart does not reflect the impact of sales charges, which lower
the fund's return. The table, which includes applicable sales charges, compares
how the fund's average annual returns for different calendar periods compare to
the returns of the Russell Mid Cap Growth Index (MCG), a widely recognized
unmanaged index of stock performance. The bar chart and table assume
reinvestment of dividends and capital gains distributions. As with all mutual
funds, past performance is not a prediction of future results.
- --------------------------------------------------------------------------------
YEAR-BY-YEAR TOTAL RETURN as of 12/31 each year (%)
CLASS A SHARES
--------------
(17,30)
-------------------------------------------------
2000
- --------------------------------------------------------------------------------
CLASS A SHARES: QUARTER ENDED RETURN
------------- ------
Best Quarter: 3/31/00 13.79%
Worst Quarter: 12/31/00 (34.35)%
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS AS OF 12/31/00
SINCE
ONE YEAR INCEPTION
- --------------------------------------------------------------------------------
A Shares (21.84)% 27.77%
- --------------------------------------------------------------------------------
B Shares (22.07)% 29.24%
- --------------------------------------------------------------------------------
C Shares (17.97)% 9.59%
- --------------------------------------------------------------------------------
M Shares (19.50)% 30.39%
- --------------------------------------------------------------------------------
MCG* (11.75)% 3.59%
- --------------------------------------------------------------------------------
* SINCE INCEPTION (3/01/99); SINCE INCEPTION OF CLASS C SHARES
(11/01/99) - 12.01%.
[GRAPHIC} FEES AND EXPENSES
This table describes the fees and expenses that you may pay if you buy and hold
shares of the fund.
================================================================================
SHAREHOLDER FEES (fees paid directly from your investment)
CLASS OF SHARES
A B C M
- --------------------------------------------------------------------------------
Maximum sales charge (load)
imposed on purchases
(AS A % OF OFFERING PRICE) 5.50% None None 1.00%
Maximum deferred sales
charge (load) None(a) 5.00% None 1.00%(b)
(AS A PERCENTAGE OF PURCHASE PRICE OR
REDEMPTION PROCEEDS, WHICHEVER IS LOWER)
================================================================================
ANNUAL FUND OPERATING EXPENSES (expenses that are deducted from fund assets) (d)
% OF AVERAGE DAILY NET ASSETS CLASS OF SHARES
A B C M
- ------------------------------------------------------------------------------
Management fees 0.80% 0.80% 0.80% 0.80%
Distribution and service
(12b-1) fees 0.35% 1.00% 1.00% 0.90%
Other expenses) 0.91% 0.91% 0.91% 0.91%
----------------------------------------
TOTAL ANNUAL FUND OPERATING
EXPENSES 2.06% 2.71% 2.71% 2.61%
EXPENSE REDUCTION (C) 0.46% 0.46% 0.46% 0.46%
----------------------------------------
NET OPERATING EXPENSES 1.60% 2.25% 2.25% 2.15%
- ------------------------------------------------------------------------------
(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) Purchases of Class M shares are subject to a 1% contingent deferred sales
charge if redeemed within 18 months of purchase.
(c) Contractual arrangement with Idex Management, Inc. through 11/30/01, for
expenses that exceed 1.20%, and for the period 12/01/01 through 4/30/02,
for expenses that exceed 1.40%, excluding 12b-1 fees.
(d) Annual fund operating expenses are estimated based on the fund's expenses
for the fiscal year ended 10/31/00.
A $10 semi-annual fee is imposed on accounts open for over 2 years that are
below a minimum balance due to redemptions. See page 77.
================================================================================
EXAMPLE*
This example is here to help you compare the cost of investing in this fund
with that of other mutual funds. It shows the cumulative expenses you would pay
if you invested $10,000 and held your shares for various time periods, with a
5% annual return and fund operating expenses remaining the same. This return is
for illustration purposes and is not guaranteed. Actual costs may be higher or
lower.
If the shares are redeemed at the end of each period:
SHARE CLASS 1 YEAR 3 YEARS 5 YEARS 10 YEARS
- --------------------------------------------------------------------------------
A $704 $1,118 $1,558 $2,774
B** $728 $1,098 $1,494 $2,851
C $228 $ 798 $1,394 $3,008
M $415 $ 860 $1,431 $2,981
- --------------------------------------------------------------------------------
If the shares are not redeemed:
SHARE CLASS 1 YEAR 3 YEARS 5 YEARS 10 YEARS
- --------------------------------------------------------------------------------
A $704 $1,118 $1,558 $2,774
B** $228 $ 798 $1,394 $2,851
C $228 $ 798 $1,394 $3,008
M $316 $ 860 $1,431 $2,981
- --------------------------------------------------------------------------------
* THE TABLE REFLECTS THE EXPENSE CAP INCREASE ON 12/01/01.
** EXAMPLES FOR CLASS B SHARES ASSUME THEY WILL CONVERT TO CLASS A SHARES EIGHT
YEARS AFTER YOU PURCHASE THEM.
For information regarding a similar sub-adviser fund, please see page 85.
27
IDEX PILGRIM BAXTER TECHNOLOGY
SUMMARY OF RISKS AND RETURNS
[GRAPHIC] OBJECTIVE
THE OBJECTIVE OF IDEX PILGRIM BAXTER TECHNOLOGY IS GROWTH OF CAPITAL. Current
income is incidental to this objective.
[GRAPHIC] PRINCIPAL STRATEGIES
AND POLICIES
The fund's sub-adviser, Pilgrim Baxter & Associates, Ltd. (Pilgrim Baxter),
seeks to achieve this objective by investing principally in:
. common stocks of companies doing business in the technology and
communications sectors of the market
In seeking growth of capital, Pilgrim Baxter normally invests at least 65% of
the fund's total assets in common stocks of small, medium or large
capitalization companies doing business in the technology and communications
sectors of the market. This fund is also concentrated which means Pilgrim
Baxter invests 25% or more of the fund's total assets in one or more industries
within those sectors.
These industries may include computer software and hardware, network and cable
broadcasting, defense and data storage and retrieval, and biotechnology.
Pilgrim Baxter feels that there is significant growth potential because the
fund invests in companies that may be responsible for breakthrough products or
technologies or positioned to take advantage of cutting-edge developments. The
fund's holdings may range from smaller companies developing new technologies or
pursuing scientific breakthroughs to large, blue chip firms with established
track records in developing, using or marketing scientific advances.
Pilgrim Baxter uses its own fundamental research and proprietary measures of
growth and business momentum in determining which stocks to buy and sell.
Pilgrim Baxter's decision to sell a stock depends on many factors. Generally
speaking, Pilgrim Baxter considers selling a security when its anticipated
appreciation is no longer probable, alternate investments offer more superior
appreciation prospects, or the risk of a decline in its market price is too
great.
Pilgrim Baxter may take a temporary defensive position when the securities
trading markets or the economy are experiencing excessive volatility or a
prolonged general decline, or other adverse conditions exist (which is
inconsistent with the fund's principal investment strategies). Under these
circumstances, the fund will be unable to achieve its investment objective.
While the fund invests principally in common stocks, Pilgrim Baxter may, to a
lesser extent, invest in options and futures contracts for hedging and risks
management or in other securities and investment strategies in pursuit of its
investment objective, which are explained beginning on page 64 and in the SAI.
WHAT IS A NON-DIVERSIFIED FUND?
A "non-diversified" fund has the ability to take larger positions in a
smaller number of issuers. To the extent a fund invests a greater portion
of its assets in the securities of a smaller number of issuers, it may be
more susceptible to any single economic, political or regulatory
occurrence than a diversified fund and may be subject to greater loss with
respect to its portfolio securities. However, to meet federal tax
requirements, at the close of each quarter the fund may not have more than
25% of its total assets invested in any one issuer, and, with respect to
50% of its total assets, not more than 5% of its total assets invested in
any one issuer.
[GRAPHIC] PRINCIPAL RISKS
The fund is subject to the following principal investment risks:
. STOCKS
While stocks have historically outperformed other investments over the long
term, they tend to go up and down more dramatically over the shorter term.
These price movements may result from factors affecting individual companies,
industries or the securities markets as a whole.
Because the stocks the fund holds fluctuate in price, the value of your
investment in the fund will go up and down.
. TECHNOLOGY STOCKS
Securities of technology companies are strongly affected by worldwide
scientific and technological developments and governmental policies, and,
therefore, are generally more volatile than securities of companies not
dependent upon or associated with technological issues.
. SMALL-OR MEDIUM-SIZED COMPANIES
These companies present additional risks because their earnings are less
predictable, their share price more volatile, and their securities less liquid
than larger or more established companies.
THIS FUND IS NON-DIVERSIFIED.
YOU MAY LOSE MONEY IF YOU INVEST IN THIS FUND.
These and other risks are fully described in the section entitled "Explanation
of Strategies and Risks," beginning on page 64.
28
. INVESTOR PROFILE
This fund may be appropriate for investors who are willing to accept the higher
risk of loss inherent in a fund that invests in technology company securities
which may be strongly affected by worldwide scientific and technological
developments and governmental policies, in exchange for the potential of
greater capital appreciation.
[GRAPHIC] PAST PERFORMANCE
Because the fund commenced operations in March 2000, no historical performance
information is presented here. Performance information will be presented for
the fund after it has been in operation for one complete calendar year.
[GRAPHIC] FEES AND EXPENSES
This table describes the fees and expenses that you may pay if you buy and hold
shares of the fund.
================================================================================
SHAREHOLDER FEES (fees paid directly from your investment)
CLASS OF SHARES
A B C M
- --------------------------------------------------------------------------------
Maximum sales charge (load)
imposed on purchases
(AS A % OF OFFERING PRICE) 5.50% None None 1.00%
Maximum deferred sales
charge (load) None(a) 5.00% None 1.00%(b)
(AS A PERCENTAGE OF PURCHASE PRICE OR
REDEMPTION PROCEEDS, WHICHEVER IS LOWER)
================================================================================
ANNUAL FUND OPERATING EXPENSES (expenses that are deducted from fund assets)
% OF AVERAGE DAILY NET ASSETS
CLASS OF SHARES
A B C M
- --------------------------------------------------------------------------------
Management fees 1.00% 1.00% 1.00% 1.00%
Distribution and service
(12b-1) fees 0.35% 1.00% 1.00% 0.90%
Other expenses (c) 0.92% 0.92% 0.92% 0.92%
-----------------------------------------
TOTAL ANNUAL FUND OPERATING
EXPENSES 2.27% 2.92% 2.92% 2.82%
EXPENSE REDUCTION (D) 0.47% 0.47% 0.47% 0.47%
-----------------------------------------
NET OPERATING EXPENSES 1.80% 2.45% 2.45% 2.35%
- --------------------------------------------------------------------------------
(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) Purchases of Class M shares are subject to a 1% contingent deferred sales
charge if redeemed within 18 months of purchase.
(c) Because the fund commenced operations in March 2000, the "Other expenses"
are estimates.
(d) Contractual arrangement with Idex Management, Inc. through 11/30/01, for
expenses that exceed 1.40%, and for the period 12/01/01 through 4/30/02,
for expenses that exceed 1.60%, excluding 12b-1 fees.
A $10 semi-annual fee is imposed on accounts open for over 2 years that are
below a minimum balance due to redemptions. See page 77.
================================================================================
EXAMPLE*
This example is here to help you compare the cost of investing in this fund
with that of other mutual funds. It shows the cumulative expenses you would pay
if you invested $10,000 and held your shares for various time periods, with a
5% annual return and fund operating expenses remaining the same. This return is
for illustration purposes and is not guaranteed. Actual costs may be higher or
lower.
If the shares are redeemed at the end of each period:
SHARE CLASS 1 YEAR 3 YEARS
- --------------------------------------------------------------------------------
A $723 $1,178
B** $748 $1,160
C $248 $ 860
M $435 $ 921
- --------------------------------------------------------------------------------
If the shares are not redeemed:
SHARE CLASS 1 YEAR 3 YEARS
- --------------------------------------------------------------------------------
A $723 $1,178
B** $248 $ 860
C $248 $ 860
M $336 $ 921
- --------------------------------------------------------------------------------
* THE TABLE REFLECTS THE EXPENSE CAP INCREASE ON 12/01/01.
** EXAMPLES FOR CLASS B SHARES ASSUME THEY WILL CONVERT TO CLASS A SHARES EIGHT
YEARS AFTER YOU PURCHASE THEM.
For information regarding a similar sub-adviser fund, please see page 85.
29
IDEX TRANSAMERICA SMALL COMPANY
SUMMARY OF RISKS AND RETURNS
[GRAPHIC] OBJECTIVE
THE OBJECTIVE OF IDEX TRANSAMERICA SMALL COMPANY IS TO MAXIMIZE LONG-TERM
GROWTH.
[GRAPHIC] PRINCIPAL STRATEGIES
AND POLICIES
The fund's sub-adviser, Transamerica Investment Management, LLC (TIM), uses a
"bottom-up" approach to investing and builds the fund's portfolio one company
at a time by investing fund assets principally in:
. equity securities such as common stocks, preferred stocks, rights, warrants
and securities convertible into or exchangeable for common stocks of small
companies
TIM generally invests at least 65% of the fund's assets in a diversified
portfolio of equity securities. The companies issuing these securities are
companies with small market capitalization. TIM defines small companies as
those whose market capitalization or annual revenues are no more than $1
billion.
TIM selects stocks that are issued by small U.S. companies which, in its
opinion, show:
. strong potential for steady growth
. high barriers to competition
It is the opinion of TIM that companies with smaller capitalization levels are
less actively followed by security analysts and therefore they may be
undervalued, providing strong opportunities for a rise in value.
While the fund invests principally in equity securities of small companies, TIM
may also, to a lesser extent, invest in debt securities or other securities and
investment strategies in pursuit of its investment objective, which are
explained beginning on page 64 and in the SAI.
TIM may also invest in cash or cash equivalents for temporary defensive
purposes when market conditions warrant (which is inconsistent with the fund's
principal investment strategies). To the extent it is invested in these
securities, the fund may not be able to achieve its investment objective.
[GRAPHIC] PRINCIPAL RISKS
The fund is subject to the following principal investment risks:
. STOCKS
While stocks have historically outperformed other investments over the long
term, they tend to go up and down more dramatically over the shorter term.
These price movements may result from factors affecting individual companies,
industries or the securities market as a whole.
Because the stocks the fund holds fluctuate in price, the value of your
investment in the fund will go up and down.
. CONVERTIBLE SECURITIES
Convertible securities may include corporate notes or preferred stock, but
ordinarily are a long-term debt obligation of the issuer convertible at a
stated exchange rate into common stock of the issuer. As with all debt
securities, the market value of convertible securities tends to decline as
interest rates increase and, conversely to increase as interest rates decline.
Convertible securities generally offer lower interest or dividend yields than
non-convertible securities of similar quality. However, when the market price
of the common stock underlying a convertible security exceeds the conversion
price, the price of the convertible security tends to reflect the value of the
underlying common stock. As the market price of the underlying common stock
declines, the convertible security tends to trade increasingly on a yield
basis, and thus may not depreciate to the same extent as the underlying stock.
. SMALL-CAP COMPANIES
Investing in small companies involves greater risk than is customarily
associated with more established companies. Stocks of small companies may be
subject to more abrupt or erratic price movements than larger company
securities. Small companies often have limited product lines, market, or
financial resources, and their management may lack depth and experience.
Also, growth stocks can experience steep price declines if the company's
earnings disappoint investors. Since the fund will typically be fully invested
in this market sector, investors are fully exposed to its volatility.
. WARRANTS AND RIGHTS
Warrants and rights may be considered more speculative than certain other types
of investments because they do not entitle a holder to the dividends or voting
rights for the securities that may be purchased. They do not represent any
rights in the assets of the issuing company.
Also, the value of a warrant or right does not necessarily change with the
value of the underlying securities. A warrant or right ceases to have value if
it is not exercised prior to the expiration date.
YOU MAY LOSE MONEY IF YOU INVEST IN THIS FUND.
These and other risks are fully described in the section entitled "Explanation
of Strategies and Risks," beginning on page 64.
WHAT IS A "BOTTOM UP" ANALYSIS?
When a sub-adviser uses a "bottom up" approach, it looks primarily at
individual companies against the context of broad market factors. It seeks
to identify individual companies with earnings growth potential that may
not be recognized by the market at large.
. INVESTOR PROFILE
This fund may be appropriate for long-term investors who are willing and
financially able to take on above-average stock market volatility in order to
pursue long-term capital growth.
30
[GRAPHIC] PAST PERFORMANCE
Because the fund commenced operations in March 2000, no historical performance
information is presented here. Performance information will be presented for
the fund after it has been in operation for one complete calendar year.
[GRAPHIC] FEES AND EXPENSES
This table describes the fees and expenses that you may pay if you buy and hold
shares of the fund.
================================================================================
SHAREHOLDER FEES (fees paid directly from your investment)
CLASS OF SHARES
A B C M
----------------------------------------------
Maximum sales charge (load)
imposed on purchases
(AS A % OF OFFERING PRICE) 5.50% None None 1.00%
Maximum deferred sales
charge (load) None(a) 5.00% None 1.00%(b)
(AS A PERCENTAGE OF PURCHASE PRICE OR
REDEMPTION PROCEEDS, WHICHEVER IS LOWER)
================================================================================
ANNUAL FUND OPERATING EXPENSES (expenses that are deducted from fund assets)
% OF AVERAGE DAILY NET ASSETS
CLASS OF SHARES
A B C M
- -----------------------------------------------------------------------
Management fees 0.80% 0.80% 0.80% 0.80%
Distribution and service
(12b-1) fees 0.35% 1.00% 1.00% 0.90%
Other expenses (c) 3.39% 3.39% 3.39% 3.39%
----------------------------------
TOTAL ANNUAL FUND
OPERATING EXPENSES 4.54% 5.19% 5.19% 5.09%
EXPENSE REDUCTION (D) 2.94% 2.94% 2.94% 2.94%
----------------------------------
NET OPERATING EXPENSES 1.60% 2.25% 2.25% 2.15%
- ---------------------------------------------------------------------
(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) Purchases of Class M shares are subject to a 1% contingent deferred sales
charge if redeemed within 18 months of purchase.
(c) Because the fund commenced operations in March 2000, the "Other expenses"
are estimates.
(d) Contractual arrangement with Idex Management, Inc. through 11/30/01, for
expenses that exceed 1.20%, and for the period 12/01/01 through 4/30/02, for
expenses that exceed 1.40%, excluding 12b-1 fees.
A $10 semi-annual fee is imposed on accounts open for over 2 years that
are below a minimum balance due to redemptions. See page 77.
================================================================================
EXAMPLE*
This example is here to help you compare the cost of investing in this fund
with that of other mutual funds. It shows the cumulative expenses you would pay
if you invested $10,000 and held your shares for various time periods, with a
5% annual return and fund operating expenses remaining the same. This return is
for illustration purposes and is not guaranteed. Actual costs may be higher or
lower.
If the shares are redeemed at the end of each period:
SHARE CLASS 1 YEAR 3 YEARS
- -----------------------------------
A $704 $1,595
B** $728 $1,593
C $228 $1,293
M $415 $1,351
- ---------------------------------
If the shares are not redeemed:
SHARE CLASS 1 YEAR 3 YEARS
- -----------------------------------
A $704 $1,595
B** $228 $1,293
C $228 $1,293
M $316 $1,351
- ---------------------------------
* THE TABLE REFLECTS THE EXPENSE CAP INCREASE ON 12/01/01.
** EXAMPLES FOR CLASS B SHARES ASSUME THEY WILL CONVERT TO CLASS A SHARES EIGHT
YEARS AFTER YOU PURCHASE THEM.
For information regarding a similar sub-adviser fund, please see page 85.
31
IDEX T. ROWE PRICE SMALL CAP
SUMMARY OF RISKS AND RETURNS
[GRAPHIC] OBJECTIVE
THE INVESTMENT OBJECTIVE OF IDEX T. ROWE PRICE SMALL CAP IS TO SEEK LONG-TERM
GROWTH OF CAPITAL BY INVESTING PRIMARILY IN COMMON STOCKS OF SMALL GROWTH
COMPANIES.
[GRAPHIC] PRINCIPAL STRATEGIES
AND POLICIES
The fund's sub-adviser, T. Rowe Price Associates, Inc. (T. Rowe Price), seeks
to achieve the fund's objective by investing fund assets principally in:
. common stocks of small-cap growth companies
This fund will invest at least 65% of its total assets in small-cap growth
companies. These are defined as companies whose market capitalization falls
within the range of, or less than, the smallest 100 companies in the Standard &
Poor's 500 Composite Stock Index (S&P 500) which was approximately $3.269
billion and below as of December 31, 2000, but the upper size limit will vary
with market fluctuations. Companies whose capitalization increases above this
range after the fund's initial purchase continue to be considered small
companies for purposes of this policy. The S&P 500 measures the performance of
the common stocks of 500 large U.S. companies in the manufacturing, utilities,
transportation, and financial industries. (A company's market "cap" is found by
multiplying its shares outstanding by its stock price.)
To help manage cash flows efficiently, T. Rowe Price may also buy and sell
stock index futures. The fund intends to be invested in a large number of
holdings. T. Rowe Price believes this diversification should minimize the
effects of individual security selection on fund performance.
T. Rowe Price uses a number of quantitative models that are designed to
identify key characteristics of small-cap growth stocks. Based on these models,
stocks are selected in a "top-down" manner so that the fund's portfolio as a
whole reflects characteristics T. Rowe Price considers important, such as
valuations (price/
earnings or price/book value ratios, for example) and projected earnings
growth.
WHAT IS A QUANTITATIVE MODEL?
A quantitative model is fashioned by a fund's sub-adviser to assist the
sub-adviser in evaluating a potential security. The sub-adviser creates a
model that is designed using characteristics that the sub-adviser deems
advantageous in a security. The sub-adviser then compares a potential
security's characteristics against those of the model, and makes a
determination of whether or not to purchase the security based on the
results of that comparison.
The fund may sell securities for a variety of reasons, such as to secure gains,
limit losses, or redeploy assets into more promising opportunities.
The fund may take a temporary defensive position when the securities trading
markets or the economy are experiencing excessive volatility or a prolonged
general decline, or other adverse conditions exist (which is inconsistent with
the fund's principal investment strategies). Under these circumstances, the
fund may be unable to achieve its investment objective.
WHAT IS A TOP-DOWN APPROACH?
When using a "top-down" approach, the fund manager looks first at broad
market factors, and on the basis of those market factors, chooses certain
sectors, or industries within the overall market. The manager then looks
at individual companies within those sectors or industries.
While the fund invests principally in small-cap common stocks, T. Rowe Price
may, to a lesser extent, invest in stock index futures, or other securities and
investment strategies in pursuit of its investment objective, which are
explained beginning on page 64 and in the SAI.
[GRAPHIC] PRINCIPAL RISKS
The fund is subject to the following principal investment risks:
. STOCKS
While stocks have historically outperformed other investments over the long
term, they tend to go up and down more dramatically over the shorter term.
These price movements may result from factors affecting individual companies,
industries or the securities market as a whole.
Because the stocks the fund holds fluctuate in price, the value of your
investment in the fund will go up and down.
. SMALL-CAP COMPANIES
Investing in small companies involves greater risk than is customarily
associated with more established companies. Stocks of small companies may be
subject to more abrupt or erratic price movements than larger company
securities. Small companies often have limited product lines, markets, or
financial resources, and their management may lack depth and experience. Such
companies usually do not pay significant dividends that could cushion returns
in a falling market.
Also, growth stocks can experience steep price declines if the company's
earnings disappoint investors. Since the fund will typically be fully invested
in this market sector, investors are fully exposed to its volatility.
. QUANTITATIVE MODELS
A quantitative model that is developed to select stocks may not be effective.
As a result, overall returns of the fund may be lower than if other methods
were used to select the stock held by the fund.
YOU MAY LOSE MONEY IF YOU INVEST IN THIS FUND.
These and other risks are fully described in the section entitled "Explanation
of Strategies and Risks," beginning on page 64.
. INVESTOR PROFILE
This fund may be appropriate for investors who want an aggressive, long-term
approach to building capital and who can tolerate significant fluctuations
inherent in small-cap stock investing.
32
[GRAPHIC] PAST PERFORMANCE
The bar chart and the table below show the fund's annual returns and its
long-term performance. The bar chart and table indicate the risks of investing
in the fund by showing you how the fund's performance has varied from year to
year. The bar chart does not reflect the impact of sales charges, which lower
the fund's return. The table, which includes applicable sales charges, compares
how the fund's average annual returns for different calendar periods compare to
the returns of the Russell 2000 Index (Russell 2000), a widely recognized
unmanaged index of stock performance. The bar chart and table assume
reinvestment of dividends and capital
gains distributions. As with all mutual funds, past performance is not a
prediction of future results.
- --------------------------------------------------------------------------------
YEAR-BY-YEAR TOTAL RETURN as of 12/31 each year (%)
CLASS A SHARES
--------------
(9.15)
- --------------------------------------------------------------------------------
2000
- --------------------------------------------------------------------------------
CLASS A SHARES: QUARTER ENDED RETURN
--------------- ---------
Best Quarter: 3/31/00 11.20 %
Worst Quarter: 12/31/00 (11.20)%
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS AS OF 12/31/00
SINCE
ONE YEAR INCEPTION
- ---------------------------------------------
A Shares (14.15)% 9.49%
- ---------------------------------------------
B Shares (14.31)% 10.25%
- ---------------------------------------------
C Shares (9.79)% 10.79%
- ---------------------------------------------
M Shares (11.49)% 11.73%
- ---------------------------------------------
Russell 2000* (3.03)% 13.59%
- --------------------------------------------------------------------------------
* SINCE INCEPTION (3/01/99); SINCE INCEPTION OF CLASS C SHARES
(11/01/99) - 2.53%.
[GRAPHIC] FEES AND EXPENSES
This table describes the fees and expenses that you may pay if you buy and hold
shares of the fund.
================================================================================
SHAREHOLDER FEES (fees paid directly from your investment)
CLASS OF SHARES
A B C M
- -----------------------------------------------------------------------------
Maximum sales charge (load)
imposed on purchases
(AS A % OF OFFERING PRICE) 5.50% None None 1.00%
Maximum deferred sales
charge (load) None(a) 5.00% None 1.00%(b)
(AS A PERCENTAGE OF PURCHASE PRICE OR
REDEMPTION PROCEEDS, WHICHEVER IS LOWER)
================================================================================
ANNUAL FUND OPERATING EXPENSES (expenses that are deducted from fund assets)(d)
% OF AVERAGE DAILY NET ASSETS CLASS OF SHARES
A B C M
- -----------------------------------------------------------------
Management fees 0.80% 0.80% 0.80% 0.80%
Distribution and service
(12b-1) fees 0.35% 1.00% 1.00% 0.90%
Other expenses 1.68% 1.68% 1.68% 1.68%
------------------------------------
TOTAL ANNUAL FUND
OPERATING EXPENSES 2.83% 3.48% 3.48% 3.38%
EXPENSE REDUCTION (C) 1.23% 1.23% 1.23% 1.23%
------------------------------------
NET OPERATING EXPENSES 1.60% 2.25% 2.25% 2.15%
- -----------------------------------------------------------------
(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) Purchases of Class M shares are subject to a 1% contingent deferred sales
charge if redeemed within 18 months of purchase.
(c) Contractual arrangement with Idex Management, Inc. through 11/30/01, for
expenses that exceed 1.20%, and for the period 12/01/01 through 4/30/02,
for expenses that exceed 1.40%, excluding 12b-1 fees.
(d) Annual fund operating expenses are estimated based on the fund's expenses
for the fiscal year ended 10/31/00.
A $10 semi-annual fee is imposed on accounts open for over 2 years that are
below a minimum balance due to redemptions. See page 77.
================================================================================
EXAMPLE*
This example is here to help you compare the cost of investing in this fund
with that of other mutual funds. It shows the cumulative expenses you would pay
if you invested $10,000 and held your shares for various time periods, with a
5% annual return and fund operating expenses remaining the same. This return is
for illustration purposes and is not guaranteed. Actual costs may be higher or
lower.
If the shares are redeemed at the end of each period:
SHARE CLASS 1 YEAR 3 YEARS 5 YEARS 10 YEARS
- -------------------------------------------------------------
A $704 $1,269 $1,859 $3,449
B** $728 $1,254 $1,802 $3,529
C $228 $ 954 $1,702 $3,675
M $415 $1,015 $1,738 $3,649
- -------------------------------------------------------------
If the shares are not redeemed:
SHARE CLASS 1 YEAR 3 YEARS 5 YEARS 10 YEARS
- -------------------------------------------------------------
A $704 $1,269 $1,859 $3,449
B** $228 $ 954 $1,702 $3,529
C $228 $ 954 $1,702 $3,675
M $316 $1,015 $1,738 $3,649
- -------------------------------------------------------------
* THE TABLE REFLECTS THE EXPENSE CAP INCREASE ON 12/01/01.
** EXAMPLES FOR CLASS B SHARES ASSUME THEY WILL CONVERT TO CLASS A SHARES EIGHT
YEARS AFTER YOU PURCHASE THEM.
For information regarding a similar sub-adviser fund, please see page 85.
33
IDEX AMERICAN CENTURY INTERNATIONAL
SUMMARY OF RISKS AND RETURNS
[GRAPHIC] OBJECTIVE
THE OBJECTIVE OF IDEX AMERICAN CENTURY INTERNATIONAL IS TO SEEK CAPITAL GROWTH.
[GRAPHIC] PRINCIPAL STRATEGIES AND POLICIES
The fund's sub-adviser, American Century Investment Management, Inc. (American
Century), seeks to achieve this objective by investing principally in:
. stocks of growing foreign companies
The fund manager uses a growth investment strategy developed by American
Century to invest in stocks of companies that it believes will increase in
value over time. This strategy looks for companies with earnings and revenue
growth potential. Ideally, the fund manager looks for companies whose earnings
and revenues are not only growing, but growing at a successfully faster, or
accelerating, pace. This strategy is based on the premise that, over the long
term, the stocks of companies with earnings and revenue growth have a
greater-than-average chance to increase in value.
The manager uses a bottom-up approach to select stocks to buy for the fund. The
manager tracks financial information for thousands of companies to identify
trends in the companies' earnings and revenues. This information is used to
help the fund manager to select or decide to continue to hold the stocks of
companies it believes will be able to sustain their growth, and to sell stocks
of companies whose growth begins to slow down.
In addition to locating strong companies with earnings and revenue growth, the
fund manager believes that it is important to diversify the fund's holdings
across different countries and geographical regions in an effort to manage the
risks of an international portfolio. For this reason, the fund manager also
considers the prospects for relative economic growth among countries or
regions, economic and political conditions, expected inflation rates, currency
exchange fluctuations and tax considerations when making investments.
The fund manager does not attempt to time the market. Instead, under normal
market conditions, the manager intends to keep the fund essentially fully
invested in stocks regardless of the movement of stock prices. When the manager
believes it is prudent, the fund may invest a portion of its assets in
convertible securities, short-term securities, non-leveraged stock index
futures contracts and other similar securities.
Stock index futures contracts, a type of derivative security, can help the
fund's cash assets remain liquid by performing more like stocks. The fund has a
policy governing stock index futures and similar derivative securities to help
manage the risk of these types of investments. For example, the manager cannot
leverage the fund's assets by investing in a derivative security. A complete
description of the derivatives policy is included in the SAI.
[GRAPHIC] PRINCIPAL RISKS
The fund is subject to the following principal investment risks:
. STOCKS
While stocks have historically outperformed other investments over the long
term, they tend to go up and down more dramatically over the shorter term.
These price movements may result from factors affecting individual companies,
industries or the securities markets as a whole.
Because the stocks the fund holds fluctuate in price, the value of your
investment in the fund will go up and down.
. FOREIGN STOCKS
Investments in foreign securities (including American Depositary Receipts
(ADRs), Global Depositary Receipts (GDRs) and European Depositary Receipts
(EDRs)) involve risks relating to political, social and economic developments
abroad, as well as risks resulting from the differences between the regulations
to which U.S. and foreign issuer markets are subject. These risks include:
. changes in currency values
. currency speculation
. currency trading costs
. different accounting and reporting practices
. less information available to the public
. less (or different) regulation of securities markets
. more complex business negotiations
. less liquidity
. more fluctuations in prices
. delays in settling foreign securities transactions
. higher costs for holding shares (custodial fees)
. higher transaction costs
. vulnerability to seizure and taxes
. political instability and small markets
. different market trading days
. forward foreign currency contracts for hedging
. CURRENCY RISK
Because the fund's foreign investments are generally held in foreign
currencies, the fund is subject to currency risk, meaning the fund could
experience gains or losses solely on changes in the exchange rate between
foreign currencies and the U.S. dollar.
YOU MAY LOSE MONEY IF YOU INVEST IN THIS FUND.
These and other risks are fully described in the section entitled "Explanation
of Strategies and Risks," beginning on page 64.
. INVESTOR PROFILE
This fund may be appropriate for the investor who is seeking long-term capital
growth, diversification of his or her investment portfolio through investment
in foreign securities, and is comfortable with the risks associated with
investing in foreign growth securities and short-term price volatility. It may
also be appropriate when investing through an IRA or other tax-advantaged
retirement plan.
34
[GRAPHIC] PAST PERFORMANCE
Because the fund will commence operations in April 2001, no historical
performance information is presented here. Performance information will be
presented for the fund after it has been in operation for one complete calendar
year.
[GRAPHIC] FEES AND EXPENSES
This table describes the fees and expenses that you may pay if you buy and hold
shares of the fund.
================================================================================
SHAREHOLDER FEES (fees paid directly from your investment)
CLASS OF SHARES
A B C M
- -----------------------------------------------------------------------------
Maximum sales charge (load)
imposed on purchases
(AS A % OF OFFERING PRICE) 5.50% None None 1.00%
Maximum deferred sales
charge (load) None(a) 5.00% None 1.00%(b)
(AS A PERCENTAGE OF PURCHASE PRICE OR
REDEMPTION PROCEEDS, WHICHEVER IS LOWER)
================================================================================
ANNUAL FUND OPERATING EXPENSES (expenses that are deducted from fund assets)
% OF AVERAGE DAILY NET ASSETS
CLASS OF SHARES
A B C M
- ---------------------------------------------------------------------
Management fees 1.00% 1.00% 1.00% 1.00%
Distribution and service
(12b-1) fees 0.35% 1.00% 1.00% 0.90%
Other expenses (c) 2.70% 2.70% 2.70% 2.70%
----------------------------------
TOTAL ANNUAL FUND
OPERATING EXPENSES 4.05% 4.70% 4.70% 4.60%
EXPENSE REDUCTION (D) 2.10% 2.10% 2.10% 2.10%
----------------------------------
NET OPERATING EXPENSES 1.95% 2.60% 2.60% 2.50%
- ---------------------------------------------------------------
(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) Purchases of Class M shares are subject to a 1% contingent deferred sales
charge if redeemed within 18 months of purchase.
(c) Because the fund will commence operations in April 2001, the "Other
expenses" are estimates.
(d) Contractual arrangement with Idex Management, Inc. through 4/30/02, for
expenses that exceed 1.60%, excluding 12b-1 fees.
A $10 semi-annual fee is imposed on accounts open for over 2 years that are
below a minimum balance due to redemptions. See page 77.
===============================================================================
EXAMPLE
This example is here to help you compare the cost of investing in this fund
with that of other mutual funds. It shows the cumulative expenses you would pay
if you invested $10,000 and held your shares for various time periods, with a
5% annual return and fund operating expenses remaining the same. This return is
for illustration purposes and is not guaranteed. Actual costs may be higher or
lower.
If the shares are redeemed at the end of each period:
SHARE CLASS 1 YEAR 3 YEARS
- -----------------------------------
A $737 $1,533
B* $763 $1,529
C $263 $1,229
M $450 $1,288
- ---------------------------------
If the shares are not redeemed:
SHARE CLASS 1 YEAR 3 YEARS
- -----------------------------------
A $737 $1,533
B* $263 $1,229
C $263 $1,229
M $351 $1,288
- ---------------------------------
* EXAMPLES FOR CLASS B SHARES ASSUME THEY WILL CONVERT TO CLASS A SHARES EIGHT
YEARS AFTER YOU PURCHASE THEM.
For more information regarding a similar sub-adviser fund, please see page 85.
35
IDEX GABELLI GLOBAL GROWTH
SUMMARY OF RISKS AND RETURNS
[GRAPHIC] OBJECTIVE
THE OBJECTIVE OF IDEX GABELLI GLOBAL GROWTH IS TO SEEK TO PROVIDE INVESTORS
WITH APPRECIATION OF CAPITAL.
[GRAPHIC] PRINCIPAL STRATEGIES
AND POLICIES
The fund's sub-adviser, Gabelli Asset Management Company (Gabelli), seeks to
achieve this objective by investing principally in:
. common stocks
Under normal market conditions, the fund will invest at least 65% of its total
assets in common stock of companies involved in the global market place. The
fund invests primarily in common stocks of foreign and domestic small
capitalization, mid-capitalization and large capitalization issuers. The fund
may invest without limitation in securities of foreign issuers and will invest
in securities of issuers located in at least three countries.
To seek to achieve the fund's primary objective, Gabelli employs a disciplined
investment program focusing on the globalization and interactivity of the
world's market place. The fund invests in companies that, in Gabelli's opinion,
are at the forefront of accelerated growth.
Gabelli strives to find reasonably valued businesses exhibiting creativity to
adapt to the changing environment. Additionally, Gabelli looks for solid
franchises, ideally with unique copyrights that can add to overall value
creation. And lastly, Gabelli likes growth and therefore looks to businesses
involved in the ever-evolving communication revolution. Looking forward,
Gabelli continues to believe that the dominant companies of tomorrow will be
conducting a major portion of their business via the Internet within the next
five years.
Currently in selecting investments, Gabelli seeks companies participating in
emerging advances in services and products that are accessible to individuals
in their homes or offices through consumer electronics content based devices
such as telephones, televisions, radios and personal computers. The fund will
invest in companies which Gabelli believes are likely to have rapid growth in
revenues and earnings and potential for above average capital appreciation or
are undervalued. In addition, Gabelli also considers the market price of the
issuer's securities, its balance sheet characteristics and the perceived
strength of its management.
Gabelli sells the fund's securities when they view the stock to be overvalued,
or when Gabelli feels the stocks are no longer in what it considers to be a
favorable media.
In seeking to achieve the investment objective of this fund, Gabelli may make
investment decisions without giving consideration to the turnover rate of the
fund. As a result, the turnover rate of the fund's portfolio may be higher than
other comparable funds. Consequently, the fund may incur higher transaction
related expenses than funds that do not engage in frequent trading.
[GRAPHIC] PRINCIPAL RISKS
The fund is subject to the following principal investment risks:
. STOCKS
While stocks have historically outperformed other investments over the long
term, they tend to go up and down more dramatically over the shorter term.
These price movements may result from factors affecting individual companies,
industries or the securities market as a whole.
Because the stocks the fund holds fluctuate in price, the value of your
investment in the fund will go up and down.
. FOREIGN STOCKS
Investments in foreign securities (including ADRs, GDRs and EDRs) involve risks
relating to political, social and economic developments abroad, as well as
risks resulting from the differences between regulations to which U.S. and
foreign issuer markets are subject. These risks include:
. changes in currency values
. currency speculation
. currency trading costs
. different accounting and reporting practices
. less information available to the public
. less (or different) regulation of securities markets
. more complex business negotiations
. less liquidity
. more fluctuations in prices
. delays in settling foreign securities transactions
. higher costs for holding shares (custodial fees)
. higher transaction costs
. vulnerability to seizure and taxes
. political instability and small markets
. different market trading days
. forward foreign currency contracts for hedging
. ENTERTAINMENT AND COMMUNICATIONS STOCK
Securities of entertainment and communications companies are strongly affected
by worldwide scientific and technological developments and governmental
policies, and, therefore, are generally more volatile than securities of
companies not dependent upon or associated with such issues.
YOU MAY LOSE MONEY IF YOU INVEST IN THIS FUND.
These and other risks are fully described in the section entitled "Explanation
of Strategies and Risks," beginning on page 64.
. INVESTOR PROFILE
This fund may be appropriate for investors who are long-term investors and who
seek growth of capital in a diversified portfolio of stocks of companies
located inside and outside the United States.
36
[GRAPHIC] PAST PERFORMANCE
Because the fund commenced operations in September 2000, no historical
performance information is presented here. Performance information will be
presented for the fund after it has been in operation for one complete calendar
year.
[GRAPHIC] FEES AND EXPENSES
This table describes the fees and expenses that you may pay if you buy and hold
shares of the fund.
================================================================================
SHAREHOLDER FEES (fees paid directly from your investment)
CLASS OF SHARES
A B C M
- ------------------------------------------------------------- ---------------
Maximum sales charge (load)
imposed on purchases
(AS A % OF OFFERING PRICE) 5.50% None None 1.00%
Maximum deferred sales
charge (load) None(a) 5.00% None 1.00%(b)
(AS A PERCENTAGE OF PURCHASE PRICE OR
REDEMPTION PROCEEDS, WHICHEVER IS LOWER)
================================================================================
ANNUAL FUND OPERATING EXPENSES (expenses that are deducted from fund assets)
% OF AVERAGE DAILY NET ASSETS
CLASS OF SHARES
A B C M
- -----------------------------------------------------------------
Management fees 1.00% 1.00% 1.00% 1.00%
Distribution and service
(12b-1) fees 0.35% 1.00% 1.00% 0.90%
Other expenses (c) 5.87% 5.87% 5.87% 5.87%
----------------------------------
TOTAL ANNUAL FUND
OPERATING EXPENSES 7.22% 7.87% 7.87% 7.77%
EXPENSE REDUCTION (D) 5.47% 5.47% 5.47% 5.47%
----------------------------------
NET OPERATING EXPENSES 1.75% 2.40% 2.40% 2.30%
- ---------------------------------------------------------------
(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) Purchases of Class M shares are subject to a 1% contingent deferred sales
charge if redeemed within 18 months of purchase.
(c) Because the fund commenced operations in September 2000, the "Other
expenses" are estimates.
(d) Contractual arrangement with Idex Management, Inc. through 4/30/02, for
expenses that exceed 1.40%, excluding 12b-1 fees.
A $10 semi-annual fee is imposed on accounts open for over 2 years that are
below a minimum balance due to redemptions. See page 77.
================================================================================
EXAMPLE
This example is here to help you compare the cost of investing in this fund
with that of other mutual funds. It shows the cumulative expenses you would pay
if you invested $10,000 and held your shares for various time periods, with a
5% annual return and fund operating expenses remaining the same. This return is
for illustration purposes and is not guaranteed. Actual costs may be higher or
lower.
If the shares are redeemed at the end of each period:
SHARE CLASS 1 YEAR 3 YEARS
- ----------------------------------
A $718 $2,096
B* $743 $2,112
C $243 $1,812
M $430 $1,867
- ---------------------------------
If the shares are not redeemed:
SHARE CLASS 1 YEAR 3 YEARS
- -----------------------------------
A $718 $2,096
B* $243 $1,812
C $243 $1,812
M $331 $1,867
- ---------------------------------
* EXAMPLES FOR CLASS B SHARES ASSUME THEY WILL CONVERT TO CLASS A SHARES EIGHT
YEARS AFTER YOU PURCHASE THEM.
For information regarding a similar sub-adviser fund, please see page 85.
37
IDEX GE INTERNATIONAL EQUITY
SUMMARY OF RISKS AND RETURNS
[GRAPHIC] OBJECTIVE
THE OBJECTIVE OF IDEX GE INTERNATIONAL EQUITY IS LONG-TERM GROWTH OF CAPITAL.
[GRAPHIC] PRINCIPAL STRATEGIES AND POLICIES
The fund's sub-adviser, GE Asset Management Incorporated (GEAM), seeks to
achieve this objective by investing principally in:
. common stocks of companies located in developed and developing countries
other than the United States.
GEAM focuses on companies that it expects will grow faster than relevant
markets and whose security price does not, in GEAM's view, fully reflect their
potential for growth. Under normal circumstances, the fund's assets are
invested in foreign securities of companies representing at least three
different countries.
GEAM determines the country represented by an issuer by reference to the
country in which the issuer is organized; derives at least 50% of its revenues
or profits from goods produced or sold, investments made or services performed;
has at least 50% of its assets situated; or has the principal trading market
for its securities.
GEAM seeks to identify securities of growth companies with characteristics such
as:
. low prices relative to their long-term cash earnings potential
. potential for significant improvement in the company's business
. financial strength
. sufficient liquidity
The fund invests not only in the larger markets of Europe and Japan, but may
also invest in the smaller markets of Asia, emerging Europe, Latin America, and
other emerging markets.
Overseas economies often do not move in the same direction and operate
differently. This creates situations the fund aims to take advantage of through
asset allocation among international markets.
The fund may, to a lesser extent, invest in equity securities other than common
stocks (including preferred securities; depositary receipts such as ADRs, EDRs
and GDRs; convertible securities and rights and warrants); securities of
companies located in the United States; debt securities or other securities;
and use various investment techniques and investment strategies in pursuit of
its investment objective, which are explained beginning on page 64 and in the
SAI.
[GRAPHIC] PRINCIPAL RISKS
The fund is subject to the following principal investment risks:
. STOCKS
While stocks have historically outperformed other investments over the long
term, they tend to go up and down more dramatically over the shorter term.
These price movements may result from factors affecting individual companies,
industries or the securities market as a whole.
Because the stocks the fund holds fluctuate in price, the value of your
investment in the fund will go up and down.
. FOREIGN STOCKS
Investments in foreign securities involve risks relating to political, social
and economic developments abroad, as well as risks resulting from differences
between the regulations to which U.S. and foreign issuers and markets are
subject. These risks include: changes in currency values; currency speculation;
currency trading costs; different accounting and reporting practices; less
information available to the public; less (or different) regulation of
securities' markets; more complex business negotiations; less liquidity; more
fluctuations in market prices; delays in settling foreign securities
transactions; higher transaction costs; higher costs for holding foreign
securities (custodial fees); vulnerability to seizure and taxes; political
instability and small markets; and different market trading days.
. EMERGING MARKETS
Emerging market securities bear most of the foreign exposure risks discussed
above. In addition, the risks associated with investing in emerging markets are
often greater than investing in developed foreign markets. These risks are
further explained on page 66.
YOU MAY LOSE MONEY IF YOU INVEST IN THIS FUND.
These and other risks are fully described in the section entitled "Explanation
of Strategies and Risks," beginning on page 64.
. INVESTOR PROFILE
This fund may be appropriate for investors who seek long-term capital growth
through foreign investments, and who are able to tolerate the significant risks
in such investments.
38
[GRAPHIC] PAST PERFORMANCE
The bar chart and the table below show the fund's annual returns and its
long-term performance. The bar chart and table indicate the risks of investing
in the fund by showing you how the fund's performance has varied from year to
year. The bar chart does not reflect the impact of sales charges, which lower
the fund's return. The table, which includes applicable sales charges, compares
how the fund's average annual returns for different calendar periods compare to
the returns of the Morgan Stanley Capital International-Europe, Asia & Far East
Asia Index (MSCI-EAFE), a widely recognized unmanaged index of market
performance. The bar chart and table assume reinvestment of dividends and
capital gains distributions. As with all mutual funds, past performance is not
a prediction of future results.
- --------------------------------------------------------------------------------
YEAR-BY-YEAR TOTAL RETURN as of 12/31 each year (%)
CLASS A SHARES
--------------
11.21 30.63 (12.43)
---------------------------------------------
1998 1999 2000
- -----------------------------------------------
CLASS A SHARES: QUARTER ENDED RETURN
---------------------------
Best Quarter: 12/31/99 23.80%
Worst Quarter: 9/30/98 (16.94)%
- -----------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS AS OF 12/31/00
SINCE
ONE YEAR INCEPTION
- ----------------------------------------
A Shares (17.24)% 6.49%
- ---------------------------------------
B Shares (17.32)% 6.99%
- ---------------------------------------
C Shares (12.97)% 3.37%
- ---------------------------------------
M Shares (14.62)% 7.23%
- ---------------------------------------
MSCI-EAFE** (13.96)% 8.84%
- ---------------------------------------
* SINCE INCEPTION (2/01/97); SINCE INCEPTION OF CLASS C SHARES
(11/01/99) - (2.51)%.
[GRAPHIC] FEES AND EXPENSES
The following table describes the fees and expenses that you may pay if you buy
and hold shares of the fund.
================================================================================
SHAREHOLDER FEES (fees paid directly from your investment)
CLASS OF SHARES
A B C M
- -----------------------------------------------------------------------------
Maximum sales charge (load)
imposed on purchases
(AS A % OF OFFERING PRICE) 5.50% None None 1.00%
Maximum deferred sales
charge (load) None(a) 5.00% None 1.00%(b)
(AS A PERCENTAGE OF PURCHASE PRICE OR
REDEMPTION PROCEEDS, WHICHEVER IS LOWER)
================================================================================
ANNUAL FUND OPERATING EXPENSES (expenses that are deducted from fund assets)
(d)
% OF AVERAGE DAILY NET ASSETS CLASS OF SHARES
A B C M
- -----------------------------------------------------------------------
Management fees 0.80% 0.80% 0.80% 0.80%
Distribution and service
(12b-1) fees 0.35% 1.00% 1.00% 0.90%
Other expenses 2.41% 2.41% 2.41% 2.41%
-----------------------------------
TOTAL ANNUAL FUND
OPERATING EXPENSES 3.56% 4.21% 4.21% 4.11%
EXPENSE REDUCTION (C) 1.96% 1.96% 1.96% 1.96%
-----------------------------------
NET OPERATING EXPENSES 1.60% 2.25% 2.25% 2.15%
- -----------------------------------------------------------------------
(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) Purchases of Class M shares are subject to a 1% contingent deferred sales
charge if redeemed within 18 months of purchase.
(c) Contractual arrangement with Idex Management, Inc. through 11/30/01, for
expenses that exceed 1.20%, and for the period 12/01/01 through 4/30/02, for
expenses that exceed 1.40%, excluding 12b-1 fees.
(d) Annual fund operating expenses are estimated based on the fund's expenses
for the fiscal year ended 10/31/00.
A $10 semi-annual fee is imposed on accounts open for over 2 years that are
below a minimum balance due to redemptions. See page 77.
================================================================================
EXAMPLE*
This example is here to help you compare the cost of investing in this fund
with that of other mutual funds. It shows the cumulative expenses you would pay
if you invested $10,000 and held your shares for various time periods, with a
5% annual return and fund operating expenses remaining the same. This return is
for illustration purposes and is not guaranteed. Actual costs may be higher or
lower.
If the shares are redeemed at the end of each period:
SHARE CLASS 1 YEAR 3 YEARS 5 YEARS 10 YEARS
- ------------------------------------------------------------
A $704 $1,410 $2,136 $4,045
B** $728 $1,400 $2,086 $4,125
C $228 $1,100 $1,986 $4,262
M $415 $1,160 $2,020 $4,237
- ------------------------------------------------------------
If the shares are not redeemed:
SHARE CLASS 1 YEAR 3 YEARS 5 YEARS 10 YEARS
- ------------------------------------------------------------
A $704 $1,410 $2,136 $4,045
B** $228 $1,100 $1,986 $4,125
C $228 $1,100 $1,986 $4,262
M $316 $1,160 $2,020 $4,237
- ------------------------------------------------------------
* THE TABLE REFLECTS THE EXPENSE CAP INCREASE ON 12/01/01.
** EXAMPLES FOR CLASS B SHARES ASSUME THEY WILL CONVERT TO CLASS A SHARES EIGHT
YEARS AFTER YOU PURCHASE THEM.
For information regarding a similar sub-adviser fund, please see page 85.
39
IDEX GREAT COMPANIES -- GLOBAL/2/
SUMMARY OF RISKS AND RETURNS
[GRAPHIC] OBJECTIVE
THE OBJECTIVE OF IDEX GREAT COMPANIES -- GLOBAL/2/ IS TO SEEK LONG-TERM GROWTH
OF CAPITAL IN A MANNER CONSISTENT WITH PRESERVATION OF CAPITAL.
[GRAPHIC] PRINCIPAL STRATEGIES
AND POLICIES
The fund's sub-adviser Great Companies, L.L.C (Great Companies), seeks to
achieve this objective by investing in common stocks of domestic and foreign
issuers which are selected from a group of companies that it has identified as
being "great companies." All stocks selected for the fund's portfolio will meet
the common criteria listed below.
All companies selected for the domestic portion of the fund's portfolio must be
incorporated in the United States. Domestic non-technology stocks will only be
selected if they (and their predecessors) have outperformed the S&P 500 over
the ten-year period ended December 29, 2000, are global companies (at least 40%
of its revenues outside the U.S.), and have been in business at least 50 years
and survived the founder.
Domestic technology stocks will only be selected if they, (and their
predecessors) have outperformed the NASDAQ Composite Index over the ten-year
period ended December 31, 1998, are global companies (at least 30% of its
revenues outside the U.S.), and have been in business at least 15 years.
The stocks selected for the international portion of the fund's portfolio must
be incorporated outside of the United States. The non-technology portion of
international stocks must consist of stocks of companies that have at least 40%
of their revenues outside the country of origin, and the technology portion
must have at least 30% of their revenues outside the country of origin. In
addition, the international stocks will only be selected if they (and their
predecessors) have outperformed the Morgan Stanley Capital International World
Index (MSCIW) over the ten-year period ended June 30, 2000. (MSCIW is the
primary benchmark for the fund.) The international stocks cannot have
government ownership in excess of 10% and, generally, must be ADR traded
securities.
To be considered a "great company" candidate by the sub-adviser, the
sub-adviser will initially determine if a company meets certain of the
following criteria: be highly regarded by management experts; be publicly
traded; have a market cap in excess of $15 billion; be engaged in what the
sub-adviser considers to be "terrific businesses"; have a "protective barrier"
such as superior brand franchises; consider employees to be a company's most
valuable asset; have, in the sub-adviser's opinion, "world class management";
and be an innovation-driven company that, in the sub-adviser's opinion, can
convert changes into opportunities.
To determine which "great company" in which the fund should invest, Great
Companies uses Intrinsic Value investing. Intrinsic Value is the discounted
value of the estimated amount of cash that can be taken out of a business
during its remaining life. It is an estimate rather than a precise figure, and
changes when interest rates move or when forecasts of future cash flows are
revised. Please see page 67 for a complete description of Intrinsic Value
investing.
The allocation of the fund's portfolio between domestic and international
companies will be driven by three factors: Momentum/growth of U.S. equities and
international equities; Intrinsic Value momentum of the stocks in the domestic
portfolio versus the stocks in the international portfolio; and Market price of
the stocks in the portfolios relative to their intrinsic values.
The allocation of stocks within each portion of the fund's portfolio will be
driven by these factors: Market price relative to intrinsic value and Intrinsic
value momentum.
[GRAPHIC] PRINCIPAL RISKS
The fund is subject to the following principal investment risks:
. STOCKS
While stocks have historically outperformed other investments over the long
term, they tend to go up and down more dramatically over the shorter term.
These price movements may result from factors affecting individual companies,
industries or the securities market as a whole.
Because the stocks the fund holds fluctuate in price, the value of your
investment in the fund will go up and down.
. FOREIGN STOCKS
Investments in foreign securities (including ADRs, GDRs and EDRs) involve risks
relating to political, social and economic developments abroad, as well as
risks resulting from the differences between the regulations to which U.S. and
foreign issuer markets are subject. These risks include: changes in currency
values; currency speculation; currency trading costs; different accounting and
reporting practices; less information available to the public; less (or
different) regulation of securities markets; more complex business
negotiations; less liquidity; more fluctuations in prices; delays in settling
foreign securities transactions; higher costs for holding shares (custodial
fees); higher transaction costs; vulnerability to seizure and taxes; political
instability and small markets; different market trading days and forward
currency contracts for hedging.
40
. ESTABLISHED COMPANY STOCKS
Because both domestic and foreign companies in which this fund invests must
have been in existence for at least 50 and 15 years, respectively, certain
sector stocks, which would otherwise present attractive investment
opportunities, will not be selected for the fund.
. PROPRIETARY RESEARCH
Proprietary forms of research may not be effective and may cause overall
returns to be lower than if other forms of research are used.
. TECHNOLOGY STOCKS
Securities of technology companies are strongly affected by worldwide
scientific and technological developments and governmental policies, and,
therefore, are generally more volatile than securities of companies not
dependent upon or associated with technological issues. The entire value of the
fund may decrease if the technology industry suffers a loss.
YOU MAY LOSE MONEY IF YOU INVEST IN THIS FUND.
These and other risks are fully described in the section entitled "Explanation
of Strategies and Risks," beginning on page 64.
. INVESTOR PROFILE
This fund may be appropriate for the investor who seeks capital growth without
being limited to investments in U.S. securities, and who can tolerate the risks
associated with foreign investing.
[GRAPHIC] PAST PERFORMANCE
Because the fund commenced operations in September 2000, no historical
performance information is presented here. Performance information will be
presented for the fund after it has been in operation for one complete calendar
year.
[GRAPHIC] FEES AND EXPENSES
This table describes the fees and expenses that you may pay if you buy and hold
shares of the fund.
================================================================================
SHAREHOLDER FEES (fees paid directly from your investment)
CLASS OF SHARES
A B C M
- -----------------------------------------------------------------------------
Maximum sales charge (load)
imposed on purchases
(AS A % OF OFFERING PRICE) 5.50% None None 1.00%
Maximum deferred sales
charge (load) None(a) 5.00% None 1.00%(b)
(AS A PERCENTAGE OF PURCHASE PRICE OR
REDEMPTION PROCEEDS, WHICHEVER IS LOWER)
================================================================================
ANNUAL FUND OPERATING EXPENSES (expenses that are deducted from fund assets)
% OF AVERAGE DAILY NET ASSETS CLASS OF SHARES
A B C M
- ---------------------------------------------------------------------
Management fees 0.80% 0.80% 0.80% 0.80%
Distribution and service
(12b-1) fees 0.35% 1.00% 1.00% 0.90%
Other expenses (c) 24.19% 24.19% 24.19% 24.19%
-----------------------------------------
TOTAL ANNUAL FUND
OPERATING EXPENSES 25.34% 25.99% 25.99% 25.89%
EXPENSE REDUCTION (D) 23.79% 23.79% 23.79% 23.79%
-----------------------------------------
NET OPERATING EXPENSES 1.55% 2.20% 2.20% 2.10%
- ---------------------------------------------------------------------
(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) Purchases of Class M shares are subject to a 1% contingent deferred sales
charge if redeemed within 18 months of purchase.
(c) Because the fund commenced operations in September 2000, the "Other
expenses" are estimates.
(d) Contractual arrangement with Idex Management, Inc. through 4/30/02, for
expenses that exceed 1.20%, excluding 12b-1 fees.
A $10 semi-annual fee is imposed on accounts open for over 2 years that are
below a minimum balance due to redemptions. See page 77.
================================================================================
EXAMPLE
This example is here to help you compare the cost of investing in this fund
with that of other mutual funds. It shows the cumulative expenses you would pay
if you invested $10,000 and held your shares for various time periods, with a
5% annual return and fund operating expenses remaining the same. This return is
for illustration purposes and is not guaranteed. Actual costs may be higher or
lower.
If the shares are redeemed at the end of each period:
SHARE CLASS 1 YEAR 3 YEARS
- -----------------------------------
A $699 $4,697
B* $723 $4,804
C $223 $4,504
M $410 $4,541
- -----------------------------------
If the shares are not redeemed:
SHARE CLASS 1 YEAR 3 YEARS
- -----------------------------------
A $699 $4,697
B* $223 $4,504
C $223 $4,504
M $311 $4,541
- -----------------------------------
* EXAMPLES FOR CLASS B SHARES ASSUME THEY WILL CONVERT TO CLASS A SHARES EIGHT
YEARS AFTER YOU PURCHASE THEM.
41
IDEX JANUS GLOBAL (FORMERLY IDEX JCC GLOBAL)
PLEASE NOTE: THIS FUND IS NOT AVAILABLE FOR NEW INVESTORS.
SUMMARY OF RISKS AND RETURNS
[GRAPHIC] OBJECTIVE
THE OBJECTIVE OF IDEX JANUS GLOBAL IS LONG-TERM GROWTH OF CAPITAL IN A MANNER
CONSISTENT WITH PRESERVATION OF CAPITAL.
[GRAPHIC] PRINCIPAL STRATEGIES
AND POLICIES
The sub-adviser, Janus Capital Corporation (Janus), seeks to achieve this
objective by investing principally in:
. common stocks of foreign and domestic issuers
. depositary receipts including ADRs, GDRs and EDRs
The fund may invest on a worldwide basis in companies and securities issued by
foreign or domestic governments, government agencies or other government
entities of any size, regardless of country of organization or place of
principal business activity.
The fund manager's main strategy is to use a "bottom up" approach to build the
fund's portfolio. Foreign stocks are generally selected on a stock-by-stock
basis without regard to defined allocation among countries or geographic
regions.
When evaluating foreign investments, the fund manager (in addition to looking
at individual companies) considers such factors as:
. expected levels of inflation in various countries
. government policies that might affect business conditions
. the outlook for currency relationships
. prospects for economic growth among countries, regions or geographic areas
The fund manager sells the fund's securities when its expectations regarding
growth potential change.
While the fund invests principally in common stocks of foreign and domestic
issuers and depositary receipts, the fund manager may, to a lesser extent,
invest in forward foreign currency contracts and futures for hedging, or other
securities and investment strategies in pursuit of the fund's investment
objective, which are explained beginning on page 64 and in the SAI.
WHAT IS A "BOTTOM UP" ANALYSIS?
When a sub-adviser uses a "bottom up" approach, it looks primarily at
individual companies against the context of broad market factors. It seeks
to identify individual companies with earnings growth potential that may
not be recognized by the market at large.
[GRAPHIC] PRINCIPAL RISKS
The fund is subject to the following principal investment risks:
. STOCKS
While stocks have historically outperformed other investments over the long
term, they tend to go up and down more dramatically over the shorter term.
These price movements may result from factors affecting individual companies,
industries or the securities market as a whole.
Because the stocks the fund holds fluctuate in price, the value of your
investment in the fund will go up and down.
. FOREIGN STOCKS
Investments in foreign securities (including ADRs, GDRs and EDRs) involve risks
relating to political, social and economic developments abroad, as well as
risks resulting from the differences between the regulations to which U.S. and
foreign issuer markets are subject. These risks include:
. changes in currency values
. currency speculation
. currency trading costs
. different accounting and reporting practices
. less information available to the public
. less (or different) regulation of securities markets
. more complex business negotiations
. less liquidity
. more fluctuations in prices
. delays in settling foreign securities transactions
. higher costs for holding shares (custodial fees)
. higher transaction costs
. vulnerability to seizure and taxes
. political instability and small markets
. different market trading days
. forward foreign currency contracts for hedging
YOU MAY LOSE MONEY IF YOU INVEST IN THIS FUND.
These and other risks are fully described in the section entitled "Explanation
of Strategies and Risks," beginning on page 64.
. INVESTOR PROFILE
The fund may be appropriate for investors who want capital growth without being
limited to investments in U.S. securities, and who can stand the risks
associated with foreign investing.
42
[GRAPHIC OMITTED]
PAST PERFORMANCE
The bar chart and the table below show the fund's annual returns and its
long-term performance. The bar chart and table indicate the risks of investing
in the fund by showing you how the fund's performance has varied from year to
year. The bar chart does not reflect the impact of sales charges, which lower
the fund's return. The table, which includes applicable sales charges, compares
how the fund's average annual returns for different calendar periods compare to
the returns of the Morgan Stanley Capital International World Index (MSCIW), a
widely recognized unmanaged index of market performance. The bar chart and
table assume reinvestment of dividends and capital gains distributions. As with
all mutual funds, past performance is not a prediction of future results.
- --------------------------------------------------------------------------------
YEAR-BY-YEAR TOTAL RETURN as of 12/31 each year (%)
CLASS A SHARES
--------------
[GRAPHIC]
31.28 0.62 20.03 26.76 20.44 24.88 63.31 (17.72)
- --------------------------------------------------------------------------------
1993 1994 1995 1996 1997 1998 1999 2000
- --------------------------------------------------------------------------------
QUARTER ENDED RETURN
CLASS A SHARES: --------------- ---------
Best Quarter: 12/31/99 43.29%
Worst Quarter: 9/30/98 (16.02)%
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS AS OF 12/31/00
SINCE
ONE YEAR 5 YEARS INCEPTION
- ------------------------------------------------------
A Shares (22.24)% 19.34% 20.18%
- ------------------------------------------------------
B Shares (22.36)% 20.29% 19.62%
- ------------------------------------------------------
C Shares (18.27)% -- 7.45%
- ------------------------------------------------------
M Shares (19.79)% 20.18% 18.77%
- ------------------------------------------------------
MSCIW** (12.79)% 12.57% 13.52%
- ------------------------------------------------------
* SINCE INCEPTION OF CLASS A SHARES (10/01/92). SINCE INCEPTION OF CLASS B
SHARES (10/01/95) - 12.91%; SINCE INCEPTION OF CLASS C SHARES (11/01/99) -
(2.73)%; AND CLASS M SHARES (10/01/93) - 12.52%.
[GRAPHIC] FEES AND EXPENSES
The following table describes the fees and expenses that you may pay if you buy
and hold shares of the fund.
================================================================================
SHAREHOLDER FEES (fees paid directly from your investment)
CLASS OF SHARES
A B C M
--------- ------- ------ ---------------
Maximum sales charge (load)
imposed on purchases
(AS A % OF OFFERING PRICE) 5.50% None None 1.00%
Maximum deferred sales
charge (load) None(a) 5.00% None 1.00%(b)
(AS A PERCENTAGE OF PURCHASE PRICE OR
REDEMPTION PROCEEDS, WHICHEVER IS LOWER)
================================================================================
ANNUAL FUND OPERATING EXPENSES (expenses that are deducted from fund assets)(c)
% OF AVERAGE DAILY NET ASSETS CLASS OF SHARES
A B C M
- ------------------------------------------------------------------
Management fees 0.93% 0.93% 0.93% 0.93%
Distribution and service
(12b-1) fees 0.35% 1.00% 1.00% 0.90%
Other expenses 0.36% 0.36% 0.36% 0.36%
- ------------------------------------------------------------------
TOTAL ANNUAL FUND
OPERATING EXPENSES 1.64% 2.29% 2.29% 2.19%
- ------------------------------------------------------------------
(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) Purchases of Class M shares are subject to a 1% contingent deferred sales
charge if redeemed within 18 months of purchase.
(c) Annual fund operating expenses are estimated based on the fund's expenses
for the fiscal year ended 10/31/00.
A $10 semi-annual fee is imposed on accounts open for over 2 years that are
below a minimum balance due to redemptions. See page 77.
================================================================================
EXAMPLE
This example is here to help you compare the cost of investing in this fund
with that of other mutual funds. It shows the cumulative expenses you would pay
if you invested $10,000 and held your shares for various time periods, with a
5% annual return and fund operating expenses remaining the same. This return is
for illustration purposes and is not guaranteed. Actual costs may be higher or
lower.
If the shares are redeemed at the end of each period:
SHARE CLASS 1 YEAR 3 YEARS 5 YEARS 10 YEARS
- ------------------------------------------------------------
A $708 $1,039 $1,393 $2,387
B* $732 $1,015 $1,325 $2,463
C $232 $ 715 $1,225 $2,626
M $419 $ 778 $1,263 $2,598
- ------------------------------------------------------------
If the shares are not redeemed:
SHARE CLASS 1 YEAR 3 YEARS 5 YEARS 10 YEARS
- ------------------------------------------------------------
A $708 $1,039 $1,393 $2,387
B* $232 $ 715 $1,225 $2,463
C $232 $ 715 $1,225 $2,626
M $320 $ 778 $1,263 $2,598
- ------------------------------------------------------------
* EXAMPLES FOR CLASS B SHARES ASSUME THEY WILL CONVERT TO CLASS A SHARES EIGHT
YEARS AFTER YOU PURCHASE THEM.
43
IDEX AMERICAN CENTURY INCOME & GROWTH
SUMMARY OF RISKS AND RETURNS
[GRAPHIC] OBJECTIVE
THE OBJECTIVE OF IDEX AMERICAN CENTURY INCOME & GROWTH IS TO SEEK DIVIDEND
GROWTH, CURRENT INCOME AND CAPITAL APPRECIATION BY INVESTING IN COMMON STOCK.
[GRAPHIC] PRINCIPAL STRATEGIES AND POLICIES
The fund's sub-adviser, American Century Investment Management, Inc. (American
Century), seeks to achieve this objective by investing principally in:
. common stocks
The fund's investment strategy utilizes quantitative management techniques in a
two-step process that draws heavily on computer technology. In the first step,
the fund manager ranks stocks, primarily the 1,500 largest publicly traded
companies in the United States (measured by their market capitalization), from
most attractive to least attractive. This is determined by using a computer
model that combines measures of a stock's value, as well as measures of its
growth potential. To measure value, the manager uses ratios of stock
price-to-book value and stock price-to-cash flow, among others. To measure
growth, the manager uses, among others, the rate of growth of company's
earnings and changes in its earnings estimates.
In the second step, the manager uses a technique called portfolio optimization.
In portfolio optimization, the manager uses a computer model to build a
portfolio of stocks for the ranking described earlier that it believes will
provide the optimal balance between risk and expected return. The goal is to
create a fund that provides better returns than the S&P 500, without taking on
significant additional risk.
The fund manager does not attempt to time the market. Instead, under normal
market conditions, it intends to keep the fund essentially fully invested in
stocks regardless of the movement of stock prices. When the manager believes it
is prudent, the fund may invest a portion of its assets in convertible debt
securities, foreign securities, short-term securities, non-leveraged stock
index futures contracts and other similar securities.
Stock index futures contracts, a type of derivative security, can help the
fund's cash assets remain liquid while performing more like stocks. The fund
has a policy governing stock index futures and similar derivative securities to
help manage the risk of these types of instruments. For example, the manager
cannot leverage the fund's assets by investing in a derivative security. A
complete description of the derivatives policy is included in the SAI.
[GRAPHIC] PRINCIPAL RISKS
The fund is subject to the following principal investment risks:
. STOCKS
While stocks have historically outperformed other investments over the long
term, they tend to go up and down more dramatically over the shorter term.
These price movements may result from factors affecting individual companies,
industries or the securities markets as a whole.
Because the stocks the fund holds fluctuate in price, the value of your
investment in the fund will go up and down.
. FOREIGN STOCKS
Investments in foreign securities (including American Depositary Receipts
(ADRs), Global Depositary Receipts (GDRs) and European Depositary Receipts
(EDRs)) involve risks relating to political, social and economic developments
abroad, as well as risks resulting from the differences between the regulations
to which U.S. and foreign issuer markets are subject. These risks include:
. changes in currency values
. currency speculation
. currency trading costs
. different accounting and reporting practices
. less information available to the public
. less (or different) regulation of securities markets
. more complex business negotiations
. less liquidity
. more fluctuations in prices
. delays in settling foreign securities transactions
. higher costs for holding shares (custodial fees)
. higher transaction costs
. vulnerability to seizure and taxes
. political instability and small markets
. different market trading days
. forward foreign currency contracts for hedging
. QUANTITATIVE MODELS
A quantitative model that is developed to select stocks may not be effective.
As a result, overall returns of the fund may be lower than if other methods
were used to select the stock held by the fund.
WHAT IS A QUANTITATIVE MODEL?
A quantitative model is fashioned by a fund's sub-adviser to assist the
sub-adviser in evaluating a potential security. The sub-adviser creates a
model that is designed using characteristics that the sub-adviser deems
advantageous in a security. The sub-adviser then compares a potential
security's characteristics against those of the model, and makes a
determination of whether or not to purchase the security based on the
results of that comparison.
44
YOU MAY LOSE MONEY IF YOU INVEST IN THIS FUND.
These and other risks are fully described in the section entitled "Explanation
of Strategies and Risks," beginning on page 64.
. INVESTOR PROFILE
The fund may be appropriate for the investor who is seeking long-term capital
growth from his or her investment, is comfortable with the fund's short-term
price volatility and the risks associated with the fund's investment strategy
or is investing through an IRA or other tax-advantaged retirement plans.
[GRAPHIC] PAST PERFORMANCE
Because the fund will commence operations in April 2001, no historical
performance information is presented here. Performance information will be
presented for the fund after it has been in operation for one complete calendar
year.
[GRAPHIC] FEES AND EXPENSES
This table describes the fees and expenses that you may pay if you buy and hold
shares of the fund.
================================================================================
SHAREHOLDER FEES (fees paid directly from your investment)
CLASS OF SHARES
A B C M
- -----------------------------------------------------------------------------
Maximum sales charge (load)
imposed on purchases
(AS A % OF OFFERING PRICE) 5.50% None None 1.00%
Maximum deferred sales
charge (load) None(a) 5.00% None 1.00%(b)
(AS A PERCENTAGE OF PURCHASE PRICE OR
REDEMPTION PROCEEDS, WHICHEVER IS LOWER)
================================================================================
ANNUAL FUND OPERATING EXPENSES (expenses that are deducted from fund assets)
% OF AVERAGE DAILY NET ASSETS
CLASS OF SHARES
A B C M
- -----------------------------------------------------------------
Management fees 0.90% 0.90% 0.90% 0.90%
Distribution and service
(12b-1) fees 0.35% 1.00% 1.00% 0.90%
Other expenses (c) 2.70% 2.70% 2.70% 2.70%
----------------------------------
TOTAL ANNUAL FUND
OPERATING EXPENSES 3.95% 4.60% 4.60% 4.50%
EXPENSE REDUCTION (D) 2.10% 2.10% 2.10% 2.10%
----------------------------------
NET OPERATING EXPENSES 1.85% 2.50% 2.50% 2.40%
- ---------------------------------------------------------------
(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) Purchases of Class M shares are subject to a 1% contingent deferred sales
charge if redeemed within 18 months of purchase.
(c) Because the fund will commence operations in April 2001, the "Other
expenses" are estimates.
(d) Contractual arrangement with Idex Management, Inc. through 4/30/2002, for
expenses that exceed 1.50%, excluding 12b-1 fees.
A $10 semi-annual fee is imposed on accounts open for over 2 years that are
below a minimum balance due to redemptions. See page 77.
================================================================================
EXAMPLE
This example is here to help you compare the cost of investing in this fund
with that of other mutual funds. It shows the cumulative expenses you would pay
if you invested $10,000 and held your shares for various time periods, with a
5% annual return and fund operating expenses remaining the same. This return is
for illustration purposes and is not guaranteed. Actual costs may be higher or
lower.
If the shares are redeemed at the end of each period:
SHARE CLASS 1 YEAR 3 YEARS
- ------------------------------------
A $728 $1,506
B* $753 $1,500
C $253 $1,200
M $440 $ 801
- ------------------------------------
If the shares are not redeemed:
SHARE CLASS 1 YEAR 3 YEARS
- ------------------------------------
A $728 $1,506
B* $253 $1,200
C $253 $1,200
M $341 $ 801
- ------------------------------------
** EXAMPLES FOR CLASS B SHARES ASSUME THEY WILL CONVERT TO CLASS A SHARES EIGHT
YEARS AFTER YOU PURCHASE THEM.
For information regarding a similar sub-adviser fund, please see page 85.
45
IDEX GE U.S. EQUITY
SUMMARY OF RISKS AND RETURNS
[GRAPHIC] OBJECTIVE
THE OBJECTIVE OF IDEX GE U.S. EQUITY IS TO SEEK LONG-TERM GROWTH OF CAPITAL.
[GRAPHIC] PRINCIPAL STRATEGIES
AND POLICIES
The fund's sub-adviser, GE Asset Management Incorporated (GEAM), seeks to
achieve the fund's objective by investing principally in:
. common stocks of U.S. companies.
GEAM uses a Multi-Style(R) investment strategy that combines growth and value
investment management styles. As a result, the fund has characteristics similar
to the Standard & Poor's 500 Composite Stock Index, including capital
appreciation and income potential. Stock selection is key to the performance of
the fund.
Through fundamental company research, the portfolio managers seek to identify
securities of large companies with characteristics such as:
. attractive valuations
. financial strength
. high quality management focused on generating shareholder value.
The fund may, to a lesser extent, invest in equity securities other than common
stocks (including preferred securities, depositary receipts such as ADRs, EDRs
and GDRs, convertible securities, and rights and warrants), foreign securities,
debt securities and use various investment techniques or other securities and
investment strategies in pursuit of its investment objective, which are
explained beginning on page 64 and in the SAI.
[GRAPHIC] PRINCIPAL RISKS
The fund is subject to the following principal investment risk:
. STOCKS
While stocks have historically outperformed other investments over the long
term, they tend to go up and down more dramatically over the short term. These
price movements may result from factors affecting individual companies,
industries or the securities market as a whole.
Because the stocks the fund holds fluctuate in price, the value of your
investment in the fund will go up and down.
YOU MAY LOSE MONEY IF YOU INVEST IN THIS FUND.
These and other risks are fully described in the section entitled "Explanation
of Strategies and Risks," beginning on page 64.
. INVESTOR PROFILE
This fund may be appropriate for investors who seek long-term growth from a
diversified fund that combines "value" and "growth" investment management
styles. The investor should be comfortable with the price fluctuations of a
stock fund and be willing to accept higher short-term risk for potential
long-term returns.
46
[GRAPHIC] PAST PERFORMANCE
Because the fund commenced operations in March 2000, no historical performance
information is presented here. Performance information will be presented for
the fund after it has been in operation for one complete calendar year.
[GRAPHIC] FEES AND EXPENSES
This table describes the fees and expenses that you may pay if you buy and hold
shares of the fund.
================================================================================
SHAREHOLDER FEES (fees paid directly from your investment)
CLASS OF SHARES
A B C M
- --------------------------------------------------------------------------------
Maximum sales charge (load)
imposed on purchases
(AS A % OF OFFERING PRICE) 5.50% None None 1.00%
Maximum deferred sales
charge (load) None(a) 5.00% None 1.00%(b)
(AS A PERCENTAGE OF PURCHASE PRICE OR
REDEMPTION PROCEEDS, WHICHEVER IS LOWER)
================================================================================
ANNUAL FUND OPERATING EXPENSES (expenses that are deducted from fund assets)
% OF AVERAGE DAILY NET ASSETS
CLASS OF SHARES
A B C M
- --------------------------------------------------------------------------------------------------------------
Management fees 0.80% 0.80% 0.80% 0.80%
Distribution and service
(12b-1) fees 0.35% 1.00% 1.00% 0.90%
Other expenses (c) 5.70% 5.70% 5.70% 5.70%
----------------------------------
TOTAL ANNUAL FUND OPERATING
EXPENSES 6.85% 7.50% 7.50% 7.40%
EXPENSE REDUCTION (D) 5.25% 5.25% 5.25% 5.25%
----------------------------------
NET OPERATING EXPENSES 1.60% 2.25% 2.25% 2.15%
- ------------------------------------------------------------------------------------------------------------
(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) Purchases of Class M shares are subject to a 1% contingent
deferred sales charge if redeemed within 18 months of
purchase.
(c) Because the fund commenced operations in March 2000, the
"Other expenses" are estimates.
(d) Contractual arrangements with Idex Management, Inc. through
11/30/01, for expenses that exceed 1.20%, and for the period
12/01/01 through 4/30/02, for expenses that exceed 1.40%,
excluding 12b-1 fees.
A $10 semi-annual fee is imposed on accounts open for over 2 years that
are below a minimum balance due to redemptions. See page 77.
================================================================================
EXAMPLE*
This example is here to help you compare the cost of investing in this fund
with that of other mutual funds. It shows the cumulative expenses you would pay
if you invested $10,000 and held your shares for various time periods, with a
5% annual return and fund operating expenses remaining the same. This return is
for illustration purposes and is not guaranteed. Actual costs may be higher or
lower.
If the shares are redeemed at the end of each period:
SHARE CLASS 1 YEAR 3 YEARS
- -----------------------------------
A $704 $2,018
B** $728 $2,031
C $228 $1,731
M $415 $1,787
- ---------------------------------
If the shares are not redeemed:
SHARE CLASS 1 YEAR 3 YEARS
- -----------------------------------
A $704 $2,018
B** $228 $1,731
C $228 $1,731
M $316 $1,787
- ---------------------------------
* THE TABLE REFLECTS THE EXPENSE CAP INCREASE ON 12/01/01.
** EXAMPLES FOR CLASS B SHARES ASSUME THEY WILL CONVERT TO CLASS A SHARES EIGHT
YEARS AFTER YOU PURCHASE THEM.
For information regarding a similar sub-adviser fund, please see page 85.
47
IDEX JANUS GROWTH & INCOME (FORMERLY IDEX JCC GROWTH & INCOME)
SUMMARY OF RISKS AND RETURNS
[GRAPHIC] OBJECTIVE
THE OBJECTIVE OF IDEX JANUS GROWTH & INCOME IS TO SEEK LONG-TERM CAPITAL GROWTH
AND CURRENT INCOME.
[GRAPHIC] PRINCIPAL STRATEGIES
AND POLICIES
The fund's sub-adviser, Janus Capital Corporation (Janus), seeks to achieve the
fund's objective by investing principally in:
. common stocks
The fund normally invests up to 75% of its assets in equity securities selected
primarily for their growth potential, and at least 25% of its assets in
securities that the fund manager believes have income potential. Equity
securities may make up part of this income component if they currently pay
dividends or the fund manager believes they have potential for increasing or
commencing dividend payments. Stocks selected for this fund include those of
both domestic and foreign issuers.
The income component of the fund may include fixed income securities. Unless
otherwise limited by its specific investment policies, the fund may also invest
without limit in foreign equity and debt securities. The fund will invest less
than 35% of its net assets in high-yield/high-risk bonds (commonly known as
"junk bonds").
Please see Appendix A for a description of ratings.
In addition to considering economic factors such as the effect of interest
rates on the fund's investments, the fund manager applies a "bottom up"
approach in choosing investments. If the fund manager is unable to find such
investments, the fund's assets may be in cash or other similar investments.
While the fund invests principally in common stocks, the fund manager may, to a
lesser extent, invest in warrants, preferred stocks or convertible securities
selected primarily for their growth potential, or other securities and
investment strategies in pursuit of its investment objective, which are
explained beginning on page 64 and in the SAI.
WHAT IS A "BOTTOM UP" ANALYSIS?
When a sub-adviser uses a "bottom up" approach, it looks primarily at
individual companies against the context of broad market factors. It seeks
to identify individual companies with earnings growth potential that may
not be recognized by the market at large.
[GRAPHIC] PRINCIPAL RISKS
The fund is subject to the following principal investment risks:
. STOCKS
While stocks have historically outperformed other investments over the long
term, they tend to go up and down more dramatically over the shorter term.
These price movements may result from factors affecting individual companies,
industries or the securities markets as a whole.
Because the stocks the fund holds fluctuate in price, the value of your
investment in the fund will go up and down.
. FOREIGN STOCKS
Investments in foreign securities (including American Depositary Receipts
(ADRs), Global Depositary Receipts (GDRs) and European Depositary Receipts
(EDRs)) involve risks relating to political, social and economic developments
abroad, as well as risks resulting from the differences between the regulations
to which U.S. and foreign issuer markets are subject. These risks include:
. changes in currency values
. currency speculation
. currency trading costs
. different accounting and reporting practices
. less information available to the public
. less (or different) regulation of securities markets
. more complex business negotiations
. less liquidity
. more fluctuations in prices
. delays in settling foreign securities transactions
. higher costs for holding shares (custodial fees)
. higher transaction costs
. vulnerability to seizure and taxes
. political instability and small markets
. different market trading days
. forward foreign currency contracts for hedging
. FIXED-INCOME SECURITIES
The value of these securities may change daily based on changes in the interest
rates, and other market conditions and factors. The risks include:
. changes in interest rates
. length of time to maturity may cause fluctuations in the value of the
security
. issuers defaulting on their obligations to pay
. dependency on the ability of the issuer to meet interest or principal
payments
. HIGH-YIELD/HIGH-RISK SECURITIES
. credit risk
. greater sensitivity to interest rate movements
. greater vulnerability to economic changes
. decline in market value in event of default
. less liquidity
. greater chance of default than higher rated debt securities
YOU MAY LOSE MONEY IF YOU INVEST IN THIS FUND.
These and other risks are fully described in the section entitled "Explanation
of Strategies and Risks," beginning on page 64.
. INVESTOR PROFILE
This fund may be appropriate for long-term investors who seek growth of capital
with varying degrees of emphasis on income, but do not desire a consistent
level of income. The investor must be able to tolerate the greater risks
associated with common stock investments.
48
[GRAPHIC] PAST PERFORMANCE
Because the fund commenced operations in December 2000, no historical
performance information is presented here. Performance information will be
presented for the fund after it has been in operation for one complete calendar
year.
[GRAPHIC] FEES AND EXPENSES
This table describes the fees and expenses that you may pay if you buy and hold
shares of the fund.
================================================================================
SHAREHOLDER FEES (fees paid directly from your investment)
CLASS OF SHARES
A B C M
- -------------------------------------------------------------------------------
Maximum sales charge (load)
imposed on purchases
(AS A % OF OFFERING PRICE) 5.50% None None 1.00%
Maximum deferred sales
charge (load) None(a) 5.00% None 1.00%(b)
(AS A PERCENTAGE OF PURCHASE PRICE OR
REDEMPTION PROCEEDS, WHICHEVER IS LOWER)
================================================================================
ANNUAL FUND OPERATING EXPENSES (expenses that are deducted from fund assets)
% OF AVERAGE DAILY NET ASSETS CLASS OF SHARES
A B C M
- -----------------------------------------------------------------
Management fees 1.00% 1.00% 1.00% 1.00%
Distribution and service
(12b-1) fees 0.35% 1.00% 1.00% 0.90%
Other expenses (c) 2.70% 2.70% 2.70% 2.70%
------------------------------------
TOTAL ANNUAL FUND
OPERATING EXPENSES 4.05% 4.70% 4.70% 4.60%
EXPENSE REDUCTION (D) 2.25% 2.25% 2.25% 2.25%
------------------------------------
NET OPERATING EXPENSES 1.80% 2.45% 2.45% 2.35%
- -----------------------------------------------------------------
(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) Purchases of Class M shares are subject to a 1% contingent deferred sales
charge if redeemed within 18 months of purchase.
(c) Because the fund will commence operations in December 2000, the "Other
expenses" are estimates.
(d) Contractual arrangement with Idex Management, Inc. through 11/30/01, for
expenses that exceed 1.40%, and for the period 12/01/01 through 4/30/02
for expenses that exceed 1.60%, excluding 12b-1 fees.
A $10 semi-annual fee is imposed on accounts open for over 2 years that are
below a minimum balance due to redemptions. See page 77.
================================================================================
EXAMPLE*
This example is here to help you compare the cost of investing in this fund
with that of other mutual funds. It shows the cumulative expenses you would pay
if you invested $10,000 and held your shares for various time periods, with a
5% annual return and fund operating expenses remaining the same. This return is
for illustration purposes and is not guaranteed. Actual costs may be higher or
lower.
If the shares are redeemed at the end of each period:
SHARE CLASS 1 YEAR 3 YEARS
- -----------------------------------
A $723 $1,482
B** $748 $1,476
C $248 $1,176
M $435 $ 787
- -----------------------------------
If the shares are not redeemed:
SHARE CLASS 1 YEAR 3 YEARS
- -----------------------------------
A $723 $1,482
B** $248 $1,176
C $248 $1,176
M $336 $ 787
- -----------------------------------
* THE TABLE REFLECTS THE EXPENSE CAP INCREASE ON 12/01/01.
** EXAMPLES FOR CLASS B SHARES ASSUME THEY WILL CONVERT TO CLASS A SHARES EIGHT
YEARS AFTER YOU PURCHASE THEM.
For information regarding a similar sub-adviser fund, please see page 85.
49
IDEX T. ROWE PRICE DIVIDEND GROWTH
SUMMARY OF RISKS AND RETURNS
[GRAPHIC] OBJECTIVE
THE INVESTMENT OBJECTIVE OF IDEX T. ROWE PRICE DIVIDEND GROWTH IS TO PROVIDE AN
INCREASING LEVEL OF DIVIDEND INCOME, LONG-TERM CAPITAL APPRECIATION, AND
REASONABLE CURRENT INCOME THROUGH INVESTMENTS PRIMARILY IN DIVIDEND-PAYING
STOCKS.
[GRAPHIC] PRINCIPAL STRATEGIES
AND POLICIES
The fund's sub-adviser, T. Rowe Price Associates, Inc. (T. Rowe Price), seeks
to achieve this objective by investing principally in:
. dividend-paying common stocks with favorable prospects for increasing
dividends and long-term appreciation
T. Rowe Price typically invests at least 65% of total assets in common stocks
of dividend-paying companies when it expects these companies to increase their
dividends over time and also provide long-term appreciation.
T. Rowe Price believes that a track record of dividend increases is an
excellent indicator of financial health and growth prospects, and over the
long-term, income can contribute significantly to total return. Dividends can
also help reduce the fund's volatility during periods of market turbulence and
help offset losses when stock prices are falling.
T. Rowe Price looks for stocks with sustainable, above-average growth in
earnings and dividends, and attempts to buy them when they are temporarily out
of favor or undervalued by the market. Holdings tend to be in large to
medium-sized companies. In selecting investments, T. Rowe Price favors
companies with one or more of the following:
. either a track record of, or the potential for, above-average earnings and
dividend growth
. a competitive current dividend yield
. a sound balance sheet and solid cash flow to support future dividend
increases
. a sustainable competitive advantage and leading market position
. attractive valuations such as low price/earnings, price/cash flow, or
price/dividend ratios yield
The fund may sell securities for a variety of reasons such as to secure gains,
limit losses or redeploy assets into more promising opportunities.
The fund may take a temporary defensive position when the securities trading
markets or the economy are experiencing excessive volatility or a prolonged
general decline, or other adverse conditions exist (which is inconsistent with
the fund's principal investment strategies). Under these circumstances, the
fund may be unable to achieve its investment objective.
While the fund invests principally in common stocks, T. Rowe Price may also
invest up to 25% in foreign securities. To a lesser extent, T. Rowe Price may
purchase other securities such as convertible securities, warrants, preferred
stocks, and corporate and government debt in pursuit of the fund's objective.
Futures and options may be used for any number of reasons, including: to manage
the fund's exposure to securities prices and foreign currencies; to enhance
income; to manage cash flows efficiently; or to protect the value of portfolio
securities. If the fund uses futures and options, it is exposed to additional
volatility and potential losses. These are explained beginning on page 64 and
in the SAI.
[GRAPHIC] PRINCIPAL RISKS
The fund is subject to the following principal investment risks:
. STOCKS
While stocks have historically outperformed other investments over the long
term, they tend to go up and down more dramatically over the shorter term.
These price movements may result from factors affecting individual companies,
industries or the securities market as a whole.
Because the stocks the fund may hold fluctuate in price, the value of your
investment in the fund will go up and down.
. DIVIDEND-PAYING COMPANIES
The fund's emphasis on dividend-paying companies could result in significant
investments in large-capitalization stocks. At times, stocks such as these may
lag shares of smaller, faster-growing companies. Also, a company may reduce or
eliminate its dividend. The fund's efforts to buy stocks that appear
temporarily out of favor carry the risk that a stock or group of stocks may
remain out of favor for a long time and may continue to decline.
. FOREIGN STOCKS
Foreign stock holdings are subject to the risk that some holdings may lose
value because of declining foreign currencies or adverse political or economic
events.
YOU MAY LOSE MONEY IF YOU INVEST IN THIS FUND.
These and other risks are fully described in the section entitled "Explanation
of Strategies and Risks," beginning on page 64.
. INVESTOR PROFILE
This fund may be appropriate for investors who want a reasonable level of
current income from equity investments that have the potential to rise faster
than inflation, and who can tolerate significant fluctuations in the value of
their investments.
50
[GRAPHIC] PAST PERFORMANCE
The bar chart and the table below show the fund's annual returns and its
long-term performance. The bar chart and table indicate the risks of investing
in the fund by showing you how the fund's performance has varied from year to
year. The bar chart does not reflect the impact of sales charges, which lower
the fund's return. The table, which includes applicable sales charges, compares
how the fund's average annual returns for different calendar periods compare to
the returns of the Standard & Poor's Composite Stock Index (S&P 500), a widely
recognized unmanaged index of stock performance. The bar chart and table assume
reinvestment of dividends and capital gains distributions. As with all mutual
funds, past performance is not a prediction of future results.
- --------------------------------------------------------------------------------
YEAR-BY-YEAR TOTAL RETURN as of 12/31 each year (%)
CLASS A SHARES
--------------
9.44
- --------------------------------------------------------------------------------
2000
- --------------------------------------------------------------------------------
QUARTER ENDED RETURN
CLASS A SHARES: --------------- --------
Best Quarter: 12/31/00 4.14%
Worst Quarter: 3/31/00 (1.18)%
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS AS OF 12/31/00
SINCE
ONE YEAR INCEPTION
- ---------------------------------------
A Shares 3.42% 1.98%
- ---------------------------------------
B Shares 3.79% 2.40%
- ---------------------------------------
C Shares 8.79% 5.43%
- ---------------------------------------
M Shares 6.80% 4.05%
- ---------------------------------------
S&P 500* (9.11)% 4.81%
- ---------------------------------------
* SINCE INCEPTION (3/01/99); SINCE INCEPTION OF CLASS C SHARES
(11/01/99) - (2.67)%.
[GRAPHIC] FEES AND EXPENSES
This table describes the fees and expenses that you may pay if you buy and hold
shares of the fund.
================================================================================
SHAREHOLDER FEES (fees paid directly from your investment)
CLASS OF SHARES
A B C M
- -----------------------------------------------------------------------------
Maximum sales charge (load)
imposed on purchases
(AS A % OF OFFERING PRICE) 5.50% None None 1.00%
Maximum deferred sales
charge (load) None(a) 5.00% None 1.00%(b)
(AS A PERCENTAGE OF PURCHASE PRICE OR
REDEMPTION PROCEEDS, WHICHEVER IS LOWER)
- --------------------------------------------------------------------------------
ANNUAL FUND OPERATING EXPENSES (expenses that are deducted from fund assets)(d)
% OF AVERAGE DAILY NET ASSETS CLASS OF SHARES
A B C M
- -----------------------------------------------------------------
Management fees 0.80% 0.80% 0.80% 0.80%
Distribution and service
(12b-1) fees 0.35% 1.00% 1.00% 0.90%
Other expenses 1.53% 1.53% 1.53% 1.53%
-------------------------------------
TOTAL ANNUAL FUND
OPERATING EXPENSES 2.68% 3.33% 3.33% 3.23%
EXPENSE REDUCTION (C) 1.08% 1.08% 1.08% 1.08%
-------------------------------------
NET OPERATING EXPENSES 1.60% 2.25% 2.25% 2.15%
- -----------------------------------------------------------------
(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) Purchases of Class M shares are subject to a 1% contingent deferred sales
charge if redeemed within 18 months of purchase.
(c) Contractual arrangement with Idex Management, Inc. through 11/30/01, for
expenses that exceed 1.20%, and for the period 12/01/01 through 4/30/02,
for expenses that exceed 1.40%, excluding 12b-1 fees.
(d) Annual fund operating expenses are estimated based on the fund's expenses
for the fiscal year ended 10/31/00.
A $10 semi-annual fee is imposed on accounts open for over 2 years that are
below a minimum balance due to redemptions. See page 77.
- --------------------------------------------------------------------------------
EXAMPLE*
This example is here to help you compare the cost of investing in this fund
with that of other mutual funds. It shows the cumulative expenses you would pay
if you invested $10,000 and held your shares for various time periods, with a
5% annual return and fund operating expenses remaining the same. This return is
for illustration purposes and is not guaranteed. Actual costs may be higher or
lower.
If the shares are redeemed at the end of each period:
SHARE CLASS 1 YEAR 3 YEARS 5 YEARS 10 YEARS
- -------------------------------------------------------------
A $704 $1,240 $1,801 $3,322
B** $728 $1,224 $1,743 $3,400
C $228 $ 924 $1,643 $3,549
M $415 $ 985 $1,679 $3,522
- -------------------------------------------------------------
If the shares are not redeemed:
SHARE CLASS 1 YEAR 3 YEARS 5 YEARS 10 YEARS
- -------------------------------------------------------------
A $704 $1,240 $1,801 $3,322
B** $228 $ 924 $1,643 $3,400
C $228 $ 924 $1,643 $3,549
M $316 $ 985 $1,679 $3,522
- -------------------------------------------------------------
* THE TABLE REFLECTS THE EXPENSE CAP INCREASE ON 12/01/01.
** EXAMPLES FOR CLASS B SHARES ASSUME THEY WILL CONVERT TO CLASS A SHARES EIGHT
YEARS AFTER YOU PURCHASE THEM.
For information regarding a similar sub-adviser fund, please see page 85.
51
IDEX DEAN ASSET ALLOCATION
SUMMARY OF RISKS AND RETURNS
[GRAPHIC] OBJECTIVE
THE OBJECTIVE OF IDEX DEAN ASSET ALLOCATION IS PRESERVATION OF CAPITAL AND
COMPETITIVE INVESTMENT RETURNS.
[GRAPHIC] PRINCIPAL STRATEGIES
AND POLICIES
The fund's sub-adviser, Dean Investment Associates (Dean), seeks to achieve the
fund's objective by investing fund assets principally in:
. income-producing common and preferred stocks
. debt obligations of U.S. issuers, some of which will be convertible into
common stocks
. U.S. Treasury bonds, notes and bills
. money market funds
. covered call options & put options
In selecting stocks, Dean focuses on quality, liquid, large capitalization
stocks, using a "bottom up" screening process to identify stocks that are
statistically undervalued. Dean's ultimate goal is to choose stocks whose price
has been driven down by a market that has "over-reacted" to perceived risks.
With this approach, the fund seeks to achieve a dividend income yield higher
than that of the Russell 1000 Value Index (Russell 1000), a widely recognized
unmanaged index of market performance. The Russell 1000 measures the
performance of the 1,000 largest companies in the Russell 3000 Index, which
represents approximately 89% of the total market capitalization of the Russell
3000 Index. As of the latest reconstitution, the average market capitalization
was approximately $9.9 billion; the medium market capitalization was
approximately $3.7 billion. The smallest company in the Index had an
approximate market capitalization of $1,404.7 million.
Dean employs an investment technique called "tactical asset allocation," which
shifts assets from one class of investment to another (such as from equity to
debt) when Dean anticipates changes in market direction.
Dean will seek to enhance returns in rising stock markets by increasing its
allocation to equity, then protect itself in falling stock markets by reducing
equity exposure and shifting into fixed-income investments, as well as into
money market funds.
Dean has developed forecasting models to predict movements in the stock market
for both short (12 to 18-month) and long (3 to 5-year) time periods. These
models help compare the risks and rewards Dean anticipates in holding stocks
versus debt instruments and money market funds. Such techniques may result in
increased fund expenses such as brokerage fees.
Thus, the models determine when Dean is to "tactically" adjust the fund's asset
allocation among stocks, bonds, U.S. debt obligations and money market funds.
Dean increases equity holdings in rising stock markets, then reduces equity in
falling stock markets and increases fixed-income and money market holdings.
Dean switches from equity to debt securities when it anticipates changes in the
market direction. Dean also sells stocks when they become overvalued.
WHAT IS A "BOTTOM UP" ANALYSIS?
When a sub-adviser uses a "bottom up" approach, it looks primarily at
individual companies against the context of broader market factors. It
seeks to identify individual companies with earnings growth potential that
may not be recognized by the market at large.
[GRAPHIC] PRINCIPAL RISKS
The fund is subject to the following principal investment risks:
. STOCKS
While stocks have historically outperformed other investments over the long
term, they tend to go up and down more dramatically over the shorter term.
These price movements may result from factors affecting individual companies,
industries, or the securities market as a whole.
Because the stocks the fund holds fluctuate in price, the value of your
investment in the fund will go up and down.
. CONVERTIBLE SECURITIES
Convertible securities may include corporate notes or preferred stock, but
ordinarily are a long-term debt obligation of the issuer convertible at a
stated exchange rate into common stock of the issuer. As with all debt
securities, the market value of convertible securities tends to decline as
interest rates increase and, conversely, to increase as interest rates decline.
Convertible securities generally offer lower interest or dividend yields than
non-convertible securities of similar quality. However, when the market price
of the common stock underlying a convertible security exceeds the conversion
price, the price of the convertible security tends to reflect the value of the
underlying common stock. As the market price of the underlying common stock
declines, the convertible security tends to trade increasingly on a yield
basis, and thus may not depreciate to the same extent as the underlying stock.
. FIXED-INCOME SECURITIES
The value of these securities may change daily based on changes in the interest
rates, and other market conditions and factors. The risks include:
. changes in interest rates
. length of time to maturity
. issuers defaulting on their obligations to pay interest or return principal
. statistical models
. OPTIONS
Investing in financial contracts such as options involve additional risks and
costs. Risks include:
. inaccurate market predictions which may result in losses instead of gains
. prices may not match so the benefits of the transaction might be diminished
and the fund may incur substantial losses
. TACTICAL ASSET ALLOCATION
The "tactical asset allocation" investment technique may not be effective. As a
result, overall returns of the
52
fund may be lower than if other methods were used to select the securities held
by the fund.
Securities selected using statistical models may result in incorrect asset
allocations causing overall returns to be lower than if other methods of
selection were used.
YOU MAY LOSE MONEY IF YOU INVEST IN THIS FUND.
These and other risks are fully described in the section entitled "Explanation
of Strategies and Risks," beginning on page 64.
. INVESTOR PROFILE
This fund may be appropriate for investors who want a combination of capital
growth and income, and who can tolerate the risks associated with an
actively-traded portfolio which shifts assets between equity and debt.
[GRAPHIC] PAST PERFORMANCE
The bar chart and the table below show the fund's annual returns and its
long-term performance. The bar chart and table indicate the risks of investing
in the fund by showing you how the fund's performance has varied from year to
year. The bar chart does not reflect the impact of sales charges, which lower
the fund's return. The table, which includes applicable sales charges, compares
how the fund's average annual returns for different calendar periods compare to
the returns of the Lehman Brothers Intermediate U.S. Government/Credit Index
(LBIGC) (primary benchmark) and the Russell 1000 Value Index (Russell 1000),
widely recognized unmanaged indexes of market performance. The bar chart and
table assume reinvestment of dividends and capital gains distributions. As with
all mutual funds, past performance is not a prediction of future results.
- --------------------------------------------------------------------------------
YEAR-BY-YEAR TOTAL RETURN as of 12/31 each year (%)
CLASS A SHARES
--------------
13.16 17.06 6.87 (6.61) 15.85
----------------------------------------
1996 1997 1998 1999 2000
- --------------------------------------------------------------------------------
CLASS A SHARES: QUARTER ENDED RETURN
--------------- --------
Best Quarter: 6/30/97 8.95%
Worst Quarter: 9/30/99 (8.25)%
- --------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS AS OF 12/31/00
SINCE
ONE YEAR 5 YEARS INCEPTION
- -----------------------------------------------------
A Shares 9.48% 7.67% 8.08%
- ---------------------------------------------------
B Shares 10.18% 8.22% 8.43%
- ---------------------------------------------------
C Shares 15.18% -- 11.34%
- ---------------------------------------------------
M Shares 13.13% 8.10% 8.46%
- ---------------------------------------------------
LBIGC* 10.10% 6.11% 6.51%
Russell 1000* 7.02% 16.93% 17.49%
- ---------------------------------------------------
** SINCE INCEPTION (10/01/95); SINCE INCEPTION OF CLASS C SHARES
(11/01/99) - 5.69% (RUSSELL 1000); 8.35% (LBIGC).
[GRAPHIC] FEES AND EXPENSES
The following table describes the fees and expenses that you may pay if you buy
and hold shares of the fund.
================================================================================
SHAREHOLDER FEES (fees paid directly from your investment)
CLASS OF SHARES
A B C M
--------- ------- ------ ---------------
Maximum sales charge (load)
imposed on purchases
(AS A % OF OFFERING PRICE) 5.50% None None 1.00%
Maximum deferred sales
charge (load) None(a) 5.00% None 1.00%(b)
(AS A PERCENTAGE OF PURCHASE PRICE OR
REDEMPTION PROCEEDS, WHICHEVER IS LOWER)
================================================================================
ANNUAL FUND OPERATING EXPENSES (expenses that are deducted from fund assets)
(d)
% OF AVERAGE DAILY NET ASSETS
CLASS OF SHARES
A B C M
- ----------------------------------------------------------------
Management fees 0.80% 0.80% 0.80% 0.80%
Distribution and service
(12b-1) fees 0.35% 1.00% 1.00% 0.90%
Other expenses 0.87% 0.87% 0.87% 0.87%
----------------------------------
TOTAL ANNUAL FUND
OPERATING EXPENSES 2.02% 2.67% 2.67% 2.57%
EXPENSE REDUCTION (C) 0.47% 0.47% 0.47% 0.47%
----------------------------------
NET OPERATING EXPENSES 1.55% 2.20% 2.20% 2.10%
- --------------------------------------------------------------------------------
(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) Purchases of Class M shares are subject to a 1% contingent deferred sales
charge if redeemed within 18 months of purchase.
(c) Contractual arrangement with Idex Management, Inc.
through 4/30/02, for expenses that exceed 1.20%, excluding 12b-1 fees.
(d) Annual fund operating expenses are estimated based on the fund's expenses
for the fiscal year ended 10/31/00.
A $10 semi-annual fee is imposed on accounts open for over 2 years that are
below a minimum balance due to redemptions. See page 77.
================================================================================
EXAMPLE
This example is here to help you compare the cost of investing in this fund
with that of other mutual funds. It shows the cumulative expenses you would pay
if you invested $10,000 and held your shares for various time periods, with a
5% annual return and fund operating expenses remaining the same. This return is
for illustration purposes and is not guaranteed. Actual costs may be higher or
lower.
If the shares are redeemed at the end of each period:
SHARE CLASS 1 YEAR 3 YEARS 5 YEARS 10 YEARS
- ------------------------------------------------------------
A $699 $1,106 $1,537 $2,733
B* $723 $1,085 $1,473 $2,811
C $223 $ 785 $1,373 $2,968
M $410 $ 847 $1,410 $2,941
- ------------------------------------------------------------
If the shares are not redeemed:
SHARE CLASS 1 YEAR 3 YEARS 5 YEARS 10 YEARS
- ------------------------------------------------------------
A $699 $1,106 $1,537 $2,733
B* $223 $ 785 $1,373 $2,811
C $223 $ 785 $1,373 $2,968
M $311 $ 847 $1,410 $2,941
- ---------------------------------------------------------
* EXAMPLES FOR CLASS B SHARES ASSUME THEY WILL CONVERT TO CLASS A SHARES EIGHT
YEARS AFTER YOU PURCHASE THEM.
53
IDEX JANUS BALANCED (FORMERLY IDEX JCC BALANCED)
SUMMARY OF RISKS AND RETURNS
[GRAPHIC] OBJECTIVE
THE OBJECTIVE OF IDEX JANUS BALANCED IS LONG-TERM CAPITAL GROWTH, CONSISTENT
WITH PRESERVATION OF CAPITAL AND BALANCED BY CURRENT INCOME.
[GRAPHIC] PRINCIPAL STRATEGIES
AND POLICIES
The fund's sub-adviser, Janus Capital Corporation (Janus), seeks to achieve the
fund's objective by investing principally in:
. 40% to 60% in securities selected primarily for growth potential - such as
common stocks
. 40% to 60% in securities selected primarily for income potential - both
equity and debt.
The basic strategy of the fund is to maintain a growth component and an income
component. Normally, 40% to 60% of the fund's securities are chosen primarily
for their GROWTH potential, and the remaining 40% to 60% are chosen primarily
for their INCOME potential. These securities may include some of foreign
issuers.
The growth component is expected to consist mainly of common stocks in
companies and industries that the fund manager believes are experiencing
favorable demand for their products and services, and that are operating in a
favorable competitive and regulatory climate. In its analysis, the fund manager
looks for companies with earnings growth potential that may not be recognized
by the market.
The income component will consist of securities that the fund manager believes
have income potential. Such securities may include equity securities,
convertible securities and all types of debt securities.
At least 25% of the fund's assets will normally be invested in fixed-income
securities.
The sub-adviser uses a "bottom up" approach to select stocks. In other words,
the fund manager looks mostly for income producing securities that meet its
investment criteria one at a time. If the fund manager is unable to find such
investments, the fund's assets may be in cash or similar investments.
Securities are selected without regard to any industry sector or other
similarly defined selection procedure.
Up to 35% of the fund's assets may be invested in high-yield/high-risk bonds
(commonly known as "junk bonds"). These bonds are rated below investment grade
by the primary rating agencies.
The fund may shift assets between the growth and income portions of its
portfolio, based on the fund manager analysis of the market and conditions in
the economy. If the fund manager believes that at a particular time growth
investments will provide better returns than the yields from income-producing
investments, the fund may put a greater emphasis on growth. The reverse may
also take place.
The fund manager may sell the fund's securities when its expectations regarding
earnings growth potential change.
The fund may, to a lesser extent, invest in futures and foreign securities, or
other securities and investment strategies in pursuit of the fund's investment
objectives, which are explained beginning on page 64 and in the SAI.
WHAT IS A "BOTTOM UP" ANALYSIS?
When a sub-adviser uses a "bottom up" approach, it looks primarily at
individual companies against the context of broad market factors. It seeks
to identify individual companies with earnings growth potential that may
not be recognized by the market at large.
[GRAPHIC] PRINCIPAL RISKS
The fund is subject to the following principal investment risks:
. STOCKS
While stocks have historically outperformed other investments over the long
term, they tend to go up and down more dramatically over the shorter term.
These price movements may result from factors affecting individual companies,
industries, or the securities market as a whole.
Because the stocks the fund holds fluctuate in price, the value of your
investment in the fund will go up and down.
. FIXED-INCOME SECURITIES
The value of these securities may change daily based on changes in the interest
rates, and other market conditions and factors. The risks include:
. changes in interest rates
. length of time to maturity
. issuers defaulting on their obligations to pay interest or return principal
. HIGH-YIELD/HIGH-RISK SECURITIES
. credit risk
. greater sensitivity to interest rate movements
. greater vulnerability to economic changes
. decline in market value in event of default
. less liquidity
YOU MAY LOSE MONEY IF YOU INVEST IN THIS FUND.
These and other risks are fully described in the section entitled "Explanation
of Strategies and Risks," beginning on page 64.
. INVESTOR PROFILE
This fund may be appropriate for investors who seek capital growth and income
from the same investment, but who also want an investment that sustains value
by maintaining a balance between equity and debt (stocks and bonds). The fund
is not for investors who desire a consistent level of income.
54
[GRAPHIC] PAST PERFORMANCE
The bar chart and the table below show the fund's annual returns and its
long-term performance. The bar chart and table indicate the risks of showing
you how the fund's performance has varied from year to year. The bar chart does
not reflect the impact of sales charges, which lower the fund's return. The
table, which includes applicable sales charges, compares how the fund's average
annual returns for different calendar periods compare to the returns of the
Standard & Poor's 500 Composite Stock Index (S&P 500) and the Lehman Brothers
U.S. Government/Credit Index (LBGC), widely recognized unmanaged indexes of
market performance. The bar chart and table assume reinvestment of dividends
and capital gains distributions. As with all mutual funds, past performance is
not a prediction of future results.
- --------------------------------------------------------------------------------
YEAR-BY-YEAR TOTAL RETURN as of 12/31 each year (%)
CLASS A SHARES
25.20 16.60 21.17 30.78 23.55 (3.39)
-------------------------------------------------------------
1995 1996 1997 1998 1999 2000
- ----------------------------------------------
CLASS A SHARES: QUARTER ENDED RETURN
--------------- --------
Best Quarter: 12/31/98 18.31%
Worst Quarter: 9/30/98 (3.63)%
- ----------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS AS OF 12/31/00
SINCE
ONE YEAR 5 YEARS INCEPTION
- --------------------------------------------------
A Shares (8.70)% 15.82% 17.05%
- --------------------------------------------------
B Shares (8.77)% 16.42% 17.25%
- --------------------------------------------------
C Shares (3.00)% -- 5.04%
- --------------------------------------------------
M Shares (5.79)% 16.29% 17.33%
- --------------------------------------------------
LBGC* 11.84% 6.24% 8.30%
- --------------------------------------------------
S&P 500* (9.11)% 18.33% 21.31%
- --------------------------------------------------
SINCE INCEPTION OF CLASS A, AND M SHARES. SINCE INCEPTION OF CLASS B SHARES
(10/1/95) - 6.84% (LBGC); 16.77% (S&P 500). SINCE INCEPTION OF CLASS C SHARES
(11/01/99) - 9.37% (LBGC); (2.67)% (S&P 500).
[GRAPHIC] FEES AND EXPENSES
The following table describes the fees and expenses that you may pay if you buy
and hold shares of the fund.
================================================================================
SHAREHOLDER FEES (fees paid directly from your investment)
CLASS OF SHARES
A B C M
- ------------------------------------------------------------------------
Maximum sales charge (load)
imposed on purchases
(AS A % OF OFFERING PRICE) 5.50% None None 1.00%
Maximum deferred sales
charge (load) None(a) 5.00% None 1.00%(b)
(AS A PERCENTAGE OF PURCHASE PRICE OR
REDEMPTION PROCEEDS, WHICHEVER IS LOWER)
================================================================================
ANNUAL FUND OPERATING EXPENSES (expenses that are deducted from fund assets)(d)
% OF AVERAGE DAILY NET ASSETS
CLASS OF SHARES
A B C M
- -----------------------------------------------------------------------------
Management fees 1.00% 1.00% 1.00% 1.00%
Distribution and service
(12b-1) fees 0.35% 1.00% 1.00% 0.90%
Other expenses 0.34% 0.34% 0.34% 0.34%
-----------------------------------------------
TOTAL ANNUAL FUND
OPERATING EXPENSES 1.69% 2.34% 2.34% 2.24%
EXPENSE REDUCTION (C) 0.02% 0.02% 0.02% 0.02%
-----------------------------------------------
NET OPERATING EXPENSES 1.67% 2.32% 2.32% 2.22%
- ---------------------------------------------------------------------------
(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) Purchases of Class M shares are subject to a 1% contingent deferred sales
charge if redeemed within 18 months of purchase.
(c) Contractual arrangement with Idex Management, Inc. through 4/30/02, for
expenses that exceed 1.50%.
(d) Annual fund operating expenses are estimated based on the fund's expenses
for the fiscal year ended 10/31/00.
A $10 semi-annual fee is imposed on accounts open for over 2 years that are
below a minimum balance due to redemptions. See page 77.
================================================================================
EXAMPLE
This example is here to help you compare the cost of investing in this fund
with that of other mutual funds. It shows the cumulative expenses you would pay
if you invested $10,000 and held your shares for various time periods, with a
5% annual return and fund operating expenses remaining the same. This return is
for illustration purposes and is not guaranteed. Actual costs may be higher or
lower.
If the shares are redeemed at the end of each period:
SHARE CLASS 1 YEAR 3 YEARS 5 YEARS 10 YEARS
- -----------------------------------------------------------
A $710 $1,052 $1,416 $2,436
B* $735 $1,029 $1,349 $2,513
C $235 $ 729 $1,249 $2,675
M $422 $ 791 $1,286 $2,647
- -----------------------------------------------------------
If the shares are not redeemed:
SHARE CLASS 1 YEAR 3 YEARS 5 YEARS 10 YEARS
- -----------------------------------------------------------
A $710 $1,052 $1,416 $2,436
B* $235 $ 729 $1,249 $2,513
C $235 $ 729 $1,249 $2,675
M $323 $ 791 $1,286 $2,647
- -----------------------------------------------------------
* EXAMPLES FOR CLASS B SHARES ASSUME THEY WILL CONVERT TO CLASS A SHARES EIGHT
YEARS AFTER YOU PURCHASE THEM.
55
IDEX LKCM STRATEGIC TOTAL RETURN
SUMMARY OF RISKS AND RETURNS
[GRAPHIC] OBJECTIVE
THE OBJECTIVE OF IDEX LKCM STRATEGIC TOTAL RETURN IS CURRENT INCOME, LONG-TERM
GROWTH OF INCOME, AND CAPITAL APPRECIATION.
[GRAPHIC] PRINCIPAL STRATEGIES AND POLICIES
The fund's sub-adviser, Luther King Capital Management Corporation (Luther
King), seeks to achieve this objective by principally investing fund assets in
both equity and fixed-income securities which include:
. common stocks
. corporate bonds
. government bonds
The fund seeks to invest in both equity and fixed-income securities to achieve
a balance of capital appreciation and investment income while limiting
volatility to a lesser extent. In choosing such securities, Luther King looks
for companies with strong fundamental characteristics. It considers factors
such as:
. balance sheet quality
. cash flow generation
. earnings and dividend growth record and outlook
. profitability levels
In some cases, Luther King bases its selections on other factors. For example,
some securities may be bought at an apparent discount to their appropriate
value, with the anticipation that they'll increase in value over time.
The fund seeks to achieve an income yield greater than the average yield of the
stocks in the S&P 500.
The fund invests mainly in the stocks and bonds of companies with established
operating histories and strong fundamental characteristics. The majority of the
stocks the fund buys will be listed on a national exchange or traded on NASDAQ
or domestic over-the-counter markets.
Luther King closely analyzes a company's financial status and a security's
valuation in a effort to control risk at the individual level. In addition, the
growth elements of the fund's equity investments drive capital appreciation.
As part of its income-oriented strategy, Luther King expects to invest about
25% of the fund's assets in fixed-income securities, some of which will be
convertible into common stocks, and no more than 20% of its assets in stocks
that don't pay a dividend. Corporate debt securities in which the fund invests
will generally have a rating within the four highest grades as determined by
Moody's or S&P. (See Appendix A for a description of bond ratings.)
Luther King may sell fund securities when its stocks become overvalued or when
the stocks lose their strong fundamentals.
While the fund invests principally in common stocks and corporate and
government bonds, it may, to a lesser extent, invest in convertible preferred
stocks, corporate convertible bonds, or other securities and investment
strategies in pursuit of its investment objective, which are explained
beginning on page 64 and in the SAI.
[GRAPHIC] PRINCIPAL RISKS
The fund is subject to the following principal investment risks:
. STOCKS
While stocks have historically outperformed other investments over the long
term, they tend to go up and down more dramatically over the shorter term.
These price movements may result from factors affecting individual companies,
industries or the securities market as a whole.
Because the stocks the fund holds fluctuate in price, the value of your
investment in the fund will go up and down.
. FIXED-INCOME SECURITIES
The value of these securities may change daily based on changes in the interest
rates, and other market conditions and factors. The risks include:
. changes in interest rates
. length of time to maturity
. issuers defaulting on their obligations to pay interest or return principal
YOU MAY LOSE MONEY IF YOU INVEST IN THIS FUND.
These and other risks are fully described in the section entitled "Explanation
of Strategies and Risks," beginning on page 64.
. INVESTOR PROFILE
This fund may be appropriate for investors who seek capital appreciation and
income growth through a strategic blend of stocks and bonds, and who desire a
fundamentally-oriented investment approach, emphasizing risk management.
56
[GRAPHIC] PAST PERFORMANCE
The bar chart and the table below show the fund's annual returns and its
long-term performance. The bar chart and table indicate the risks of investing
in the fund by showing you how the fund's performance has varied from year to
year. The bar chart does not reflect the impact of sales charges, which lower
the fund's return. The table, which includes applicable sales charges, compares
how the fund's average annual returns for different calendar periods compare to
the returns of the Standard & Poor's 500 Composite Stock Index (primary
benchmark), and the Lehman Brothers Intermediate U.S. Government/Credit Index
(LBIGC), widely recognized unmanaged indexes of market performance. The bar
chart and table assume reinvestment of dividends and capital gains
distributions. As with all mutual funds, past performance is not a prediction
of future results.
- --------------------------------------------------------------------------------
YEAR-BY-YEAR TOTAL RETURN as of 12/31 each year (%)
CLASS A SHARES
--------------
22.81 16.42 21.99 10.07 10.59 (5.28)
---------------------------------------------------------------
1995 1996 1997 1998 1999 2000
- ----------------------------------------------
CLASS A SHARES: QUARTER ENDED RETURN
--------------- --------
Best Quarter: 6/30/97 12.74%
Worst Quarter: 9/30/98 (7.39)%
- ----------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS AS OF 12/31/00
SINCE
ONE YEAR 5 YEARS INCEPTION
- -----------------------------------------------------
A Shares (10.49)% 9.12% 11.46%
- -----------------------------------------------------
B Shares (10.56)% 9.68% 10.18%
- -----------------------------------------------------
C Shares (5.86)% -- (0.55)%
- -----------------------------------------------------
M Shares (7.64)% 9.56% 11.72%
- -----------------------------------------------------
S&P 500* (9.11)% 18.33% 21.31%
- -----------------------------------------------------
LBIGC* 10.10% 6.11% 7.55%
- -----------------------------------------------------
* SINCE INCEPTION OF CLASS A, AND CLASS M SHARES (12/02/94). SINCE INCEPTION OF
CLASS B SHARES (10/1/95) - 16.77% (S&P 500); 6.51% (LBIGC). SINCE INCEPTION OF
CLASS C SHARES (11/01/99) - (2.67)% (S&P 500); 8.35% (LBIGC).
[GRAPHIC] FEES AND EXPENSES
The following table describes the fees and expenses that you may pay if you buy
and hold shares of the fund.
================================================================================
SHAREHOLDER FEES (fees paid directly from your investment)
CLASS OF SHARES
A B C M
- -------------------------------------------------------------------------
Maximum sales charge (load)
imposed on purchases
(AS A % OF OFFERING PRICE) 5.50% None None 1.00%
Maximum deferred sales
charge (load) None(a) 5.00% None 1.00%(b)
(AS A PERCENTAGE OF PURCHASE PRICE
OR REDEMPTION PROCEEDS, WHICHEVER IS LOWER)
================================================================================
ANNUAL FUND OPERATING EXPENSES (expenses that are deducted from fund assets)
(d)
% OF AVERAGE DAILY NET ASSETS
CLASS OF SHARES
A B C M
- ---------------------------------------------------------------
Management fees 0.80% 0.80% 0.80% 0.80%
Distribution and service
(12b-1) fees 0.35% 1.00% 1.00% 0.90%
Other expenses 0.54% 0.54% 0.54% 0.54%
-------------------------------------
TOTAL ANNUAL FUND
OPERATING EXPENSES 1.69% 2.34% 2.34% 2.24%
EXPENSE REDUCTION (C) 0.14% 0.14% 0.14% 0.14%
-------------------------------------
NET OPERATING EXPENSES 1.55% 2.20% 2.20% 2.10%
- --------------------------------------------------------------
(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) Purchases of Class M shares are subject to a 1% contingent deferred sales
charge if redeemed within 18 months of purchase.
(c) Contractual arrangement with Idex Management, Inc. through 4/30/02, for
expenses that exceed 1.20%, excluding 12b-1 fees.
(d) Annual fund operating expenses are estimated based on the fund's expenses
for the fiscal year ended 10/31/00.
A $10 semi-annual fee is imposed on accounts open for over 2 years that are
below a minimum balance due to redemptions. See page 77.
================================================================================
EXAMPLE
This example is here to help you compare the cost of investing in this fund
with that of other mutual funds. It shows the cumulative expenses you would pay
if you invested $10,000 and held your shares for various time periods, with a
5% annual return and fund operating expenses remaining the same. This return is
for illustration purposes and is not guaranteed. Actual costs may be higher or
lower.
If the shares are redeemed at the end of each period:
SHARE CLASS 1 YEAR 3 YEARS 5 YEARS 10 YEARS
- -----------------------------------------------------------
A $699 $1,040 $1,405 $2,427
B* $723 $1,017 $1,338 $2,503
C $223 $ 717 $1,238 $2,665
M $410 $ 780 $1,275 $2,638
- -----------------------------------------------------------
If the shares are not redeemed:
SHARE CLASS 1 YEAR 3 YEARS 5 YEARS 10 YEARS
- -----------------------------------------------------------
A $699 $1,040 $1,405 $2,427
B* $223 $ 717 $1,238 $2,503
C $223 $ 717 $1,238 $2,665
M $311 $ 780 $1,275 $2,638
- -----------------------------------------------------------
* EXAMPLES FOR CLASS B SHARES ASSUME THEY WILL CONVERT TO CLASS A SHARES EIGHT
YEARS AFTER YOU PURCHASE THEM.
57
IDEX AEGON INCOME PLUS
SUMMARY OF RISKS AND RETURNS
[GRAPHIC] OBJECTIVE
THE OBJECTIVE OF IDEX AEGON INCOME PLUS IS TO SEEK AS HIGH A LEVEL OF CURRENT
INCOME AS IS CONSISTENT WITH THE AVOIDANCE OF EXCESSIVE RISK.
[GRAPHIC] PRINCIPAL STRATEGIES AND POLICIES
The fund's sub-adviser, AEGON USA Investment Management, Inc. (AIMI), seeks to
achieve this objective by principally investing fund assets in a diversified
portfolio of:
. fixed-income securities including investment grade bonds and
high-yield/high-risk bonds (commonly known as "junk bonds")
When investing in rated securities, the fund buys those rated B or better by
Moody's or S&P. When investing in rated commercial paper, the fund buys those
rated Prime-2 or better by Moody's or A-2 or better by S&P. The fund may invest
in unrated securities which, in AIMI's judgment, are of equivalent quality. If
the rated securities held by the fund are downgraded, AIMI will consider
whether to keep these securities.
The fund may not invest in rated corporate securities that are rated below
investment grade, if such holdings are more than 50% of its total holdings of
securities (other than commercial paper). (The fund will not invest in any
security rated below BBB-).
Please see Appendix A for a description of bond ratings.
AIMI's strategy is to achieve yields as high as possible while managing risk.
AIMI uses a "top down/bottom up" approach in managing the fund's assets. The
"top down" approach is to adjust the risk profile of the fund. AIMI analyzes
four factors that affect the movement of fixed-income bond prices which
include: economic indicators; technical indicators that are specific to the
high-yield market; investor sentiment and valuation. Analysis of these factors
assists AIMI in its decisions regarding the fund's portfolio allocations.
AIMI has developed a proprietary credit model that is the foundation of its
"bottom up" analysis. The model tracks historical cash flow numbers and
calculates credit financial ratios. Because high-yield companies are of higher
financial risk, AIMI does a thorough credit analysis of all companies in the
fund's portfolio, as well as all potential acquisitions.
Each potential buy and sell candidate is analyzed by AIMI from both the "top
down" and "bottom up" strategies. An industry may look attractive in one area,
but not the other. They can then review the results of their analysis and
decide whether or not to proceed with a transaction.
For temporary defensive purposes, the fund may invest some or all of its assets
in short-term U.S. government, obligations (Treasury bills) (which is
inconsistent with the fund's principal investment strategies). Under these
circumstances, the fund may be unable to achieve its investment objective.
AIMI may sell fund securities when it determines there are changes in economic
indicators, technical indicators or valuation.
WHAT IS A "BOTTOM UP" ANALYSIS?
When a sub-adviser uses a "bottom up" approach, it looks primarily at
individual companies against the context of broader market factors. It
seeks to identify individual companies with earnings growth potential that
may not be recognized by the market at large.
WHAT IS A TOP-DOWN APPROACH?
When using a "top-down" approach, the fund manager looks first at broad
market factors, and on the basis of those market factors, chooses certain
sectors, or industries within the overall market. The manager then looks
at individual companies within those sectors or industries.
[GRAPHIC] PRINCIPAL RISKS
The fund is subject to the following principal investment risks:
. FIXED-INCOME SECURITIES
The value of these securities may change daily based on changes in the interest
rates, and other market conditions and factors. Risks include:
. changes in interest rates
. length of time to maturity
. issuers defaulting on their obligations to pay interest or return principal
. HIGH-YIELD/HIGH-RISK SECURITIES
. credit risk
. greater sensitivity to interest rate movements
. greater vulnerability to economic changes
. decline in market value in event of default
. less liquidity
. PROPRIETARY RESEARCH
AIMI's proprietary forms of research may not be effective and may cause overall
returns to be lower than if other forms of research are used.
YOU MAY LOSE MONEY IF YOU INVEST IN THIS FUND.
These and other risks are fully described in the section entitled "Full
Explanation of Strategies and Risks," beginning on page 64.
. INVESTOR PROFILE
This fund may be appropriate for investors who seek high current income and are
willing to tolerate the fluctuation in principal value associated with changes
in interest rates.
58
[GRAPHIC] PAST PERFORMANCE
The bar chart and the table below show the fund's annual returns and its
long-term performance. The bar chart and table indicate the risks of investing
in the fund by showing you how the fund's performance has varied from year to
year. The bar chart does not reflect the impact of sales charges, which lower
the fund's return. The table, which includes applicable sales charges, compares
how the fund's average annual returns for different calendar periods compare to
the returns of the Merrill Lynch High Yield Master Index (MLHYM), a widely
recognized unmanaged index of market performance. The bar chart and table
assume reinvestment of dividends and capital gains distributions. As with all
mutual funds, past performance is not a prediction of future results.
- --------------------------------------------------------------------------------
YEAR-BY-YEAR TOTAL RETURN as of 12/31 each year (%)
CLASS A SHARES
--------------
22.28 12.63 13.35 (4.02) 18.43 9.45 11.53 4.33 (0.34) 4.18
- -------------------------------------------------------------------------------
1991 1992 1993 1994 1995 1996 1997 1998 1999 2000
- --------------------------------------------------------------------------------
QUARTER ENDED RETURN
CLASS A SHARES: --------------- --------
Best Quarter: 6/30/95 6.74%
Worst Quarter: 3/31/94 (2.82)%
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS AS OF 12/31/00
SINCE
ONE YEAR 5 YEARS 10 YEARS INCEPTION
- ----------------------------------------------------------------
A Shares (0.77)% 4.72% 8.37% 8.78%
- ---------------------------------------------------------------
B Shares (1.45)% 5.06% -- 5.13%
- ---------------------------------------------------------------
C Shares 3.55% -- -- 3.54%
- ---------------------------------------------------------------
M Shares 1.61% 4.96% -- 5.14%
- ---------------------------------------------------------------
MLHYM* (3.54)% 4.89% 11.06% 9.97%
- ---------------------------------------------------------------
* Since inception of Class A shares (6/14/85). Since inception of Class B
shares (10/01/95) - 5.30%; Class C shares
(11/01/99) - (1.64)%; and Class M shares (10/01/93) - 6.56%.
[GRAPHIC] FEES AND EXPENSES
The following table describes the fees and expenses that you may pay if you buy
and hold shares of the fund.
================================================================================
SHAREHOLDER FEES (fees paid directly from your investment)
CLASS OF SHARES
A B C M
- ------------------------------------------------------------------------------
Maximum sales charge (load)
imposed on purchases
(AS A % OF OFFERING PRICE) 4.75% None None 1.00%
Maximum deferred sales
charge (load) None(a) 5.00% None 1.00%(b)
(AS A PERCENTAGE OF PURCHASE PRICE OR
REDEMPTION PROCEEDS, WHICHEVER IS LOWER)
================================================================================
ANNUAL FUND OPERATING EXPENSES (expenses that are deducted from fund assets)
(c)
% OF AVERAGE DAILY NET ASSETS CLASS OF SHARES
A B C M
- ---------------------------------------------------------------
Management fees 0.60% 0.60% 0.60% 0.60%
Distribution and service
(12b-1) fees 0.35% 1.00% 1.00% 0.90%
Other expenses 0.41% 0.41% 0.41% 0.41%
----------------------------------
TOTAL ANNUAL FUND
OPERATING EXPENSES 1.36% 2.01% 2.01% 1.91%
- --------------------------------------------------------------
(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) Purchases of Class M shares are subject to a 1% contingent deferred sales
charge if redeemed within 18 months of purchase.
(c) Annual fund operating expenses are estimated based on the fund's expenses
for the fiscal year ended 10/31/00.
A $10 semi-annual fee is imposed on accounts open for over 2 years that are
below a minimum balance due to redemptions. See page 77.
================================================================================
EXAMPLE
This example is here to help you compare the cost of investing in this fund
with that of other mutual funds. It shows the cumulative expenses you would pay
if you invested $10,000 and held your shares for various time periods, with a
5% annual return and fund operating expenses remaining the same. This return is
for illustration purposes and is not guaranteed. Actual costs may be higher or
lower.
If the shares are redeemed at the end of each period:
SHARE CLASS 1 YEAR 3 YEARS 5 YEARS 10 YEARS
- ------------------------------------------------------------
A $607 $885 $1,184 $2,032
B* $704 $930 $1,183 $2,170
C $204 $630 $1,083 $2,338
M $391 $694 $1,121 $2,310
- ------------------------------------------------------------
If the shares are not redeemed:
SHARE CLASS 1 YEAR 3 YEARS 5 YEARS 10 YEARS
- ------------------------------------------------------------
A $607 $885 $1,184 $2,032
B* $204 $630 $1,083 $2,170
C $204 $630 $1,083 $2,338
M $292 $694 $1,121 $2,310
- ------------------------------------------------------------
* EXAMPLES FOR CLASS B SHARES ASSUME THEY WILL CONVERT TO CLASS A SHARES EIGHT
YEARS AFTER YOU PURCHASE THEM.
59
IDEX FEDERATED TAX EXEMPT (FORMERLY IDEX AEGON TAX EXEMPT)
SUMMARY OF RISKS AND RETURNS
[GRAPHIC] OBJECTIVE
THE OBJECTIVE OF IDEX FEDERATED TAX EXEMPT IS MAXIMUM CURRENT INTEREST INCOME
EXEMPT FROM FEDERAL INCOME TAX, CONSISTENT WITH PRESERVATION OF CAPITAL.
[GRAPHIC] PRINCIPAL STRATEGIES
AND POLICIES
The fund's sub-adviser, Federated Investment Management Company (Federated),
seeks to achieve this objective by investing in a portfolio of tax exempt
securities so that at least 80% of its annual interest income is exempt from
federal regular income tax. The fund invests primarily in long-term, investment
grade, tax exempt securities (Grade AAA, AA, A and BBB).
Interest income from the fund's investments may be subject to the federal
alternative minimum tax ("AMT").
Please see Appendix A for a description of bond ratings.
Federated manages the fund's portfolio by seeking to manage the interest rate
risk and credit risk assumed by the fund and to provide superior levels of
after tax total return.
Federated considers a variety of factors in formulating its interest rate
outlook, including the following: current and expected U.S. economic growth;
current and expected interest rates and inflation; the Federal Reserve's
current monetary policy; and supply and demand factors related to the municipal
market and the effect they may have on the returns offered for various bond
maturities.
Federated manages credit risk by performing a fundamental credit analysis on
tax exempt securities before the fund purchases such securities. Federated
considers various factors, including the following: the economic feasibility of
revenue bond financings and general purpose financings; the financial condition
of the issuer or guarantor; and political developments that may affect credit
quality.
Federated monitors the credit risks of all portfolio securities on an ongoing
basis by reviewing periodic financial data and ratings of nationally recognized
ratings services.
Federated also will seek to further enhance after tax total return by engaging
in a relative value analysis; that is, Federated will assess the cost of a tax
exempt security compared with other tax exempt securities and taxable
securities such as U.S. Treasury obligations. Federated may also allocate
investments in sectors of the tax exempt market that offer the highest return.
Finally, Federated will invest a portion of the fund's portfolio (no more than
20%) in tax exempt securities subject to AMT, which may offer higher returns.
Federated may also use credit enhancements and futures contracts, or other
securities and investment strategies in pursuit of its investment objective,
which are explained beginning on page 64 and in the SAI.
Federated may use hedging to reduce specific risks. For example, to protect the
fund against circumstances that would normally cause the fund's portfolio
securities to decline in value, the fund may buy or sell a futures contract
that would normally increase in value under the same circumstances. The fund
may also attempt to lower the cost of hedging by using combinations of
different futures contracts, or futures contracts and securities.
The fund may take a temporary defensive position from its principal investment
strategies by investing its assets in securities subject to federal income tax.
It may do this to minimize potential losses and maintain liquidity to meet
shareholder redemptions during adverse market conditions. This may cause the
fund to receive and distribute taxable income to investors. Under these
circumstances, the fund may be unable to achieve its investment objective.
Prior to June 15, 2000, this fund was sub-advised by AEGON USA Investment
Management, Inc.
[GRAPHIC] PRINCIPAL RISKS
The fund is subject to the following principal investment risks:
. MUNICIPAL OBLIGATIONS
. their yields are usually lower than on similar, but taxable securities
. the income may be subject to state and local taxes
. the income may be a preference item for determining the federal alternative
minimum tax
. unrated municipal securities may be less liquid than rated securities
. congress occasionally considers restricting or eliminating the federal tax
exemption and may do so in the future
. obligations could ultimately be federally taxable
. FIXED-INCOME SECURITIES
The value of these securities may change daily based on changes in the interest
rates, and other market conditions and factors. These risks include:
. fluctuations in market value
. changes in interest rates; the value of a bond increases as interest rate
declines and decreases as interest rates rise
. length of time to maturity; the longer the duration, the more vulnerable
the value of a bond is to fluctuations in interest rates
. issuers defaulting on their obligations to pay interest or return principle
YOU MAY LOSE MONEY IF YOU INVEST IN THIS FUND.
These and other risks are fully described in the section entitled "Explanation
of Strategies and Risks," beginning on page 64.
. INVESTOR PROFILE
This fund may be appropriate for investors who seek high current federal
tax-free income and are willing to tolerate the fluctuation in principal value
associated with changes in interest rates. Yields on municipal obligations are
typically lower than on similar taxable securities. Such investors will
generally have higher taxable incomes.
The fund is not for tax-exempt retirement programs because they would receive
no benefit from the tax-exempt nature of most of the fund's income.
60
[GRAPHIC] PAST PERFORMANCE (A)
The bar chart and the table below show the fund's annual returns and its
long-term performance. The bar chart and table indicate the risks of investing
in the fund by showing you how the fund's performance has varied from year to
year. The bar chart does not reflect the impact of sales charges, which lower
the fund's return. The table, which includes applicable sales charges, compares
how the fund's average annual returns for different calendar periods compare to
the returns of the Lehman Brothers Municipal Bond Index (LBMB), a widely
recognized unmanaged index of market performance. The bar chart and table
assume reinvestment of dividends and capital gains distributions. As with all
mutual funds, past performance is not a prediction of future results.
- --------------------------------------------------------------------------------
YEAR-BY-YEAR TOTAL RETURN as of 12/31 each year (%)
CLASS A SHARES
--------------
10.24 6.60 8.66 (2.25) 12.86 3.89 10.12 4.58 (6.25) 12.55
- ------------------------------------------------------------------------------
1981 1982 1983 1984 1985 1986 1987 1988 1989 2000
- --------------------------------------------------------------------------------
CLASS A SHARES: QUARTER ENDED RETURN
------------- ------
Best Quarter: 3/31/95 5.34%
Worst Quarter: 3/31/94 (3.02)%
================================================================================
AVERAGE ANNUAL TOTAL RETURNS AS OF 12/31/00
SINCE
ONE YEAR 5 YEARS 10 YEARS INCEPTION
- --------------------------------------------------------------
A Shares 7.21% 3.75% 5.41% 7.02%
- --------------------------------------------------------------
B Shares 6.88% 4.10% -- 4.46%
- --------------------------------------------------------------
C Shares 11.88% -- -- 9.88%
- --------------------------------------------------------------
M Shares 10.17% 4.28% -- 4.40%
- --------------------------------------------------------------
LBMB* 11.69% 5.84% 7.32% 8.68%
- --------------------------------------------------------------
* SINCE INCEPTION OF CLASS A SHARES (4/01/85). SINCE INCEPTION OF CLASS B
SHARES (10/01/95) - 6.36%; SINCE INCEPTION OF CLASS C SHARES (11/01/99 -
10.16%; AND CLASS M (10/01/93) - 5.75%.
(A) PRIOR TO JUNE 15,2000, AEGON INVESTMENT MANAGEMENT, INC. SERVED AS
SUB-ADVISER TO THIS FUND.
[GRAPHIC] FEES AND EXPENSES
The following table describes the fees and expenses that you may pay if you buy
and hold shares of the fund.
================================================================================
SHAREHOLDER FEES (fees paid directly from your investment)
CLASS OF SHARES
A B C M
- --------------------------------------------------------------------------------
Maximum sales charge (load)
imposed on purchases
(AS A % OF OFFERING PRICE) 4.75% None None 1.00%
Maximum deferred sales
charge (load) None(a) 5.00% None 1.00%(b)
(AS A PERCENTAGE OF PURCHASE PRICE OR
REDEMPTION PROCEEDS, WHICHEVER IS LOWER)
- --------------------------------------------------------------------------------
ANNUAL FUND OPERATING EXPENSES (expenses that are deducted from fund assets)
(d)
% OF AVERAGE DAILY NET ASSETS CLASS OF SHARES
A B C M
- --------------------------------------------------------------------------------
Management fees 0.60% 0.60% 0.60% 0.60%
Distribution and service
(12b-1) fees 0.35% 1.00% 1.00% 0.60%
Other expenses 0.73% 0.73% 0.73% 0.73%
- --------------------------------------------------------------------------------
TOTAL ANNUAL FUND
OPERATING EXPENSES 1.68% 2.33% 2.33% 1.93%
EXPENSE REDUCTION (C) 0.33% 0.33% 0.33% 0.33%
- --------------------------------------------------------------------------------
NET OPERATING EXPENSES 1.35% 2.00% 2.00% 1.60%
- --------------------------------------------------------------------------------
(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) Purchases of Class M shares are subject to a 1% contingent deferred sales
charge if redeemed within 18 months of purchase.
(c) Contractual arrangement with Idex Management, Inc. through 4/30/02, for
expenses that exceed 1.00%, excluding 12b-1 fees.
(d) Annual fund operating expenses are estimated based on the fund's expenses
for the fiscal year ended 10/31/00.
A $10 semi-annual fee is imposed on accounts open for over 2 years that are
below a minimum balance due to redemptions. See page 77.
================================================================================
EXAMPLE
This example is here to help you compare the cost of investing in this fund
with that of other mutual funds. It shows the cumulative expenses you would pay
if you invested $10,000 and held your shares for various time periods, with a
5% annual return and fund operating expenses remaining the same. This return is
for illustration purposes and is not guaranteed. Actual costs may be higher or
lower.
If the shares are redeemed at the end of each period:
SHARE CLASS 1 YEAR 3 YEARS 5 YEARS 10 YEARS
- ------------------------------------------------------------
A $606 $949 $1,315 $2,341
B* $703 $996 $1,315 $2,478
C $203 $696 $1,215 $2,641
M $360 $668 $1,101 $2,305
- ------------------------------------------------------------
If the shares are not redeemed:
SHARE CLASS 1 YEAR 3 YEARS 5 YEARS 10 YEARS
- ------------------------------------------------------------
A $606 $949 $1,315 $2,341
B* $203 $696 $1,215 $2,478
C $203 $696 $1,215 $2,641
M $261 $668 $1,101 $2,305
- ------------------------------------------------------------
* EXAMPLES FOR CLASS B SHARES ASSUME THEY WILL CONVERT TO CLASS A SHARES EIGHT
YEARS AFTER YOU PURCHASE THEM.
61
IDEX JANUS FLEXIBLE INCOME (FORMERLY IDEX JCC FLEXIBLE INCOME)
SUMMARY OF RISKS AND RETURNS
[GRAPHIC] OBJECTIVE
THE OBJECTIVE OF IDEX JANUS FLEXIBLE INCOME IS MAXIMUM TOTAL RETURN FOR
SHAREHOLDERS, CONSISTENT WITH PRESERVATION OF CAPITAL, BY ACTIVELY MANAGING A
PORTFOLIO OF INCOME-PRODUCING SECURITIES.
[GRAPHIC] PRINCIPAL STRATEGIES AND POLICIES
The fund normally invests at least 80% of its total assets in income-producing
securities of both foreign and domestic companies. The fund's sub-adviser,
Janus Capital Corporation (Janus), seeks to achieve the fund's objective by
investing principally in:
. corporate debt securities
The fund seeks maximum current income by investing principally in corporate
bonds that offer higher yields, but more risk than higher rated bonds.
While the fund may buy bonds of any maturity, the fund's average maturity may
vary substantially, depending upon the fund manager's analysis of market,
economic and financial conditions at the time. To increase the potential of
higher returns, the fund has no pre-established standards for the quality of
the debt instruments it buys.
The fund may buy unrated debt securities of both domestic and foreign issuers,
and may at times have substantial holdings of such high-yield/high-risk bonds.
Please see Appendix A for a description of ratings.
In addition to considering economic factors such as the affect of interest
rates on the fund's investments, the fund manager applies a "bottom up"
approach in choosing investments. If the fund manager is unable to find such
investments, a fund's assets may be in cash or other similar investments.
In determining the creditworthiness of bond issuers, the fund manager uses, but
doesn't rely solely on, credit ratings.
"WHAT IS A BOTTOM UP" ANALYSIS?
When a sub-adviser uses a "bottom up" approach, it looks primarily at
individual companies against the context of broader market factors. It
seeks to identify individual companies with earnings growth potential that
may not be recognized by the market at large.
The fund manager seeks to diversify the fund's investments across many
securities, sectors and countries. Currency risk is generally avoided through
hedging and other means.
The fund manager may sell the fund's securities when its expectations regarding
market interest rates change or the quality or return changes on investment.
While the fund invests principally in corporate debt securities, the fund
manager may, to a lesser extent, invest in lower-rated securities, including
bonds considered less than investment grade of both foreign and domestic
issuers, mortgage- and other asset-backed securities, convertible securities,
preferred stock, income-producing common stock, futures for hedging, or other
securities and investment strategies in pursuit of its investment objective,
which are explained beginning on page 64 and in the SAI.
[GRAPHIC] PRINCIPAL RISKS
The fund is subject to the following principal investment risks:
. FIXED-INCOME SECURITIES
The value of these securities may change daily based on changes in interest
rates, and other market conditions and factors. Risks include:
. changes in interest rates
. length of time to maturity
. issuers defaulting on their obligations to pay interest or return principal
. STOCKS
While stocks have historically outperformed other investments over the long
term, they tend to go up and down more dramatically over the shorter term.
These price movements may result from factors affecting individual companies,
industries, or the securities market as a whole.
Because the stocks the fund holds fluctuate in price, the value of your
investment in the fund will go up and down.
. HIGH-YIELD/HIGH RISK SECURITIES
. credit risk
. greater sensitivity to interest rate movements
. greater vulnerability to economic changes
. decline in market value in event of default
. less liquidity
YOU MAY LOSE MONEY IF YOU INVEST IN THIS FUND.
These and other risks are fully described in the section entitled "Explanation
of Strategies and Risks," beginning on page 64.
. INVESTOR PROFILE
This fund may be appropriate for investors who want current income enhanced by
the potential for capital growth, and who are willing to tolerate fluctuation
in principal value caused by changes in interest rates as well as the risks
associated with substantial investments in high-yield/high-risk bonds (commonly
known as "junk bonds"), or unrated bonds of domestic or foreign issuers.
62
[GRAPHIC] PAST PERFORMANCE
The bar chart and the table below show the fund's annual returns and its
long-term performance. The bar chart and the table indicate the risks of
investing in the fund by showing you how the fund's performance has varied from
year to year. The bar chart does not reflect the impact of sales charges, which
lower the fund's return. The table, which includes applicable sales charges,
compares how the fund's average annual returns for different calendar periods
compare to the returns of the Lehman Brothers U.S. Government/
Credit Index (LBGC), a widely recognized unmanaged index of market performance.
The bar chart and table assume reinvestment of dividends and capital gains
distributions. As with all mutual funds, past performance is not a prediction
of future results.
- --------------------------------------------------------------------------------
YEAR-BY-YEAR TOTAL RETURN as of 12/31 each year (%)
CLASS A SHARES
--------------
25.01 11.00 13.90 (4.29) 18.89 5.44 11.57 7.89 0.93 5.87
- --------------------------------------------------------------------------------
1991 1992 1993 1994 1995 1996 1997 1998 1999 2000
- --------------------------------------------------------------------------------
CLASS A SHARES: QUARTER ENDED RETURN
--------------- --------
Best Quarter: 3/31/91 7.85 %
Worst Quarter: 3/31/96 (1.98)%
- ----------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS AS OF 12/31/00
SINCE
ONE YEAR 5 YEARS 10 YEARS INCEPTION
- --------------------------------------------------------------
A Shares 0.85% 5.26% 8.80% 7.35%
- -------------------------------------------------------------
B Shares 0.24% 5.60% -- 6.11%
- -------------------------------------------------------------
C Shares 5.24% -- -- 5.53%
- -------------------------------------------------------------
M Shares 3.28% 5.49% -- 5.60%
- -------------------------------------------------------------
LBGC* 11.84% 6.24% 8.00% 8.35%
- -------------------------------------------------------------
* SINCE INCEPTION OF CLASS A SHARES (6/29/87). SINCE INCEPTION OF CLASS B
SHARES (10/01/95) - 6.84%; SINCE INCEPTION OF CLASS C SHARES (11/01/99) -
9.37%; AND CLASS M SHARES (10/01/93) - 6.25%.
[GRAPHIC] FEES AND EXPENSES
The following table describes the fees and expenses that you may pay if you buy
and hold shares of the fund.
================================================================================
SHAREHOLDER FEES (fees paid directly from your investment)
CLASS OF SHARES
A B C M
- --------------------------------------------------------------------------------
Maximum sales charge (load)
imposed on purchases
(AS A % OF OFFERING PRICE) 4.75% None None 1.00%
Maximum deferred sales
charge (load) None(a) 5.00% None 1.00%(b)
(AS A PERCENTAGE OF PURCHASE PRICE OR
REDEMPTION PROCEEDS, WHICHEVER IS LOWER)
================================================================================
ANNUAL FUND OPERATING EXPENSES (expenses that are deducted from fund assets)(d)
% OF AVERAGE DAILY NET ASSETS
CLASS OF SHARES
A B C M
- ----------------------------------------------------------------
Management fees 0.90% 0.90% 0.90% 0.90%
Distribution and service
(12b-1) fees 0.35% 1.00% 1.00% 0.90%
Other expenses 0.62% 0.61% 0.61% 0.61%
-----------------------------------
TOTAL ANNUAL FUND
OPERATING EXPENSES 1.87% 2.51% 2.51% 2.41%
EXPENSE REDUCTION (C) 0.03% 0.02% 0.02% 0.02%
-----------------------------------
NET OPERATING EXPENSES 1.84% 2.49% 2.49% 2.39%
- ---------------------------------------------------------------
(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) Purchases of Class M shares are subject to a 1% contingent deferred sales
charge if redeemed within 18 months of purchase.
(c) Contractual arrangement with Idex Management, Inc., through 4/30/02, for
expenses that exceed 1.50%, excluding 12b-1 fees.
(d) Annual fund operating expenses are estimated based on the fund's expenses
for the fiscal year ended 10/31/00.
A $10 semi-annual fee is imposed on accounts open for over 2 years that are
below a minimum balance due to redemptions. See page 77.
================================================================================
EXAMPLE
This example is here to help you compare the cost of investing in this fund
with that of other mutual funds. It shows the cumulative expenses you would pay
if you invested $10,000 and held your shares for various time periods, with a
5% annual return and fund operating expenses remaining the same. This return is
for illustration purposes and is not guaranteed. Actual costs may be higher or
lower.
If the shares are redeemed at the end of each period:
SHARE CLASS 1 YEAR 3 YEARS 5 YEARS 10 YEARS
- ------------------------------------------------------------
A $653 $1,032 $1,435 $2,559
B* $752 $1,080 $1,434 $2,687
C $252 $ 780 $1,334 $2,844
M $439 $ 842 $1,371 $2,817
- ------------------------------------------------------------
If the shares are not redeemed:
SHARE CLASS 1 YEAR 3 YEARS 5 YEARS 10 YEARS
- ------------------------------------------------------------
A $653 $1,032 $1,435 $2,559
B* $252 $ 780 $1,334 $2,687
C $252 $ 780 $1,334 $2,844
M $340 $ 842 $1,371 $2,817
- ------------------------------------------------------------
* EXAMPLES FOR CLASS B SHARES ASSUME THEY WILL CONVERT TO CLASS A SHARES EIGHT
YEARS AFTER YOU PURCHASE THEM.
63
EXPLANATION OF STRATEGIES AND RISKS
HOW TO USE THIS SECTION
In the discussions of the individual funds on pages 2 through 63, you found
descriptions of the principal strategies and risks associated with each fund.
In those pages, you were referred to this section for a more complete
description of the risks of both principal and non-principal investments. For
best understanding, first read the description of the fund you are interested
in. Then refer to this section and read about the risks particular to that
fund. For even more discussions of strategies and risks, see the SAI, which is
available upon request. See the back cover of this prospectus for information
on how to order the SAI.
[GRAPHIC] DIVERSIFICATION. The 1940 Act classifies investment companies as
either diversified or non-diversified.
Diversification is the practice of spreading a fund's assets over a number of
issuers to reduce risk. A non-diversified fund has the ability to take larger
positions in fewer issuers. Because the appreciation or depreciation of a
single security may have a greater impact on the net asset value of a
non-diversified fund, its share price can be expected to fluctuate more than a
diversified fund.
All of the funds (except IDEX Salomon All Cap, IDEX Janus Capital Appreciation,
IDEX Pilgrim Baxter Technology, IDEX Great Companies -- America(SM) and IDEX
Great Companies -- Technology(SM) qualify as diversified funds under the 1940
Act. The diversified funds are subject to the following diversification
requirements (which are set forth in full in the SAI):
. As a fundamental policy, with respect to 75% of the total assets of a fund,
the fund may not own more than 10% of the outstanding voting shares of any
issuer (other than U.S. government securities) as defined in the 1940 Act
and, with respect to some funds, in other types of cash items.
. As a fundamental policy with respect to 75% of the total assets of a fund,
the fund will not purchase a security of any issuer if such would cause
the portfolio's holdings of that issuer to amount to more than 5% of the
fund's total assets.
IDEX Salomon All Cap, IDEX Janus Capital Appreciation, IDEX Pilgrim Baxter
Technology, IDEX Great Companies -- America(SM) and IDEX Great Companies --
Technology(SM) each reserves the right to become a diversified investment
company (as defined by the 1940 Act).
[GRAPHIC] CONCENTRATION. Unless otherwise stated in a fund's objective or its
principal strategies and policies, as a fundamental policy governing
concentration, no fund will invest more than 25% of its total assets in any one
particular industry, other than U.S. government securities. Unless otherwise
stated in a fund's objective or its principal strategies and policies, as an
operating policy, no fund will invest 25% or more of its total assets in any one
particular industry, other than U.S. government securities.
[GRAPHIC] INVESTING IN COMMON STOCKS. Many factors cause common stocks to go
up and down in price. A major factor is the financial performance of
the company that issues the stock. Other factors include the overall economy,
conditions in a particular industry, and monetary factors like interest rates.
When your fund holds stocks, there is a risk that some or all of them may be
down in price when you choose to sell fund shares, causing you to lose money.
This is called market risk.
[GRAPHIC] INVESTING IN PREFERRED STOCKS. Because these stocks come with a
promise to pay a stated dividend, their price depends more on the
size of the dividend than on the company's performance. But if a company fails
to pay the dividend, its preferred stock is likely to drop in price. Changes in
interest rates can also affect their price. (See "Investing in bonds," below.)
[GRAPHIC] INVESTING IN "CONVERTIBLES," PREFERRED STOCKS, AND BONDS. Since
preferred stocks and corporate bonds pay a stated return, their
prices usually do not depend on the price of the company's common stock. But
some companies issue preferred stocks and bonds that are convertible into their
common stocks. Linked to the common stock in this way, convertible securities go
up and down in price inversely to interest rates as the common stock does,
adding to their market risk.
[GRAPHIC] VOLATILITY. The more an investment goes up and down in price, the
more volatile it is said to be. Volatility increases the market risk
because even though your fund may go up more than the market in good times, it
may also go down more than the market in bad times. If you decide to sell when a
volatile fund is down, you could lose more. Price changes may be temporary and
for extended periods.
[GRAPHIC] INVESTING IN BONDS. Like common stocks, bonds fluctuate in value,
though the factors causing
this are different, including:
. CHANGES IN INTEREST RATES. Bond prices tend to move the opposite of interest
rates. Why? Because when interest rates on new bond issues go up, rates on
existing bonds stay the same and they become less desirable. When rates go
down, the reverse happens. This is also true for most preferred stocks and
some convertibles.
. LENGTH OF TIME TO MATURITY. When a bond matures, the issuer must pay the
owner its face value. If the maturity date is a long way off, many things
can affect its value, so a bond is more volatile the farther it is from
maturity. As that date approaches, fluctuations usually become smaller and
the price gets closer to face value.
. DEFAULTS. All bond issuers make at least two promises: (1) to pay interest
during the bond's term and (2) to return principal when it matures. If an
issuer fails to keep one or both of these promises,
64
the bond will probably drop in price dramatically, and may even become
worthless.
. DECLINES IN RATINGS. At the time of issue, most bonds are rated by
professional rating services, such as Moody's and S&P. The stronger the
financial backing behind the bond, the higher the rating. If this backing
is weakened or lost, the rating service may downgrade the bond's rating.
This is virtually certain to cause the bond to drop in price.
. LOW RATING. High-yield/high-risk securities (commonly known as "junk bonds")
have greater credit risk, are more sensitive to interest rate movements,
are considered more speculative, have a greater vulnerability to economic
changes, subject to greater price volatility and are less liquid.
. LACK OF RATING. Some bonds are considered speculative, or for other reasons
are not rated. Such bonds must pay a higher interest rate in order to attract
investors. They're considered riskier because of the higher possibility of
default or loss of liquidity.
. LOSS OF LIQUIDITY. If a bond is downgraded, or for other reasons drops in
price, the market demand for it may "dry up." In that case, the bond may be
hard to sell or "liquidate" (convert to cash).
Please see Appendix A for a description of bond ratings.
[GRAPHIC] INVESTING IN FOREIGN SECURITIES. Foreign securities are investments
offered by non-U.S. companies, governments and government agencies.
They involve risks not usually associated with U.S. securities, including:
. CHANGES IN CURRENCY VALUES. Foreign securities are sold in currencies other
than U.S. dollars. If a currency's value drops, the value of your fund
shares could drop too, even if the securities are strong. Dividend and
interest payments may be lower. Factors affecting exchange rates are:
differing interest rates among countries; balances of trade; amount of a
country's overseas investments; and any currency manipulation by banks.
. CURRENCY SPECULATION. The foreign currency market is largely unregulated and
subject to speculation.
. CURRENCY TRADING COSTS. Some funds also invest in American Depositary
Receipts (ADRs) and American Depositary Shares (ADSs). They represent
securities of foreign companies traded on U.S. exchanges, and their values
are expressed in U.S. dollars. Changes in the value of the underlying
foreign currency will change the value of the ADR or ADS. The fund incurs
costs when it converts other currencies into dollars, and vice-versa.
. EURO CONVERSION. On January 1, 1999, certain participating countries in the
European Economic Monetary Union (EU) adopted the "Euro" as their official
currency. Other EU member countries may convert to the Euro at a later
date. As of January 1, 1999, governments in participating countries are
issuing debt and redenominate existing debt in Euros; corporations may choose
to issue stocks or bonds in Euros or national currency. The European Central
Bank, (the "ECB") assumed responsibility for a uniform monetary policy in
participating countries. These transactions have a troubled trading history.
The Euro Bank has intervened to resolve such troubles. Euro conversion risks
that can affect a fund's foreign investments include: (1) the readiness of
Euro payment, clearing, and other operational systems; (2) the legal treatment
of debt instruments and financial contracts in existing national currencies
rather than the Euro; (3) exchange-rate fluctuations between the Euro and
non-Euro currencies during the transition period of January 1, 1999 through
December 31, 2001 and beyond; (4) potential U.S. tax issues with respect to
fund securities; and (5) the ECB's ability to manage monetary policies among
the participating countries.
. DIFFERING ACCOUNTING AND REPORTING PRACTICES. Foreign tax laws are different,
as are laws, practices and standards for accounting, auditing and
reporting data to investors.
. LESS INFORMATION AVAILABLE TO THE PUBLIC. Foreign companies usually make far
less information available to the public.
. LESS REGULATION. Securities regulations in many foreign countries are more
lax than in the U.S.
. MORE COMPLEX NEGOTIATIONS. Because of differing business and legal
procedures, a fund might find it hard to enforce obligations or negotiate
favorable brokerage commission rates.
. LESS LIQUIDITY/MORE VOLATILITY. Some foreign securities are harder to convert
to cash than U.S. securities, and their prices may fluctuate more
dramatically.
. SETTLEMENT DELAYS. "Settlement" is the process of completing payment and
delivery of a securities transaction. In many countries, this process takes
longer than it does in the U.S.
. HIGHER CUSTODIAL CHARGES. Fees charged by the fund's custodian for holding
shares are higher for foreign securities than those of domestic securities.
. VULNERABILITY TO SEIZURE AND TAXES. Some governments can seize assets. They
may also limit movement of assets from the country. Fund interest,
dividends and capital gains may be subject to foreign withholding taxes.
. POLITICAL INSTABILITY AND SMALL MARKETS. Developing countries can be
politically unstable. Economies can be dominated by a few industries, and
markets may trade a small number of securities. Regulation of banks and
capital markets can be weak.
. DIFFERENT MARKET TRADING DAYS. Foreign markets may not be open for trading
the same days as U.S. markets are open and asset values can change before
your transaction occurs.
65
Explanation of Strategies and Risks (Continued)
. HEDGING. A fund may enter into forward currency contracts to hedge against
declines in the value of securities denominated in, or whose value is tied
to, a currency other than the U.S. dollar or to reduce the impact of currency
fluctuation on purchases and sales of such securities. Shifting a fund's
currency exposure from one currency to another removes the fund's opportunity
to profit from the original currency and involves a risk of increased losses
for the fund if the sub-adviser's projection of future exchange rates is
inaccurate.
. EMERGING MARKET RISK. Investing in the securities of issuers located in or
principally doing business in emerging markets bear foreign exposure risks
as discussed above. In addition, the risks associated with investing in
emerging markets are often greater than investing in developed foreign
markets. Specifically, the economic structures in emerging market countries
are less diverse and mature than those in developed countries, and their
political systems are less stable. Investments in emerging market countries
may be affected by national policies that restrict foreign investments.
Emerging market countries may have less developed legal structures, and the
small size of their securities markets and low trading volumes can make
investments illiquid and more volatile than investments in developed
countries. As a result, a fund investing in emerging market countries may
be required to establish special custody or other arrangements before
investing.
[GRAPHIC] INVESTING IN FUTURES, OPTIONS AND DERIVATIVES. Besides conventional
securities, your fund may seek to increase returns by investing in
financial contracts related to its primary investments. Such contracts involve
additional risks and costs. Risks include:
. Inaccurate market predictions. If the sub-adviser is wrong in its
expectation, for example, with respect to interest rates, securities prices or
currency markets, the contracts could produce losses instead of gains.
. Prices may not match. Movements in the price of the financial contracts may
be used to offset movements in the price of other securities included in
the fund's portfolio. If those prices don't correlate or match closely
(I.E., imperfect correlation), the benefits of the transaction might be
diminished and the fund may lose money, which may result in substantial
losses.
. Illiquid markets. If there is no market for the contracts, the fund may not be
able to control losses.
. Tax consequences. A fund may have to delay closing out certain derivative
positions to avoid adverse tax consequences.
[GRAPHIC] INVESTING IN STOCK INDEX FUTURES. Futures involve additional
investment risks and transactional costs, and draw upon skills and
experience which are different than those needed to pick other securities.
Special risks include:
. inaccurate market predictions
. imperfect correlation
. illiquidity
. tax consequences
. potential unlimited loss
. volatile net asset value due to substantial fluctuations in the value of
these futures
[GRAPHIC] INVESTING IN FORWARD FOREIGN CURRENCY CONTRACTS. A forward foreign
currency contract is an agreement between contracting parties to
exchange an amount of currency at some future time at an agreed upon rate. These
contracts are used as a hedge against fluctuations in foreign exchange rates.
Hedging against a decline in the value of a currency does not eliminate
fluctuations in the prices of securities, or prevent losses if the prices of
the fund's securities decline.
Such hedging transactions preclude the opportunity for a gain if the value of
the hedging currency should rise. Forward contracts may, from time to time, be
considered illiquid, in which case they would be subject to the fund's
limitations on investing in illiquid securities. If a fund's manager makes the
incorrect prediction, the opportunity for loss can be magnified.
[GRAPHIC] ZERO COUPON SECURITIES. Zero coupon securities do not pay interest or
principal until final maturity unlike debt securities that provide
periodic payments of interest (referred to as coupon payment). Investors buy
zero coupon securities at a price below the amount payable at maturity. The
difference between the purchase price and the amount paid at maturity represents
interest on the zero coupon security. Investors must wait until maturity to
receive interest and principal, which exposes investors to risks of payment
default and volatility.
[GRAPHIC] GENERAL OBLIGATION BONDS. General obligation bonds are supported by
the issuer's power to exact property or other taxes. The issuer must
impose and collect taxes sufficient to pay principal and interest on the bonds.
However, the issuer's authority to impose additional taxes may be limited by its
charter or state law.
[GRAPHIC] SPECIAL REVENUE BONDS. Special revenue bonds are payable solely from
specific revenues received by the issuer such as specific taxes,
assessments, tolls, or fees. Bondholders may not collect from the municipality's
general taxes or revenues. For example, a municipality may issue bonds to build
a toll road, and pledge the tolls to repay the bonds. Therefore, a shortfall in
the tolls normally would result in a default on the bonds. Investors in these
bonds are exposed to the credit standing of the municipality. If the
municipality defaults on the bonds, there may be a loss on the investment.
[GRAPHIC] PRIVATE ACTIVITY BONDS. Private activity bonds are special revenue
bonds used to finance private entities. For example, a municipality
may issue
66
bonds to finance a new factory to improve its local economy. The municipality
would lend the proceeds from its bonds to the company using the factory, and
the company would agree to make loan payments sufficient to repay the bonds.
The bonds would be payable solely from the company's loan payments, not from
any other revenues of the municipality. Therefore, any default on the loan
normally would result in a default on the bonds.
The interest on many types of private activity bonds is subject to Alternate
Minimum Tax (AMT). The IDEX Federated Tax Exempt Fund may invest in bonds
subject to AMT.
[GRAPHIC] TAX INCREMENT FINANCING BONDS. Tax increment financing (TIF) bonds
are payable from increases in taxes or other revenues attributable to
projects financed by the bonds. For example, a municipality may issue
TIF bonds to redevelop a commercial area. The TIF bonds would be payable solely
from any increase in sales taxes collected from merchants in the area. The bonds
could default if merchants' sales, and related tax collections, failed to
increase as anticipated.
[GRAPHIC] VARIABLE RATE DEMAND INSTRUMENTS. Variable rate demand instruments
are tax exempt securities that require the issuer or a third party,
such as a dealer or bank, to repurchase the security for its face
value upon demand. Investors in these securities are subject to the risk that
the dealer or bank may not repurchase the instrument. The securities also pay
interest at a variable rate intended to cause the securities to trade at their
face value. The Fund treats demand instruments as short-term securities, because
their variable interest rate adjusts in response to changes in market rates,
even though their stated maturity may extend beyond 13 months.
[GRAPHIC] CREDIT ENHANCEMENT. Credit enhancement consists of an arrangement in
which a company agrees to pay amounts due on a fixed income security
if the issuer defaults. In some cases the company providing credit
enhancement makes all payments directly to the security holders and receives
reimbursement from the issuer. Normally, the credit enhancer has greater
financial resources and liquidity than the issuer. For this reason, the
sub-adviser usually evaluates the credit risk of a fixed income security based
solely upon its credit enhancement.
[GRAPHIC] INVESTING IN TAX-EXEMPT SECURITIES. Some municipal obligations pay
interest that, while tax-exempt, may be considered a "preference item"
for determining the federal alternative minimum tax. This may result
in your paying more tax than you would have otherwise. Also, Congress
periodically threatens to limit or do away with the tax exemption on municipal
obligations. If that happened, it could substantially reduce the value of your
fund's assets.
[GRAPHIC] INVESTING IN SPECIAL SITUATIONS. Each fund may invest in "special
situations" from time to time. Special situations arise when, in the
opinion of a fund manager, a company's securities may be undervalued,
then potentially increase considerably in price, due to:
. a new product or process
. a management change
. a technological breakthrough
. an extraordinary corporate event
. a temporary imbalance in the supply of, and demand for, the securities of an
issuer
Investing in a special situation carries an additional risk of loss if the
expected development does not happen or does not attract the expected
attention. The impact of special situation investing to a fund will depend on
the size of the fund's investment in a situation.
[GRAPHIC] INTRINSIC VALUE. (GREAT COMPANIES' FUNDS) Great Companies monitors
changes in a company's Intrinsic Value over a twelve to eighteen
month period. It then determines a company's Intrinsic Value Momentum
(IVM), which is a measurement of the rate at which a company is increasing or
decreasing its Intrinsic Value. Great Companies looks at the trading price of
the stock and compares it to its Intrinsic Value calculation. If a stock appears
to be significantly overvalued in the market and its IVM is flat or declining
when compared to the Intrinsic Value calculation, Great Companies does not
invest in the stock or, if the fund has already invested in the company, may
reduce its position in the stock. When the stock share price drops well below
the Intrinsic Value calculation and its IVM is rising, Great Companies will
normally invest in the company or, if the fund has already invested in the
company, attempt to buy more shares.
[GRAPHIC] PORTFOLIO TURNOVER. A fund may engage in a significant number of
short-term transactions, which may lower fund performance. High
turnover rate will not limit a manager's ability to buy or sell
securities for these funds, although certain tax rules may restrict a fund's
ability to sell securities when the security has been held for less than three
months. Increased turnover (100% or more) results in higher brokerage costs or
mark-up charges for a fund. The funds ultimately pass these charges on to
shareholders. Short-term trading may also result in short-term capital gains,
which are taxed as ordinary income to shareholders. IDEX Janus Capital
Appreciation, IDEX Alger Aggressive Growth, IDEX Pilgrim Baxter Technology, IDEX
GE International Equity, IDEX GE U.S. Equity, IDEX Jennison Equity Opportunity
(formerly IDEX C.A.S.E. Growth), IDEX Janus Flexible Income and IDEX Pilgrim
Baxter Mid Cap Growth had turnover rates greater than 100% for the fiscal year
ended October 31, 2000.
[GRAPHIC] INVESTMENT STRATEGIES. A fund is permitted to use other securities
and investment strategies in pursuit of its investment objective,
subject to
67
EXPLANATION OF STRATEGIES AND RISKS (CONTINUED)
limits established by the Fund's Board of Trustees. No fund is under any
obligation to use any of the techniques or strategies at any given time or
under any particular economic condition. Certain instruments and investment
strategies may expose the funds to other risks and considerations, which are
discussed in the Fund's SAI.
[GRAPHIC] GROWTH INVESTING. Securities with different characteristics tend to
shift in and out of favor depending upon market and economic
conditions as well as investor sentiment. A fund may underperform
other funds that employ a different style. Growth stocks may be more volatile
than other stocks because they are more sensitive to investor perceptions of the
issuing company's growth potential. Growth-oriented funds typically will
underperform when value investing is in favor.
[GRAPHIC] VARIOUS INVESTMENT TECHNIQUES. Various investment techniques are
utilized to increase or decrease exposure to changing security prices,
interest rates, currency exchange rates, commodity prices or other
factors that affect security values. These techniques may involve derivative
securities and transactions such as buying and selling options and futures
contracts, entering into currency exchange contracts or swap agreements and
purchasing indexed securities. These techniques are designed to adjust the risk
and return characteristics of the fund's portfolio of investments and are not
used for leverage. Use of such strategies may result in a fund manager's failure
to achieve the fund's goals. Also, limiting losses in this manner may cap
possible gains.
[GRAPHIC] RESERVE INVESTMENT FUNDS. IDEX T. Rowe Price Small Cap and IDEX T.
Rowe Price Dividend Growth may invest in money market instruments
directly or indirectly through investment in an internally managed,
money market fund, the Reserve Investment Funds, Inc. (Reserve Fund). The
Reserve Investment Fund and Government Reserve Investment Fund, each a series of
the Reserve Fund, are advised by T. Rowe Price and charges no advisory fees to
the investment manager, but other fees may be incurred which may result in a
duplication of fees. Further information is included in the SAI.
[GRAPHIC] GEI SHORT-TERM INVESTMENT FUND. IDEX GE International Equity and IDEX
GE U.S. Equity may invest in money market instruments directly or
indirectly through investment in the GEI Short-Term Investment Fund
(Investment Fund). The Investment Fund is advised by GEAM; GEAM charges no
advisory fee to the Investment Fund, but other fees may be incurred which may
result in a duplication of fees.
[GRAPHIC] IPOs. IPOs are subject to specific risks which include:
. high volatility
. no track record for consideration
. securities are less liquid
. earnings are less predictable
[GRAPHIC] TEMPORARY DEFENSIVE STRATEGIES. For temporary defensive purposes, a
fund may, at times, choose to hold some portion of its net assets in
cash, or to invest that cash in a variety of debt securities. This may
be done as a defensive measure at times when desirable risk/reward
characteristics are not available in stocks or to earn income from otherwise
uninvested cash. When a fund increases its cash or debt investment position, its
income may increase while its ability to participate in stock market advances or
declines decrease. Furthermore, when a fund assumes a temporary defensive
position it may not be able to achieve its investment objective.
[GRAPHIC] INTERNET OR SECTOR RISK. IDEX Munder Net50 will invest primarily in
companies engaged in Internet and Intranet related activities. The
value of such companies is particularly vulnerable to rapidly changing
technology, extensive government regulation and relatively high risks of
obsolescence caused by scientific and technological advances. The value of the
fund's shares may fluctuate more than shares of a fund investing in a broader
range of industries.
68
HOW THE IDEX FUNDS ARE MANAGED AND ORGANIZED
IDEX Mutual Funds is run by a Board of Trustees.
The assets of each fund are managed by an investment adviser, who in turn
selects sub-advisers, who have hired fund managers. All such advisers to the
funds are supervised by the Board of Trustees. You can find information about
the Trustees and officers of the Fund in the SAI.
IDEX MANAGEMENT, INC. (IMI), located at 570 Carillon Parkway, St. Petersburg,
Florida 33716, serves as investment adviser to the Fund. IMI has been serving
as an investment adviser since 1985.
The investment adviser hires sub-advisers to furnish investment advice and
recommendations and has entered into sub-advisory agreements with each
sub-adviser. The investment adviser also monitors the sub-advisers' buying and
selling of securities and administration of the funds. For these services, it
is paid an advisory fee. This fee is based on the average daily net assets of
each fund, and is paid at the rates shown in the table below.
IMI is a wholly-owned direct subsidiary, and Great Companies, LLC is a 30%
owned indirect subsidiary, of AUSA Holding Company (AUSA). AUSA is a holding
company which is wholly-owned by AEGON USA, Inc. (AEGON USA), a financial
services holding company whose primary emphasis is on life and health
insurance, and annuity and investment products. AEGON USA is a wholly-owned
indirect subsidiary of AEGON N.V., a Netherlands corporation and publicly
traded international insurance group.
Here is a listing of the sub-advisers and the funds they manage:
SUB-ADVISER FUND NAME
- ----------- ---------
Janus IDEX Janus Growth
IDEX Janus Global
IDEX Janus Balanced
IDEX Janus Capital Appreciation
IDEX Janus Flexible Income
IDEX Janus Growth & Income
Alger IDEX Alger Aggressive Growth
T. Rowe Price IDEX T. Rowe Price Dividend
Growth
IDEX T. Rowe Price Small Cap
Pilgrim Baxter IDEX Pilgrim Baxter Mid Cap
Growth
IDEX Pilgrim Baxter Technology
Gabelli IDEX Gabelli Global Growth
GSAM IDEX Goldman Sachs Growth
TIM IDEX Transamerica Equity
IDEX Transamerica Small
Company
SaBAM IDEX Salomon All Cap
Great Companies IDEX Great Companies --
America(SM)
IDEX Great Companies --
Technology(SM)
IDEX Great Companies -- Global/2/
AIMI IDEX AEGON Income Plus
Federated IDEX Federated Tax Exempt
GEAM IDEX GE International Equity
IDEX GE U.S. Equity
Dean IDEX Dean Asset Allocation
Luther King IDEX LKCM Strategic Total Return
NWQ IDEX NWQ Value Equity
Jennison IDEX Jennison Equity Opportunity
Munder IDEX Munder Net50
American IDEX American Century Income &
Century Growth
IDEX American Century
International
Ironwood IDEX Isabelle Small Cap Value
69
HOW THE IDEX FUNDS ARE MANAGED AND ORGANIZED (CONTINUED)
- --------------------------------------------------------------------------------
ADVISORY FEE SCHEDULE--ANNUAL RATES
- --------------------------------------------------------------------------------
IDEX IDEX IDEX IDEX
JANUS* IDEX IDEX IDEX JANUS** AEGON FEDERATED
CAPITAL JANUS JANUS* JANUS* FLEXIBLE INCOME TAX
AVERAGE DAILY NET ASSETS APPRECIATION GLOBAL GROWTH BALANCED INCOME PLUS EXEMPT
- -------------------------------------------------------------------------------------------------------------------
First $750 million 1.00% 1.00% 1.00% 1.00% N/A 0.60% 0.60%
- -------------------------------------------------------------------------------------------------------------------
the next $250 million 0.90% 0.90% 0.90% 0.90% N/A 0.60% 0.60%
- -------------------------------------------------------------------------------------------------------------------
over $1 billion 0.85% 0.85% 0.85% 0.85% N/A 0.60% 0.60%
- -------------------------------------------------------------------------------------------------------------------
First $100 million 0.90%
- -------------------------------------------------------------------------------------------------------------------
the next $150 million 0.80%
- -------------------------------------------------------------------------------------------------------------------
over $250 million 0.70%
- -------------------------------------------------------------------------------------------------------------------
*IMI has contractually agreed to waive a portion of its advisory fee for this
fund as follows: 0.0250% of average daily net assets from $100 - $500 million
(net 0.9750%); 0.0750% of assets from $500 - $750 million (net 0.9250%);
0.0250% of assets from $750 million - $1 billion (net 0.8750%); and 0.0250% of
assets above $1 billion (net 0.8250%).
**IMI has contractually agreed to waive a portion of its advisory fee as
follows: 0.0250% of the first $100 million of average daily net assets (net
0.8750%); 0.0250% of assets from $100 - $250 million (net 0.7750%); and 0.0250%
of assets above $250 million (net 0.6750%).
- --------------------------------------------------------------------------------
IDEX IDEX IDEX
ALGER T. ROWE PRICE IDEX PILGRIM BAXTER
AVERAGE DAILY AGGRESSIVE DIVIDEND T. ROWE PRICE MID CAP
NET ASSETS GROWTH GROWTH SMALL CAP GROWTH
- ---------------------------------------------------------------------------------
First $500 million 0.80% 0.80% 0.80% 0.80%
- ---------------------------------------------------------------------------------
over $500 million 0.70% 0.70% 0.70% 0.70%
- ---------------------------------------------------------------------------------
IDEX IDEX
IDEX GOLDMAN IDEX TRANSAMERICA IDEX
AVERAGE DAILY PILGRIM BAXTER SACHS TRANSAMERICA SMALL SALOMON
NET ASSETS TECHNOLOGY GROWTH EQUITY COMPANY ALL CAP
- ---------------------------------------------------------------------------------------
First $500 million 1.00% 0.80% 0.80% 0.80% 0.80%
- ---------------------------------------------------------------------------------------
over $500 million 0.90% 0.70% 0.70% 0.70% 0.70%
- ---------------------------------------------------------------------------------------
IDEX IDEX IDEX
GE IDEX DEAN GREAT
AVERAGE DAILY INTERNATIONAL GE U.S. ASSET COMPANIES --
NET ASSETS EQUITY EQUITY ALLOCATION AMERICASM
- --------------------------------------------------------------------------
First $500 million 0.80% 0.80% 0.80% 0.80%
- --------------------------------------------------------------------------
over $500 million 0.70% 0.70% 0.70% 0.70%
- --------------------------------------------------------------------------
IDEX IDEX IDEX IDEX IDEX
LKCM GREAT GREAT NWQ JENNISON
AVERAGE DAILY STRATEGIC COMPANIES -- COMPANIES -- VALUE EQUITY
NET ASSETS TOTAL RETURN TECHNOLOGYSM GLOBAL2 EQUITY OPPORTUNITY
- ---------------------------------------------------------------------------------------
First $500 million 0.80% 0.80% 0.80% 0.80% 0.80%
- ---------------------------------------------------------------------------------------
over $500 million 0.70% 0.70% 0.70% 0.70% 0.70%
- ---------------------------------------------------------------------------------------
IDEX
AVERAGE DAILY GABELLI GLOBAL
NET ASSETS GROWTH
- ---------------------------------------------
First $500 million 1.00%
- ---------------------------------------------
$500 million -- $1 billion 0.90%
- ---------------------------------------------
over $1 billion 0.80%
- ---------------------------------------------
IDEX
AVERAGE DAILY JANUS GROWTH
NET ASSETS & INCOME
- ---------------------------------------
First $100 Million 1.00%
- --------------------------------------
the next $400 Million 0.95%
- --------------------------------------
Over $500 Million 0.85%
- --------------------------------------
AVERAGE DAILY IDEX
NET ASSETS MUNDER NET50
- ----------------------------------
First $1 billion 1.00%
- ---------------------------------
over $1 billion 0.95%
- ---------------------------------
IDEX
AVERAGE DAILY AMERICAN CENTURY
NET ASSETS INCOME & GROWTH
- -------------------------------------------
First $100 million 0.90%
- ------------------------------------------
the next $150 million 0.85%
- ------------------------------------------
over $250 million 0.80%
- ------------------------------------------
IDEX
AVERAGE DAILY AMERICAN CENTURY
NET ASSETS INTERNATIONAL
- -------------------------------------------
First $50 million 1.00%
- ------------------------------------------
the next $100 million 0.95%
- ------------------------------------------
the next $350 million 0.90%
- ------------------------------------------
over $500 million 0.85%
- ------------------------------------------
IDEX
AVERAGE DAILY ISABELLE
NET ASSETS SMALL CAP VALUE
- ---------------------------------------
First $200 million 0.90%
- ----------------------------------
over $200 million 0.85%
- ----------------------------------
70
For the fiscal year ended October 31, 2000, each fund paid the following
management fee as a percentage of the fund's average daily net assets, after
reimbursement and/or fee waivers (if applicable)*:
IDEX Janus Capital Appreciation (formerly IDEX JCC Capital Appreciation) 0.96%
IDEX Janus Global (formerly IDEX JCC Global) 0.98%
IDEX Janus Growth (formerly IDEX JCC Growth) 0.85%
IDEX Janus Balanced (formerly IDEX JCC Balanced) 0.98%
IDEX Janus Flexible Income (formerly IDEX JCC Flexible Income) 0.87%
IDEX Alger Aggressive Growth 0.58%
IDEX AEGON Income Plus 0.60%
IDEX Federated Tax Exempt (formerly IDEX AEGON Tax Exempt) 0.27%
IDEX GE International Equity 0.00%
IDEX Dean Asset Allocation 0.33%
IDEX LKCM Strategic Total Return 0.67%
IDEX NWQ Value Equity 0.15%
IDEX Jennison Equity Opportunity (formerly IDEX C.A.S.E. Growth) 0.00%
IDEX T. Rowe Price Dividend Growth/(1)/ 0.00%
IDEX T. Rowe Price Small Cap/(1)/ 0.00%
IDEX Salomon All Cap/(1)/ 0.00%
IDEX Goldman Sachs Growth/(1)/ 0.00%
IDEX Pilgrim Baxter Mid Cap Growth/(1)/ 0.28%
IDEX Pilgrim Baxter Technology/(2)/ 0.32%
IDEX Transamerica, Equity/(2)/ 0.00%
IDEX Transamerica Small Company/(2)/ 0.00%
IDEX GE U.S. Equity/(2)/ 0.00%
IDEX Great Companies -- America(SM)/(3)/ 0.00%
IDEX Great Companies -- Technology(SM)/(3)/ 0.00%
IDEX Great Companies -- Global/(4)/ 0.00%
IDEX Gabelli Global Growth/(4)/ 0.00%
* Information is not included for IDEX Janus Growth & Income, IDEX American
Century Income & Growth, IDEX American Century International, IDEX Isabelle
Small Cap Value and IDEX Munder Net50 as they had not commenced operations
as of October 31, 2000.
(1) Fund commenced operations on 3/01/99.
(2) Fund commenced operations on 3/01/00.
(3) Fund commenced operations on 7/14/00.
(4) Fund commenced operations on 9/15/00.
71
HOW THE IDEX FUNDS ARE MANAGED AND ORGANIZED (CONTINUED)
Day-to-day management of the investments in each fund is the responsibility of
the fund manager. The fund managers for IDEX Mutual Funds are:
IDEX JANUS GROWTH
EDWARD KEELY, vice president, serves as manager of this fund.
Mr. Keely has been sole manager of this fund since January, 2000. He served as
co-manager of the fund since January, 1999. Prior to joining Janus in 1998, he
was a senior vice president of investments at Founders.
Janus has provided investment advisory services to various clients since 1978.
IDEX JANUS GLOBAL
HELEN YOUNG HAYES, CFA, executive vice president, and LAURENCE CHANG, CFA,
executive vice president, serve as co-managers of this fund. Ms. Hayes has
served as manager or co-manager of this fund since inception. She has been
employed by Janus since 1987. Laurence Chang has served as co-manager of this
fund since January 2000. Before joining Janus in 1993, Mr. Chang was a project
director at the National Security Archive.
IDEX JANUS BALANCED
KAREN L. REIDY, CFA, executive vice president, has served as manager of this
fund since January 2000. Prior to joining Janus in 1995, she was a manager in
both the Mergers and Acquisitions and Audit business units at
PricewaterhouseCoopers LLP.
IDEX JANUS CAPITAL APPRECIATION
JAMES P. GOFF, CFA, executive vice president, has managed this fund since its
inception. He joined Janus in 1988.
IDEX JANUS FLEXIBLE INCOME
RONALD V. SPEAKER, executive vice president, has managed this fund since
October 1993. He has been with Janus since 1986. On January 13, 1997, Mr.
Speaker settled an SEC administrative action involving two personal trades that
he made in January 1993. Without admitting or denying the allegations, he
agreed to civil monetary penalty, disgorgement and interest payments totaling
$37,199 and a 90-day suspension starting January 29, 1997.
IDEX JANUS GROWTH & INCOME
DAVID J. CORKINS, has managed this fund since its inception. Prior to joining
Janus in 1995, he served as Chief Financial Officer of Chase U.S. Consumer
Services, Inc., a Chase Manhattan mortgage business. Mr. Corkins serves as
portfolio manager to other Janus funds.
IDEX ALGER AGGRESSIVE GROWTH
DAVID D. ALGER has been employed by Alger since 1971 and has served as
president since 1995. He has managed this fund since inception.
SEILAI KHOO has served as co-manager of this fund since June 2000. She has been
employed by Alger as a senior research analyst since 1989, as a senior vice
president since 1995 and an executive vice president since 2000. Ms. Khoo also
serves as a portfolio manager of other Alger funds.
Alger has provided investment advisory services to various clients since 1964.
IDEX T. ROWE PRICE DIVIDEND GROWTH
THOMAS J. HUBER, CFA, has managed this fund since March 29, 2000 and heads the
Investment Team for this fund. He joined T. Rowe Price in 1994. Mr. Huber and
the Investment team also manage the T. Rowe Price Dividend Growth Fund.
T. Rowe Price has provided investment advisory services to various clients
since 1937.
IDEX T. ROWE PRICE SMALL CAP
PAUL W. WOJCIK, CFA, has managed this fund since December 2000 and heads the
Investment Team for this fund. He joined T. Rowe Price in 1996 and has been a
member of the Investment Team since the fund's inception. In addition, Mr.
Wojcik serves as the Chairman of the Investment Team for the T. Rowe Price
Diversified Small-Cap Growth Fund. Prior to joining T. Rowe Price, Mr. Wojcik
was a Senior Programmer/Analyst at Fidelity Investments.
IDEX PILGRIM BAXTER MID CAP GROWTH
IDEX PILGRIM BAXTER TECHNOLOGY
JEFFREY A. WRONA, CFA, has managed these funds since inception. Prior to
joining Pilgrim Baxter in 1997, he was a senior portfolio manager at Munder
Capital Management.
Mr. Wrona also serves as the portfolio manager of the PBHG Technology &
Communications Fund. In addition, he manages small and mid cap portfolios.
While at Munder Capital Management, he co-founded Munder's Mid Cap Growth
product, the Munder NetNet Fund, and managed both mutual fund and separate
account portfolios.
Pilgrim Baxter has provided investment advisory services to various clients
since 1982.
IDEX GOLDMAN SACHS GROWTH
HERBERT E. EHLERS, Managing Director of GSAM, has served as head of an
investment team that has managed this fund since inception. As of the date of
this prospectus, the investment team consists of nineteen persons. Prior to
joining GSAM in 1997, he was chief investment officer at Liberty Investment
Management, Inc. from 1994-1997.
This investment team also manages the Goldman Sachs Capital Growth Fund,
Goldman Sachs Balanced Fund, Goldman Sachs Strategic Growth Fund, Goldman Sachs
72
Growth Opportunities Fund and Goldman Sachs Internet Tollkeeper Fund(SM.)
Goldman Sachs has provided investment advisory services to various clients
since 1981.
IDEX TRANSAMERICA EQUITY
JEFFREY S. VAN HARTE, CFA, primary manager, and GARY U. ROLLE, CFA, secondary
manager, serve as co-managers of this fund. Mr. Van Harte is senior vice
president and head of Equity Investments, TIM, manager of the Transamerica
Premier Equity Fund since 1998 and Transamerica VIF Growth Portfolio since
1984, co-manager of the Transamerica Value Fund since 1998, and was manager of
the Transamerica Premier Balanced Fund from 1995 to 1998. He joined
Transamerica in 1980.
Mr. Rolle is president & chief investment officer, TIM, chairman & president,
Transamerica Income Shares, Transamerica Occidental's Separate Account Fund B
and Transamerica Variable Insurance Fund, Inc. and president of Transamerica
Investors, Inc. He was chief investment officer, Transamerica Occidental Life
Insurance Company, Transamerica Life Insurance & Annuity Company and
Transamerica Assurance Company until 2000 and investment officer of these
companies since 2000. He has been manager of Transamerica Premier Balanced Fund
since 1998 and co-manager of Transamerica Premier Equity Fund since 1999. He
joined Transamerica in 1967.
TIM, through its affiliates, has provided investment advisory services to
various clients since 1967.
IDEX TRANSAMERICA SMALL COMPANY
CHRISTOPHER J. BONAVICO, CFA, primary manager, and TIMOTHY S. GAUMER, CFA,
secondary manager, serve as co-managers of this fund. Mr. Bonavico is vice
president and fund manager, TIM, and manager of the Transamerica Premier
Aggressive Growth Fund and Transamerica Premier Small Company Fund since 1999.
He was manager of the Transamerica Premier Value Fund from 1998 to 1999;
manager of the Transamerica Premier Index Fund from inception to 1998; and
co-manager of the Transamerica Premier Aggressive Growth Fund, Transamerica
Premier Small Company Fund, Transamerica Premier Balanced Fund and Transamerica
Premier Index Fund from 1998 to 1999. He joined Transamerica in 1993.
Mr. Gaumer is assistant vice president and portfolio manager, TIM. He has been
co-manager of the Transamerica Premier Small Company Fund since 1999. Prior to
joining Transamerica in 1997, he was an equity analyst, Chancellor LGT Asset
Management, 1995 - 1997, and Senior Analyst, Emerging Growth Management, 1994 -
1995.
IDEX SALOMON ALL CAP
ROSS S. MARGOLIES, managing director of SaBAM, has managed this fund since
inception. Mr. Margolies joined SBAM in 1992.
ROBERT M. DONAHUE, JR., managing director and equity analyst with SBAM, assists
in the day-to-day management of the fund. Prior to joining SBAM in 1997, Mr.
Donahue worked as an equity analyst at Gabelli & Company. Mr. Margolies and Mr.
Donahue also manage the Capital Fund for SBAM.
Salomon has provided investment advisory services to various clients since
1987.
IDEX AEGON INCOME PLUS
DAVID R. HALFPAP, CFA, has served as manager of this fund since its inception.
He has been employed by AIMI since 1975 and currently is a senior vice
president.
CRAIG M. ENRIGHT, CFA, became a co-manager of this fund in August 1998. He
joined AIMI in 1996. His prior work experience includes ten years with the
Chicago Board of Trade, two years with the Securities Corporation of Iowa and
five years at Northern Trust Company.
BRADLEY J. BEMAN, CFA, became a co-manager of this fund in August 1998. He
joined AIMI in 1988 after working in various capacities with AEGON USA, Inc.
and Life Investors Insurance Company of America.
AIMI has provided investment advisory services to various clients since 1989.
IDEX GE INTERNATIONAL EQUITY
RALPH R. LAYMAN is a director and executive vice president of GEAM. Mr. Layman
leads a team of portfolio managers for the Fund. He has served in this capacity
since the fund's inception. Mr. Layman joined GEAM in 1991 as executive vice
president for international investments.
Mr. Layman manages the overall international equity investments for GE Asset
Management Incorporated. He leads the team of portfolio managers for the GE
International Equity Fund and GE Emerging Markets Fund and serves as
co-portfolio manager for GE Global Equity Fund. Mr. Layman has also managed
foreign investments for GE Strategic Investment Fund.
GEAM has provided investment advisory services to various clients since 1988.
IDEX GE U.S. EQUITY
EUGENE K. BOLTON is a director and executive vice president of GEAM. MR. Bolton
leads a team of fund managers for this fund. He has served in that capacity
since the fund's inception. Mr. Bolton joined GEAM in 1984 as Chief Financial
Officer and has been a portfolio manager since 1986. Mr. Bolton manages the
overall U.S. equity investments for GEAM. He leads the team of portfolio
managers for the GE U.S. Equity Fund.
IDEX DEAN ASSET ALLOCATION
JOHN C. RIAZZI, CFA, president and chief investment officer, served as
co-portfolio manager of this fund since its inception through October 1999 at
which point he became sole manager. He joined Dean in 1989.
73
HOW THE IDEX FUNDS ARE MANAGED AND ORGANIZED (CONTINUED)
Dean has provided investment advisory services to various clients since 1972.
IDEX LKCM STRATEGIC TOTAL RETURN
LUTHER KING, JR., CFA, and SCOT C. HOLLMANN, CFA, have co-managed this fund
since its inception. Mr. King has been a portfolio manager and the president of
Luther King since 1979. Mr. Hollmann has been a portfolio manager and a vice
president since 1983.
Luther King has provided investment advisory services to various clients since
1979.
IDEX NWQ VALUE EQUITY
E. C. "TED" FRIEDEL, CFA, has been the senior manager of this fund since
inception. He has been a managing director and investment strategist with NWQ
since 1983.
JON D. BOSSE, CFA, has served as co-manager of this fund since January 2001. He
joined NWQ in 1996 as Director of Equity Research and Managing Director. His
prior experience includes ten years with ARCO Investment Management Co. as
Director of Equity Research.
NWQ has provided investment advisory services to various clients since 1982.
IDEX JENNISON EQUITY OPPORTUNITY
BRADLEY GOLDBERG, CFA, MARK G. DEFRANCO AND BRIAN GILLOTT serve as co-managers
of this fund. Mr. Goldberg has served as manager of this fund since December 1,
2000. Mr. Goldberg is an executive vice president of Jennison. Mr. Goldberg
joined Jennison in 1974 and serves as portfolio manager to other funds.
MARK G. DEFRANCO, Vice President, Equity Research, has served as co-manager of
this fund since December, 2000. Mr. DeFranco joined Jennison in 1998. Prior to
joining Jennison, Mr. DeFranco was a precious metal equity analyst and
portfolio manager at Pomboy Capital from 1995 to 1998.
BRIAN GILLOTT, Vice President, Equity Research, has served as co-manager of
this fund since December, 2000. Mr. Gillott joined Jennison in 1998. Prior to
joining Jennison, Mr. Gillott served as an equity analyst for the Soros Fund,
and prior to that he was an analyst at Goldman Sachs & Co.
Jennison has provided investment advisory services to various clients since
1969.
IDEX GREAT COMPANIES -- AMERICA(SM)
IDEX GREAT COMPANIES -- TECHNOLOGY(SM)
IDEX GREAT COMPANIES -- GLOBAL/2/
JAMES H. HUGUET and GERALD W. BOLLMAN, CFA serve as co-managers of these funds.
Mr. Huguet serves as Director, President and Co-CEO of Great Companies, L.L.C.
Mr. Huguet also serves as director and president of Great Companies, Inc. From
1994 until 1998, Mr. Huguet was executive vice president of Information
Resources, Inc., Chicago, IL, a market research firm.
Mr. Bollman is executive vice president of Great Companies, L.L.C. Mr. Bollman
also serves as executive vice president of Great Companies, Inc. From 1995
until 1999, Mr. Bollman was chairman and manager of Intrinsic Value Associates,
an investment advisory service for institutional managers. He previously served
as executive vice president and portfolio manager for Continental Asset
Management Corporation.
Great Companies has provided investment advisory services to various clients
services since 2000.
IDEX FEDERATED TAX EXEMPT
J. SCOTT ALBRECHT, CFA and MARY JO OCHSON, CFA have served as co-managers of
this fund since June 15, 2000. Mr. Albrecht joined Federated in 1989 and has
been a senior portfolio manager since 1997. He has served as a vice president
of Federated since 1994. He also serves as co-manager of Federated's Municipal
Securities Fund, Inc.
Ms. Ochson joined Federated in 1982 and has been a senior portfolio manager and
senior vice president since 1996. From 1988 through 1995, Ms. Ochson served as
a portfolio manager and vice president of Federated. She also serves as
co-manager of Federated's Municipal Securities Fund, Inc.
Federated has provided investment advisory services to various clients since
1955.
IDEX GABELLI GLOBAL GROWTH
The fund is managed by an investment team that is headed by Marc J. Gabelli,
Portfolio Manager. Mr. Gabelli, as Team Manager, is primarily responsible for
all the investment decisions for the fund. Mr. Gabelli has been a portfolio
manager and an analyst with Gabelli since 1993.
Gabelli Asset Management Company and its predecessors has provided investment
advisory services to various clients since 1977.
IDEX MUNDER NET50
ALAN H. HARRIS, CFA and Senior Portfolio Manager has served as head of a
committee of professional fund managers employed by Munder that makes the
investment decisions for the fund since inception. Mr. Harris serves as
co-manager of The Munder NetNet Fund, The Munder Future Technology Fund and The
Munder International NetNet Fund. He is also a member of the team responsible
for Munder Capital Management's equity security analysis, specializing in the
communications industry.
Munder has provided investment advisory services to various clients since 1985.
IDEX AMERICAN CENTURY INCOME & GROWTH
American Century uses a team of fund managers and analysts to manage this fund.
The team meets regularly to review portfolio holdings and discuss purchase and
74
sale activity. Team members buy and sell securities for the fund as they see
fit, guided by the fund's investment objective and strategy.
The fund managers on the investment team are:
JOHN SCHNIEDWIND, CFA, Senior Vice President, Senior Portfolio Manager and
Group Leader-Quantitative Equity, has been a member of the team since the
fund's inception. He joined American Century in 1982 and also supervises other
portfolio management teams.
KURT BORGWARDT, CFA, Senior Portfolio Manager and Director of Quantitative
Equity Research, joined American Century in August 1990, and has managed the
quantitative equity research effort since then. He has been a member of the
team since inception. American Century has provided investment advisory
services to various clients since 1958.
IDEX AMERICAN CENTURY INTERNATIONAL
American Century uses a team of fund managers and analysts to manage this fund.
The team meets regularly to review portfolio holdings and discuss purchase and
sale activity. Team members buy and sell securities for the fund as they see
fit, guided by the fund's investment objective and strategy.
The fund managers on the investment team are:
HENRIK STRABO, Chief Investment Officer-International Equities, has been a
member of the team since the fund's inception. He joined American Century in
1993 and serves as a member of other management teams for various American
Century funds.
MARK S. KOPINSKI, Senior Vice President and Senior Portfolio Manager, has been
a member of the team since the fund's inception. Mr. Kopinski joined American
Century in April 1997 and serves as a member of other management teams for
various American Century funds. Prior to rejoining American Century in 1997,
Mr. Kopinski served as Vice President and Portfolio Manager at Federated
Investors, Inc. From 1990-1995, he served as Vice President and a member of the
management team for American Century International Growth and International
Discovery.
IDEX ISABELLE SMALL CAP VALUE
WARREN J. ISABELLE, President, Portfolio Manager and co-founder of Ironwood,
has managed the fund since its inception. Prior to the formation of Ironwood
Capital in 1997, Mr. Isabelle was Head of Domestic Equities at Pioneer
Management Company and Portfolio Manager of the Pioneer Capital Growth Fund
(from July 1990 through January 1997 - later named Pioneer Mid Cap Value Fund).
He also managed Pioneer Small Company Fund (November 1995 through January
1997). From February 1997, Mr. Isabelle was Chief Investment Officer at
Keystone Investments.
Ironwood has provided investment advisory services to various clients since
1998.
75
SHAREHOLDER INFORMATION
[GRAPHIC] OPENING AN ACCOUNT
If you are opening a fund through a registered representative, he or she can
assist you with all phases of your investment.
If you are investing through an authorized dealer, the dealer is responsible
for opening your account and providing your taxpayer ID number. If you already
have an IDEX account, you do not need additional documentation.
The Fund or its agents may reject a request for purchase of shares at any time,
including any purchase under the exchange privilege.
NEW ACCOUNT APPLICATION
Fill out the New Account Application form which is included in this prospectus.
IRAs and other retirement accounts require a different application, which you
can request by calling 1-888-233-IDEX (4339) or writing IDEX Customer Service.
You can avoid future inconvenience by signing up for any services you think you
may later use.
Note: On your application, be sure to include your social security number or
taxpayer identification number. If you don't, your account may be subject to
backup withholding, or be closed.
There are many ways that you can pay for your shares. The minimum initial
purchase is $500 for Class A, B and T shares, and $1,000 for Class C and Class
M shares and shares purchased through authorized dealers. There is a $50
minimum on additional purchases. Purchases through regular investment plans,
like the Automatic Investment Plan, have no minimum to open an account, but you
must invest at least $50 monthly per account.
[GRAPHIC] 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.
[GRAPHIC] 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 InTouchSM, or
by a person-to-person verbal request
The proceeds of your redemption may be paid by check, or by direct deposit to
your bank account subject to any restrictions that may be applicable. Purchases
may be held at IDEX 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.
[GRAPHIC] HOW TO EXCHANGE SHARES
You can exchange $500 or more of one fund for shares in the same class of
another fund. As explained below, you may be able to exchange your shares into
any one of the three portfolios of the Cash Equivalent Fund (CEF) without a
sales charge. The CEF includes the Money Market Portfolio, the Government
Securities Portfolio and Tax Exempt Portfolio. Any CDSC will be calculated from
the date you bought your original shares. This means your new shares will be
the same age as your old shares, so your sales charge will not increase because
of the exchange. The minimum exchange to a new account is $500 unless an
automatic investment plan is established on the new account. If your
transaction is into an A share CEF, you may incur a CDSC.
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.
76
MONEY MARKET EXCHANGE PRIVILEGE
You can exchange Class A, C and T shares for any of the three CEF portfolios.
You may exchange Class B and M shares only into the CEF's Money Market
Portfolio.
SPECIAL RULES FOR CLASS B OR M SHARES IN MONEY MARKET FUND EXCHANGES
When exchanging Class B or M shares for shares of the CEF Money Market
Portfolio, you will not be charged a CDSC. If you later sell the Class B or M
shares of the CEF, you will be charged the sales charge, but the time that you
held those Class B or M shares of the CEF will not count toward calculating the
sales charge.
The Fund may restrict the number of times that you may exchange your shares.
Please see the section below titled "Excessive Trading."
SPECIAL SITUATIONS FOR EXCHANGING SHARES
. Class T shares may be exchanged for only Class A shares of any IDEX fund,
other than IDEX 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.
. The Fund reserves the right to modify or terminate the exchange privilege at
any time upon 60 days written notice.
EXCESSIVE TRADING
The exchange privilege is not intended as a vehicle for short-term or excessive
trading. The Fund does not permit excessive trading/market-timing. Excessive
purchases, redemptions or exchanges of fund shares disrupt portfolio management
and drive fund expenses higher. The Fund may limit or terminate your exchange
privileges or may not accept future investments from you if you engage in
excessive trading. In determining excessive trading, we consider frequent
purchases and redemptions having similar effects as exchanges to be excessive
trading. Four or more exchanges in a quarter (3 months) is considered excessive
trading, though the Fund reserves the right to impose restrictions if there are
less frequent transactions.
[GRAPHIC] OTHER ACCOUNT INFORMATION
MINIMUM PURCHASES
. $500 for Class A, B and T shares; $1,000 for Class C and M shares; additional
purchases are a minimum of $50.
If your check, draft or electronic transfer is returned unpaid by your bank,
the Fund may charge a $15 fee.
PRICING OF SHARES
Each fund's price (NAV) is calculated on each day the New York Stock Exchange
(NYSE) is open for business. The NAV of 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 the Fund receives your order by regular closing time of the NYSE (usually 4
p.m. New York time), you will pay or receive that day's NAV plus any applicable
sales charges. If later, it will be priced based on the next day's NAV. Share
prices may change when a fund holds shares in companies traded on foreign
exchanges that are open on days the NYSE is closed.
In determining NAV, each fund's portfolio investments are valued at market
value. Investments for which quotations are not readily available are valued at
fair value determined in good faith under the supervision of the Board of
Trustees.
MINIMUM ACCOUNT BALANCE
Due to the proportionately higher cost of maintaining customer accounts with
balances below the stated minimums for each class of shares, the Fund reserves
the right to close such accounts. However, the Fund will provide a 60-day
notification to you prior to assessing a minimum account fee, or closing, any
account. The following describes the fees assessed to accounts with low
balances:
No fees will be charged on:
. accounts opened within the preceding 24 months
. accounts with an active monthly Automatic Investment Plan ($50 minimum per
account)
. accounts owned by individuals which, when combined by social security number,
have a balance of $5,000 or more
- --------------------------------------------------------------
ACCOUNT BALANCE FEE ASSESSMENT
- --------------------------------------------------------------
If your balance is below $10 fee assessed every 6
$500 due to months, until balance
redemptions reaches $500
If your balance is below Your account will be
$250, due to charged a fee and be
redemptions liquidated; any
applicable CDSC will be
deducted, and a check
will be mailed to the
address of record
- --------------------------------------------------------------
TELEPHONE TRANSACTIONS
The Fund and Idex Investor Services, Inc. (IIS) are not liable for complying
with telephone instructions which are deemed by them to be genuine. The Fund
and IIS will employ reasonable procedures to make sure
77
SHAREHOLDER INFORMATION (CONTINUED)
telephone instructions are genuine. In situations where the Fund or IIS
reasonably believe they were acting on genuine telephone instructions, you bear
the risk of loss. These procedures may include requiring personal
identification, providing written confirmation of transactions, and tape
recording conversations. The Fund has the right to modify the telephone
redemption privilege at any time.
Telephone redemption with payment by check is not allowed within 10 days of a
change of registration/
address. Call IDEX Customer Service (1-888-233-IDEX (4339)) or see the SAI for
details. You may redeem up to $50,000 worth of shares by phone and get your
money by direct deposit to a pre-authorized bank account. No fee is charged.
PROFESSIONAL FEES
Your financial professional may charge a fee for his or her services. This fee
will be in addition to any fees charged by IDEX. Your financial professional
will answer any questions that you may have regarding such fees.
WIRE TRANSACTIONS
In most cases, the Fund can send your redemption money via a federal funds bank
wire. The Fund charges a $10 fee for this service, in addition to any fee your
bank may charge. For more details, call IDEX Customer Service (1-888-233-IDEX
(4339)) or see the SAI.
REINVESTMENT PRIVILEGE
Within a 90 day period after you sell your shares, you have the right to
"reinvest" your money in any fund of the same class. You will not incur a new
sales charge if you use this privilege within the allotted time frame. Any CDSC
you paid on your shares will be credited to your account. You may reinvest the
proceeds of a Class B share sale (less the CDSC) in Class A shares without
paying the up-front sales charge. Send your written request to the Fund along
with your check for your reinvestment privileges.
STATEMENTS AND REPORTS
The Fund will send you a confirmation statement after every transaction that
affects your account balance or registration. Please review the confirmation
statement carefully and promptly notify IDEX in writing of any error or you
will be deemed to have ratified the transaction as reported to you. If you are
enrolled in the Automatic Investment Plan and invest on a monthly basis, you
will receive a quarterly confirmation. Information about the tax status of
income dividends and capital gains distributions will be mailed to shareholders
early each year.
Financial reports for the funds, which include a list of the holdings, will be
mailed twice a year to all shareholders.
A Historical Statement may be ordered for transactions of prior years.
SHARE CERTIFICATES
The Fund no longer issues share certificates. If you are redeeming or
exchanging shares represented by certificates previously issued by the Fund,
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
The Fund permits "Access Persons" as defined by Rule 17j-1 under the 1940 Act
to engage in personal securities transactions, subject to the terms of the Code
of Ethics and Insider Trading Policy that has been adopted by the Board of
Trustees of the Fund. Access Persons must use the guidelines established by
this Policy for all personal securities transactions and are subject to certain
prohibitions on personal trading. The Fund's sub-advisers, pursuant to Rule
17j-1 and other applicable laws, and pursuant to the terms of the Policy, must
adopt and enforce their own Code of Ethics and Insider Trading Policies
appropriate to their particular business needs. Each sub-adviser must report to
the Board of Trustees on a quarterly basis with respect to the administration
and enforcement of such Policy, including any violations thereof which may
potentially affect the Fund.
[GRAPHIC] DISTRIBUTIONS AND TAXES
Each of our funds intends to elect and qualify as a regulated investment
company under the Internal Revenue Code. As a regulated investment company, a
fund will not be subject to federal income tax on ordinary income and capital
gains, if any, that it distributes to its shareholders.
TAXES ON DISTRIBUTIONS FROM THE FUNDS
The following summary does not apply to:
. qualified retirement accounts
. tax-exempt investors; or
. exempt-interest distributions from IDEX 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 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
78
distributions for each calendar year will be detailed in your annual tax
statement or tax forms from the Fund.
DISTRIBUTIONS FROM IDEX FEDERATED TAX EXEMPT
IDEX Federated Tax Exempt expects to distribute primarily exempt-interest
dividends. These dividends will be exempt income for federal income tax
purposes, whether reinvested or received in cash. However, dividends from the
fund may not be entirely tax-exempt and any distributions by the fund of net
long-term capital gains will generally be taxable to you as long-term capital
gains. Distributions from the fund may be subject to state and local taxes.
Your annual statement will provide you with information about the
exempt-interest dividends you have received. You must disclose this information
on your federal tax return. The statement will also report the amount that
relates to private activity bonds which could be subject to the alternative
minimum tax (AMT). If you are subject to the AMT, please consult your tax
advisor regarding the implications of holding shares in IDEX Federated Tax
Exempt. If you receive Social Security or railroad retirement benefits, please
consult your tax advisor and be aware that exempt-interest dividends will be
considered for the purpose of determining to what extent your benefits will be
taxed. Interest on indebtedness incurred by you to purchase or carry shares of
IDEX Federated Tax Exempt generally will not be deductible for federal income
tax purposes.
TAXES ON THE SALE OF SHARES
Any sale or exchange or redemption of fund shares may generate tax liability
(unless you are a tax-exempt investor or your investment is in a qualified
retirement or other tax- advantaged account). You will generally recognize
taxable gain or loss on a sale, exchange or redemption of your shares based
upon the difference between your cost (basis) in the shares and the amount you
receive for them. Any loss recognized on shares held for six months or less
will be treated as long-term capital loss to the extent of any capital 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.
WITHHOLDING TAXES
The Fund will be required to withhold 31% 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 an accurate
taxpayer identification number to the Fund in the manner required by IRS
regulations.
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 account at the net asset value
next calculated after reinvestment. We will then 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.
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 the Fund. More information is provided in the SAI. You should
also consult your own tax advisor for information regarding all tax
consequences applicable to your investments in the Fund.
79
SHAREHOLDER INFORMATION (CONTINUED)
- ---------------------------------------------------------------------------------------------------------------------------------
HOW TO BUY SHARES TO OPEN A NEW ACCOUNT (FIRST-TIME IDEX INVESTORS)
- ---------------------------------------------------------------------------------------------------------------------------------
BY MAIL Send your completed application and check payable to:
Idex Investor Services, Inc., P.O. Box 9015, Clearwater, Florida 33758-9015;
[GRAPHIC] 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.
[GRAPHIC]
- ---------------------------------------------------------------------------------------------------------------------------------
BY AUTOMATIC INVESTMENT PLAN Send your completed application, along with a check for your initial investment (if
any), payable to Idex Investor Services, Inc., P.O. Box 9015, Clearwater, Florida
[GRAPHIC] 33758-9015.
- ---------------------------------------------------------------------------------------------------------------------------------
TO ADD TO YOUR EXISTING ACCOUNT
- ---------------------------------------------------------------------------------------------------------------------------------
BY CHECK Make your check payable to Idex Investor Services, Inc. and mail it to:
P.O. Box 9015, Clearwater, FL 33758-9015; or, for overnight delivery: 570 Carillon
[GRAPHIC] Parkway, St. Petersburg, FL 33716. Third party checks, or checks endorsed to IDEX,
will not be accepted. All checks must be made payable to Idex Investor Services, Inc.
- ---------------------------------------------------------------------------------------------------------------------------------
BY AUTOMATIC INVESTMENT PLAN With an Automatic Investment Plan (AIP), a level dollar amount is invested monthly
and payment is deducted electronically from your bank account. Call or write IDEX
[GRAPHIC] 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
[GRAPHIC] Bank Link" on the Application or write to the Fund. Funds can then be transferred
electronically from your bank to the Fund. Call IDEX Customer Service to invest by
phone, either through our automated IDEX InTouch(SM) system (1-888-233-IDEX
(4339)), or by speaking directly with your representative. Shares will be purchased via
electronic funds when the money is received by IDEX, usually 2-4 business days after
the request.
- ---------------------------------------------------------------------------------------------------------------------------------
THROUGH AUTHORIZED DEALERS If your dealer has already established your account for you, no additional
documentation is needed. Call your dealer to place your order. The dealer's bank may
[GRAPHIC] charge you for a wire transfer. (The Fund currently does not charge for this service.)
The Fund must receive your payment within three business days after your order is
accepted.
- ---------------------------------------------------------------------------------------------------------------------------------
BY THE INTERNET You may request a transfer of funds from your bank account to the Fund. Visit our
website at www.idexfunds.com. Payment will be transferred from your bank account
[GRAPHIC] electronically. Shares will be purchased via electronic funds when the money is received
by IDEX, usually 2-4 business days after the request.
- ---------------------------------------------------------------------------------------------------------------------------------
BY PAYROLL DEDUCTION You may have money transferred regularly from your payroll to your IDEX account.
Please instruct your employer's payroll department to do so. Call IDEX Customer
[GRAPHIC] Service (1-888-233-IDEX (4339)) to establish this deduction.
- ---------------------------------------------------------------------------------------------------------------------------------
BY WIRE TRANSFER Request that your bank wire funds to the Fund. You must have an existing account to
make a payment by wire transfer. Ask your bank to send your payment to:
[GRAPHIC] Bank of America, NA, Tampa, FL, ABA# 063100277,
Credit: Idex Investor Services Acct #: 3601194554,
Ref: Shareholder name, IDEX fund and account numbers.
- ---------------------------------------------------------------------------------------------------------------------------------
80
- ----------------------------------------------------------------------------------------------------------------------------------
TO RECEIVE PAYMENT BY HOW TO REQUEST YOUR REDEMPTION
- ----------------------------------------------------------------------------------------------------------------------------------
DIRECT DEPOSIT - ACH Call IDEX Customer Service (1-888-233-IDEX (4339)) to verify that this feature is in
(ONLY FOR ACCOUNTS THAT ARE NOT place on your account. Maximum amount per day is the lesser of your balance or
QUALIFIED RETIREMENT PLANS) $50,000. Request an "ACH redemption" in writing, by phone (automated IDEX InTouch(SM)
system (1-888-233-IDEX (4339)) or person-to-person), or by internet access to your
[GRAPHIC] account. Payment should usually be received by your bank account 3-5 banking days
after your request. The Fund does not charge for this payment option. Certain IRAs
and Qualified Plans may not be eligible for ACH redemptions.
- ----------------------------------------------------------------------------------------------------------------------------------
DIRECT DEPOSIT Call IDEX Customer Service (1-888-233-IDEX (4339)) to be sure this feature is in
(ELECTRONIC FUNDS TRANSFER-FEDERAL place on your account. Maximum amount per day is the lesser of your available
FUNDS BANK WIRE) balance or $50,000 (with a minimum of $1,000). Request an "Expedited Wire
Redemption" in writing, or by phone (person-to-person request). Payment should be
[GRAPHIC] received by your bank account the next banking day after your request. The Fund
charges $10 for this service. Your bank may charge a fee as well.
- ----------------------------------------------------------------------------------------------------------------------------------
CHECK TO THE ADDRESS OF RECORD WRITTEN REQUEST:
Send a letter requesting a withdrawal to the Fund and include any share certificates
[GRAPHIC] you may have. Specify the fund, account number, and dollar amount or number of
shares you wish to redeem. Mail to: Idex Investor Services, P.O. Box 9015, Clearwater,
FL 33758-9015. Attention: Redemptions. Be sure to include all account owners'
signatures and any additional documents, as well as a signature guarantee(s) if required
(see "How To Sell Shares").
TELEPHONE OR INTERNET REQUEST:
If your request is not required to be in writing (see "How To Sell Shares"), you may
call IDEX Customer Service (1-888-233-IDEX (4339)) and make your request using
the automated IDEX InTouchSM system (1-888-233-IDEX (4339)), by person-to-person,
or by accessing your account on the internet. Maximum amount per day is the lesser
of your available balance or $50,000.
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: Idex Investor Services, Inc., P.O. Box 9015, Clearwater,
[GRAPHIC] FL 33758-9015. Attention: Redemptions.
- ----------------------------------------------------------------------------------------------------------------------------------
PERIODIC AUTOMATIC PAYMENT You can establish a Systematic Withdrawal Plan (SWP) either at the time you open
(BY DIRECT DEPOSIT-ACH OR CHECK) your account or at a later date. Call IDEX Customer Service (1-888-233-IDEX (4339))
for assistance. You must have a minimum balance of $10,000 in your account.
- ----------------------------------------------------------------------------------------------------------------------------------
BY EXCHANGE You may request an exchange in writing, by phone (automated IDEX InTouchSM
system (1-888-233-IDEX (4339)) or person-to-person), or by accessing your account
[GRAPHIC] 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
[GRAPHIC] (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.
- ----------------------------------------------------------------------------------------------------------------------------------
81
SHAREHOLDER INFORMATION (CONTINUED)
CHOOSING A SHARE CLASS
The Fund offers four share classes, each with its own sales charge and expense
structure. (An additional class, Class T, is offered through IDEX Janus Growth,
but Class T shares are not available to new investors.) Also, effective March
1, 1999, shares that were designated as Class C shares became Class M shares.
The Class M shares have an initial sales charge of 1.00% and a contingent
deferred sales charge (CDSC) of 1.00% if you sell within 18 months of purchase.
The sales charge and CDSC only apply to shares purchased after February 28,
1999.
The Fund began offering a new Class C share on November 1, 1999. This new Class
C share has no initial or deferred sales charges. All shares that were
designated as Class C shares prior to March 1, 1999, which then converted to
Class M shares on that date, will continue as Class M shares.
The amount of your investment and the amount of time that you plan to hold your
shares will determine which class of shares you should choose. You should make
this decision carefully because all of your future investments in your account
will be in the same share class that you designate when you open your account.
Your financial professional can help you choose the share class that makes the
best sense for you.
If you are investing a large amount and plan to hold your shares for a long
period, Class A or Class M shares may make the most sense for you. If you are
investing a lesser amount, you may want to consider Class B shares (if you plan
to invest for a period of at least 6 years) or Class C shares (if you plan to
invest for a period of less than 6 years).
The Fund may, at any time and in its sole discretion, add, delete, or change the
sales charges for any share class.
CLASS A SHARES -- FRONT LOAD
With Class A shares, you pay an initial sales charge only when you buy shares.
(The offering price includes the sales charge.)
If you are investing $1 million or more (either as a lump sum or through any of
the methods described above), you can purchase Class A shares without any sales
charge. However, if you redeem any of those shares within the first 24 months
after buying them, you will pay a 1.00% CDSC, unless they were purchased through
a qualified retirement plan.
Also, the Fund will treat Class A share purchases in an amount of less than $1
million by defined contribution plans, other than 403(b) plans, that are
sponsored by employers with 100 or more eligible employees as if such purchases
were equal to an amount more than $1 million.
- ----------------------------------------------------------------------------------------------------------------------------
CLASS T SHARES
CLASS A SHARES - CLASS B SHARES - CLASS C SHARES - CLASS M SHARES - (CLOSED TO NEW
FRONT LOAD BACK LOAD LEVEL LOAD LEVEL LOAD INVESTORS)
- ----------------------------------------------------------------------------------------------------------------------------
. Initial sales . No up-front sales . No up-front sales . Initial sales . Initial sales
charge of 5.50% charge charge charge of 1.00% charge of 8.50%
(except for IDEX Janus or less
Flexible Income, IDEX . Deferred sales . No deferred sales . 12b-1 distribution
AEGON Income Plus and charge of 5.00% or charge and service . No 12b-1
IDEX Federated Tax Exempt less on shares you fees of 0.90% per distribution and
which is 4.75%) or less sell within 6 years . 12b-1 distribution year (except for service fees
(see Class A Share (see deferred sales and service fees the IDEX Federated
Quantity Discounts Table charge table of 1.00% Tax Exempt, whose . Sales charge
below) 12b-1 distribution percentage can be
. Discounts of sales . No conversion to and service fee is reduced in the
charge for larger . 12b-1 distribution Class A shares; 0.60%) same four ways as
investments and service fees expenses do not Class A Shares
of 1.00% decrease . Deferred sales (see Class A Share
. 12b-1 distribution charge of 1.00% if Quantity
and service fees . Automatic you sell within 18 Discounts Table)
of 0.35% conversion to months of purchase
Class A shares
. Lower annual after 8 years, . Automatic
expenses reducing future conversion to
than Class B, C annual expenses Class A Shares
or M shares due after 10 years,
to lower 12b-1 reducing future
and service fees annual expenses
- ----------------------------------------------------------------------------------------------------------------------------
82
CLASS B SHARES -- BACK LOAD
Class B shares are sold in amounts up to $250,000. With Class B shares, you pay
no initial sales charge when you invest, but you are charged a CDSC when you
sell shares you have held for six years or less, as described in the table
below.
Class B shares automatically convert to Class A shares after 8 years, lowering
annual expenses from that time on.
CONTINGENT DEFERRED SALES CHARGE - CLASS B SHARES
- ---------------------------------------------------
AS A % OF DOLLAR AMOUNT
YEAR AFTER PURCHASING (SUBJECT TO CHANGE)
- ---------------------------------------------------
First 5%
Second 4%
Third 3%
Fourth 2%
Fifth and Sixth 1%
Seventh and Later 0%
- ---------------------------------------------------
CLASS C SHARES -- LEVEL LOAD
With Class C shares, you pay no initial sales charge or CDSC. There are 12b-1
distribution and service fees of up to 1.00% per year.
CLASS M SHARES -- LEVEL LOAD
Class M shares are sold in amounts up to $1 million. With Class M shares, you
pay an initial sales charge of 1.00% based on offering price. (The offering
price includes the sales charge.) There are 12b-1 distribution and service fees
of 0.90% per year. If you redeem within 18 months from the date of purchase,
you 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.
CLASS T SHARES (IDEX JANUS GROWTH ONLY)
(Closed to new investors)
When you buy Class T shares of IDEX Janus Growth, you pay an up-front sales
charge. You can reduce the sales charge percentage in the same four ways that
are described under Class A shares. Class T shares are not subject to annual
12b-1 distribution and service fees.
You pay no sales charge when you redeem Class T shares. As with Class A shares,
if you pay no up-front sales charge because you are purchasing $1 million or
more of Class T shares, you will pay a deferred sales charge of 1.00% if you
redeem any of those shares within the first 24 months after buying them, unless
they were purchased through a qualified retirement plan. The charge is assessed
on an amount equal to the lesser of the then current market value or the
original cost of the shares being redeemed. No sales charge is imposed on net
asset value above the initial purchase.
Waivers of the sales charges are granted under certain conditions. Persons
eligible to buy Class T shares at NAV may not impose a sales charge when they
re-sell those shares.
CONTINGENT DEFERRED SALES CHARGE
Your shares may be subject to a CDSC. Dividends and capital gains are not
subject to the sales charge. There is no charge on any increase in the value of
your shares. To ensure that you pay the lowest CDSC possible, the Fund will
always use the shares with the lowest CDSC to fill your redemption requests. If
your shares are worth less than when you bought them, the charge will be
assessed on their current, lower value. In some cases, the sales charge may be
waived.
CLASS A SALES CHARGE REDUCTIONS
You can lower the sales charge percentage in four ways:
. Substantial investments receive lower sales charge rates. Please see the SAI
for details on these reductions.
. The "right of accumulation" allows you to include your existing Class A
Shares (or Class T shares of IDEX Janus Growth) as part of your current
investments for sales charge purposes.
. A "letter of intent" allows you to count all Class A share investments in an
IDEX fund over the next 13 months, as if you were making them all at once,
to qualify for reduced sales charges.
. By investing as part of a qualified group.
83
SHAREHOLDER INFORMATION (CONTINUED)
Class A Share Quantity Discounts
(all funds except IDEX Janus Flexible Income, IDEX AEGON
Income Plus & IDEX Federated Tax Exempt)
- ----------------------------------------------------------------------
SALES CHARGE SALES CHARGE
AS % OF AS % OF
OFFERING AMOUNT
AMOUNT OF PURCHASE PRICE INVESTED
- ----------------------------------------------------------------------
Under $50,000 5.50% 5.82%
$50,000 to under $100,000 4.75% 4.99%
$100,000 to under $250,000 3.50% 3.63%
$250,000 to under $500,000 2.75% 2.83%
$500,000 to under $1,000,000 2.00% 2.04%
$1,000,000 and over 0.00% 0.00%
- ----------------------------------------------------------------------
- ----------------------------------------------------------------------
Class A Share Quantity Discounts
(IDEX Janus Flexible Income, IDEX AEGON Income Plus
& IDEX Federated Tax Exempt)
SALES CHARGE SALES CHARGE
AS % OF AS % OF
OFFERING AMOUNT
AMOUNT OF PURCHASE PRICE INVESTED
- ----------------------------------------------------------------------
Under $50,000 4.75% 4.99%
$50,000 to under $100,000 4.00% 4.17%
$100,000 to under $250,000 3.50% 3.63%
$250,000 to under $500,000 2.25% 2.30%
$500,000 to under $1,000,000 1.25% 1.27%
$1,000,000 and over 0.00% 0.00%
- ----------------------------------------------------------------------
- ----------------------------------------------------------------------
Class T Share Quantity Discounts
(IDEX Janus Growth)
SALES CHARGE SALES CHARGE
AS % OF AS % OF
OFFERING AMOUNT
AMOUNT OF PURCHASE PRICE INVESTED
- ----------------------------------------------------------------------
Under $10,000 8.50% 9.29%
$10,000 to under $25,000 7.75% 8.40%
$25,000 to under $50,000 6.25% 6.67%
$50,000 to under $75,000 5.75% 6.10%
$75,000 to under $100,000 5.00% 5.26%
$100,000 to under $250,000 4.25% 4.44%
$250,000 to under $500,000 3.00% 3.09%
$500,000 to under $1,000,000 1.25% 1.27%
$1,000,000 and over 0.00% 0.00%
- ----------------------------------------------------------------------
WAIVERS OF SALES CHARGES
WAIVER OF CLASS A AND T SALES CHARGES
Class A and Class T shares may be purchased without a sales charge by:
. Current or former trustees, directors, officers, full-time employees or
sales representatives of the Fund, IMI, ISI, any of the sub-advisers or
any of their affiliates.
. directors, officers, full-time employees and sales representatives of
dealers having a sales agreement with ISI.
. 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 the Fund or ISI.
Persons eligible to buy Class A and Class T shares at NAV may not impose a
sales charge when they re-sell those shares.
-----------------------------------------------------------------------------
WAIVER OF CLASS A, CLASS B, CLASS M, AND CLASS T REDEMPTION CHARGES
-----------------------------------------------------------------------------
You will not be assessed a sales charge for shares if you sell in the
following situations:
. 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.
84
PERFORMANCE INFORMATION
PERFORMANCE
IDEX may include quotations of a fund's total return or yield in
advertisements, sales literature or reports to shareholders or to prospective
investors. Total return and yield quotations for a fund reflect only the
performance of a hypothetical investment in the fund during the particular time
period shown as calculated based on the historical performance of the fund
during that period. Such quotations do not in any way indicate or project
-----------------------------------------------------
future performance.
- -------------------
YIELD
Yield quotations for a fund refer to the income generated by a hypothetical
investment in the fund over a specified thirty-day period expressed as a
percentage rate of return for that period. The yield is calculated by dividing
the net investment income per share for the period by the price per share on
the last day of that period.
TOTAL RETURN
Total return refers to the average annual percentage change in value of an
investment in a fund held for a stated period of time as of a stated ending
date. When a fund has been in operation for the stated period, the total return
for such period will be provided if performance information is quoted. Total
return quotations are expressed as average annual compound rates of return for
each of the periods quoted. They also reflect the deduction of a proportionate
share of a fund's investment advisory fees and direct fund expenses, and assume
that all dividends and capital gains distributions during the period are
reinvested in the fund when made.
SIMILAR SUB-ADVISER PERFORMANCE
A fund may disclose to shareholders or to prospective investors the total
returns of an existing SEC-registered fund that is managed by the fund's
-------- ----------
sub-adviser and that has investment objectives, policies, and strategies
substantially similar to those of such fund (a "Similar Sub-Adviser Fund"). A
Similar Sub-Adviser Fund generally means there are no material differences in
objective, policies or strategies.
ALTHOUGH THE SIMILAR SUB-ADVISER FUNDS HAVE SUBSTANTIALLY SIMILAR INVESTMENT
OBJECTIVES, POLICIES, AND STRATEGIES AS THE DESIGNATED FUND YOU SHOULD NOT
ASSUME THAT THE SIMILAR SUB-ADVISER FUND WILL HAVE THE SAME FUTURE PERFORMANCE
AS THE FUNDS WHOSE TOTAL RETURNS ARE SHOWN. Each fund's future performance may
be greater or lesser than the historical performance of the corresponding
------- ------
Similar Sub-Adviser Fund. Past performance is not indicative of future
performance. THERE CAN BE NO ASSURANCE, AND NO REPRESENTATION IS MADE, THAT THE
INVESTMENT RESULTS OF ANY FUND WILL BE COMPARABLE TO ANY OF THE RESULTS OF THE
SIMILAR-SUB ADVISER FUNDS OR ANY OTHER FUND MANAGED BY IMI OR ANY OF THE
SUB-ADVISERS.
The table below sets forth certain funds of IDEX and, for each fund's
respective Similar Sub-Adviser Fund, the Similar Sub-Adviser Fund's inception
date, asset size, and the average total returns for one, five and ten year
period (or life of the Similar Sub-Adviser Fund, if shorter) ending December
31, 2000. The information included in the table was provided by the respective
sub-adviser listed therein.
The figures included show the actual investment performance of the Similar
Sub-Adviser Fund. Those returns have been recalculated to show you a
hypothetical return for the Similar Sub-Adviser Fund if the fund was subject to
the IDEX expense structure for IDEX Class A shares. You should note that the
performance of the Similar-Adviser Funds does not reflect the historical
performance of any IDEX funds.
85
PERFORMANCE INFORMATION
INFORMATION AS OF 12/31/00:
SIMILAR FUND:
-------------------------------
TOTAL ASSETS
SIMILAR INCEPTION (APPROXIMATE)
IDEX FUND FUND NAME DATE & CLASS (12/31/00)
- ------------------------------------------------------------------------------------------------------------------ --------------
IDEX American Century Income & Growth American Century Income & Growth(1)(2) 12/17/90 $ 5B
Investor Class
IDEX American Century International American Century International Growth(1)(2) 5/9/91 $ 5B
Investor Class
IDEX Gabelli Global Growth Gabelli Global Growth Fund(1)(2) 2/7/94 $285M
Class AAA
IDEX GE International Equity GE International Equity(1)(6) 3/2/94 $ 37M
Class Y
IDEX GE U.S. Equity GE U.S. Equity(1)(6) 11/29/93 $365M
Class Y
IDEX Goldman Sachs Growth Goldman Sachs Capital Growth Fund(1)(4) 4/20/90 $3.4B
Class A
IDEX Isabelle Small Cap Value ICM/Isabelle Small Cap Value Fund(1) 3/9/98 $102M
Investment Class
IDEX Janus Growth & Income Janus Growth & Income(1) 5/15/91 $8.7M
IDEX Jennison Equity Opportunity Jennison Equity Opportunity(1) 11/7/96 $269M
Class A
IDEX Pilgrim Baxter Mid Cap Growth PBHG Growth II Portfolio(1)(2)(8) 4/30/97 $376M
IDEX Pilgrim Baxter Technology PBHG Technology & Communications Fund(1)(2)(7) 9/29/95 $1.8B
IDEX Salomon All Cap Salomon Capital Fund(1)(5) 8/23/76 $227M
Class O
IDEX Transamerica Equity Transamerica Premier Equity Fund(1)(2) 10/2/95 $244M
Investor Class
IDEX Transamerica Small Company Transamerica Premier Small Company Fund(1)(2) 6/30/97 $235M
Investor Class
IDEX T. Rowe Price Dividend Growth T. Rowe Price Dividend Growth Fund(1)(2)(3) 12/30/92 $751M
IDEX T. Rowe Price Small Cap T. Rowe Price Diversified Small-Cap Growth Fund(1)(2)(3) 6/30/97 $ 85M
- --------------
* The hypothetical returns are included to show you what your return would
have been for the Similar Sub-Adviser Fund if the IDEX Class A fee structure
with a 5.5% front-end sales load was applied to the Similar Sub-Adviser
Fund. The IDEX hypothetical returns were calculated by taking the gross
returns of the Similar Sub-Adviser Fund and deducting the fees and expenses
of the IDEX Fund and the 5.5% front-end sales load. Actual and IDEX
Hypothetical return figures include reinvestment of dividends and other
earnings. Performance reflects fee waivers in effect. In their absence,
performance would be reduced. Investment return and principal value will
fluctuate so that an investor's share, when redeemed, may be worth more or
less than their original cost.
(1) The IDEX Funds are separate and distinct from the Similar Sub-Adviser Fund.
They will have different holdings and their performance will vary. The
above performance for each Similar Sub-Adviser Fund is not the performance
of the IDEX Fund and should neither be considered indicative of the future
performance of the IDEX Fund nor a substitute for the performance of the
IDEX Fund.
(2) The T. Rowe Price Dividend Growth Fund, PBHG Growth II Portfolio, PBHG
Technology & Communications Fund, T. Rowe Price Diversified Small-Cap
Growth Fund, Transamerica Premier Equity Fund, Transamerica Premier Small
Company Fund, Gabelli Global Growth Fund, American Century Income & Growth
(Investor Class) and American Century International Growth (Investor
Class) do not have sales loads.
(3) The Actual returns were calculated net of the fees and expenses for the T.
Rowe Price Funds. The IDEX Hypothetical return figures were calculated by
taking the gross return number, and then deducting IDEX net operating
expenses of 1.55%. Actual and IDEX Hypothetical return figures include
changes in principal value, reinvested dividends, and capital gain
distributions. Investment return and principal value will vary, and shares
may be worth more or less at redemption than at original purchase. The
Actual and IDEX Hypothetical returns are annualized, and returns of the T.
Rowe Price Diversified Small-Cap Growth Fund reflect past and present
expense limitations, which increased the fund's total return.
86
INFORMATION AS OF 12/31/00:
10 YEARS
OR
SINCE INCEPTION
1 YEAR 5 YEAR (IF LESS THAN 10 YEARS)
- ----------------------------- ---------------------------- ----------------------------
IDEX IDEX IDEX
ACTUAL HYPOTHETICAL* ACTUAL HYPOTHETICAL* ACTUAL HYPOTHETICAL*
- ----------- --------------- ---------- --------------- ----------- --------------
(10.54)% (16.58)% 17.60% 8.38% 17.73% 16.76%
(15.01)% (20.39)% 17.91% 16.26% 15.46% 15.25%
(37.49)% (41.07)% 22.65% 20.31% 19.17% 18.27%
(12.85)% (18.09)% 9.44% 7.84% 8.48% 7.26%
(0.19)% (6.60)% 19.13% 17.26% 18.06% 16.72%
(7.67)% (12.84)% 20.87% 19.44% 19.55% 18.54%
7.73% 1.97% N/A N/A 11.12% 9.12%
(11.48)% (17.22)% 25.12% 23.34% 20.77% 19.81%
32.33% 24.71% N/A N/A 20.34% 18.59%
(15.42)% (20.54)% N/A N/A 20.21% 18.13%
(42.85)% (46.66)% 33.15% 31.45% 33.44% 31.84%
19.20% 12.03% 25.22% 23.63% 19.07% 17.56%
(13.81)% (18.82)% 23.96% 22.50% 22.28% 20.81%
(26.00)% (30.34)% N/A N/A 39.79% 37.46%
10.06% 9.21% 15.06% 14.25% 15.83% 15.09%
(8.29)% (8.39)% N/A N/A 7.76% 7.42%
- --------------
(4) Total returns are for Class A shares of the Goldman Sachs Capital Growth
Fund. The Fund also offers Class B and Class C shares with different sales
loads. Calculating total returns with those sales loads may have resulted
in lower total returns.
(5) Total returns are for Class O shares of Salomon Capital Fund which does not
have a sales load. The fund also has classes A, B, Y and 2 shares which
have different expenses. Calculating total returns with these classes
would result in lower total fees.
(6) Total returns are for Class Y shares of the GE U.S. Equity and GE
International Equity Funds which do not have a sales load. The funds also
have Classes A, B & C, each of which have sales loads and fees that are
different from Class Y shares. Calculating total return using those
classes would result in lower total returns.
(7) Prior to November 2, 1999, the PBHG Technology & Communications Fund was
diversified and did not concentrate its investments in one or more
industries within the technology and communications sectors. Therefore,
the Fund's performance prior to November 2, 1999 may not be indicative of
how it will perform in the future.
(8) The PBHG Growth II Portfolio is a variable product investment portfolio.
87
DISTRIBUTION ARRANGEMENTS
[GRAPHIC] UNDERWRITING AGREEMENT
[GRAPHIC]
The Fund has an Underwriting Agreement with AFSG Securities Corporation (AFSG),
located at 4333 Edgewood Road NE, Cedar Rapids, Iowa 52499. AFSG is an
affiliate of the investment adviser. Under this agreement, AFSG underwrites and
distributes all classes of fund shares and bears the expenses of offering these
shares to the public. The funds pay AFSG fees for its services. Of the
distribution and service fees it receives for Class A and B shares, AFSG
reallows, or pays, to brokers or dealers who sold them, 0.25% of the average
daily net assets of those shares. In the case of Class C or M shares, AFSG
reallows its entire fee to those sellers.
[GRAPHIC] DISTRIBUTION PLANS
The Fund has adopted a 12b-1 Plan for each class of shares in each fund in the
series.
DISTRIBUTION OF CLASS A SHARES. AFSG receives the sales fees or loads imposed
on these shares (up to 5.50% of the offering price, which includes the sales
load) and reallows a portion of those fees to the sellers of the shares. AFSG
also receives fees under a Rule 12b-1 Plan of Distribution. Under its Plan for
Class A shares, the funds may pay AFSG a distribution fee of up to 0.35%
annually which includes a service fee of 0.25%. Fees are based on the average
daily net assets of Class A shares. However, if the service fees rise, the
distribution fee is lowered so that the total fees payable don't exceed 0.35%
annually.
DISTRIBUTION OF CLASS B SHARES. For these shares, the funds may pay AFSG an
annual distribution fee of up to 1.00%, which includes an annual service fee of
0.25%.
DISTRIBUTION OF CLASS C SHARES. For these shares, the funds may pay AFSG an
annual distribution fee of up to 1.00%, which includes an annual service fee of
0.25%.
DISTRIBUTION OF CLASS M SHARES. The fees paid to AFSG for these shares may go
as high as the Class B and C shares fees, but the total annual fee may not
exceed 0.90% of the average daily net assets of the funds.
CLASS T SHARES (IDEX JANUS GROWTH ONLY). This class of shares does not have a
12b-1 Plan of Distribution, and is closed to new shareholders.
THE EFFECT OF RULE 12B-1. Because the funds have 12b-1 Plans, even though Class
B and C shares do not carry an up-front sales load, the higher distribution and
service fees payable by those shares may, over time, be higher than the total
fees paid by owners of Class A and M shares. For a complete description of the
funds' 12b-1 Plans, see the SAI.
88
THIS PAGE HAS BEEN INTENTIONALLY LEFT BLANK
89
FINANCIAL HIGHLIGHTS
FOR A SHARE OF BENEFICIAL INTEREST OUTSTANDING THROUGHOUT EACH PERIOD:
THE FINANCIAL HIGHLIGHTS TABLE IS INTENDED TO HELP YOU TO UNDERSTAND EACH
FUND'S PERFORMANCE FOR AS LONG AS IT HAS BEEN OPERATING, OR FOR FIVE YEARS,
WHICHEVER IS SHORTER. CERTAIN INFORMATION REFLECTS FINANCIAL RESULTS FOR A
SINGLE FUND SHARE. THE TOTAL RETURNS IN THE TABLE REPRESENT THE RATE AN
INVESTOR WOULD HAVE EARNED (OR LOST) ON AN INVESTMENT IN THE FUND FOR THE
PERIOD SHOWN, ASSUMING REINVESTMENT OF ALL DIVIDENDS AND DISTRIBUTIONS. THIS
INFORMATION THROUGH OCTOBER 31, 2000 HAS BEEN DERIVED FROM FINANCIAL STATEMENTS
AUDITED BY PRICEWATERHOUSECOOPERS LLP, WHOSE REPORT, ALONG WITH THE FUND'S
FINANCIAL STATEMENTS, IS INCLUDED IN THE 2000 ANNUAL REPORT, WHICH IN AVAILABLE
TO YOU UPON REQUEST. INFORMATION IS NOT INCLUDED FOR IDEX JANUS GROWTH &
INCOME, IDEX MUNDER NET50, IDEX AMERICAN CENTURY INCOME & GROWTH, IDEX AMERICAN
CENTURY INTERNATIONAL AND IDEX ISABELLE SMALL CAP VALUE AS THEY HAD NOT
COMMENCED OPERATIONS ON 10/31/00. (PRIOR TO JUNE 14, 2000, IDEX FEDERATED TAX
EXEMPT WAS NAMED IDEX AEGON TAX EXEMPT, AND PRIOR TO DECEMBER 1, 2000 IDEX
JENNISON EQUITY OPPORTUNITY WAS NAMED IDEX C.A.S.E. GROWTH.)
INVESTMENT OPERATIONS
---------------------------------------------
NET ASSET
YEAR OR VALUE, NET NET REALIZED
PERIOD BEGINNING INVESTMENT AND UNREALIZED TOTAL
ENDED OF PERIOD INCOME (LOSS) GAIN (LOSS) OPERATIONS
----------------- ----------- --------------- ---------------- ------------
IDEX JANUS Class A 10/31/00 $46.72 $ 0.03 $ 5.35 $ 5.38
GROWTH 10/31/99 29.35 0.06 17.70 17.76
10/31/98 25.04 (0.02) 7.64 7.62
10/31/97 21.97 (0.02) 3.56 3.54
10/31/96(6) 22.21 -- (0.24) (0.24)
9/30/96 22.84 (0.11) 4.66 4.55
---------- ------ -------- -------- --------
Class B 10/31/00 45.38 (0.36) 5.35 4.99
10/31/99 28.63 (0.56) 17.70 17.14
10/31/98 24.55 (0.25) 7.64 7.39
10/31/97 21.60 (0.14) 3.56 3.42
10/31/96(6) 21.85 (0.01) (0.24) (0.25)
9/30/96 22.64 (0.27) 4.66 4.39
---------- ------ -------- -------- --------
Class C 10/31/00 45.38 (0.36) 5.35 4.99
--------- ---------- ------ -------- -------- --------
Class M 10/31/00 45.58 (0.29) 5.35 5.06
10/31/99(5) 28.74 (0.47) 17.70 17.23
10/31/98 24.62 (0.21) 7.64 7.43
10/31/97 21.65 (0.12) 3.56 3.44
10/31/96(6) 21.91 (0.02) (0.24) (0.26)
9/30/96 22.64 (0.21) 4.66 4.45
---------- ------ -------- -------- --------
Class T 10/31/00 47.45 0.25 5.35 5.60
10/31/99 29.74 0.40 17.70 18.10
10/31/98(7) 25.31 0.13 7.64 7.77
10/31/97 22.17 0.05 3.56 3.61
10/31/96(6) 22.41 -- (0.24) (0.24)
9/30/96(9) 22.23 -- 0.18 0.18
---------- ------ -------- -------- --------
DISTRIBUTIONS
---------------------------------------
FROM NET
FROM NET REALIZED
INVESTMENT CAPITAL TOTAL
INCOME GAINS DISTRIBUTIONS
------------ ----------- --------------
IDEX JANUS $ -- $ (8.29) $ (8.29)
GROWTH -- (0.39) (0.39)
-- (3.31) (3.31)
-- (0.47) (0.47)
-- -- --
-- (5.18) (5.18)
-------- ------- -------
-- (8.29) (8.29)
-- (0.39) (0.39)
-- (3.31) (3.31)
-- (0.47) (0.47)
-- -- --
-- (5.18) (5.18)
-------- ------- -------
-- (8.29) (8.29)
-------- ------- -------
-- (8.29) (8.29)
-- (0.39) (0.39)
-- (3.31) (3.31)
-- (0.47) (0.47)
-- -- --
-- (5.18) (5.18)
-------- ------- -------
-- (8.29) (8.29)
-- (0.39) (0.39)
(0.03) (3.31) (3.34)
-- (0.47) (0.47)
-- -- --
-- -- --
-------- ------- -------
90
RATIOS/SUPPLEMENTAL DATA
-----------------------------------------------------------------------
RATIO OF EXPENSES TO AVERAGE NET
ASSETS/(12)(13)/ NET INVESTMENT
NET ASSET NET ASSETS, ----------------------------------- INCOME (LOSS) PORTFOLIO
VALUE, END TOTAL END OF EXCLUDING INCLUDING TO AVERAGE TURNOVER
OF PERIOD RETURN/(11)/ PERIOD (000'S) CREDITS GROSS CREDITS NET ASSETS /(12)(13)/ RATE/(14)/
- -------------------------------------------------------------------------------------------------------------------------
$43.81 10.82% $1,727,573 1.39% 1.42% 1.39% (0.61)% 40.71%
46.72 61.00 1,467,595 1.40 1.43 1.40 (0.60) 70.97
29.35 35.21 817,749 1.51 -- 1.51 (0.55) 27.19
25.04 16.40 614,544 1.61 -- 1.61 (0.10) 91.52
21.97 (1.09) 565,032 1.68 -- 1.68 (0.13) 9.40
22.21 22.41 567,564 1.83 -- 1.82 (0.22) 57.80
- ----------------------------------------------------------------------------------------------------------------------
42.08 10.11 775,252 2.04 2.07 2.04 (1.26) 40.71
45.38 60.36 327,926 2.05 2.08 2.05 (1.25) 70.97
28.63 34.96 40,809 2.16 -- 2.16 (1.20) 27.19
24.55 16.11 13,046 2.26 -- 2.26 (0.75) 91.52
21.60 (1.14) 5,242 2.32 -- 2.32 (0.78) 9.40
21.85 21.87 4,536 2.46 -- 2.45 (0.86) 57.80
- ----------------------------------------------------------------------------------------------------------------------
42.08 10.11 121,633 2.04 2.07 2.04 (1.26) 40.71
- ----------------------------------------------------------------------------------------------------------------------
42.35 10.22 287,530 1.94 1.97 1.94 (1.16) 40.71
45.58 60.45 141,586 1.95 1.98 1.95 (1.15) 70.97
28.74 35.00 58,265 2.06 -- 2.06 (1.10) 27.19
24.62 16.19 14,295 2.16 -- 2.16 (0.65) 91.52
21.65 (1.19) 11,016 2.23 -- 2.23 (0.68) 9.40
21.91 22.15 11,167 2.34 -- 2.33 (0.77) 57.80
- ----------------------------------------------------------------------------------------------------------------------
44.76 11.20 1,232,295 1.04 1.07 1.04 (0.26) 40.71
47.45 61.34 1,166,965 1.05 1.08 1.05 (0.25) 70.97
29.74 35.53 755,770 1.16 -- 1.16 (0.20) 27.19
25.31 16.54 603,129 1.26 -- 1.26 (0.25) 91.52
22.17 (1.03) 573,884 1.33 -- 1.33 (0.20) 9.40
22.41 0.81 585,505 1.18 -- 1.17 (0.36) 57.80
- ----------------------------------------------------------------------------------------------------------------------
See notes to the Financial Highlights at page 106.
91
FINANCIAL HIGHLIGHTS (CONTINUED)
FOR A SHARE OF BENEFICIAL INTEREST OUTSTANDING THROUGHOUT EACH PERIOD:
INVESTMENT OPERATIONS DISTRIBUTIONS
----------------------------------------------------------------------------
NET ASSET FROM NET
YEAR OR VALUE, NET NET REALIZED FROM NET REALIZED
PERIOD BEGINNING INVESTMENT AND UNREALIZED TOTAL INVESTMENT CAPITAL TOTAL
ENDED OF PERIOD INCOME (LOSS) GAIN (LOSS) OPERATIONS INCOME GAINS DISTRIBUTIONS
- -----------------------------------------------------------------------------------------------------------------------------------
<c>
IDEX JANUS Class A 10/31/00 $33.80 $ -- $7.53 $ 7.53 $ -- $ (1.13) $ (1.13)
GLOBAL(15) 10/31/99/(16)/ 24.09 0.22 9.49 9.71 -- -- --
10/31/98/(7)/ 23.74 0.08 2.34 2.42 -- (2.07) (2.07)
10/31/97 21.39 0.07 4.38 4.45 -- (2.10) (2.10)
10/31/96/(6)/ 21.40 (0.02) 0.01 (0.01) -- -- --
9/30/96 17.73 (0.09) 4.38 4.29 -- (0.62) (0.62)
----------------------------------------------------------------------------------------------------------------------
Class B 10/31/00 32.98 (0.41) 7.53 7.12 -- (1.13) (1.13)
10/31/99/(16)/ 23.62 (0.13) 9.49 9.36 -- -- --
10/31/98/(7)/ 23.38 (0.03) 2.34 2.31 -- (2.07) (2.07)
10/31/97 21.13 (0.03) 4.38 4.35 -- (2.10) (2.10)
10/31/96/(6)/ 21.14 (0.02) 0.01 (0.01) -- -- --
9/30/96 17.57 (0.19) 4.38 4.19 -- (0.62) (0.62)
----------------------------------------------------------------------------------------------------------------------
Class C 10/31/00 32.98 (0.40) 7.53 - 7.13 -- (1.13) (1.13)
----------------------------------------------------------------------------------------------------------------------
Class M 10/31/00 32.91 (0.37) 7.53 7.16 -- (1.13) (1.13)
10/31/99/(5)(16)/ 23.56 (0.14) 9.49 9.35 -- -- --
10/31/98/(7)/ 23.30 (0.01) 2.34 2.33 -- (2.07) (2.07)
10/31/97 21.03 (0.01) 4.38 4.37 -- (2.10) (2.10)
10/31/96/(6)/ 21.04 (0.02) 0.01 (0.01) -- -- --
9/30/96 17.46 (0.18) 4.38 4.20 -- (0.62) (0.62)
- -----------------------------------------------------------------------------------------------------------------------------------
IDEX JANUS Class A 10/31/00 18.96 0.25 1.03 1.28 (0.24) (0.25) (0.49)
BALANCED 10/31/99 14.75 0.19 4.27 4.46 (0.17) (0.08) (0.25)
10/31/98 14.34 0.15 1.76 1.91 (0.15) (1.35) (1.50)
10/31/97 13.58 0.19 2.52 2.71 (0.20) (1.75) (1.95)
10/31/96/(6)/ 13.47 0.01 0.10 0.11 -- -- --
9/30/96 11.47 0.24 2.25 2.49 (0.21) (0.28) (0.49)
----------------------------------------------------------------------------------------------------------------------
Class B 10/31/00 18.95 0.21 1.03 1.24 (0.21) (0.25) (0.46)
10/31/99 14.74 0.08 4.27 4.35 (0.06) (0.08) (0.14)
10/31/98 14.33 0.06 1.76 1.82 (0.06) (1.35) (1.41)
10/31/97 13.56 0.12 2.52 2.64 (0.12) (1.75) (1.87)
10/31/96/(6)/ 13.46 -- 0.10 0.10 -- -- --
9/30/96 11.47 0.15 2.25 2.40 (0.13) (0.28) (0.41)
----------------------------------------------------------------------------------------------------------------------
Class C 10/31/00 18.95 0.21 1.03 1.24 (0.21) (0.25) (0.46)
----------------------------------------------------------------------------------------------------------------------
Class M 10/31/00 18.95 0.23 1.03 1.26 (0.23) (0.25) (0.48)
10/31/99/(5)/ 14.74 0.10 4.27 4.37 (0.08) (0.08) (0.16)
10/31/98 14.33 0.07 1.76 1.83 (0.07) (1.35) (1.42)
10/31/97 13.57 0.12 2.52 2.64 (0.13) (1.75) (1.88)
10/31/96/(6)/ 13.46 0.01 0.10 0.11 -- -- --
9/30/96 11.47 0.16 2.25 2.41 (0.14) (0.28) (0.42)
- -----------------------------------------------------------------------------------------------------------------------------------
92
RATIOS/SUPPLEMENTAL DATA
----------------------------------------------------------------------
RATIO OF EXPENSES TO AVERAGE NET
ASSETS/(12)(13)/ NET INVESTMENT
NET ASSET NET ASSETS, ----------------------------------- INCOME (LOSS) PORTFOLIO
VALUE, END TOTAL END OF EXCLUDING INCLUDING TO AVERAGE TURNOVER
OF PERIOD RETURN/(11)/ PERIOD (000'S) CREDITS GROSS CREDITS NET ASSETS/(12)(13)/ RATE/(14)/
- -----------------------------------------------------------------------------------------------------------------------
$40.20 22.26% $749,671 1.64% --% 1.64% (0.56)% 52.51%
33.80 40.31 487,787 1.73 -- 1.73 (0.22) 145.40
24.09 11.30 296,450 1.82 -- 1.82 (0.45) 87.68
23.74 22.72 218,681 1.91 -- 1.91 (0.50) 91.02
21.39 (0.05) 135,837 2.08 -- 2.07 (1.15) 2.59
21.40 25.04 131,347 2.09 -- 2.06 (0.67) 97.94
- -----------------------------------------------------------------------------------------------------------------------
38.97 21.62 614,789 2.29 -- 2.29 (1.21) 52.51
32.98 39.62 283,847 2.38 -- 2.38 (0.87) 145.40
23.62 10.93 110,630 2.47 -- 2.47 (1.10) 87.68
23.38 22.53 43,951 2.56 -- 2.56 (1.15) 91.02
21.13 (0.05) 5,966 2.73 -- 2.72 (1.80) 2.59
21.14 24.70 5,000 2.74 -- 2.71 (1.32) 97.94
- -----------------------------------------------------------------------------------------------------------------------
38.98 21.62 116,071 2.29 -- 2.29 (1.21) 52.51
- -----------------------------------------------------------------------------------------------------------------------
38.94 21.72 306,667 2.19 -- 2.19 (1.11) 52.51
32.91 39.73 155,147 2.28 -- 2.28 (0.77) 145.40
23.56 11.08 63,552 2.37 -- 2.37 (1.00) 87.68
23.30 22.72 27,210 2.46 -- 2.46 (1.05) 91.02
21.03 (0.05) 8,624 2.63 -- 2.62 (1.70) 2.59
21.04 24.91 8,081 2.64 -- 2.61 (1.22) 97.94
- -----------------------------------------------------------------------------------------------------------------------
19.75 7.23 133,445 1.67 1.69 1.67 1.73 70.87
18.96 30.43 67,749 1.81 1.82 1.81 1.28 59.57
14.75 14.69 22,995 1.85 2.04 1.85 1.12 61.50
14.34 22.96 13,414 1.85 2.88 1.85 1.29 127.08
13.58 0.81 8,402 1.85 3.44 1.85 1.84 9.08
13.47 22.12 8,056 1.85 3.11 1.85 1.87 175.78
- -----------------------------------------------------------------------------------------------------------------------
19.73 6.58 229,160 2.32 2.34 2.32 1.08 70.87
18.95 29.64 92,833 2.46 2.47 2.46 0.63 59.57
14.74 13.97 11,916 2.50 2.69 2.50 0.47 61.50
14.33 22.19 2,583 2.50 3.53 2.50 0.64 127.08
13.56 0.74 878 2.50 4.09 2.50 1.18 9.08
13.46 21.38 687 2.50 3.76 2.50 1.22 175.78
- -----------------------------------------------------------------------------------------------------------------------
19.73 6.58 42,447 2.32 2.34 2.32 1.08 70.87
- -----------------------------------------------------------------------------------------------------------------------
19.73 6.68 66,249 2.22 2.24 2.22 1.18 70.87
18.95 29.76 34,122 2.36 2.37 2.36 0.73 59.57
14.74 14.08 4,897 2.40 2.59 2.40 0.57 61.50
14.33 22.31 1,561 2.40 3.43 2.40 0.74 127.08
13.57 0.81 967 2.40 3.99 2.40 1.28 9.08
13.46 21.49 943 2.40 3.66 2.40 1.32 175.78
- -----------------------------------------------------------------------------------------------------------------------
See notes to the Financial Highlights at page 106.
93
FINANCIAL HIGHLIGHTS (CONTINUED)
FOR A SHARE OF BENEFICIAL INTEREST OUTSTANDING THROUGHOUT EACH PERIOD:
INVESTMENT OPERATIONS DISTRIBUTIONS
-------------------------------------- -------------------------------------
NET ASSET FROM NET
YEAR OR VALUE, NET NET REALIZED FROM NET REALIZED
PERIOD BEGINNING INVESTMENT AND UNREALIZED TOTAL INVESTMENT CAPITAL TOTAL
ENDED OF PERIOD INCOME (LOSS) GAIN (LOSS) OPERATIONS INCOME GAINS DISTRIBUTIONS
- -----------------------------------------------------------------------------------------------------------------------------------
IDEX JANUS Class A 10/31/00 $31.09 $ (0.13) $ 3.19 $ 3.06 $ -- $ (2.07) $ (2.07)
CAPITAL 10/31/99 16.97 0.05 15.88 15.93 -- (1.81) (1.81)
APPRECIATION 10/31/98 15.90 0.01 1.51 1.52 -- (0.45) (0.45)
10/31/97 15.49 0.04 0.58 0.62 -- (0.21) (0.21)
10/31/96/(6)/ 15.75 (0.02) (0.24) (0.26) -- -- --
9/30/96/(7)/ 13.54 (0.02) 3.12 3.10 (0.07) (0.82) (0.89)
-----------------------------------------------------------------------------------------------------------------
Class B 10/31/00 30.51 (0.38) 3.19 2.81 -- (2.07) (2.07)
10/31/99 16.72 (0.28) 15.88 15.60 -- (1.81) (1.81)
10/31/98 15.74 (0.08) 1.51 1.43 -- (0.45) (0.45)
10/31/97 15.42 (0.05) 0.58 0.53 -- (0.21) (0.21)
10/31/96/(6)/ 15.69 (0.03) (0.24) (0.27) -- -- --
9/30/96 13.49 (0.10) 3.12 3.02 -- (0.82) (0.82)
-----------------------------------------------------------------------------------------------------------------
Class C 10/31/00 30.51 (0.38) 3.19 2.81 -- (2.07) (2.07)
-----------------------------------------------------------------------------------------------------------------
Class M 10/31/00 30.60 (0.34) 3.19 2.85 -- (2.07) (2.07)
10/31/99/(5)/ 16.76 (0.23) 15.88 15.65 -- (1.81) (1.81)
10/31/98 15.77 (0.07) 1.51 1.44 -- (0.45) (0.45)
10/31/97 15.43 (0.03) 0.58 0.55 -- (0.21) (0.21)
10/31/96/(6)/ 15.70 (0.03) (0.24) (0.27) -- -- --
9/30/96/(7)/ 13.49 (0.08) 3.12 3.04 (0.01) (0.82) (0.83)
- -----------------------------------------------------------------------------------------------------------------------------------
IDEX JANUS Class A 10/31/00 9.46 0.57 (0.19) 0.38 (0.58) -- (0.58)
FLEXIBLE INCOME 10/31/99 9.84 0.54 (0.38) 0.16 (0.54) -- (0.54)
10/31/98 9.75 0.61 0.10 0.71 (0.62) -- (0.62)
10/31/97 9.33 0.61 0.42 1.03 (0.61) -- (0.61)
10/31/96/(6)/ 9.19 0.05 0.14 0.19 (0.05) -- (0.05)
9/30/96 9.17 0.60 -- 0.60 (0.58) -- (0.58)
-----------------------------------------------------------------------------------------------------------------
Class B 10/31/00 9.46 0.51 (0.19) 0.32 (0.52) -- (0.52)
10/31/99 9.83 0.49 (0.38) 0.11 (0.48) -- (0.48)
10/31/98 9.75 0.54 0.10 0.64 (0.56) -- (0.56)
10/31/97 9.32 0.56 0.42 0.98 (0.55) -- (0.55)
10/31/96/(6)/ 9.18 0.05 0.14 0.19 (0.05) -- (0.05)
9/30/96 9.17 0.53 -- 0.53 (0.52) -- (0.52)
-----------------------------------------------------------------------------------------------------------------
Class C 10/31/00 9.46 0.51 (0.19) 0.32 (0.52) -- (0.52)
-----------------------------------------------------------------------------------------------------------------
Class M 10/31/00 9.46 0.52 (0.19) 0.33 (0.53) -- (0.53)
10/31/99/(5)/ 9.84 0.49 (0.38) 0.11 (0.49) -- (0.49)
10/31/98 9.75 0.56 0.10 0.66 (0.57) -- (0.57)
10/31/97 9.32 0.57 0.42 0.99 (0.56) -- (0.56)
10/31/96/(6)/ 9.18 0.05 0.14 0.19 (0.05) -- (0.05)
9/30/96 9.17 0.54 -- 0.54 (0.53) -- (0.53)
- -----------------------------------------------------------------------------------------------------------------------------------
94
RATIOS/SUPPLEMENTAL DATA
----------------------------------------------------------------------
RATIO OF EXPENSES TO AVERAGE NET
ASSETS/(12)(13)/ NET INVESTMENT
NET ASSET NET ASSETS, ----------------------------------- INCOME (LOSS) PORTFOLIO
VALUE, END TOTAL END OF EXCLUDING INCLUDING TO AVERAGE TURNOVER
OF PERIOD RETURN/(11)/ PERIOD (000'S) CREDITS GROSS CREDITS NET ASSETS/(12)(13)/ RATE/(14)/
------------ ------------ ---------------- ----------- ------- ----------- -------------------- ----------
$32.08 9.14% $176,996 1.85% 1.89% 1.85% (1.53)% 103.64%
31.09 102.19 74,614 1.84 2.02 1.84 (1.55) 93.54
16.97 9.87 23,798 1.85 2.24 1.85 (1.37) 136.59
15.90 4.09 20,605 1.85 2.66 1.85 (1.27) 130.48
15.49 (1.59) 19,350 1.85 2.48 1.85 (1.41) 10.11
15.75 24.35 18,713 1.85 2.72 1.85 (0.35) 160.72
--------------------------------------------------------------------------------------------------------------------
31.25 8.45 187,067 2.50 2.54 2.50 (2.18) 103.64
30.51 101.72 36,467 2.49 2.67 2.49 (2.20) 93.54
16.72 9.35 3,734 2.50 2.89 2.50 (2.02) 136.59
15.74 3.56 2,866 2.50 3.31 2.50 (1.92) 130.48
15.42 (1.66) 2,132 2.50 3.13 2.50 (2.06) 10.11
15.69 23.63 2,022 2.50 3.37 2.50 (1.00) 160.72
--------------------------------------------------------------------------------------------------------------------
31.25 8.45 43,065 2.50 2.54 2.50 (2.18) 103.64
--------------------------------------------------------------------------------------------------------------------
31.38 8.55 51,450 2.40 2.44 2.40 (2.08) 103.64
30.60 101.79 10,062 2.39 2.57 2.39 (2.10) 93.54
16.76 9.43 1,382 2.40 2.79 2.40 (1.92) 136.59
15.77 3.64 1,751 2.40 3.21 2.40 (1.82) 130.48
15.43 (1.66) 2,243 2.40 3.03 2.40 (1.96) 10.11
15.70 23.81 2,369 2.40 3.27 2.40 (0.90) 160.72
--------------------------------------------------------------------------------------------------------------------
9.26 4.10 16,530 1.84 1.87 1.84 6.17 165.55
9.46 1.70 14,963 1.85 2.00 1.85 5.72 100.22
9.84 7.43 14,970 1.83 -- 1.83 6.22 90.63
9.75 11.53 15,532 1.85 2.40 1.85 6.41 135.53
9.33 2.08 17,001 1.85 2.98 1.85 6.15 16.16
9.19 6.73 17,065 1.85 2.07 1.85 6.46 135.38
--------------------------------------------------------------------------------------------------------------------
9.26 3.46 14,008 2.49 2.51 2.49 5.52 165.55
9.46 1.01 9,006 2.50 2.65 2.50 5.07 100.22
9.83 6.74 2,387 2.48 -- 2.48 5.57 90.63
9.75 10.79 746 2.50 3.05 2.50 5.76 135.53
9.32 2.04 522 2.50 3.63 2.50 5.50 16.16
9.18 5.94 494 2.50 2.72 2.50 5.81 135.38
--------------------------------------------------------------------------------------------------------------------
9.26 3.46 8,169 2.49 2.51 2.49 5.52 165.55
--------------------------------------------------------------------------------------------------------------------
9.26 3.56 6,220 2.39 2.41 2.39 5.62 165.55
9.46 1.11 3,778 2.40 2.55 2.40 5.17 100.22
9.84 6.84 2,207 2.38 -- 2.38 5.67 90.63
9.75 10.91 928 2.40 2.95 2.40 5.86 135.53
9.32 2.04 846 2.40 3.53 2.40 5.60 16.16
9.18 6.03 883 2.40 2.62 2.40 5.91 135.38
--------------------------------------------------------------------------------------------------------------------
See notes to the Financial Highlights at page 106.
95
FINANCIAL HIGHLIGHTS (CONTINUED)
FOR A SHARE OF BENEFICIAL INTEREST OUTSTANDING THROUGHOUT EACH PERIOD:
INVESTMENT OPERATIONS
---------------------------------------------
NET ASSET
YEAR OR VALUE, NET NET REALIZED
PERIOD BEGINNING INVESTMENT AND UNREALIZED TOTAL
ENDED OF PERIOD INCOME (LOSS) GAIN (LOSS) OPERATIONS
- ------------------------------------------------------------------------------------------------------
IDEX ALGER Class A 10/31/00 $33.05 $ (0.13) $ 2.15 $ 2.02
AGGRESSIVE 10/31/99 22.24 0.17 11.82 11.99
GROWTH 10/31/98 18.77 0.03 4.02 4.05
10/31/97 15.70 0.05 3.69 3.74
10/31/96/(6)/ 15.75 (0.01) (0.04) (0.05)
9/30/96/(7)/ 17.68 (0.15) (0.76) (0.91)
--------------------------------------------------------------------------------------
Class B 10/31/00 32.44 (0.36) 2.15 1.79
10/31/99 21.93 (0.13) 11.82 11.69
10/31/98 18.58 (0.09) 4.02 3.93
10/31/97 15.58 (0.02) 3.69 3.67
10/31/96/(6)/ 15.63 (0.01) (0.04) (0.05)
9/30/96/(7)/ 17.64 (0.23) (0.76) (0.99)
--------------------------------------------------------------------------------------
Class C 10/31/00 32.44 (0.36) 2.15 1.79
--------------------------------------------------------------------------------------
Class M 10/31/00 32.53 (0.32) 2.15 1.83
10/31/99/(5)/ 21.98 (0.09) 11.82 11.73
10/31/98 18.61 (0.07) 4.02 3.95
10/31/97 15.60 (0.01) 3.69 3.68
10/31/96/(6)/ 15.65 (0.01) (0.04) (0.05)
9/30/96/(7)/ 17.64 (0.21) (0.76) (0.97)
- ------------------------------------------------------------------------------------------------------
IDEX T. ROWE Class A 10/31/00 10.20 0.08 0.44 0.52
PRICE DIVIDEND 10/31/99/(4)/ 10.00 0.06 0.18 0.24
--------------------------------------------------------------------------------------
GROWTH Class B 10/31/00 10.19 0.02 0.44 0.46
10/31/99/(4)/ 10.00 0.01 0.18 0.19
-------------------------------------------------------------------------------------
Class C 10/31/00 10.19 0.02 0.44 0.46
--------------------------------------------------------------------------------------
Class M 10/31/00 10.19 0.03 0.44 0.47
10/31/99/(4)/ 10.00 0.02 0.18 0.20
- ------------------------------------------------------------------------------------------------------
IDEX T. ROWE Class A 10/31/00/(7)/ 11.01 (0.07) 2.51 2.44
PRICE SMALL CAP 10/31/99/(4)/ 10.00 0.02 0.99 1.01
--------------------------------------------------------------------------------------
Class B 10/31/00/(7)/ 10.97 (0.15) 2.51 2.36
10/31/99/(4)/ 10.00 (0.02) 0.99 0.97
--------------------------------------------------------------------------------------
Class C 10/31/00/(7)/ 10.97 (0.15) 2.51 2.36
--------------------------------------------------------------------------------------
Class M 10/31/00/(7)/ 10.98 (0.14) 2.51 2.37
10/31/99/(4)/ 10.00 (0.01) 0.99 0.98
- ------------------------------------------------------------------------------------------------------
IDEX PILGRIM Class A 10/31/00 14.80 (0.02) 6.47 6.45
BAXTER MID CAP 10/31/99/(4)/ 10.00 0.02 4.78 4.80
--------------------------------------------------------------------------------------
GROWTH Class B 10/31/00 14.76 (0.16) 6.47 6.31
10/31/99/(4)/ 10.00 (0.02) 4.78 4.76
--------------------------------------------------------------------------------------
Class C 10/31/00 14.76 (0.16) 6.47 6.31
--------------------------------------------------------------------------------------
Class M 10/31/00 14.77 (0.14) 6.47 6.33
10/31/99/(4)/ 10.00 (0.01) 4.78 4.77
- ------------------------------------------------------------------------------------------------------
IDEX PILGRIM Class A 10/31/00/(3)/ 10.00 (0.02) (3.20) (3.22)
--------------------------------------------------------------------------------------
BAXTER Class B 10/31/00/(3)/ 10.00 (0.07) (3.20) (3.27)
--------------------------------------------------------------------------------------
TECHNOLOGY
Class C 10/31/00/(3)/ 10.00 (0.07) (3.20) (3.27)
--------------------------------------------------------------------------------------
Class M 10/31/00/(3/ 10.00 (0.06) (3.20) (3.26)
--------------------------------------------------------------------------------------
DISTRIBUTIONS
---------------------------------------
FROM NET
FROM NET REALIZED
INVESTMENT CAPITAL TOTAL
INCOME GAINS DISTRIBUTIONS
---------------------------------------
IDEX ALGER $ -- $ (3.00) $ (3.00)
AGGRESSIVE -- (1.18) (1.18)
GROWTH -- (0.58) (0.58)
-- (0.67) (0.67)
-- -- --
-- (1.02) (1.02)
----------------------------------------
-- (3.00) (3.00)
-- (1.18) (1.18)
-- (0.58) (0.58)
-- (0.67) (0.67)
-- -- --
-- (1.02) (1.02)
----------------------------------------
-- (3.00) (3.00)
----------------------------------------
-- (3.00) (3.00)
-- (1.18) (1.18)
-- (0.58) (0.58)
-- (0.67) (0.67)
-- -- --
-- (1.02) (1.02)
- --------------------------------------------------------
IDEX T. ROWE (0.08) -- (0.08)
PRICE DIVIDEND (0.04) -- (0.04)
----------------------------------------
GROWTH (0.02) -- (0.02)
-- -- --
----------------------------------------
(0.02) -- (0.02)
----------------------------------------
(0.03) -- (0.03)
(0.01) -- (0.01)
- --------------------------------------------------------
IDEX T. ROWE -- (0.28) (0.28)
PRICE SMALL CAP -- -- --
----------------------------------------
-- (0.28) (0.28)
-- -- --
----------------------------------------
-- (0.28) (0.28)
----------------------------------------
-- (0.28) (0.28)
-- -- --
- --------------------------------------------------------
IDEX PILGRIM -- (0.31) (0.31)
BAXTER MID CAP -- -- --
----------------------------------------
GROWTH -- (0.31) (0.31)
-- -- --
----------------------------------------
-- (0.31) (0.31)
----------------------------------------
-- (0.31) (0.31)
-- -- --
- --------------------------------------------------------
IDEX PILGRIM -- -- --
----------------------------------------
BAXTER -- -- --
----------------------------------------
TECHNOLOGY
-- -- --
----------------------------------------
-- -- --
----------------------------------------
96
RATIOS/SUPPLEMENTAL DATA
----------------------------------------------------------------------
RATIO OF EXPENSES TO AVERAGE NET
ASSETS/(12)(13)/ NET INVESTMENT
NET ASSET NET ASSETS, ----------------------------------- INCOME (LOSS) PORTFOLIO
VALUE, END TOTAL END OF EXCLUDING INCLUDING TO AVERAGE TURNOVER
OF PERIOD RETURN/(11)/ PERIOD (000'S) CREDITS GROSS CREDITS NET ASSETS/(12)(13)/ RATE/(14)/
- ------------------------------------------------------------------------------------------------------------------------
$32.07 4.81% $164,730 1.55% 1.77% 1.55% (0.94)% 107.81%
33.05 55.49 100,078 1.61 1.90 1.61 (1.15) 96.25
22.24 22.48 46,413 1.85 2.18 1.85 (1.11) 142.08
18.77 24.71 31,260 1.85 2.44 1.85 (1.07) 120.96
15.70 (0.32) 21,938 1.85 2.62 1.85 (1.06) 9.40
15.75 (4.91) 22,078 1.85 2.60 1.85 (1.15) 127.49
- ------------------------------------------------------------------------------------------------------------------------
31.23 4.13 115,689 2.20 2.42 2.20 (1.59) 107.81
32.44 54.88 47,399 2.26 2.55 2.26 (1.80) 96.25
21.93 22.04 10,564 2.50 2.83 2.50 (1.76) 142.08
18.58 24.47 4,880 2.50 3.09 2.50 (1.71) 120.96
15.58 (0.32) 1,992 2.50 3.27 2.50 (1.71) 9.40
15.63 (5.33) 1,800 2.50 3.25 2.50 (1.80) 127.49
------------------------------------------------------------------------------------------------------------------------
31.23 4.13 16,586 2.20 2.42 2.20 (1.59) 107.81
------------------------------------------------------------------------------------------------------------------------
31.36 4.24 33,223 2.10 2.32 2.10 (1.49) 107.81
32.53 54.97 18,538 2.16 2.45 2.16 (1.70) 96.25
21.98 22.11 5,573 2.40 2.73 2.40 (1.66) 142.08
18.61 24.50 3,468 2.40 2.99 2.40 (1.62) 120.96
15.60 (0.32) 2,129 2.40 3.17 2.40 (1.62) 9.40
15.65 (5.22) 2,250 2.40 3.15 2.40 (1.70) 127.49
- ------------------------------------------------------------------------------------------------------------------------
10.64 5.14 5,452 1.55 2.68 1.55 0.66 58.32
10.20 2.40 1,840 1.55 7.57 1.55 1.09 20.48
- ------------------------------------------------------------------------------------------------------------------------
10.63 4.49 7,597 2.20 3.33 2.20 0.01 58.32
10.19 1.96 2,134 2.20 8.22 2.20 0.44 20.48
- ------------------------------------------------------------------------------------------------------------------------
10.63 4.49 1,935 2.20 3.33 2.20 0.01 58.32
- ------------------------------------------------------------------------------------------------------------------------
10.63 4.59 1,916 2.10 3.23 2.10 0.11 58.32
10.19 2.03 1,058 2.10 8.12 2.10 0.54 20.48
- ------------------------------------------------------------------------------------------------------------------------
13.17 22.31 8,262 1.55 2.83 1.55 (1.14) 52.97
11.01 10.13 1,272 1.55 7.93 1.55 (1.15) 42.52
- ------------------------------------------------------------------------------------------------------------------------
13.05 21.63 8,119 2.20 3.48 2.20 (1.79) 52.97
10.97 9.70 1,135 2.20 8.58 2.20 (1.80) 42.52
- ------------------------------------------------------------------------------------------------------------------------
13.05 21.63 1,626 2.20 3.48 2.20 (1.79) 52.97
- ------------------------------------------------------------------------------------------------------------------------
13.07 21.73 2,489 2.10 3.38 2.10 (1.69) 52.97
10.98 9.77 685 2.10 8.48 2.10 (1.70) 42.52
- ------------------------------------------------------------------------------------------------------------------------
20.94 43.78 48,842 1.55 2.06 1.55 (0.80) 129.20
14.80 48.06 2,571 1.55 6.95 1.55 (0.88) 150.78
- ------------------------------------------------------------------------------------------------------------------------
20.76 43.07 68,184 2.20 2.71 2.20 (1.45) 129.20
14.76 47.63 2,875 2.20 7.60 2.20 (1.53) 150.78
- ------------------------------------------------------------------------------------------------------------------------
20.76 43.07 16,972 2.20 2.71 2.20 (1.45) 129.20
- ------------------------------------------------------------------------------------------------------------------------
20.79 43.17 14,734 2.10 2.61 2.10 (1.35) 129.20
14.77 47.70 1,016 2.10 7.50 2.10 (1.43) 150.78
- ------------------------------------------------------------------------------------------------------------------------
6.78 (32.21) 26,933 1.75 2.27 1.75 (1.19) 142.19
- ------------------------------------------------------------------------------------------------------------------------
6.73 (32.65) 40,165 2.40 2.92 2.40 (1.84) 142.19
- ------------------------------------------------------------------------------------------------------------------------
6.73 (32.65) 11,750 2.40 2.92 2.40 (1.84) 142.19
- ------------------------------------------------------------------------------------------------------------------------
6.74 (32.58) 9,361 2.30 2.82 2.30 (1.74) 142.19
- ------------------------------------------------------------------------------------------------------------------------
See notes to the Financial Highlights at page 106.
97
FINANCIAL HIGHLIGHTS (CONTINUED)
FOR A SHARE OF BENEFICIAL INTEREST OUTSTANDING THROUGHOUT EACH PERIOD:
INVESTMENT OPERATIONS
---------------------------------------------
NET ASSET
YEAR OR VALUE, NET NET REALIZED
PERIOD BEGINNING INVESTMENT AND UNREALIZED TOTAL
ENDED OF PERIOD INCOME (LOSS) GAIN (LOSS) OPERATIONS
- -----------------------------------------------------------------------------------------------------------
IDEX GABELLI GLOBAL Class A 10/31/00/(1)/ $10.00 $ 0.03 $ 0.03 $ 0.06
-------------------------------------------------------------------------------------
GROWTH
Class B 10/31/00/(1)/ 10.00 0.02 0.03 0.05
-------------------------------------------------------------------------------------
Class C 10/31/00/(1)/ 10.00 0.02 0.03 0.05
-------------------------------------------------------------------------------------
Class M 10/31/00/(1)/ 10.00 0.02 0.03 0.05
- -----------------------------------------------------------------------------------------------------------
IDEX GOLDMAN Class A 10/31/00 11.40 0.02 1.15 1.17
SACHS GROWTH 10/31/99/(4)/ 10.00 0.03 1.37 1.40
-------------------------------------------------------------------------------------
Class B 10/31/00 11.35 (0.06) 1.15 1.09
10/31/99/(4)/ 10.00 (0.02) 1.37 1.35
-------------------------------------------------------------------------------------
Class C 10/31/00 11.35 (0.06) 1.15 1.09
-------------------------------------------------------------------------------------
Class M 10/31/00 11.36 (0.05) 1.15 1.10
10/31/99/(4)/ 10.00 (0.01) 1.37 1.36
- -----------------------------------------------------------------------------------------------------------
IDEX TRANSAMERICA Class A 10/31/00/(3)/ 10.00 (0.02) 0.18 0.16
-------------------------------------------------------------------------------------
EQUITY
Class B 10/31/00/(3)/ 10.00 (0.06) 0.18 0.12
-------------------------------------------------------------------------------------
Class C 10/31/00/(3)/ 10.00 (0.06) 0.18 0.12
-------------------------------------------------------------------------------------
Class M 10/31/00/(3)/ 10.00 (0.06) 0.18 0.12
- -----------------------------------------------------------------------------------------------------------
IDEX TRANSAMERICA Class A 10/31/00/(3)/ 10.00 (0.02) (1.28) (1.30)
-------------------------------------------------------------------------------------
SMALL COMPANY
Class B 10/31/00/(3)/ 10.00 (0.06) (1.28) (1.34)
-------------------------------------------------------------------------------------
Class C 10/31/00/(3)/ 10.00 (0.06) (1.28) (1.34)
-------------------------------------------------------------------------------------
Class M 10/31/00/(4)/ 10.00 (0.05) (1.28) (1.33)
- -----------------------------------------------------------------------------------------------------------
IDEX SALOMON ALL Class A 10/31/00 11.70 0.08 3.92 4.00
CAP 10/31/99/(4)/ 10.00 0.02 1.68 1.70
-------------------------------------------------------------------------------------
Class B 10/31/00 11.66 (0.03) 3.92 3.89
10/31/99/(4)/ 10.00 (0.02) 1.68 1.66
-------------------------------------------------------------------------------------
Class C 10/31/00 11.66 (0.03) 3.92 3.89
-------------------------------------------------------------------------------------
Class M 10/31/00/(3)/ 11.67 (0.02) 3.92 3.90
10/31/99/(4)/ 10.00 (0.01) 1.68 1.67
- -----------------------------------------------------------------------------------------------------------
IDEX GREAT Class A 10/31/00/(2)/ 10.00 -- 0.58 0.58
-------------------------------------------------------------------------------------
COMPANIES --
Class B 10/31/00/(2)/ 10.00 (0.02) 0.58 0.56
-------------------------------------------------------------------------------------
AMERICASM
Class C 10/31/00/(2)/ 10.00 (0.02) 0.58 0.56
-------------------------------------------------------------------------------------
Class M 10/31/00/(2)/ 10.00 (0.02) 0.58 0.56
- -----------------------------------------------------------------------------------------------------------
IDEX GREAT Class A 10/31/00/(2)/ 10.00 -- (2.07) (2.07)
-------------------------------------------------------------------------------------
COMPANIES --
Class B 10/31/00/(2)/ 10.00 (0.02) (2.07) (2.09)
-------------------------------------------------------------------------------------
TECHNOLOGY(SM
Class C 10/31/00/(2)/ 10.00 (0.02) (2.07) (2.09)
-------------------------------------------------------------------------------------
Class M 10/31/00/(2)/ 10.00 (0.01) (2.07) (2.08)
- ----------------------------------------------------------------------------------------------------------
IDEX GREAT Class A 10/31/00/(1)/ 10.00 -- (0.19) (0.19)
-------------------------------------------------------------------------------------
Class B 10/31/00/(1)/ 10.00 (0.01) (0.19) (0.20)
-------------------------------------------------------------------------------------
GLOBAL/2/
Class C 10/31/00/(1)/ 10.00 (0.01) (0.19) (0.20)
-------------------------------------------------------------------------------------
Class M 10/31/00/(1)/ 10.00 (0.01) (0.19) (0.20)
-------------------------------------------------------------------------------------
DISTRIBUTIONS
--------------------------------------
FROM NET
FROM NET REALIZED
INVESTMENT CAPITAL TOTAL
INCOME GAINS DISTRIBUTIONS
------------ ---------- --------------
IDEX GABELLI GLOBAL $-- $ -- $ --
-------------------------------------
GROWTH
-- -- --
-------------------------------------
-- -- --
-------------------------------------
-- -- --
- ------------------------------------------------------------
IDEX GOLDMAN -- (0.03) (0.03)
SACHS GROWTH -- -- --
-------------------------------------
-- (0.03) (0.03)
-- -- --
-------------------------------------
-- (0.03) (0.03)
-------------------------------------
-- (0.03) (0.03)
-- -- --
- ------------------------------------------------------------
IDEX TRANSAMERICA -- -- --
-------------------------------------
EQUITY
-- -- --
-------------------------------------
-- -- --
-------------------------------------
-- -- --
- ------------------------------------------------------------
IDEX TRANSAMERICA -- -- --
-------------------------------------
SMALL COMPANY
-- -- --
-------------------------------------
-- -- --
-------------------------------------
-- -- --
- ------------------------------------------------------------
IDEX SALOMON ALL -- (0.19) (0.19)
CAP -- -- --
-------------------------------------
-- (0.19) (0.19)
-- -- --
-------------------------------------
-- (0.19) (0.19)
-------------------------------------
-- (0.19) (0.19)
-- -- --
- ------------------------------------------------------------
IDEX GREAT -- -- --
-------------------------------------
COMPANIES --
-- -- --
-------------------------------------
AMERICASM
-- -- --
-------------------------------------
-- -- --
- ------------------------------------------------------------
IDEX GREAT -- -- --
-------------------------------------
COMPANIES --
-- -- --
-------------------------------------
TECHNOLOGY(SM)
-- -- --
-------------------------------------
-- -- --
- ------------------------------------------------------------
IDEX GREAT -- -- --
-------------------------------------
COMPANIES --
-- -- --
-------------------------------------
GLOBAL2
-- -- --
-------------------------------------
-- -- --
-------------------------------------
98
RATIOS/SUPPLEMENTAL DATA
--------------------------------------------------------------------------
RATIO OF EXPENSES TO AVERAGE NET
ASSETS/(12)(13)/ NET INVESTMENT
NET ASSET NET ASSETS, -------------------------------------- INCOME (LOSS) PORTFOLIO
VALUE, END TOTAL END OF EXCLUDING INCLUDING TO AVERAGE TURNOVER
OF PERIOD RETURN/(11)/ PERIOD (000'S) CREDITS GROSS CREDITS NET ASSETS /(12)(13)/ RATE/(14)/
- ------------ ------------ ---------------- ----------- ---------- ----------- -------------------- ----------
<s>
$10.06 0.61% $ 4,488 1.75% 7.22% 1.75% 3.22% --%
---------------------------------------------------------------------------------------------------------------------
10.05 0.52 6,558 2.40 7.87 2.40 2.57 --
---------------------------------------------------------------------------------------------------------------------
10.05 0.52 7,468 2.40 7.87 2.40 2.57 --
---------------------------------------------------------------------------------------------------------------------
10.05 0.54 2,240 2.30 7.77 2.30 2.67 --
---------------------------------------------------------------------------------------------------------------------
12.54 10.29 6,587 1.55 2.53 1.55 (0.47) 25.10
11.40 13.97 1,978 1.55 7.65 1.54 (0.55) 21.91
---------------------------------------------------------------------------------------------------------------------
12.41 9.54 7,908 2.20 3.18 2.20 (1.12) 25.10
11.35 13.54 2,261 2.20 8.30 2.19 (1.20) 21.91
---------------------------------------------------------------------------------------------------------------------
12.41 9.54 6,484 2.20 3.18 2.20 (1.12) 25.10
---------------------------------------------------------------------------------------------------------------------
12.43 9.65 2,976 2.10 3.08 2.10 (1.02) 25.10
11.36 13.61 748 2.10 8.20 2.09 (1.10) 21.91
---------------------------------------------------------------------------------------------------------------------
10.16 1.60 3,053 1.55 6.10 1.55 (1.18) 12.86
---------------------------------------------------------------------------------------------------------------------
10.12 1.17 2,840 2.20 6.75 2.20 (1.83) 12.86
---------------------------------------------------------------------------------------------------------------------
10.12 1.17 1,118 2.20 6.75 2.20 (1.83) 12.86
---------------------------------------------------------------------------------------------------------------------
10.12 1.24 969 2.10 6.65 2.10 (1.73) 12.86
---------------------------------------------------------------------------------------------------------------------
8.70 (12.96) 3,726 1.55 4.54 1.55 (1.23) 18.58
---------------------------------------------------------------------------------------------------------------------
8.66 (13.39) 4,366 2.20 5.19 2.20 (1.88) 18.58
---------------------------------------------------------------------------------------------------------------------
8.66 (13.39) 1,704 2.20 5.19 2.20 (1.88) 18.58
---------------------------------------------------------------------------------------------------------------------
8.67 (13.33) 2,090 2.10 5.09 2.10 (1.78) 18.58
---------------------------------------------------------------------------------------------------------------------
15.51 34.50 25,575 1.55 2.41 1.55 0.45 91.39
11.70 17.03 1,880 1.55 8.85 1.54 0.35 82.70
---------------------------------------------------------------------------------------------------------------------
15.36 33.72 38,203 2.20 3.06 2.20 (0.20) 91.39
11.66 16.60 1,571 2.20 9.50 2.19 (0.30) 82.70
---------------------------------------------------------------------------------------------------------------------
15.36 33.72 10,675 2.20 3.06 2.20 (0.20) 91.39
---------------------------------------------------------------------------------------------------------------------
15.38 33.84 10,785 2.10 2.96 2.10 (0.10) 91.39
11.67 16.67 728 2.10 9.40 2.09 (0.20) 82.70
---------------------------------------------------------------------------------------------------------------------
10.58 5.81 13,377 1.55 3.38 1.55 (0.08) 2.11
---------------------------------------------------------------------------------------------------------------------
10.56 5.62 7,839 2.20 4.03 2.20 (0.73) 2.11
---------------------------------------------------------------------------------------------------------------------
10.56 5.62 2,875 2.20 4.03 2.20 (0.73) 2.11
---------------------------------------------------------------------------------------------------------------------
10.56 5.65 1,744 2.10 3.93 2.10 (0.63) 2.11
---------------------------------------------------------------------------------------------------------------------
7.93 (20.66) 6,322 1.55 5.55 1.55 (0.64) 11.25
---------------------------------------------------------------------------------------------------------------------
7.91 (20.86) 3,295 2.20 6.20 2.20 (1.29) 11.25
---------------------------------------------------------------------------------------------------------------------
7.91 (20.86) 1,443 2.20 6.20 2.20 (1.29) 11.25
---------------------------------------------------------------------------------------------------------------------
7.92 (20.83) 710 2.10 6.10 2.10 (1.19) 11.25
---------------------------------------------------------------------------------------------------------------------
9.81 (1.92) 2,173 1.55 25.34 1.55 (0.52) 15.15
---------------------------------------------------------------------------------------------------------------------
9.80 (2.01) 582 2.20 25.99 2.20 (1.17) 15.15
---------------------------------------------------------------------------------------------------------------------
9.80 (2.01) 353 2.20 25.99 2.20 (1.17) 15.15
---------------------------------------------------------------------------------------------------------------------
9.80 (1.99) 833 2.10 25.89 2.10 (1.07) 15.15
---------------------------------------------------------------------------------------------------------------------
See notes to the Financial Highlights at pages 106.
99
FINANCIAL HIGHLIGHTS (CONTINUED)
FOR A SHARE OF BENEFICIAL INTEREST OUTSTANDING THROUGHOUT EACH PERIOD:
INVESTMENT OPERATIONS DISTRIBUTIONS
--------------------------------------- ----------------------------------
NET ASSET FROM NET
YEAR OR VALUE, NET NET REALIZED FROM NET REALIZED
PERIOD BEGINNING INVESTMENT AND UNREALIZED TOTAL INVESTMENT CAPITAL TOTAL
ENDED OF PERIOD INCOME/(LOSS) GAIN/(LOSS) OPERATIONS INCOME GAINS DISTRIBUTIONS
- -----------------------------------------------------------------------------------------------------------------------------------
IDEX AEGON Class A 10/31/00/(7)/ $ 9.67 $ 0.69 $ (0.37) $0.32 $(0.69) $(0.06) $ (0.75)
INCOME PLUS 10/31/99 10.43 0.65 (0.54) 0.11 (0.67) (0.20) (0.87)
10/31/98 10.96 0.69 (0.30) 0.39 (0.70) (0.22) (0.92)
10/31/97 10.61 0.76 0.44 1.20 (0.75) (0.10) (0.85)
10/31/96/(6)/ 10.41 0.04 0.22 0.26 (0.06) -- (0.06)
9/30/96 10.36 0.72 0.04 0.76 (0.71) -- (0.71)
-----------------------------------------------------------------------------------------------------------------
Class B 10/31/00/(7)/ 9.67 0.63 (0.37) 0.26 (0.63) (0.06) (0.69)
10/31/99 10.42 0.59 (0.54) 0.05 (0.60) (0.20) (0.80)
10/31/98 10.96 0.61 (0.30) 0.31 (0.63) (0.22) (0.85)
10/31/97 10.61 0.69 0.44 1.13 (0.68) (0.10) (0.78)
10/31/96/(6)/ 10.40 0.05 0.22 0.27 (0.06) -- (0.06)
9/30/96 10.35 0.65 0.04 0.69 (0.64) -- (0.64)
-----------------------------------------------------------------------------------------------------------------
Class C 10/31/00/(7)/ 9.67 0.63 (0.37) 0.26 (0.63) (0.06) (0.69)
-----------------------------------------------------------------------------------------------------------------
Class M 10/31/00/(7)/ 9.67 0.64 (0.37) 0.27 (0.64) (0.06) (0.70)
10/31/99/(5)/ 10.42 0.60 (0.54) 0.06 (0.61) (0.20) (0.81)
10/31/98 10.96 0.62 (0.30) 0.32 (0.64) (0.22) (0.86)
10/31/97 10.61 0.70 0.44 1.14 (0.69) (0.10) (0.79)
10/31/96/(6)/ 10.40 0.05 0.22 0.27 (0.06) -- (0.06)
9/30/96 10.35 0.66 0.04 0.70 (0.65) -- (0.65)
- -----------------------------------------------------------------------------------------------------------------------------------
IDEX FEDERATED Class A 10/31/00/(7)/ 10.60 0.44 0.42 0.86 (0.44) (0.11) (0.55)
TAX EXEMPT 10/31/99 11.94 0.44 (1.14) (0.70) (0.44) (0.20) (0.64)
(FORMERLY IDEX 10/31/98 11.75 0.48 0.34 0.82 (0.48) (0.15) (0.63)
AEGON TAX 10/31/97 11.40 0.53 0.43 0.96 (0.53) (0.08) (0.61)
EXEMPT) 10/31/96/(6)/ 11.36 0.05 0.04 0.09 (0.05) -- (0.05)
9/30/96 11.34 0.55 0.10 0.65 (0.56) (0.07) (0.63)
-----------------------------------------------------------------------------------------------------------------
Class B 10/31/00/(7)/ 10.59 0.37 0.42 0.79 (0.37) (0.11) (0.48)
10/31/99 11.94 0.35 (1.14) (0.79) (0.36) (0.20) (0.56)
10/31/98 11.74 0.41 0.34 0.75 (0.40) (0.15) (0.55)
10/31/97 11.40 0.44 0.43 0.87 (0.45) (0.08) (0.53)
10/31/96/(6)/ 11.36 0.04 0.04 0.08 (0.04) -- (0.04)
9/30/96 11.34 0.48 0.10 0.58 (0.49) (0.07) (0.56)
-----------------------------------------------------------------------------------------------------------------
Class C 10/31/00/(7)/ 10.59 0.37 0.42 0.79 (0.37) (0.11) (0.48)
-----------------------------------------------------------------------------------------------------------------
Class M 10/31/00/(7)/ 10.59 0.42 0.42 0.84 (0.41) (0.11) (0.52)
10/31/99/(5)/ 11.94 0.39 (1.14) (0.75) (0.40) (0.20) (0.60)
10/31/98 11.75 0.45 0.34 0.79 (0.45) (0.15) (0.60)
10/31/97 11.40 0.50 0.43 0.93 (0.50) (0.08) (0.58)
10/31/96/(6)/ 11.36 0.04 0.04 0.08 (0.04) -- (0.04)
9/30/96 11.34 0.52 0.10 0.62 (0.53) (0.07) (0.60)
- -----------------------------------------------------------------------------------------------------------------------------------
IDEX GE Class A 10/31/00 12.85 0.05 0.35 0.40 -- (0.49) (0.49)
INTERNATIONAL 10/31/99 10.77 0.03 2.05 2.08 -- -- --
EQUITY 10/31/98/(7)/ 10.57 0.07 0.20 0.27 (0.07) -- (0.07)
10/31/97/(8)/ 10.00 0.07 0.50 0.57 -- -- --
-----------------------------------------------------------------------------------------------------------------
Class B 10/31/00 12.70 (0.03) 0.35 0.32 -- (0.49) (0.49)
10/31/99 10.71 (0.06) 2.05 1.99 -- -- --
10/31/98/(7)/ 10.52 -- 0.20 0.20 (0.01) -- (0.01)
10/31/97/(8)/ 10.00 0.02 0.50 0.52 -- -- --
-----------------------------------------------------------------------------------------------------------------
Class C 10/31/00 12.70 (0.03) 0.35 0.32 -- (0.49) (0.49)
-----------------------------------------------------------------------------------------------------------------
Class M 10/31/00 12.73 (0.02) 0.35 0.33 -- (0.49) (0.49)
10/31/99/(5)/ 10.72 (0.04) 2.05 2.01 -- -- --
10/31/98/(7)/ 10.53 0.01 0.20 0.21 (0.02) -- (0.02)
10/31/97/(8)/ 10.00 0.03 0.50 0.53 -- -- --
- -----------------------------------------------------------------------------------------------------------------------------------
100
RATIOS/SUPPLEMENTAL DATA
-----------------------------------------------------------------------
RATIO OF EXPENSES TO AVERAGE NET
ASSETS/(12)(13)/ NET INVESTMENT
NET ASSET NET ASSETS, ----------------------------------- INCOME (LOSS) PORTFOLIO
VALUE, END TOTAL END OF EXCLUDING INCLUDING TO AVERAGE TURNOVER
OF PERIOD RETURN/(11)/ PERIOD (000'S) CREDITS GROSS CREDITS NET ASSETS /(12)(13)/ RATE/(14)/
- ------------ ------------ ---------------- ----------- ------- ----------- -------------------- ----------
<s>
$ 9.24 3.37% $49,259 1.36% --% 1.36% 7.34% 11.37%
9.67 1.09 59,082 1.38 -- 1.38 6.41 26.95
10.43 3.54 63,494 1.24 -- 1.24 6.38 53.09
10.96 11.86 65,612 1.27 -- 1.27 7.14 62.28
10.61 2.53 66,285 1.33 -- 1.32 5.60 1.58
10.41 7.64 65,252 1.33 -- 1.31 6.89 65.96
-------------------------------------------------------------------------------------------------------------------
9.24 2.74 13,808 2.01 -- 2.01 6.69 11.37
9.67 0.38 12,930 2.03 -- 2.03 5.76 26.95
10.42 2.87 5,041 1.89 -- 1.89 5.73 53.09
10.96 11.10 1,761 1.92 -- 1.92 6.49 62.28
10.61 2.59 804 1.98 -- 1.97 4.95 1.58
10.40 6.95 774 1.98 -- 1.96 6.24 65.96
-------------------------------------------------------------------------------------------------------------------
9.24 2.74 1,025 2.01 -- 2.01 6.69 11.37
-------------------------------------------------------------------------------------------------------------------
9.24 2.84 4,319 1.91 -- 1.91 6.79 11.37
9.67 0.54 5,515 1.93 -- 1.93 5.86 26.95
10.42 2.97 4,073 1.79 -- 1.79 5.83 53.09
10.96 11.22 3,480 1.82 -- 1.82 6.59 62.28
10.61 2.59 2,781 1.88 -- 1.87 5.05 1.58
10.40 7.05 2,684 1.88 -- 1.86 6.34 65.96
-------------------------------------------------------------------------------------------------------------------
10.91 8.38 16,999 1.35 1.68 1.35 4.14 67.32
10.60 (6.23) 20,996 1.35 1.50 1.31 3.83 35.97
11.94 7.19 22,313 1.23 1.27 1.23 4.08 42.42
11.75 8.68 23,320 1.00 1.63 1.00 4.60 71.29
11.40 0.76 24,439 1.00 1.89 1.00 4.60 3.79
11.36 5.89 24,708 1.00 1.46 1.00 4.88 71.05
-------------------------------------------------------------------------------------------------------------------
10.90 7.72 1,728 2.00 2.33 2.00 3.49 67.32
10.59 (6.89) 1,253 2.00 2.15 1.96 3.18 35.97
11.94 6.50 654 1.88 1.92 1.88 3.43 42.42
11.74 7.93 377 1.65 2.28 1.65 3.95 71.29
11.40 0.71 198 1.65 2.54 1.65 3.94 3.79
11.36 5.21 189 1.65 2.11 1.65 4.23 71.05
-------------------------------------------------------------------------------------------------------------------
10.90 7.72 195 2.00 2.33 2.00 3.49 67.32
-------------------------------------------------------------------------------------------------------------------
10.91 8.13 2,014 1.60 1.93 1.60 3.89 67.32
10.59 (6.56) 2,193 1.60 1.75 1.56 3.58 35.97
11.94 6.92 1,607 1.48 1.52 1.48 3.83 42.42
11.75 8.39 921 1.25 1.88 1.25 4.35 71.29
11.40 0.74 939 1.25 2.14 1.25 4.34 3.79
11.36 5.63 907 1.25 1.71 1.25 4.63 71.05
-------------------------------------------------------------------------------------------------------------------
12.76 2.74 6,977 1.62 3.56 1.62 0.09 108.37
12.85 19.12 4,902 1.90 3.53 1.90 (0.16) 71.70
10.77 2.58 4,981 2.03 4.22 2.03 (0.21) 50.01
10.57 5.70 3,076 1.70 8.93 1.70 0.19 21.85
-------------------------------------------------------------------------------------------------------------------
12.53 2.09 4,407 2.27 4.21 2.27 (0.56) 108.37
12.70 18.45 1,527 2.55 4.18 2.55 (0.81) 71.70
10.71 1.89 1,198 2.68 4.87 2.68 (0.86) 50.01
10.52 5.20 589 2.35 9.58 2.35 (0.45) 21.85
-------------------------------------------------------------------------------------------------------------------
12.53 2.09 629 2.27 4.21 2.27 (0.56) 108.37
-------------------------------------------------------------------------------------------------------------------
12.57 2.19 840 2.17 4.11 2.17 (0.46) 108.37
12.73 18.55 480 2.45 4.08 2.45 (0.71) 71.70
10.72 1.99 397 2.58 4.77 2.58 (0.76) 50.01
10.53 5.30 399 2.25 9.48 2.25 (0.35) 21.85
-------------------------------------------------------------------------------------------------------------------
See notes to the Financial Highlights at page 106.
101
FINANCIAL HIGHLIGHTS (CONTINUED)
FOR A SHARE OF BENEFICIAL INTEREST OUTSTANDING THROUGHOUT EACH PERIOD:
INVESTMENT OPERATIONS
---------------------------------------------
NET ASSET
YEAR OR VALUE, NET NET REALIZED
PERIOD BEGINNING INVESTMENT AND UNREALIZED TOTAL
ENDED OF PERIOD INCOME/(LOSS) GAIN (LOSS) OPERATIONS
- ----------------------------------------------------- ----------- --------------- ---------------- ------------
IDEX GE Class A 10/31/00/(3)/ $10.00 $ -- $ 0.83 $0.83
--------------------------------------------------------------------------------------
U.S. EQUITY
Class B 10/31/00/(3)/ 10.00 (0.04) 0.83 0.79
--------------------------------------------------------------------------------------
Class C 10/31/00/(3)/ 10.00 (0.04) 0.83 0.79
--------------------------------------------------------------------------------------
Class M 10/31/00/(3)/ 10.00 (0.04) 0.83 0.79
- --------------------------------------------------------------------------------------------------------
IDEX DEAN Class A 10/31/00 11.79 0.30 1.01 1.31
ASSET ALLOCATION 10/31/99/(7)/ 13.14 0.27 (0.73) (0.46)
10/31/98 13.19 0.22 0.67 0.89
10/31/97 11.19 0.19 2.02 2.21
10/31/96/(6)/ 11.03 0.02 0.14 0.16
9/30/96 10.00 0.08 1.03 1.11
--------------------------------------------------------------------------------------
Class B 10/31/00 11.78 0.23 1.01 1.24
10/31/99/(7)/ 13.13 0.19 (0.73) (0.54)
10/31/98 13.18 0.14 0.67 0.81
10/31/97 11.18 0.11 2.02 2.13
10/31/96/(6)/ 11.02 0.02 0.14 0.16
9/30/96 10.00 -- 1.03 1.03
--------------------------------------------------------------------------------------
Class C 10/31/00 11.78 0.23 1.01 1.24
--------------------------------------------------------------------------------------
Class M 10/31/00 11.78 0.24 1.01 1.25
10/31/99/(5)(7)/ 13.13 0.20 (0.73) (0.53)
10/31/98 13.18 0.15 0.67 0.82
10/31/97 11.18 0.12 2.02 2.14
10/31/96/(6)/ 11.03 0.01 0.14 0.15
9/30/96 10.00 0.02 1.03 1.05
- --------------------------------------------------------------------------------------------------------
IDEX LKCM Class A 10/31/00 17.62 0.27 (0.15) 0.12
STRATEGIC TOTAL 10/31/99 16.18 0.20 1.65 1.85
RETURN 10/31/98 15.91 0.21 0.94 1.15
10/31/97 13.43 0.20 2.79 2.99
10/31/96/(6)/ 13.27 0.01 0.15 0.16
9/30/96 11.74 0.20 1.65 1.85
--------------------------------------------------------------------------------------
Class B 10/31/00 17.60 0.18 (0.15) 0.03
10/31/99 16.17 0.09 1.65 1.74
10/31/98 15.89 0.11 0.94 1.05
10/31/97 13.42 0.10 2.79 2.89
10/31/96/(6)/ 13.27 -- 0.15 0.15
9/30/96 11.73 0.13 1.65 1.78
--------------------------------------------------------------------------------------
Class C 10/31/00 17.60 0.18 (0.15) 0.03
--------------------------------------------------------------------------------------
Class M 10/31/00 17.61 0.18 (0.15) 0.03
10/31/99/(5)/ 16.17 0.11 1.65 1.76
10/31/98 15.90 0.12 0.94 1.06
10/31/97 13.42 0.12 2.79 2.91
10/31/96/(6)/ 13.27 -- 0.15 0.15
9/30/96 11.73 0.15 1.65 1.80
--------------------------------------------------------------------------------------
DISTRIBUTIONS
--------------------------------------
FROM NET
FROM NET REALIZED
INVESTMENT CAPITAL TOTAL
INCOME GAINS DISTRIBUTIONS
- ------------------------------ ---------- --------------
IDEX GE $ -- $ -- $ --
-----------------------------------
U.S. EQUITY
-- -- --
-----------------------------------
-- -- --
-----------------------------------
-- -- --
- -----------------------------------------------------
IDEX DEAN (0.35) -- (0.35)
ASSET ALLOCATION (0.24) (0.65) (0.89)
(0.21) (0.73) (0.94)
(0.17) (0.04) (0.21)
-- -- --
(0.08) -- (0.08)
-----------------------------------
(0.28) -- (0.28)
(0.16) (0.65) (0.81)
(0.13) (0.73) (0.86)
(0.09) (0.04) (0.13)
-- -- --
(0.01) -- (0.01)
-----------------------------------
(0.28) -- (0.28)
-----------------------------------
(0.29) -- (0.29)
(0.17) (0.65) (0.82)
(0.14) (0.73) (0.87)
(0.10) (0.04) (0.14)
-- -- --
(0.02) -- (0.02)
- -----------------------------------------------------
IDEX LKCM (0.30) (0.42) (0.72)
STRATEGIC TOTAL (0.20) (0.21) (0.41)
RETURN (0.21) (0.67) (0.88)
(0.19) (0.32) (0.51)
-- -- --
(0.17) (0.15) (0.32)
-----------------------------------
(0.20) (0.42) (0.62)
(0.10) (0.21) (0.31)
(0.10) (0.67) (0.77)
(0.10) (0.32) (0.42)
-- -- --
(0.09) (0.15) (0.24)
-----------------------------------
(0.20) (0.42) (0.62)
-----------------------------------
(0.21) (0.42) (0.63)
(0.11) (0.21) (0.32)
(0.12) (0.67) (0.79)
(0.11) (0.32) (0.43)
-- -- --
(0.11) (0.15) (0.26)
-----------------------------------
102
RATIOS/SUPPLEMENTAL DATA
----------------------------------------------------------------------
RATIO OF EXPENSES TO AVERAGE NET
ASSETS/(12)(13)/ NET INVESTMENT
NET ASSET NET ASSETS, ----------------------------------- INCOME (LOSS) PORTFOLIO
VALUE, END TOTAL END OF EXCLUDING INCLUDING TO AVERAGE TURNOVER
OF PERIOD RETURN/(11)/ PERIOD (000'S) CREDITS GROSS CREDITS NET ASSETS/(12)(13)/ RATE/(14)/
- ------------ ------------ ---------------- ----------- ------- ----------- ------------------- ----------
<s>
$10.83 8.30% $ 2,974 1.55% 6.85% 1.55% (0.42)% 110.96%
------------------------------------------------------------------------------------------------------------------
10.79 7.86 3,635 2.20 7.50 2.20 (1.07) 110.96
------------------------------------------------------------------------------------------------------------------
10.79 7.86 2,077 2.20 7.50 2.20 (1.07) 110.96
------------------------------------------------------------------------------------------------------------------
10.79 7.93 741 2.10 7.40 2.10 (0.97) 110.96
------------------------------------------------------------------------------------------------------------------
12.75 11.43 9,850 1.55 2.02 1.55 2.50 28.15
11.79 (3.74) 12,377 1.66 1.85 1.66 2.12 82.20
13.14 7.25 15,747 1.85 1.87 1.85 1.82 55.45
13.19 19.84 12,291 1.85 2.30 1.85 1.57 71.63
11.19 1.45 8,396 1.85 2.65 1.85 1.26 2.38
11.03 11.07 7,401 2.85 3.20 2.85 0.72 56.22
------------------------------------------------------------------------------------------------------------------
12.74 10.76 9,193 2.20 2.67 2.20 1.85 28.15
11.78 (4.36) 12,171 2.31 2.50 2.31 1.47 82.20
13.13 6.56 14,679 2.50 2.52 2.50 1.17 55.45
13.18 19.08 9,747 2.50 2.95 2.50 0.92 71.63
11.18 1.45 5,013 2.50 3.30 2.50 0.61 2.38
11.02 10.39 4,848 3.50 3.85 3.50 0.07 56.22
------------------------------------------------------------------------------------------------------------------
12.74 10.76 565 2.20 2.67 2.20 1.85 28.15
------------------------------------------------------------------------------------------------------------------
12.74 10.86 2,868 2.10 2.57 2.10 1.95 28.15
11.78 (4.26) 4,689 2.21 2.40 2.21 1.57 82.20
13.13 6.67 7,342 2.40 2.42 2.40 1.27 55.45
13.18 19.20 5,088 2.40 2.85 2.40 1.02 71.63
11.18 1.36 4,758 2.40 3.20 2.40 0.71 2.38
11.03 10.50 4,641 3.40 3.75 3.40 0.17 56.22
------------------------------------------------------------------------------------------------------------------
17.02 0.64 40,919 1.55 1.69 1.55 1.59 56.08
17.62 11.61 37,959 1.64 1.79 1.64 1.20 60.18
16.18 7.43 32,055 1.85 1.92 1.85 1.30 32.12
15.91 22.80 21,629 1.85 2.28 1.85 1.41 51.44
13.43 1.20 11,744 1.85 2.76 1.82 1.47 5.50
13.27 16.00 11,314 1.85 2.79 1.79 1.67 40.58
------------------------------------------------------------------------------------------------------------------
17.01 0.03 19,375 2.20 2.34 2.20 0.94 56.08
17.60 10.91 15,531 2.29 2.44 2.29 0.55 60.18
16.17 6.74 9,789 2.50 2.57 2.50 0.65 32.12
15.89 22.03 4,698 2.50 2.93 2.50 0.76 51.44
13.42 1.13 1,684 2.50 3.40 2.47 0.82 5.50
13.27 15.38 1,537 2.50 3.44 2.44 1.02 40.58
------------------------------------------------------------------------------------------------------------------
17.01 0.03 2,523 2.20 2.34 2.20 0.94 56.08
------------------------------------------------------------------------------------------------------------------
17.01 0.12 7,026 2.10 2.24 2.10 1.04 56.08
17.61 11.02 8,779 2.19 2.34 2.19 0.65 60.18
16.17 6.85 6,977 2.40 2.47 2.40 0.75 32.12
15.90 22.15 4,332 2.40 2.83 2.40 0.86 51.44
13.42 1.13 1,792 2.40 3.30 2.37 0.92 5.50
13.27 15.49 1,728 2.40 3.34 2.34 1.12 40.58
------------------------------------------------------------------------------------------------------------------
See notes to the Financial Highlights at page 106.
103
FINANCIAL HIGHLIGHTS (CONTINUED)
FOR A SHARE OF BENEFICIAL INTEREST OUTSTANDING THROUGHOUT EACH PERIOD:
INVESTMENT OPERATIONS DISTRIBUTIONS
--------------------------------------- --------------------------------------
NET ASSET
YEAR OR VALUE, NET NET REALIZED FROM NET FROM NET
PERIOD BEGINNING INVESTMENT AND UNREALIZED TOTAL INVESTMENT REALIZED TOTAL
ENDED OF PERIOD INCOME (LOSS) GAIN (LOSS) OPERATIONS INCOME CAPITAL GAINS DISTRIBUTION
- -----------------------------------------------------------------------------------------------------------------------------------
IDEX NWQ Class A 10/31/00 $11.28 $ 0.09 $ 1.54 $ 1.63 $ -- $ -- $ --
VALUE EQUITY 10/31/99/(7)/ 11.09 0.05 0.41 0.46 -- (0.27) (0.27)
10/31/98 11.71 0.03 (0.61) (0.58) -- (0.04) (0.04)
10/31/97/(8)/ 10.00 0.02 1.69 1.71 -- -- --
----------------------------------------------------------------------------------------------------------------
Class B 10/31/00 11.09 (0.02) 1.54 1.52 -- -- --
10/31/99/(7)/ 10.98 (0.03) 0.41 0.38 -- (0.27) (0.27)
10/31/98 11.67 (0.04) (0.61) (0.65) -- (0.04) (0.04)
10/31/97/(8)/ 10.00 (0.02) 1.69 1.67 -- -- --
----------------------------------------------------------------------------------------------------------------
Class C 10/31/00 11.09 (0.02) 1.54 1.52 -- -- --
----------------------------------------------------------------------------------------------------------------
Class M 10/31/00 11.12 -- 1.54 1.54 -- -- --
10/31/99/(5)(7)/ 11.00 (0.02) 0.41 0.39 -- (0.27) (0.27)
10/31/98 11.67 (0.02) (0.61) (0.63) -- (0.04) (0.04)
10/31/97/(8)/ 10.00 (0.02) 1.69 1.67 -- -- --
- --------------------------------------------------------------------------------------------------------------------------------
IDEX C.A.S.E. Class A 10/31/00 12.14 (0.13) (1.54) (1.67) -- (0.21) (0.21)
GROWTH
10/31/99 10.14 0.06 2.78 2.84 -- (0.84) (0.84)
(EFFECTIVE
10/31/98 12.90 0.03 (1.84) (1.81) -- (0.95) (0.95)
DECEMBER 1,
10/31/97/(7)/ 10.56 (0.01) 2.86 2.85 (0.51) -- (0.51)
2000, THIS FUND
WAS RENAMED
10/31/96/(6)/ 10.46 (0.07) 0.17 0.10 -- -- --
IDEX JENNISON
9/30/96/(10)/ 10.00 0.61 (0.15) 0.46 -- -- --
----------------------------------------------------------------------------------------------------------------
EQUITY
OPPORTUNITY) Class B 10/31/00 11.93 (0.17) (1.54) (1.71) -- (0.21) (0.21)
10/31/99 10.02 (0.03) 2.78 2.75 -- (0.84) (0.84)
10/31/98 12.85 (0.04) (1.84) (1.88) -- (0.95) (0.95)
10/31/97/(7)/ 10.51 (0.07) 2.86 2.79 (0.45) -- (0.45)
10/31/96/(6)/ 10.41 (0.07) 0.17 0.10 -- -- --
9/30/96/(10)/ 10.00 0.56 (0.15) 0.41 -- -- --
----------------------------------------------------------------------------------------------------------------
Class C 10/31/00 11.93 (0.17) (1.54) (1.71) -- (0.21) (0.21)
----------------------------------------------------------------------------------------------------------------
Class M 10/31/00 11.96 (0.16) (1.54) (1.70) -- (0.21) (0.21)
10/31/99/(5)/ 10.04 (0.02) 2.78 2.76 -- (0.84) (0.84)
10/31/98 12.86 (0.03) (1.84) (1.87) -- (0.95) (0.95)
10/31/97/(7)/ 10.52 (0.06) 2.86 2.80 (0.46) -- (0.46)
10/31/96/(6)/ 10.42 (0.07) 0.17 0.10 -- -- --
9/30/96/(10)/ 10.00 0.57 (0.15) 0.42 -- -- --
- --------------------------------------------------------------------------------------------------------------------------------
104
RATIOS/SUPPLEMENTAL DATA
----------------------------------------------------------------------
RATIO OF EXPENSES TO AVERAGE NET
ASSETS/(12)(13)/ NET INVESTMENT
NET ASSET NET ASSETS, ----------------------------------- INCOME (LOSS) PORTFOLIO
VALUE, END TOTAL END OF EXCLUDING INCLUDING TO AVERAGE TURNOVER
OF PERIOD RETURN/(11)/ PERIOD (000'S) CREDITS GROSS CREDITS NET ASSETS/(12)(13)/ RATE/(14)/
- -----------------------------------------------------------------------------------------------------------------------------
$12.91 14.38% $ 8,431 1.55% 2.20% 1.55% 0.40% 49.75%
11.28 4.34 7,972 1.64 2.28 1.64 0.21 26.29
11.09 (4.96) 8,035 1.85 2.51 1.85 - 30.43
11.71 17.14 5,305 1.50 4.05 1.50 0.38 6.40
- -----------------------------------------------------------------------------------------------------------------------------
12.61 13.72 10,448 2.20 2.85 2.20 (0.25) 49.75
11.09 3.68 7,311 2.29 2.93 2.29 (0.44) 26.29
10.98 (5.55) 5,020 2.50 3.16 2.50 (0.65) 30.43
11.67 16.65 2,850 2.15 4.70 2.15 (0.28) 6.40
- -----------------------------------------------------------------------------------------------------------------------------
12.61 13.72 1,094 2.20 2.85 2.20 (0.25) 49.75
- -----------------------------------------------------------------------------------------------------------------------------
12.66 13.82 2,508 2.10 2.75 2.10 (0.15) 49.75
11.12 3.79 2,204 2.19 2.83 2.19 (0.34) 26.29
11.00 (5.46) 2,013 2.40 3.06 2.40 (0.55) 30.43
11.67 16.73 1,607 2.05 4.60 2.05 (0.18) 6.40
- -----------------------------------------------------------------------------------------------------------------------------
10.26 (14.06) 4,147 1.55 2.66 1.55 (0.87) 244.18
12.14 30.07 4,537 1.64 2.87 1.64 (0.99) 125.60
10.14 (14.83) 4,284 1.85 2.44 1.85 (0.73) 147.01
12.90 28.31 3,920 1.85 4.62 1.85 (0.34) 183.06
10.56 0.96 1,675 1.85 6.79 1.84 0.27 20.69
10.46 4.60 1,455 2.85 5.89 2.85 10.00 654.49
- -----------------------------------------------------------------------------------------------------------------------------
10.01 (14.70) 3,483 2.20 3.31 2.20 (1.52) 244.18
11.93 29.45 3,868 2.29 3.52 2.29 (1.64) 125.60
10.02 (15.40) 2,460 2.50 3.09 2.50 (1.38) 147.01
12.85 27.62 2,436 2.50 5.27 2.50 (0.99) 183.06
10.51 0.96 1,159 2.50 7.44 2.49 0.38 20.69
10.41 4.10 1,100 3.50 6.54 3.50 9.35 654.49
- -----------------------------------------------------------------------------------------------------------------------------
10.01 (14.70) 271 2.20 3.31 2.20 (1.52) 244.18
- -----------------------------------------------------------------------------------------------------------------------------
10.05 (14.60) 946 2.10 3.21 2.10 (1.42) 244.18
11.96 29.54 1,338 2.19 3.42 2.19 (1.54) 125.60
10.04 (15.31) 879 2.40 2.99 2.40 (1.28) 147.01
12.86 27.73 2,028 2.40 5.17 2.40 (0.89) 183.06
10.52 0.96 687 2.40 7.34 2.39 0.28 20.69
10.42 4.20 613 3.40 6.44 3.40 9.45 654.49
- -----------------------------------------------------------------------------------------------------------------------------
See notes to the Financial Highlights at page 106.
105
NOTES TO FINANCIAL HIGHLIGHTS
(1) From commencement of investment operations, September 15, 2000.
(2) From commencement of investment operations, July 14, 2000.
(3) From commencement of investment operations, March 1, 2000.
(4) From commencement of investment operations, March 1, 1999.
(5) On March 1, 1999, the fund changed the load and expense structure of C
shares and renamed them M shares. On November 1,1999, the funds began
offering new Class C shares for sale.
(6) For the month ended October 31, 1996. On October 1, 1996, each fund
changed its fiscal year end from September 30 to October 31.
(7) Distributions from net realized capital gains include distributions in
excess of current net realized capital gains for IDEX Alger Aggressive
Growth Classes A, B and M, for the period ended 9/30/96, in the amount of
$1.02 and for IDEX Janus Global Classes A, B and M, for the period ended
10/31/98 in the amount of $0.17 and IDEX T.Rowe Price Small Cap Classes A,
B, C, and M, for the period ended 10/31/00 in the amount of $0.16 and for
IDEX AEGON Income Plus Classes A, B, C, and M, for the period ended
10/31/00 in the amount of $0.06 and for IDEX Federated Tax Exempt Classes
A, B, C, and M, for the period ended 10/31/00 in the amount of $0.11.
Dividends from net investment income include distributions in excess of
current net investment income for IDEX GE International Equity Classes A,
B and M, for the period ended 10/31/98 in the amount of $0.06, $0.01 and
$0.02, respectively and for IDEX Janus Capital Appreciation Classes A and
M, for the period ended 9/30/96 in the amount of $0.01 and for IDEX Janus
Growth Class T for the period ended 10/31/98 in the amount of $0.03 and
for IDEX C.A.S.E. Growth Classes A, B and M, for the period ended 10/31/97
in the amount of $0.08 and for IDEX NWQ Value Equity Classes A, B and M
for the period ended 10/31/99 in the amount of $0.12 and IDEX Dean Asset
Allocation Classes A, B and M for the period ended 10/31/99 in the amount
of $0.11.
(8) From commencement of investment operations, February 1, 1997.
(9) From commencement of investment operations, September 20, 1996.
(10) From commencement of investment operations, February 1, 1996.
(11) Total return has been calculated for the applicable period without
deduction of a sales load, if any, on an initial purchase for Class A,
Class M or Class T Shares. Periods of less than one year are not
annualized.
(12) Ratio of expenses to average net assets shows:
Excluding Credits (total expenses less fee waivers and reimbursements by
the investment adviser).
Gross (total expenses not taking into account fee waivers and
reimbursements by the investment adviser or affiliated brokerage and
custody earnings credits, if any).
Including Credits (total expenses less fee waivers and reimbursements by
the investment adviser and reduced by affiliated brokerage and custody
earnings credits, if any).
(13) Periods of less than one year are annualized. The ratio of Net Investment
Income (Loss) to Average Net Assets is based upon Net Investment Income
(Loss) prior to certain reclassifications as discussed in Note 1 of the
Notes to the Financial Statements.
(14) Periods of less than one year are not annualized.
(15) Effective September 1, 2000, IDEX Janus Global is not available to new
investors.
(16) Net investment income, the ratio net investment income to average net
assets and the portfolio turnover rate reflect activity relating to a non
recurring initiative to invest in dividend producing securities.
106
BOND RATINGS
APPENDIX A
BRIEF EXPLANATION OF RATING CATEGORIES
BOND RATING EXPLANATION
----------- -----------
STANDARD & POOR'S CORPORATION AAA Highest rating; extremely strong capacity to pay principal and interest.
AA High quality; very strong capacity to pay principal and interest.
A Strong capacity to pay principal and interest; somewhat more susceptible
to the adverse effects of changing circumstances and economic conditions.
BBB Adequate capacity to pay principal and interest; normally exhibit adequate
protection parameters, but adverse economic conditions or changing
circumstances more likely to lead to a weakened capacity to pay principal
and interest than for higher rated bonds.
Predominantly speculative with respect to the issuer's capacity to meet
BB,B, and
CC,CC,C required interest and principal payments. BB - lowest degree of
speculation; C - the highest degree of speculation. Quality and protective
characteristics outweighed by large uncertainties or major risk exposure to
adverse conditions.
D In default.
PLUS (+) OR MINUS (-) -The ratings from "AA" to "BBB" may be modified by the
addition of a plus or minus sign to
show relative standing within the major rating categories.
UNRATED - Indicates that no public rating has been requested, that there is
insufficient information on which to base a rating, or that S&P does not
rate a particular type of obligation as a matter of policy.
MOODY'S INVESTORS SERVICE, INC. Aaa Highest quality, smallest degree of investment risk.
Aa High quality; together with Aaa bonds, they compose the high-grade bond
group.
A Upper-medium grade obligations; many favorable investment attributes.
Baa Medium-grade obligations; neither highly protected nor poorly secured.
Interest and principal appear adequate for the present but certain
protective elements may be lacking or may be unreliable over any great
length of time.
Ba More uncertain, with speculative elements. Protection of interest
and principal payments not well safeguarded during good and bad
times.
B Lack characteristics of desirable investment; potentially low assurance of
timely interest and principal payments or maintenance of other contract
terms over time.
Caa Poor standing, may be in default; elements of danger with respect to
principal or interest payments.
Ca Speculative in a high degree; could be in default or have other marked
short- comings.
C Lowest-rated; extremely poor prospects of ever attaining investment
standing.
UNRATED - Where no rating has been assigned or where a rating has been
suspended or withdrawn, it may be for reasons unrelated to the quality of
the issue.
Should no rating be assigned, the reason may be one of the following:
1. An application for rating was not received or accepted.
2. The issue or issuer belongs to a group of securities or companies
that are not rated as a matter of policy.
3. There is a lack of essential data pertaining to the issue or issuer.
4. The issue was privately placed, in which case the rating is not
published in Moody's publications.
Suspension or withdrawal may occur if new and material circumstances arise,
the effects of which preclude satisfactory analysis; if there is no longer
available reasonable up-to-date data to permit a judgment to be formed; if
a bond is called for redemption; or for other reasons.
A-1
IDEX MUTUAL FUNDS
570 Carillon Parkway
St. Petersburg, Florida, 33716-1202
INVESTMENT ADVISER: CUSTODIAN:
IDEX Management, Inc. State Street Bank & Trust Co.
570 Carillon Parkway
St. Petersburg, Florida 33716-1202
INDEPENDENT CERTIFIED PUBLIC
DISTRIBUTOR: ACCOUNTANTS:
AFSG Securities Corporation PricewaterhouseCoopers LLP
4333 Edgewood Road NE 400 N. Ashley Street, Suite 2800
Cedar Rapids, Iowa 52499 Tampa, Florida 33602-4319
SUB-ADVISERS:
FRED ALGER MANAGEMENT, INC. JANUS CAPITAL CORPORATION
100 Fillmore Street
One World Trade Center, Suite 9333
Denver, Colorado 80206-4928
New York, New York 10048-9301
JENNISON ASSOCIATES, LLC
AEGON USA INVESTMENT
466 Lexington Avenue
MANAGEMENT, INC.
New York, New York 10017
4333 Edgewood Road, N.E.
Cedar Rapids, Iowa 52499-0002 LUTHER KING CAPITAL MANAGEMENT
301 Commerce Street, Suite 1600
AMERICAN CENTURY INVESTMENT
Fort Worth, Texas 76102-4190
MANAGEMENT, INC.
American Century Tower MUNDER CAPITAL MANAGEMENT
4500 Main Street 480 Pierce Street, Suite 300
Kansas City, MO 64111 Birmingham, Michigan 48009
DEAN INVESTMENT ASSOCIATES NWQ INVESTMENT MANAGEMENT
2480 Kettering Tower COMPANY, INC.
Dayton, Ohio 45423-2480 2049 Century Park East, 4th Floor
Los Angeles, California 90067-3214
FEDERATED INVESTMENT
MANAGEMENT COMPANY PILGRIM BAXTER & ASSOCIATES, LTD.
Federated Investment Tower 825 Duportail Road
Pittsburgh, Pennsylvania 15222-3779 Wayne, Pennsylvania 19087-5593
GABELLI ASSET MANAGEMENT COMPANY SALOMON BROTHERS ASSET
One Corporate Center MANAGEMENT INC
Rye, New York 10580-1434 7 World Trade Center
New York, New York 10048-4600
GE ASSET MANAGEMENT INCORPORATED
3003 Summer Street TRANSAMERICA INVESTMENT
Stamford, Connecticut 06905-4316 MANAGEMENT, LLC
1150 South Olive Street Suite 2700
GOLDMAN SACHS ASSET MANAGEMENT
Los Angeles, California 90015
32 Old Slip
New York, New York 10005-3500 T. ROWE PRICE ASSOCIATES, INC.
100 East Pratt Street
GREAT COMPANIES, L.L.C.
Baltimore, Maryland 21202-1090
8550 Ulmerton Road
Largo, Florida 33771
IRONWOOD CAPITAL MANAGEMENT LLC
21 Custom House Street
Boston, MA 02110
SEND YOUR CORRESPONDENCE TO: CUSTOMER SERVICE:
Idex Investor Services, Inc. (888) 233-IDEX (4339) toll free call
P.O. Box 9015 Hours: 8 a.m. to 8 p.m. Monday - Friday
Clearwater, Florida 33758-9015
IDEX WEBSITE: WWW.IDEXFUNDS.COM
THIS PAGE HAS BEEN INTENTIONALLY LEFT BLANK
THIS PAGE HAS BEEN INTENTIONALLY LEFT BLANK
NOTICE OF PRIVACY POLICY
At IDEX Mutual Funds, protecting your privacy is very important to us. We want
you to understand what information we collect and how we use it. We collect and
use "nonpublic personal information" in order to provide our customers with a
broad range of financial products and services as effectively and conveniently
as possible. We treat nonpublic personal information in accordance with our
Privacy Policy.
WHAT INFORMATION WE COLLECT AND FROM WHOM WE COLLECT IT
We may collect nonpublic personal information about you from the following
sources:
. Information we receive from you on applications or other forms, such as
your name, address and account number;
. Information about your transactions with us, our affiliates, or others,
such as your account balance and purchase/redemption history; and
. Information we receive from non-affiliated third parties, including
consumer reporting agencies.
"Nonpublic personal information" is nonpublic information about you that we
obtain in connection with providing a financial product or service to you.
WHAT INFORMATION WE DISCLOSE AND TO WHOM WE DISCLOSE IT
We do not disclose any nonpublic personal information about current or former
customers to anyone without their express consent, except as permitted by law.
We may disclose the nonpublic personal information we collect, as described
above, to persons or companies that perform services on our behalf and to other
financial institutions with which we have joint marketing agreements.
OUR SECURITY PROCEDURES
We restrict access to your nonpublic personal information and only allow
disclosures to persons and companies as permitted by law to assist in providing
products or services to you. We maintain physical, electronic and procedural
safeguards to protect your nonpublic personal information.
THIS PAGE IS NOT PART OF THE PROSPECTUS
---------------------------------------
IDEX
MUTUAL FUNDS
Visit our website at www.idexfunds.com
IDEX Mutual Funds . P.O. Box 9015 . Clearwater, FL . 33758-9015
Customer Service 1-888-233-4339 . Sales Support 1-800-851-7555
Distributor: AFSG Securities Corporation
MUTUAL FUNDS:
ARE NOT FDIC May Lose Value
INSURED Are Not Bank Guaranteed
BOTH THE PRINCIPAL VALUE AND RETURNS OF
INVESTMENTS WILL FLUCTUATE OVER TIME, SO AN
INVESTOR'S SHARES, WHEN REDEEMED, MAY BE WORTH
MORE OR LESS THAN THEIR ORIGINAL COST.
ADDITIONAL INFORMATION about these funds is contained in the Statement of
Additional Information, dated March 1, 2001, and in the Funds's Annual and
Semi-Annual reports to shareholders, which are incorporated by reference into
this prospectus. Other information about these funds has been filed with and is
available from the U.S. Securities and Exchange Commission. Information about
the funds (including the Statement of Additional Information) can be reviewed
and copied at the Securities and Exchange Commission's Public Reference Room in
Washington D.C. Information on the operation of the public reference room may be
obtained by calling the Commission at 1-202-942-8090. Copies of this information
may be obtained, upon payment of a duplication fee, by writing the Public
Reference Section of the Commission, Washington, D.C. 20549-6009. Reports and
other information about the funds are also available on the Commission's
Internet site at http://www.sec.gov. To obtain a copy of the Statement of
Additional Information or the Annual and Semi-Annual reports, without charge, or
to make other inquiries about these funds, call or write to IDEX Mutual Funds at
the phone number or address at the top of this page. In the Fund's Annual
report, you will find a discussion of the market conditions and investment
strategies that significantly affected the Fund's performance during the last
fiscal year.
IDEX MUTUAL FUNDS
THE IDEX FUNDS INCLUDE:
JENNISON EQUITY OPPORTUNITY
GREAT COMPANIES -- AMERICA(SM)
GOLDMAN SACHS GROWTH
JANUS GROWTH
NWQ VALUE EQUITY
SALOMON ALL CAP
TRANSAMERICA EQUITY
ALGER AGGRESSIVE GROWTH
GREAT COMPANIES -- TECHNOLOGY(SM)
ISABELLE SMALL CAP VALUE
JANUS CAPITAL APPRECIATION
MUNDER NET50
PILGRIM BAXTER MID CAP GROWTH
PILGRIM BAXTER TECHNOLOGY
TRANSAMERICA SMALL COMPANY
T. ROWE PRICE SMALL CAP
AMERICAN CENTURY INTERNATIONAL
GABELLI GLOBAL GROWTH
GE INTERNATIONAL EQUITY
GREAT COMPANIES -- GLOBAL/2/
JANUS GLOBAL (closed to new investors)
AMERICAN CENTURY INCOME & GROWTH
GE U.S. EQUITY
JANUS GROWTH & INCOME
T. ROWE PRICE DIVIDEND GROWTH
DEAN ASSET ALLOCATION
JANUS BALANCED
LKCM STRATEGIC TOTAL RETURN
AEGON INCOME PLUS
FEDERATED TAX EXEMPT
JANUS FLEXIBLE INCOME
STATEMENT OF ADDITIONAL INFORMATION
March 1, 2001, as amended April 2, 2001
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IDEX MUTUAL FUNDS
570 Carillon Parkway
St. Petersburg, Florida 33716
Customer Service (888) 233-4339 (toll free)
The funds listed above are series of IDEX Mutual Funds (the "Fund"), an open-end
management investment company that offers a selection of investment funds. The
Fund is registered under the Investment Company Act of 1940, as amended (the
"1940 Act"). All funds, other than the IDEX Janus Capital Appreciation, IDEX
Pilgrim Baxter Technology, IDEX Salomon All Cap, IDEX Great Companies --
America(SM) and IDEX Great Companies -- Technology(SM), are diversified.
This Statement of Additional Information is not a prospectus, and should be read
in conjunction with the Fund's prospectus dated March 1, 2001 which may be
obtained free of charge by writing or calling the Fund at the above address or
telephone number. This Statement of Additional Information ("SAI") contains
additional and more detailed information about the Fund's operations and
activities than that set forth in the prospectus. The Fund's annual report to
shareholders is incorporated by reference into this SAI.
TABLE OF CONTENTS
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INVESTMENT OBJECTIVES................................................................... 1
Investment Restrictions, Policies and Practices......................................... 1
Investment Restrictions of IDEX Jennison Equity Opportunity........................... 1
Investment Restrictions of IDEX Great Companies -- America(SM) and IDEX Great
Companies -- Technology(SM)........................................................ 2
Investment Restrictions of IDEX Goldman Sachs Growth.................................. 3
Investment Restrictions of IDEX Janus Growth and IDEX Janus Flexible Income........... 4
Investment Restrictions of IDEX NWQ Value Equity...................................... 5
Investment Restrictions of IDEX Salomon All Cap....................................... 6
Investment Restrictions of IDEX Transamerica Small Company and IDEX
Transamerica Equity................................................................ 7
Investment Restrictions of IDEX Alger Aggressive Growth............................... 9
Investment Restrictions of IDEX Isabelle Small Cap Value.............................. 10
Investment Restrictions of IDEX Janus Capital Appreciation and IDEX
Janus Balanced..................................................................... 10
Investment Restrictions of IDEX Munder Net50.......................................... 12
Investment Restrictions of IDEX Pilgrim Baxter Mid Cap Growth......................... 13
Investment Restrictions of IDEX Pilgrim Baxter Technology............................. 14
Investment Restrictions of IDEX T. Rowe Price Small Cap and IDEX T. Rowe Price
Dividend Growth.................................................................... 14
Investment Restrictions of IDEX American Century International........................ 16
Investment Restrictions of IDEX Gabelli Global Growth................................. 17
Investment Restrictions of IDEX GE International Equity............................... 18
Investment Restrictions of IDEX Great Companies -- Global/2/.......................... 19
Investment Restrictions of IDEX Janus Global (Closed to new Investors)................ 20
Investment Restrictions of IDEX American Century Income & Growth...................... 22
Investment Restrictions of IDEX GE U.S. Equity........................................ 23
Investment Restrictions of IDEX Janus Growth & Income................................. 24
Investment Restrictions of IDEX Dean Asset Allocation................................. 25
Investment Restrictions of IDEX LKCM Strategic Total Return........................... 26
Investment Restrictions of IDEX AEGON Income Plus..................................... 27
Investment Restrictions of IDEX Federated Tax Exempt.................................. 29
OTHER POLICIES AND PRACTICES OF THE FUNDS............................................... 30
Futures, Options and Other Derivative Instruments..................................... 30
Futures Contracts.................................................................... 30
Options on Futures Contracts......................................................... 32
Options on Securities................................................................ 33
Options on Foreign Currencies........................................................ 36
Forward Contracts.................................................................... 37
Swaps and Swap-Related Products...................................................... 38
Index Options........................................................................ 39
WEBS and Other Index-Related Securities.............................................. 40
Euro Instruments..................................................................... 40
Special Investment Considerations and Risks.......................................... 40
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Additional Risks of Options on Foreign Currencies,
Forward Contracts and Foreign Instruments......................................... 41
Sovereign Debt Securities (IDEX Gabelli Global Growth).................................. 41
Other Investment Companies.............................................................. 42
GEI Short-Term Investment Fund.......................................................... 42
When-Issued, Delayed Settlement and Forward Delivery Securities......................... 42
Zero Coupon, Pay-In-Kind and Step Coupon Securities................................... 43
Income Producing Securities........................................................... 43
Lending of Fund Securities............................................................ 44
Joint Trading Accounts................................................................ 44
Illiquid Securities................................................................... 44
Securities Subject to Reorganization (IDEX Gabelli Global Growth)..................... 45
Equity Equivalents.................................................................... 45
Repurchase and Reverse Repurchase Agreements.......................................... 45
Pass-Through Securities............................................................... 46
High-Yield/High-Risk Bonds............................................................ 47
Warrants and Rights................................................................... 48
U.S. Government Securities............................................................ 48
Temporary Defensive Position.......................................................... 48
Money Market Reserves (IDEX T. Rowe Price Small Cap and IDEX T. Rowe Price
Dividend Growth).................................................................... 48
Turnover Rate......................................................................... 49
INVESTMENT ADVISORY AND OTHER SERVICES.................................................. 50
DISTRIBUTOR............................................................................. 58
ADMINISTRATIVE SERVICES................................................................. 59
CUSTODIAN, TRANSFER AGENT AND OTHER AFFILIATES.......................................... 60
FUND TRANSACTIONS AND BROKERAGE......................................................... 61
TRUSTEES AND OFFICERS................................................................... 65
PURCHASE OF SHARES...................................................................... 69
DEALER REALLOWANCES..................................................................... 69
DISTRIBUTION PLANS...................................................................... 71
DISTRIBUTION FEES....................................................................... 72
NET ASSET VALUE DETERMINATION........................................................... 77
DIVIDENDS AND OTHER DISTRIBUTIONS....................................................... 80
SHAREHOLDER ACCOUNTS.................................................................... 80
RETIREMENT PLANS........................................................................ 81
REDEMPTION OF SHARES.................................................................... 81
TAXES................................................................................... 82
PRINCIPAL SHAREHOLDERS.................................................................. 84
MISCELLANEOUS........................................................................... 88
Organization.......................................................................... 88
Shares of Beneficial Interest......................................................... 88
Legal Counsel and Independent Certified Public Accountants............................ 89
Registration Statement................................................................ 89
PERFORMANCE INFORMATION................................................................. 89
FINANCIAL STATEMENTS.................................................................... 98
APPENDIX A-CERTAIN SECURITIES IN WHICH THE FUNDS MAY INVEST............................. A-1
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INVESTMENT OBJECTIVES
The prospectus discusses the investment objective of each fund of the IDEX
Mutual Funds, the principal types of securities in which each fund will invest,
and the policies and practices of each fund. The following discussion of
Investment Restrictions, Policies and Practices supplements that set forth in
the prospectus.
There can be no assurance that a fund will, in fact, achieve its objective. A
fund's investment objective may be changed by the Board of Trustees without
shareholder approval. A change in the investment objective of a fund may result
in the fund having an investment objective different from that which the
shareholder deemed appropriate at the time of investment.
INVESTMENT RESTRICTIONS, POLICIES AND PRACTICES
As indicated in the prospectus, each fund is subject to certain fundamental
policies and restrictions which as such may not be changed without shareholder
approval. Shareholder approval would be the approval by the lesser of (i) more
than 50% of the outstanding voting securities of a fund, or (ii) 67% or more of
the voting securities present at a meeting if the holders of more than 50% of
the outstanding voting securities of a fund are present or represented by proxy.
INVESTMENT RESTRICTIONS OF IDEX JENNISON EQUITY OPPORTUNITY
(formerly IDEX C.A.S.E. Growth)
IDEX Jennison Equity Opportunity may not, as a matter of fundamental policy:
1. With respect to 75% of the fund's total assets, purchase the
securities of any one issuer (other than cash items and "government securities"
as defined in the 1940 Act) if immediately after and as a result of such
purchase (a) the value of the holdings of the fund in the securities of such
issuer exceeds 5% of the value of the fund's total assets, or (b) the fund owns
more than 10% of the outstanding voting securities of any one class of
securities of such issuer;
2. Invest 25% or more of the value of the fund's assets in any particular
industry (other than government securities);
3. Purchase or sell physical commodities other than foreign currencies
unless acquired as a result of ownership of securities (but this restriction
shall not prevent the fund from purchasing or selling options, futures
contracts, caps, floors and other derivative instruments, engaging in swap
transactions or investing in securities or other instruments backed by physical
commodities);
4. Invest directly in real estate or interests in real estate, including
limited partnership interests; however, the fund may own debt or equity
securities issued by companies engaged in those businesses;
5. Act as an underwriter of securities issued by others, except to the
extent that it may be deemed an underwriter in connection with the disposition
of portfolio securities of the fund;
6. Lend any security or make any other loan if, as a result, more than 25%
of its total assets would be lent to other parties (but this limitation does not
apply to purchases of commercial paper, debt securities or to repurchase
agreements);
7. The fund may borrow money only for temporary or emergency purposes
(not for leveraging or investment) in an amount not exceeding 25% of the value
of the fund's total assets (including the amount borrowed) less liabilities
(other than borrowings). Any borrowings that exceed 25% of the value of the
fund's total assets by reason of a decline in net assets will be reduced within
three business days to the extent necessary to comply with the 25% limitation.
This policy shall not prohibit reverse repurchase agreements or deposits of
assets to provide margin or guarantee positions in connection with transactions
in options, futures contracts, swaps, forward contracts, or other derivative
instruments or the segregation of assets in connection with such transactions;
and
8. Issue senior securities, except as permitted by the 1940 Act.
Furthermore, the fund has adopted the following non-fundamental investment
restrictions, which may be changed by the Board of Trustees without shareholder
approval:
(A) The fund may not, as a matter of non-fundamental policy (i) enter into
any futures contracts or options on futures contracts for purposes other than
bona fide hedging transactions within the meaning of Commodity Futures Trading
Commission regulations if the aggregate initial margin deposits and premiums
required to establish positions in futures contracts and related options that do
not fall within the definition of bona fide hedging transactions would exceed 5%
of the fair market value of the fund's net assets, after taking into account
unrealized profits and losses on such contracts it has entered into and (ii)
enter into any futures
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contracts or options on futures contracts if the aggregate amount of the fund's
commitments under outstanding futures contracts positions and options on futures
contracts would exceed the market value of its total assets;
(B) The fund may not mortgage or pledge any securities owned or held by the
fund in amounts that exceed, in the aggregate, 15% of the fund's net assets,
provided that this limitation does not apply to reverse repurchase agreements or
in the case of assets deposited to provide margin or guarantee positions in
options, futures contracts, swaps, forward contracts or other derivative
instruments or the segregation of assets in connection with such transactions;
(C) The fund may not sell securities short, unless it owns or has the right
to obtain securities equivalent in kind and amount to the securities sold short,
and provided that transactions in options, futures contracts, swaps, forward
contracts and other derivative instruments are not deemed to constitute selling
securities short;
(D) The fund may not purchase securities on margin, except that the fund
may obtain such short-term credits as are necessary for the clearance of
transactions, and provided that margin payments and other deposits made in
connection with transactions in options, futures contracts, swaps, forward
contracts, and other derivative instruments shall not be deemed to constitute
purchasing securities on margin;
(E) The fund may not invest more than 15% of its net assets in illiquid
securities. This does not include securities eligible for resale pursuant to
Rule 144A under the 1933 Act, or any successor to such Rule, Section 4(2)
commercial paper or other securities for which the Board of Trustees has made a
determination of liquidity, as permitted under the 1940 Act;
(F) The fund may not (i) purchase securities of other investment companies,
except in the open market where no commission except the ordinary broker's
commission is paid, or (ii) purchase or retain securities issued by other
open-end investment companies. Limitations (i) and (ii) do not apply to money
market funds or to securities received as dividends, through offers of exchange,
or as a result of consolidation, merger or other reorganization;
(G) The fund may not invest directly in oil, gas or other mineral
development or exploration programs or leases; however, the fund may own debt or
equity securities of companies engaged in those businesses;
(H) The fund may not invest more than 25% of its net assets at the time of
purchase in the securities of foreign issuers and obligors; and
(I) The fund may not invest in companies for the purpose of exercising
control or management.
In addition to the above, as a fundamental policy, the fund may, notwithstanding
any other investment policy or limitation (whether or not fundamental), invest
all of its assets in the securities of a single open-end management investment
company with substantially the same fundamental investment objectives, policies
and limitations as such fund (which might result in duplication of certain fees
and expenses).
INVESTMENT RESTRICTIONS OF IDEX GREAT COMPANIES -- AMERICA(SM) AND IDEX GREAT
COMPANIES -- TECHNOLOGY(SM)
Each fund may not, as a matter of fundamental policy:
1. Act as underwriter of securities issued by other persons, except to the
extent that, in connection with the disposition of fund securities, it may
technically be deemed to be an underwriter under certain securities laws;
2. Invest 25% or more of the fund's assets in the securities of issuers
primarily engaged in the same industry. Utilities will be divided according to
their services; for example, gas, gas transmission, electric and telephone, and
each will be considered a separate industry for purposes of this restriction. In
addition, there shall be no limitation on the purchase of obligations issued or
guaranteed by the U.S. government or its agencies or instrumentalities, or of
certificates of deposit and bankers' acceptances;
3. Buy or sell physical commodities (but this shall not prevent the fund
from entering into futures contracts and options thereon);
4. Invest directly in real estate or interests in real estate, including
limited partnership interests; however, the fund may own debt or equity
securities issued by companies engaged in those businesses;
5. Borrow money or pledge, mortgage or hypothecate any of its assets except
that the fund may borrow on a secured or unsecured basis as a temporary measure
for extraordinary or emergency purposes. Such temporary borrowing may not exceed
5% of the value of the fund's total assets when the borrowing is made;
6. Issue any senior security except to the extent that senior securities
may be deemed to arise from bank borrowings and purchases of government
securities on a "when-issued" or "delayed delivery" basis, as described in the
prospectus;
7. Lend any security or make any other loan if, as a result, more than
33 1/3% of its total assets would be lent
2
to other parties (but this limitation does not apply to purchases of commercial
paper, debt securities or to repurchase agreements);
Furthermore, each fund has adopted the following non-fundamental investment
restrictions which may be changed by the Board of Trustees of the Fund without
shareholder or policyowner approval:
(A) Each fund may not make short sales of securities or maintain a short
position. This restriction shall not apply to transactions involving selling
securities "short against the box";
(B) Each fund may not participate on a "joint" or "joint and several"
basis in any trading account in securities; and
(C) Each fund may not invest in securities of other investment companies,
except as it may be acquired as part of a merger, consolidation, reorganization,
acquisition of assets, or offer of exchange.
In addition to the above, as a fundamental policy, a fund may,
notwithstanding any other investment policy or limitation (whether or not
fundamental), invest all of its assets in the securities of a single open-end
management investment company with substantially the same fundamental investment
objectives, policies and limitations as such fund (which might result in
duplication of certain fees and expenses).
IDEX RESTRICTIONS OF IDEX GOLDMAN SACHS GROWTH
IDEX Goldman Sachs Growth may not, as a matter of fundamental policy:
1. With respect to 75% of the fund's total assets, purchase the
securities of any one issuer (other than government securities as defined in the
1940 Act) if immediately after and as a result of such purchase (a) the value of
the holdings of the fund in the securities of such issuer exceeds 5% of the
value of the fund's total assets, or (b) the fund owns more than 10% of the
outstanding voting securities of any one class of securities of such issuer;
2. Borrow money except (a) the fund may borrow from banks (as defined in
the 1940 Act) or through reverse repurchase agreements in amounts up to 33 1/3
of its total assets (including the amount borrowed), (b) the fund may, to the
extent permitted by applicable law, borrow up to an additional 5% of its total
assets for temporary purposes, (c) the fund may obtain such short-term credits
as may be necessary for the clearance of purchases and sales of fund securities,
(d) the fund may purchase securities on margin to the extent permitted by
applicable law and (e) the fund may engage in mortgage dollar rolls which are
accounted for as financings;
3. Purchase or sell physical commodities (but this shall not prevent the
fund from investing in currency and financial instruments and contracts that are
commodities or commodity contracts);
4. Invest more than 25% of the fund's assets in the securities of
issuers primarily engaged in the same industry. Utilities will be divided
according to their services; for example, gas, gas transmission, electric and
telephone, and each will be considered a separate industry for purposes of this
restriction, provided that there shall be no limitation on the purchase of
obligations issued or guaranteed by the U.S. government or its agencies or
instrumentalities, or of certificates of deposit and bankers' acceptances;
5. Make loans, except through (a) the purchase of debt obligations in
accordance with the fund's investment objective and policies, (b) repurchase
agreements with banks, brokers, dealers and other financial institutions, and
(c) loans of securities as permitted by applicable law;
6. Purchase or sell real estate (but this shall not prevent the fund from
investing in securities or other instruments backed by real estate, including
mortgage-backed securities, or securities of companies engaged in the real
estate business);
7. Issue senior securities, except as permitted by the 1940 Act; and
8. Underwrite securities issued by other persons, except to the extent that
the fund may be deemed to be an underwriter within the meaning of the 1933 Act
in connection with the purchase and sale of its fund securities in the ordinary
course of pursuing its investment objective.
Furthermore, the fund has adopted the following non-fundamental restrictions
which may be changed by the Board of Trustees without shareholder approval:
(A) The fund may not invest in companies for the purpose of exercising
control or management;
(B) The fund may not invest more than 15% of its net assets in illiquid
securities. This does not include securities eligible for resale pursuant to
Rule 144A under the 1933 Act or any other securities as to which a determination
as to liquidity has been made pursuant to
3
guidelines adopted by the Board of Trustees, as permitted under the 1940 Act;
(C) The fund may not purchase additional securities when money borrowed
exceeds 5% of its total assets. This restriction shall not apply to temporary
borrowings until the fund's assets exceed $40,000,000; and
(D) The fund may not make short sales of securities, except short sales
"against the box."
In addition to the above, as a fundamental policy, the fund may, notwithstanding
any other investment policy or limitation (whether or not fundamental), invest
all of its assets in the securities of a single open-end management investment
company with substantially the same fundamental investment objectives, policies
and limitations as such fund (which might result in duplication of certain fees
and expenses).
INVESTMENT RESTRICTIONS OF IDEX JANUS GROWTH AND IDEX JANUS FLEXIBLE INCOME
IDEX Janus Growth and IDEX Janus Flexible Income each may not, as a matter of
fundamental policy:
1. With respect to 75% of the fund's total assets, purchase the securities
of any one issuer (other than cash items and "government securities" as defined
under the 1940 Act), if immediately after and as a result of such purchase (a)
the value of the holdings of the fund in the securities of such issuer exceeds
5% of the value of the fund's total assets, or (b) the fund owns more than 10%
of the outstanding voting securities of such issuer;
2. Invest more than 25% of the value of its assets in any particular
industry (other than government securities);
3. Purchase or sell physical commodities other than foreign currencies
unless acquired as a result of ownership of securities (but this restriction
shall not prevent the fund from purchasing or selling options, futures
contracts, caps, floors and other derivative instruments, engaging in swap
transactions or investing in securities or other instruments backed by physical
commodities);
4. Invest directly in real estate or interests in real estate, including
limited partnership interests; however, the fund may own debt or equity
securities issued by companies engaged in those businesses;
5. Act as underwriter of securities issued by others, except to the
extent that it may be deemed an underwriter in connection with the disposition
of portfolio securities of the fund;
6. Lend any security or make any other loan if, as a result, more than 25%
of its total assets would be lent to other parties (but this limitation does not
apply to purchases of commercial paper, debt securities or to repurchase
agreements);
7. The fund may borrow money only for temporary or emergency purposes
(not for leveraging or investment) in an amount not exceeding 25% of the value
of the fund's total assets (including the amount borrowed) less liabilities
(other than borrowings). Any borrowings that exceed 25% of the value of the
fund's total assets by reason of a decline in net assets will be reduced within
three business days to the extent necessary to comply with the 25% limitation.
This policy shall not prohibit reverse repurchase agreements or deposits of
assets to provide margin or guarantee positions in connection with transactions
in options, futures contracts, swaps, forward contracts, and other derivative
instruments or the segregation of assets in connection with such transactions;
and
8. Issue senior securities, except as permitted by the 1940 Act.
As a fundamental policy governing concentration, the fund will not invest 25% or
more of its total assets in any one particular industry, other than U.S.
government securities.
Furthermore, each fund has adopted the following non-fundamental investment
restrictions which may be changed by the Board of Trustees without shareholder
approval:
(A) A fund may not: (i) enter into any futures contracts or options on
futures contracts for purposes other than bona fide hedging transactions within
the meaning of Commodity Futures Trading Commission regulations if the aggregate
initial margin deposits and premiums required to establish positions in futures
contracts and related options that do not fall within the definition of bona
fide hedging transactions would exceed 5% of the fair market value of the fund's
net assets, after taking into account unrealized profits and losses on such
contracts it has entered into; and (ii) enter into any futures contracts or
options on futures contracts if the aggregate amount of the fund's commitments
under outstanding futures contracts positions and options on futures contracts
would exceed the market value of its total assets;
(B) A fund may not mortgage or pledge any securities owned or held by the
fund in amounts that exceed, in the aggregate, 15% of the fund's net assets,
provided that this limitation does not apply to reverse repurchase agreements or
in the case of assets deposited to provide
4
margin or guarantee positions in options, futures contracts, swaps, forward
contracts or other derivative instruments or the segregation of assets in
connection with such transactions;
(C) A fund may not sell securities short, unless it owns or has the right
to obtain securities equivalent in kind and amount to the securities sold short,
and provided that transactions in options, futures contracts, swaps, forward
contracts, and other derivative instruments are not deemed to constitute selling
securities short;
(D) A fund may not purchase securities on margin, except that each fund may
obtain such short-term credits as are necessary for the clearance of
transactions, and provided that margin payments and other deposits made in
connection with transactions in options, futures contracts, swaps, forward
contracts, and other derivative instruments shall not be deemed to constitute
purchasing securities on margin;
(E) A fund may not invest more than 15% of its net assets in illiquid
securities. This does not include securities eligible for resale pursuant to
Rule 144A under the Securities Act of 1933 (the "1933 Act"), or any successor to
such Rule, Section 4(2) commercial paper or any securities which the Board of
Trustees or the investment sub-adviser, as appropriate, has made a determination
of liquidity, as permitted under the 1940 Act;
(F) A fund may not invest in companies for the purpose of exercising
control or management;
(G) A fund may not (i) purchase securities of other investment companies,
except in the open market where no commission except the ordinary broker's
commission is paid, or (ii) purchase or retain securities issued by other
open-end investment companies. Limitations (i) and (ii) do not apply to money
market funds or to securities received as dividends, through offers of exchange,
or as a result of consolidation, merger or other reorganization; and
(H) A fund may not invest directly in oil, gas or other mineral development
or exploration programs or leases; however, the funds may own debt or equity
securities of companies engaged in those businesses. In making all investments
for IDEX Janus Flexible Income, the sub-adviser will emphasize economic or
financial factors or circumstances of the issuer, rather than opportunities for
short-term arbitrage.
In addition to the above, as a fundamental policy, a fund may, notwithstanding
any other investment policy or limitation (whether or not fundamental), invest
all of its assets in the securities of a single open-end management investment
company with substantially the same fundamental investment objectives, policies
and limitations as such fund (which might result in duplication of certain fees
and expenses).
INVESTMENT RESTRICTIONS OF IDEX NWQ VALUE EQUITY
IDEX NWQ Value Equity may not, as a matter of fundamental policy:
1. With respect to 75% of the fund's total assets, purchase the securities
of any one issuer (other than government securities as defined in the 1940 Act)
if immediately after and as a result of such purchase (a) the value of the
holdings of the fund in the securities of such issuer exceeds 5% of the value of
the fund's total assets, or (b) the fund owns more than 10% of the outstanding
voting securities of any one class of securities of such issuer;
2. Invest 25% or more of the value of the fund's total assets in any
particular industry (other than U.S. government securities);
3. Purchase or sell physical commodities other than foreign currencies
unless acquired as a result of ownership of securities (but this restriction
shall not prevent the fund from purchasing or selling options, futures
contracts, caps, floors and other derivative instruments, engaging in swap
transactions or investing in securities or other instruments backed by physical
commodities);
4. Invest directly in real estate or interests in real estate, including
limited partnership interests; however, the fund may own debt or equity
securities issued by companies engaged in those businesses;
5. Act as an underwriter of securities issued by others, except to the
extent that it may be deemed an underwriter in connection with the disposition
of portfolio securities of the fund;
6. Lend any security or make any other loan if, as a result, more than 25%
of its total assets would be lent to other parties (but this limitation does not
apply to purchases of commercial paper, debt securities or to repurchase
agreements);
7. The fund may borrow money only for temporary or emergency purposes (not
for leveraging or investment) in an amount not exceeding 10% of the value of the
fund's total assets (including the amount borrowed) less liabilities (other than
borrowings). Any borrowings that exceed 10% of the value of the fund's total
assets by
5
reason of a decline in net assets will be reduced within three business days to
the extent necessary to comply with the 10% limitation. The fund may not
purchase additional securities when borrowings exceed 5% of total assets. This
policy shall not prohibit reverse repurchase agreements or deposits of assets to
provide margin or guarantee positions in connection with transactions in
options, futures contracts, swaps, forward contracts, or other derivative
instruments or the segregation of assets in connection with such transactions;
and
8. Issue senior securities, except as permitted by the 1940 Act.
Furthermore, the fund has adopted the following non-fundamental investment
restrictions which may be changed by the Board of Trustees without shareholder
approval:
(A) The fund may not, as a matter of non-fundamental policy (i) enter into
any futures contracts or options on futures contracts for purposes other than
bona fide hedging transactions within the meaning of Commodity Futures Trading
Commission regulations if the aggregate initial margin deposits and premiums
required to establish positions in futures contracts and related options that do
not fall within the definition of bona fide hedging transactions would exceed 5%
of the fair market value of the fund's net assets, after taking into account
unrealized profits and losses on such contracts it has entered into and (ii)
enter into any futures contracts or options on futures contracts if the
aggregate amount of the fund's commitments under outstanding futures contracts
positions and options on futures contracts would exceed the market value of its
total assets;
(B) The fund may not mortgage or pledge any securities owned or held by the
fund in amounts that exceed, in the aggregate, 15% of the fund's net assets,
provided that this limitation does not apply to reverse repurchase agreements or
in the case of assets deposited to provide margin or guarantee positions in
options, futures contracts, swaps, forward contracts or other derivative
instruments or the segregation of assets in connection with such transactions;
(C) The fund may not sell securities short, unless it owns or has the right
to obtain securities equivalent in kind and amount to the securities sold short,
and provided that transactions in options, futures contracts, swaps, forward
contracts and other derivative instruments are not deemed to constitute selling
securities short;
(D) The fund may not purchase securities on margin, except that the fund
may obtain such short-term credits as are necessary for the clearance of
transactions, and provided that margin payments and other deposits made in
connection with transactions in options, futures contracts, swaps, forward
contracts, and other derivative instruments shall not be deemed to constitute
purchasing securities on margin;
(E) The fund may not invest more than 15% of its net assets in illiquid
securities. This does not include securities eligible for resale pursuant to
Rule 144A under the 1933 Act, or any successor to such Rule, Section 4(2)
commercial paper or other securities for which the Board of Trustees has made a
determination of liquidity, as permitted under the 1940 Act;
(F) The fund may not (i) purchase securities of other investment companies,
except in the open market where no commission except the ordinary broker's
commission is paid, or (ii) purchase or retain securities issued by other
open-end investment companies. Limitations (i) and (ii) do not apply to money
market funds or to securities received as dividends, through offers of exchange,
or as a result of consolidation, merger or other reorganization;
(G) The fund may not invest directly in oil, gas or other mineral
development or exploration programs or leases; however, the fund may own debt or
equity securities of companies engaged in those businesses;
(H) The fund may not invest more than 25% of its net assets at the time of
purchase in the securities of foreign issuers and obligors; and
(I) The fund may not invest in companies for the purpose of exercising
control or management.
In addition to the above, as a fundamental policy, the fund may, notwithstanding
any other investment policy or limitation (whether or not fundamental), invest
all of its assets in the securities of a single open-end management investment
company with substantially the same fundamental investment objectives, policies
and limitations as such fund (which might result in duplication of certain fees
and expenses).
INVESTMENT RESTRICTIONS OF IDEX SALOMON ALL CAP
IDEX Salomon All Cap may not, as a matter of fundamental policy:
1. Purchase or sell real estate, real estate mortgages, commodities or
commodity contracts; however, the fund may: (a) purchase interests in real
estate investment trusts or companies which invest in or own
6
real estate if the securities of such trusts or companies are registered under
the 1933 Act and are readily marketable or holding or selling real estate
received in connection with securities it holds; and (b) may enter into futures
contracts, including futures contracts on interest rates, stock indices and
currencies, and options thereon, and may engage in forward currency contracts
and buy, sell and write options on currencies. This policy shall not prohibit
reverse repurchase agreements or deposits of assets to margin or guarantee
positions in futures, options, swaps or forward contracts, or the segregation of
assets in connection with such contracts;
2. Invest more than 25% of the fund's assets in the securities of issuers
primarily engaged in the same industry. Utilities will be divided according to
their services; for example, gas, gas transmission, electric and telephone, and
each will be considered a separate industry for purposes of this restriction. In
addition, there shall be no limitation on the purchase of obligations issued or
guaranteed by the U.S. government or its agencies or instrumentalities, or of
certificates of deposit and bankers' acceptances;
3. Borrow money, except that the fund may borrow from banks for investment
purposes up to an aggregate of 15% of the value of its total assets taken at the
time of borrowing. The fund may borrow for temporary or emergency purposes an
aggregate amount not to exceed 5% of the value of its total assets at the time
of borrowing;
4. Issue senior securities, except as permitted by the 1940 Act;
5. Underwrite securities issued by other persons, except to the extent
that the fund may be deemed to be an underwriter within the meaning of the 1933
Act in connection with the purchase and sale of its fund securities in the
ordinary course of pursuing its investment objective; and
6. Make loans, except that the fund may purchase debt obligations in which
the fund may invest consistent with its investment objectives and policies or
enter into, and make loans of, its portfolio securities, as permitted under the
1940 Act.
Furthermore, the fund has adopted the following non-fundamental restrictions
that may be changed by the Board of Trustees without shareholder approval:
(A) The fund may not invest more than 15% of its net assets in illiquid
securities. This does not include securities eligible for resale pursuant to
Rule 144A under the 1933 Act or any other securities as to which a determination
as to liquidity has been made pursuant to guidelines adopted by the Board of
Trustees, as permitted under the 1940 Act;
(B) The fund may not invest in companies for the purpose of exercising
control or management; and
(C) The fund may not sell securities short except short sales "against the
box."
In addition to the above, as a fundamental policy, the fund may, notwithstanding
any other investment policy or limitation (whether or not fundamental), invest
all of its assets in the securities of a single open-end management investment
company with substantially the same fundamental investment objectives, policies
and limitations as such fund (which might result in duplication of certain fees
and expenses).
INVESTMENT RESTRICTIONS OF IDEX TRANSAMERICA SMALL COMPANY AND IDEX TRANSAMERICA
EQUITY
Each fund may not, as a matter of fundamental policy:
1. With respect to 75% of the fund's total assets, purchase the securities
of any one issuer (other than Government securities as defined in the 1940 Act)
if immediately after and as a result of such purchase (a) the value of the
holdings of the fund in the securities of such issuer exceed 5% of the fund's
total assets, or (b) the fund owns more than 10% of the outstanding voting
securities of any one class of securities of such issuer. All securities of a
foreign government and its agencies will be treated as a single issuer for
purposes of this restriction;
2. Borrow from banks for temporary or emergency (not leveraging) purposes,
including the meeting of redemption requests and cash payments of dividends and
distributions that might otherwise require the untimely disposition of
securities, in an amount not to exceed 33.33% of the value of the fund's total
assets (including the amount borrowed) valued at market less liabilities (not
including the amount borrowed) at the time the borrowing is made. Whenever
outstanding borrowings, not including reverse repurchase agreements, represent
5% or more of the fund's total assets, the fund will not make any additional
investments;
3. Lend its assets or money to other persons, except through (a)
purchasing debt obligations, (b) lending securities in an amount not to exceed
33.33% of the fund's assets taken at market value, (c) entering into repurchase
agreements (d) trading in financial futures contracts, index futures contracts,
securities indexes and options on financial futures contracts, options on index
7
futures contracts, options on securities and options on securities indexes and
(e) entering into variable rate demand notes;
4. Purchase securities (other than U.S. government securities) of any
issuer if, as a result of the purchase, more than 5% of the fund's total assets
would be invested in the securities of the issuer, except that up to 25% of the
value of the total assets of the fund may be invested without regard to this
limitation. All securities of a foreign government and its agencies will be
treated as a single issuer for purposes of this restriction;
5. Purchase more than 10% of the voting securities of any one issuer, or
more than 10% of the oustanding securities of any class of issuer, except that
(a) this limitation is not applicable to the fund's investments in government
securities and (b) up to 25% of the value of the assets of the fund may be
invested without regard to these 10% limitations. All securities of a foreign
government and its agencies will be treated as a single issuer for purposes of
this restriction. These limitations are subject to any further limitations under
the 1940 Act;
6. Invest more than 25% of the value of its total assets in securities
issued by companies engaged in any one industry, including non-domestic banks or
any foreign government. This limitation does not apply to securities issued or
guaranteed by the United States government, its agencies or instrumentalities;
7. Underwrite any issue of securities, except to the extent that the sale
of securities in accordance with the fund's investment objective, policies and
limitations may be deemed to be an underwriting, and except that the fund may
acquire securities under circumstances in which, if the securities were sold,
the fund might be deemed to be an underwriter for purposes of the 1933 Act;
8. Purchase or sell real estate or real estate limited partnership
interests, or invest in oil, gas or mineral leases, or mineral exploration or
development programs, except that the fund may (a) invest in securities secured
by real estate, mortgages or interests in real estate or mortgages, (b) purchase
securities issued by companies that invest or deal in real estate, mortgages or
interests in real estate or mortgages, (c) engage in the purchase and sale of
real estate as necessary to provide it with an office for the transaction of
business or (d) acquire real estate or interests in real estate securing an
issuer's obligations, in the event of a default by that issuer;
9. Make short sales of securities or maintain a short position unless, at
all times when a short position is open, the fund owns an equal amount of the
securities or securities convertible into or exchangeable for, without payment
of any further consideration, securities of the same issue as, and equal in
amount to, the securities sold short;
10. Purchase securities on margin, except that the fund may obtain any
short-term credits necessary for the clearance of purchases and sales of
securities. For purposes of this restriction, the deposit or payment of initial
or variation margin in connection with futures contracts, financial futures
contracts or related options, and options on securities, and options on
securities indexes will not be deemed to be a purchase of securities on margin
by the fund;
11. Invest in commodities, except that the fund may invest in futures
contracts (including financial futures contracts or securities index futures
contracts) and related options and other similar contracts as described in this
Statement of Additional Information and in the prospectus;
12. Issue senior securities, except to the extent that senior securities
may be deemed to arise from bank borrowings and purchases of government
securities on a "when-issued" or "delayed delivery" basis, as described in the
prospectus.
Furthermore, the funds have adopted the following non-fundamental investment
restrictions which may be changed by the Board of Trustees without shareholder
approval:
(A) A fund may not purchase securities of other investment companies, other
than a security acquired in connection with a merger, consolidation,
acquisition, reorganization or offer of exchange and except as permitted under
the 1940 Act, if as a result of the purchase: (a) more than 10% of the value of
the fund's total assets would be invested in the securities of investment
companies; (b) more than 5% of the value of the fund's total assets would be
invested in the securities of any one investment company; or (c) the fund would
own more than 3% of the total outstanding voting securities of any investment
company; and
(B) A fund may not invest in companies for the purposes of exercising
control or management.
In addition to the above, as a fundamental policy, a fund may, notwithstanding
any other investment policy or limitation (whether or not fundamental), invest
all of its assets in the securities of a single open-end management investment
company with substantially the same fundamental investment objectives, policies
and limitations as such fund (which might result in duplication of certain fees
and expenses).
8
INVESTMENT RESTRICTIONS OF IDEX ALGER AGGRESSIVE GROWTH
IDEX Alger Aggressive Growth may not, as a matter of fundamental policy:
1. With respect to 75% of the fund's total assets, purchase the securities
of any one issuer (other than government securities as defined in the 1940 Act),
if immediately after and as a result of such purchase (a) the value of the
holdings of the fund in the securities of such issuer exceeds 5% of the value of
the fund's total assets, or (b) the fund owns more than 10% of the outstanding
voting securities of any one class of securities of such issuer;
2. Purchase any securities that would cause more than 25% of the value of
the fund's total assets to be invested in the securities of issuers conducting
their principal business activities in the same industry; provided that there
shall be no limit on the purchase of U.S. government securities;
3. Purchase or sell real estate or real estate limited partnerships,
except that the fund may purchase and sell securities secured by real estate,
mortgages or interests therein and securities that are issued by companies that
invest or deal in real estate;
4. Invest in commodities, except that the fund may purchase or sell stock
index futures contracts and related options thereon if thereafter no more than
5% of its total assets are invested in aggregate initial margin and premiums;
5. Make loans to others, except through purchasing qualified debt
obligations, lending fund securities or entering into repurchase agreements;
6. Act as an underwriter of securities issued by others, except to the
extent that it may be deemed an underwriter in connection with the disposition
of its fund securities;
7. Borrow money, except that the fund may borrow from banks for investment
purposes as set forth in the prospectus and may also engage in reverse
repurchase agreements. Immediately after any borrowing, including reverse
repurchase agreements, the fund will maintain asset coverage of not less than
300% with respect to all borrowings; and
8. Issue senior securities, except that the fund may borrow from banks for
investment purposes so long as the fund maintains the required coverage.
Furthermore, the fund has adopted the following non-fundamental investment
restrictions which may be changed by the Board of Trustees of the funds without
shareholder approval:
(A) The fund may not sell securities short or purchase securities on
margin, except that the fund may obtain any short-term credit necessary for the
clearance of purchases and sales of securities. These restrictions shall not
apply to transactions involving selling securities "short against the box;"
(B) The fund may not pledge, hypothecate, mortgage or otherwise encumber
more than 15% of the value of the fund's total assets except in connection with
borrowings described in number 7 above. These restrictions shall not apply to
transactions involving reverse repurchase agreements or the purchase of
securities subject to firm commitment agreements or on a when-issued basis;
(C) The fund may not invest directly in oil, gas, or other mineral
development or exploration programs or leases; however, the fund may own debt or
equity securities of companies engaged in those businesses;
(D) The fund may not (i) purchase securities of other investment companies,
except in the open market where no commission except the ordinary broker's
commission is paid, or (ii) purchase or retain securities issued by other
open-end investment companies. Limitations (i) and (ii) do not apply to money
market funds or to securities received as dividends, through offers of exchange,
or as a result of consolidation, merger or other reorganization;
(E) The fund may not invest in companies for the purpose of exercising
control or management; and
(F) The fund may not invest more than 15% of its net assets in illiquid
securities. This does not include securities eligible for resale pursuant to
Rule 144A under the 1933 Act, or any successor to such Rule, Section 4(2)
commercial paper or any other securities as to which the Board of Trustees has
made a determination as to liquidity, as permitted under the 1940 Act.
In addition to the above, as a fundamental policy, the fund may, notwithstanding
any other investment policy or limitation (whether or not fundamental), invest
all of its assets in the securities of a single open-end management investment
company with substantially the same fundamental investment objectives, policies
and limitations as such fund (which might result in duplication of certain fees
and expenses).
9
INVESTMENT RESTRICTIONS OF IDEX ISABELLE SMALL CAP VALUE
IDEX Isabelle Small Cap Value may not, as a matter of fundamental policy:
1. With respect to 75% of the fund's total assets, purchase the securities
of any one issuer (other than cash items and "Government Securities" as defined
in the 1940 Act) if immediately after and as a result of such purchase (a) the
value of the holdings of the fund in the securities of such issuer exceeds 5% of
the value of the fund's total assets, or (b), the fund owns more than 10% of the
outstanding voting securities of any one class of securities of such issuer;
2. Invest 25% or more of the fund's assets in the securities of issuers
primarily engaged in the same industry, provided that there shall be no
limitation on the purchase of obligations issued or guaranteed by the U.S.
Government or its agencies or instrumentalities;
3. Borrow amounts greater than 5% of its total assets for temporary
purposes and greater than 331/3% of its total assets for meeting redemption
requests (when aggregated with temporary borrowings);
4. Pledge, mortgage or hypothecate its assets other than to secure
borrowings permitted by restriction 3 above (collateral arrangements with
respect to margin requirements for options and futures transactions are not
deemed to be pledges or hypothecations for this purpose);
5. Lend any security or make any other loan if, as a result, more than 25%
of its total assets would be lent to other parties (but this limitation does not
apply to purchases of commercial paper, debt securities or to repurchase
agreements);
6. Act as an underwriter of securities issued by others, except to the
extent that it may be deemed an underwriter in connection with the disposition
of its fund securities;
7. Invest directly in real estate or interests in real estate; however,
the fund may own debt or equity securities issued by companies engaged in those
businesses;
8. Purchase securities on margin, except that the fund may obtain any
short-term credits necessary for the clearance of purchases and sales of
securities. For purposes of this restriction, the deposit or payment of initial
or variation margin in connection with transactions in options, futures and
options on futures will not be deemed to be a purchase of securities on margin
by the fund;
9. Buy or sell physical commodities or commodity futures contracts, except
for: (a) forward foreign currency contracts; (b) financial futures contracts;
and (c) options on financial futures contracts, securities, foreign currencies
and securities indices;
10. Issue any senior security except to the extent that senior securities
may be deemed to arise from bank borrowings and purchases of government
securities on a "when-issued" or "delayed delivery" basis.
Furthermore, the fund has adopted the following non-fundamental restrictions
that may be changed by the Board of Trustees of the fund without shareholder
approval:
(A) The fund may not sell securities short, except transactions involving
selling securities short "against the box";
(B) The fund may not make investments for the purpose of exercising control
or management;
(C) The fund may not invest in illiquid securities in an amount exceeding,
in the aggregate, 15% of its net assets. This limitation does not include any
Rule 144A restricted security that has been determined by, or pursuant to
procedures established by, the Board, based on trading markets for such
security, to be liquid; and
(D) The fund may not invest in other investment companies except as
permitted under the 1940 Act.
In addition to the above, as a fundamental policy, the fund may, notwithstanding
any other investment policy or limitation (whether or not fundamental), invest
all of its assets in the securities of a single open-end management investment
company with substantially the same fundamental investment objectives, policies
and limitations as such fund (which might result in duplication of certain fees
and expenses).
INVESTMENT RESTRICTIONS OF IDEX JANUS CAPITAL APPRECIATION AND IDEX JANUS
BALANCED
IDEX Janus Capital Appreciation and IDEX Janus Balanced each may not, as a
matter of fundamental policy:
1. With respect to 75% of its total assets in the case of IDEX Janus
Balanced, and 50% of its total assets in the case of IDEX Janus Capital
Appreciation, purchase the securities of any one issuer (except cash items and
"government securities" as defined under the 1940 Act), if immediately after and
as a result of such purchase (a) the value of the holdings of the fund in the
securities of such issuer exceeds 5% of the value of
10
such fund's total assets, or (b) the fund owns more than 10% of the outstanding
voting securities of such issuer. With respect to the remaining 50% of the value
of its total assets, IDEX Janus Capital Appreciation may invest in the
securities of as few as two issuers;
2. Invest more than 25% of the value of its assets in any particular
industry (other than U.S. government securities);
3. Invest directly in real estate or interests in real estate; however, a
fund may own debt or equity securities issued by companies engaged in those
businesses;
4. Purchase or sell physical commodities other than foreign currencies
unless acquired as a result of ownership of securities (but this limitation
shall not prevent a fund from purchasing or selling options, futures, swaps and
forward contracts or from investing in securities or other instruments backed by
physical commodities);
5. Lend any security or make any other loan if, as a result, more than 25%
of its total assets would be lent to other parties (but this limitation does not
apply to purchases of commercial paper, debt securities or repurchase
agreements);
6. Act as underwriter of securities issued by others, except to the extent
that a fund may be deemed an underwriter in connection with the disposition of
portfolio securities of that fund;
7. The fund may borrow money for temporary or emergency purposes (not for
leveraging or investment) in an amount not exceeding 25% of the value of the
fund's total assets (including the amount borrowed) less liabilities (other than
borrowings). Borrowings that exceed 25% of the value of the fund's total assets
by reason of a decline in net assets will reduce within three business days to
the extent necessary to comply with the 25% limitation. This policy shall not
prohibit reverse repurchase agreements, or deposits of assets to margin or
guarantee positions in futures, options, swaps or forward contracts, and the
segregation of assets in connection with such contracts; and
8. Issue senior securities, except as permitted by the 1940 Act.
Furthermore, the funds have adopted the following non-fundamental investment
restrictions which may be changed by the Board of Trustees without shareholder
approval:
(A) A fund may not: (i) enter into any futures contracts and related
options for purposes other than bona fide hedging transactions within the
meaning of Commodity Futures Trading Commission regulations if the aggregate
initial margin and premiums required to establish positions in futures contracts
and related options that do not fall within the definition of bona fide hedging
transactions will exceed 5% of the fair market value of a fund's net assets,
after taking into account unrealized profits and unrealized losses on any such
contracts it has entered into; and (ii) enter into any futures contracts if the
aggregate amount of such fund's commitments under outstanding futures contracts
positions of that fund's would exceed the market value of its total assets;
(B) A fund may not sell securities short, unless it owns or has the right
to obtain securities equivalent in kind and amount to the securities sold short
without the payment of any additional consideration therefore, and provided that
transactions in futures, options, swaps and forward contracts are not deemed to
constitute selling securities short;
(C) A fund may not purchase securities on margin, except that a fund may
obtain such short-term credits as are necessary for the clearance of
transactions, and provided that margin payments and other deposits in connection
with transactions in futures, options, contracts, swaps, and forward contracts,
shall not be deemed to constitute purchasing securities on margin;
(D) A fund may not (i) purchase securities of other investment companies,
except in the open market where no commission except the ordinary broker's
commission is paid, or (ii) purchase or retain securities issued by other
open-end investment companies. Limitations (i) and (ii) do not apply to money
market funds or to securities received as dividends, through offers of exchange,
or as a result of consolidation, merger or other reorganization;
(E) A fund may not mortgage or pledge any securities owned or held by a
fund in amounts that exceed, in the aggregate, 15% of that fund's net asset
value, provided that this limitation does not apply to reverse repurchase
agreements, deposits of assets to margin, guarantee positions in futures,
options, swaps or forward contracts or segregation of assets in connection with
such contracts;
(F) A fund may not invest directly in oil, gas or other mineral development
or exploration programs or leases; however, the fund may own debt or equity
securities of companies engaged in those businesses;
(G) A fund may not purchase any security or enter into a repurchase
agreement, if as a result, more than 15% of its net assets would be invested in
repurchase
11
agreements not entitling the holder to payment of principal and interest within
seven days and in securities that are illiquid by virtue of legal or contractual
restrictions on resale or the absence of a readily available market. The
Trustees, or the fund's investment adviser or sub-adviser acting pursuant to
authority delegated by the Trustees, may determine that a readily available
market exists for securities eligible for resale pursuant to Rule 144A under the
1933 Act, or any successor to such Rule, Section 4(2) commercial paper and
municipal lease obligations. Accordingly, such securities may not be subject to
the foregoing limitation;
(H) A fund may not invest in companies for the purpose of exercising
control or management; and
(I) With respect to IDEX Janus Balanced only, at least 25% of the total
assets of that fund will normally be invested in fixed-income senior securities,
which include corporate debt securities and preferred stock.
In addition to the above, as a fundamental policy, a fund may, notwithstanding
any other investment policy or limitation (whether or not fundamental), invest
all of its assets in the securities of a single open-end management investment
company with substantially the same fundamental investment objectives, policies
and limitations as such fund (which might result in duplication of certain fees
and expenses).
INVESTMENT RESTRICTIONS OF IDEX MUNDER NET50
IDEX Munder Net50 may not, as a matter of fundamental policy:
1. With respect to 75% of the fund's total assets, purchase the securities
of any one issuer (other than government securities as defined in the 1940 Act),
if immediately after and as a result of such purchase (a) the value of the
holdings of the fund in the securities of such issuer exceeds 5% of the value of
the fund's total assets, or (b) the fund owns more than 10% of the outstanding
voting securities of any one class of securities of such issuer. All securities
of a foreign government and its agencies will be treated as a single issuer for
purposes of this restriction;
2. Invest directly in real estate or interests in real estate; however,
the fund may own debt or equity securities issued by companies engaged in those
businesses;
3. Purchase or sell physical commodities other than foreign currencies
unless acquired as a result of ownership of securities (but this limitation
shall not prevent the fund from purchasing or selling options, futures, swaps
and forward contracts or from investing in securities or other instruments
backed by physical commodities);
4. Lend any security or make any other loan if, as a result, more than 25%
of the fund's total assets would be lent to other parties (but this limitation
does not apply to purchases of commercial paper, debt securities or repurchase
agreements);
5. Underwrite securities issued by other persons, except to the extent
that the fund may be deemed to be an underwriter within the meaning of the
Securities Act of 1933 in connection with the purchase and sale of the fund's
portfolio securities;
6. Borrow money but the fund may borrow money for temporary or emergency
purposes (not for leveraging or investment) in an amount not exceeding 25% of
the value of its respective total assets (including the amount borrowed) less
liabilities (other than borrowings). If the borrowings exceed 25% of the value
of the fund's total assets by reason of a decline in net assets, the fund will
reduce its borrowings within three business days to the extent necessary to
comply with the 25% limitation. This policy shall not prohibit reverse
repurchase agreements, deposits of assets to margin or guarantee positions in
futures, options, swaps or forward contracts, or the segregation of assets in
connection with such contracts; and
7. Issue senior securities, except to the extent that senior securities
may be deemed to arise from bank borrowings and purchases of government
securities on a "when issued" or "delayed delivery" basis, as described in this
SAI.
Furthermore, the fund has adopted the following non-fundamental restrictions
which may be changed by the Board of Trustees of the fund without shareholder
approval:
(A) The fund may not sell securities short, except short sales "against the
box";
(B) The fund may not participate on a "joint" or "joint and several" basis
in any trading account in securities; and
(C) The fund may not purchase securities of open-end or closed-end
investment companies except in compliance with the Investment Company Act of
1940, and the rules and regulations thereunder and with the next paragraph.
In addition to the above, as a fundamental policy, the fund may, notwithstanding
any other investment policy or
12
limitation (whether or not fundamental), invest all of its assets in the
securities of a single open-end management investment company with substantially
the same fundamental investment objectives, policies and limitations as such
fund (which might result in duplication of certain fees and expenses).
INVESTMENT RESTRICTIONS OF IDEX PILGRIM BAXTER MID CAP GROWTH
IDEX Pilgrim Baxter Mid Cap Growth may not, as a matter of fundamental policy:
1. With respect to 75% of the fund's total assets, purchase the securities
of any one issuer (other than government securities as defined in the 1940 Act)
if immediately after and as a result of such purchase (a) the value of the
holdings of the fund in the securities of such issuer exceeds 5% of the value of
the fund's total assets, or (b) the fund owns more than 10% of the outstanding
voting securities of any one class of securities of such issuer;
2. Borrow money except for temporary or emergency purposes (not for
leveraging or investment) in an amount exceeding 10% of the value of the fund's
total assets. This borrowing provision is included solely to facilitate the
orderly sale of fund securities to accommodate substantial redemption requests
if they should occur and is not for investment purposes. All borrowings in
excess of 5% of the fund's total assets will be repaid before making
investments;
3. Make loans, except that the fund, in accordance with its investment
objectives and policies, may purchase or hold debt securities, and enter into
repurchase agreements as described in the fund's prospectus and this SAI;
4. Purchase or sell real estate, real estate limited partnership
interests, futures contracts, commodities or commodity contracts, except that
this shall not prevent the fund from (i) investing in readily marketable
securities of issuers which can invest in real estate or commodities,
institutions that issue mortgages, or real estate investment trusts which deal
in real estate or interests therein, pursuant to the fund's investment objective
and policies, and (ii) entering into futures contracts and options thereon that
are listed on a national securities or commodities exchange where, as a result
thereof, no more than 5% of the fund's total assets (taken at market value at
the time of entering into the futures contracts) would be committed to margin
deposits on such futures contracts and premiums paid for unexpired options on
such futures contracts; provided that, in the case of an option that is
"in-the-money" at the time of purchase, the "in-the-money" amount, as defined
under the Commodities Futures Trading Commission regulations, may be excluded in
computing the 5% limit. The fund (as a matter of operating policy) will utilize
only listed futures contracts and options thereon;
5. Act as an underwriter of securities of other issuers except as it may
be deemed an underwriter in selling a fund security;
6. Issue senior securities, except as permitted by the 1940 Act; and
7. Invest more than 25% of the fund's assets in the securities of issuers
primarily engaged in the same industry. Utilities will be divided according to
their services, for example, gas, gas transmission, electric and telephone, and
each will be considered a separate industry for purposes of this restriction. In
addition, there shall be no limitation on the purchase of obligations issued or
guaranteed by the U.S. government or its agencies or instrumentalities, or of
certificates of deposit and bankers' acceptances.
Furthermore, the fund has adopted the following non-fundamental restrictions,
which may be changed by the Board of Trustees without shareholder approval:
(A) The fund may not invest in companies for the purpose of exercising
control;
(B) The fund may not pledge, mortgage or hypothecate assets, except (i) to
secure temporary borrowings as permitted by the fund's limitation on permitted
borrowings, or (ii) in connection with permitted transactions regarding options
and futures contracts;
(C) The fund may not invest more than 15% of its net assets in illiquid
securities. This does not include securities eligible for resale pursuant to
Rule 144A under the 1933 Act, or any successor to such Rule, Section 4(2)
commercial paper or any other securities as to which the Board of Trustees has
made a determination as to liquidity, as permitted under the 1940 Act; and
(D) The fund may not purchase securities of other investment companies
except as permitted by the 1940 Act and the rules and regulations thereunder.
With respect to restriction 7 above, the fund may use (with the consent of the
Investment Adviser) industry classifications reflected by Bloomberg Sub-Groups
for the communications equipment, electronic components and accessories, and the
computer and other data processing service sectors, if applicable at the time of
determination.
13
In addition to the above, as a fundamental policy, the fund may, notwithstanding
any other investment policy or limitation (whether or not fundamental), invest
all of its assets in the securities of a single open-end management investment
company with substantially the same fundamental investment objectives, policies
and limitations as such fund (which might result in duplication of certain fees
and expenses).
INVESTMENT RESTRICTIONS OF IDEX PILGRIM BAXTER TECHNOLOGY
IDEX Pilgrim Baxter Technology may not, as a matter of fundamental policy:
1. Make loans, except that each fund, in accordance with its investment
objectives and policies, may (i) purchase debt instruments, and (ii) enter into
repurchase agreements;
2. Act as an underwriter of securities of other issuers, except as it may
be deemed an underwriter under the 1933 Act in connection with the purchase and
sale of portfolio securities;
3. Purchase or sell commodities or commodity contracts, except that, in
accordance with its investment objective and policies may: (i) invest in readily
marketable securities of issuers which invest or engage in such activities; and
(ii) enter into forward contracts, futures contracts and options thereon;
4. Purchase or sell real estate, or real estate partnership interests,
except that this limitation shall not prevent the fund from investing directly
or indirectly in readily marketable securities of issuers which can invest in
real estate, institutions that issue mortgages, or real estate investment trusts
which deal with real estate or interests therein;
5. Issue senior securities, except as permitted by the 1940 Act;
6. Borrow money except for temporary or emergency purposes and then only
in an amount not exceeding 10% of the value of the fund's total assets. This
borrowing provision is intended to facilitate the orderly sale of fund
securities to accommodate substantial redemption requests if they should occur,
and is not for investment purposes. All borrowings in excess of 5% of the fund's
total assets will be repaid before making investments;
7. Invest in companies for the purpose of exercising control;
8. Pledge, mortgage or hypothecate assets, except (i) to secure temporary
borrowings permitted by the fund's limitation on permitted borrowings, or (ii)
in connection with permitted transactions regarding options and futures
contracts;
9. Make short sales of securities, maintain a short position or purchase
securities on margin, except that the fund may (i) obtain short-term credits as
necessary for the clearance of security transactions and (ii) establish margin
accounts as may be necessary in connection with the fund's use of options and
futures contracts;
10. Purchase securities of other investment companies except as permitted
by the 1940 Act and the rules and regulations thereunder; and
11. Invest in interests in oil, gas or other mineral exploration or
development programs.
The foregoing percentages will apply at the time of the purchase of a security.
Furthermore, the fund has adopted the following non-fundamental restrictions,
which may be changed by the Board of Trustees without a vote of shareholders:
The fund may not:
1. Invest in illiquid securities in an amount exceeding, in the aggregate,
15% of its net assets. This limitation does not include any Rule 144A restricted
security that has been determined by, or pursuant to procedures established by,
the Board, based on trading markets for such security, to be liquid; and
2. Purchase or sell puts, calls, straddles, spreads, and any combination
thereof, if by reason thereof, the value of its aggregate investment in such
classes of securities will exceed 5% of its total assets.
In addition to the above, as a fundamental policy, the fund may, notwithstanding
any other investment policy or limitation (whether or not fundamental), invest
all of its assets in the securities of a single open-end management investment
company with substantially the same fundamental investment objectives, policies
and limitations as such fund (which might result in duplication of certain fees
and expenses).
INVESTMENT RESTRICTIONS OF IDEX TRANSAMERICA SMALL COMPANY AND IDEX TRANSAMERICA
EQUITY
Each fund may not, as a matter of fundamental policy;
1. With respect to 75% of the fund's total assets, purchase the securities
of any one issuer (other than government securities as defined in the 1940 Act)
if
14
immediately after and as a result of such purchase (a) the value of the holdings
of the fund in the securities of such issuer exceed 5% of the fund's total
assets, or (b) the fund owns more than 10% of the outstanding voting securities
of any one class of securities of such issuer. All securities of a foreign
government and its agencies will be treated as a single issuer for purposes of
this restriction;
2. Borrow from banks for temporary or emergency (not leveraging)
purposes, including the meeting of redemption requests and cash payments of
dividends and distributions that might otherwise require the untimely
disposition of securities, in an amount not to exceed 33.33% of the value of the
fund's total assets (including the amount borrowed) valued at market less
liabilities (not including the amount borrowed) at the time the borrowing is
made. Whenever outstanding borrowings, not included reverse repurchase
agreements, represent 5% or more of the fund's total assets, the fund will not
make any additional investments;
3. Lend its assets or money to other persons, except through (a)
purchasing debt obligations, (b) lending securities in an amount not to exceed
33.33% of the fund's assets taken at market value, (c) entering into repurchase
agreements (d) trading in financial futures contracts, index futures contracts,
securities indexes and options on financial futures contracts, options on index
futures contracts, options on securities and options on securities indexes and
(e) entering into variable rate demand notes;
4. Purchase securities (other than U.S. government securities) of any
issuer if, as a result of the purchase, more than 5% of the fund's total assets
would be invested in the securities of the issuer, except that up to 25% of the
value of the total assets of the fund may be invested without regard to this
limitation. All securities of a foreign government and its agencies will be
treated as a single issuer for purposes of this restriction;
5. Purchase more than 10% of the voting securities of any one issuer, or
more than 10% of the outstanding securities of any class of issuer, except that
(a) this limitation is not applicable to the fund's investments in government
securities and (b) up to 25% of the value of the assets of the fund may be
invested without regard to these 10% limitations. All securities of a foreign
government and its agencies will be treated as single issuer for purposes of
this restriction. These limitations are subject to any further limitations under
the 1940 Act:
6. Invest more than 25% of the value of its total assets in securities
issued by companies engaged in any one industry, including non-domestic banks or
any foreign government. This limitation does not apply to securities issued or
guaranteed by the United States government, its agencies or instrumentalities;
7. Underwrite any issue of securities, except to the extent that the sale
of securities in accordance with the fund's investment objective, policies and
limitations may be deemed to be an underwriting, and except that the fund may
acquire securities under circumstances in which, if the securities were sold,
the fund might be deemed to be an underwriter for purposes of the 1933 Act;
8. Purchase or sell real estate or real estate limited partnership
interests, or invest in oil, gas or mineral leases, or mineral exploration or
development programs, except that the fund may (a) invest in securities secured
by real estate, mortgages or interests in real estate or mortgages, (b) purchase
securities issued by companies that invest or deal in real estate, mortgages or
interests in real estate or mortgages, (c) engage in the purchase and sale of
real estate as necessary to provide it with an office for the transaction of
business or (d) acquire real estate or interests in real estate securing an
issuer's obligations, in the event of a default by that issuer;
9. Make short sales of securities or maintain a short position unless, at
all times when a short position is open, the fund owns an equal amount of the
securities or securities convertible into or exchangeable for, without payment
of any further consideration, securities of the same issue as, and equal in
amount to, the securities sold short;
10. Purchase securities on margin, except that the fund may obtain any
short-term credits necessary for the clearance of purchases and sales of
securities. For purposes of this restriction, the deposit or payment of initial
or variation margin in connection with futures contracts, financial futures
contracts or related options, and options on securities, and options on
securities indexed will not be deemed to be a purchase of securities on margin
by the fund;
11. Invest in commodities, except that the fund may invest in futures
contracts (including financial futures contracts or securities index futures
contracts) and related options and other similar contracts as described in this
Statement of Additional Information and in the prospectus;
12. Issue senior securities, except to the extent that senior securities
may be deemed to arise from bank borrowings and purchases of government
securities on a "when-issued" or "delayed delivery" basis, as described in the
prospectus.
15
Furthermore, the funds have adopted the following non-fundamental investment
restrictions, which may be changed by the Board of Trustees without
shareholder approval:
(A) A fund may not purchase securities of other investment companies,
other than a security acquired in connection with a merger, consolidation,
acquisition, reorganization or offer of exchange and except as permitted under
the 1940 Act, if as a result of the purchase: (a) more than 10% of the value of
the fund's total assets would be invested in the securities of investment
companies; (b) more than 5% of the value of the fund's total assets would be
invested in the securities of any one investment company; or (c) the fund would
own more than 3% of the total outstanding voting securities of any investment
company; and
(B) A fund may not invest in companies for the purposes of exercising
control or management.
In addition to the above, as a fundamental policy, a fund may, notwithstanding
any other investment policy or limitation (whether or not fundamental), invest
all of its assets in the securities of a single open-end management investment
company with substantially the same fundamental investment objectives, policies
and limitations as such fund (which might result in duplication of certain fees
and expenses).
INVESTMENT RESTRICTIONS OF IDEX T. ROWE PRICE SMALL CAP AND IDEX T. ROWE PRICE
DIVIDEND GROWTH
IDEX T. Rowe Price Small Cap and IDEX T. Rowe Price Dividend Growth each may
not, as a matter of fundamental policy:
1. With respect to 75% of the fund's total assets, purchase the
securities of any one issuer (other than government securities as defined in the
1940 Act) if immediately after and as a result of such purchase (a) the value of
the holdings of the fund in the securities of such issuer exceeds 5% of the
value of the fund's total assets, or (b) the fund owns more than 10% of the
outstanding voting securities of any one class of securities of such issuer;
2. Borrow money except for temporary or emergency purposes (not for
leveraging or investment) in an amount exceeding 33 1/3 of the value of the
fund's total assets (including amount borrowed) less liabilities (other than
borrowings). Any borrowings that exceed 33 1/3 of the value of the fund's total
assets by reason of a decline in net assets will be reduced within three
business days to the extent necessary to comply with the 33 1/3 limitation. This
policy shall not prohibit reverse repurchase agreements or deposits of assets to
margin or guarantee positions in futures, options, swaps or forward contracts,
or the segregation of assets in connection with such contracts;
3. Purchase or sell physical commodities ( but this shall not prevent the
fund from entering into future contracts and options thereon);
4. Invest more than 25% of the fund's total assets in the securities of
issuers primarily engaged in the same industry. Utilities will be divided
according to their services; for example, gas, gas transmission, electric and
telephone, and each will be considered a separate industry for purposes of this
restriction, provided that there shall be no limitation on the purchase of
obligations issued or guaranteed by the U.S. government or its agencies or
instrumentalities, or of certificates of deposit;
5. Make loans, although the funds may lend fund securities provided that
the aggregate of such loans do not exceed 33 1/3 of the value of the fund's
total assets. The fund may purchase money market securities, enter into
repurchase agreements and acquire publicly distributed or privately placed debt
securities, and purchase debt;
6. Purchase or sell real estate (but this shall not prevent the fund from
investing in securities or other instruments backed by real estate, including
mortgage-backed securities, or securities of companies engaged in the real
estate business);
7. Issue senior securities, except as permitted by the 1940 Act; and
8. Underwrite securities issued by other persons, except to the extent
that the fund may be deemed to be an underwriter within the meaning of the 1933
Act in connection with the purchase and sale of its fund securities in the
ordinary course of pursuing its investment objective.
Furthermore, the funds have adopted the following non-fundamental
restrictions which may be changed by the Board of Trustees of the funds without
shareholder approval:
(A) A fund may not purchase additional securities when money borrowed
exceeds 5% of its total assets. This restriction shall not apply to temporary
borrowings until the fund's net assets exceed $40,000,000;
16
(B) A fund may not purchase a futures contract or an option thereon, if,
with respect to positions in futures or options on futures which do not
represent bona fide hedging, the aggregate initial margin and premiums on such
options would exceed 5% of the fund's net asset value;
(C) A fund may not invest more than 15% of its net assets in illiquid
securities. This does not include securities eligible for resale pursuant to
Rule 144A under the 1933 Act or any other securities as to which a determination
as to liquidity has been made pursuant to guidelines adopted by the Board of
Trustees, as permitted under the 1940 Act;
(D) A fund may not invest in companies for the purpose of exercising
control or management;
(E) A fund may not purchase securities of open-end or closed-end investment
companies except (i) in compliance with the 1940 Act; or (ii) securities of the
T. Rowe Price Reserve Investment or Government Reserve Investment Funds;
(F) A fund may not purchase securities on margin, except (i) for use of
short-term credit necessary for clearance of purchases of fund securities; and
(ii) it may make margin deposits in connection with futures contracts or other
permissible investments;
(G) A fund may not mortgage, pledge, hypothecate or, in any manner,
transfer any security owned by the fund as security for indebtedness except as
may be necessary in connection with permissible borrowings or investments and
then such mortgaging, pledging or hypothecating may not exceed 33 1/3 of the
fund's total assets at the time of borrowing or investment; and
(H) A fund may not sell securities short, except short sales "against the
box."
In addition to the above, as a fundamental policy, a fund may, notwithstanding
any other investment policy or limitation (whether or not fundamental), invest
all of its assets in the securities of a single open-end management investment
company with substantially the same fundamental investment objectives, policies
and limitations as such fund (which might result in duplication of certain fees
and expenses).
INVESTMENT RESTRICTIONS OF IDEX AMERICAN CENTURY INTERNATIONAL
IDEX American Century International may not, as a matter of fundamental policy:
1. With respect to 75% of the fund's total assets, purchase the securities
of any one issuer (other than government securities as defined in the 1940 Act)
if immediately after and as a result of such purchase (a) the value of the
holdings of the fund in the securities of such issuer exceeds 5% of the value of
the fund's total assets, or (b), the fund owns more than 10% of the outstanding
voting securities of any one class of securities of such issuer;
2. Borrow money except for temporary or emergency purposes (not for
leveraging or investment) in an amount exceeding 33 1/3% of the value of the
fund's total assets (including amount borrowed) less liabilities (other than
borrowings). Any borrowings that exceed 33 1/3% of the value of the fund's total
assets by reason of a decline in net assets will be reduced within three
business days to the extent necessary to comply with the 33 1/3% limitation.
This policy shall not prohibit reverse repurchase agreements or deposits of
assets to margin or guarantee positions in futures, options, swaps or forward
contracts, or the segregation of assets in connection with such contracts;
3. Lend any security or make any other loan if, as a result, more than
33 1/3% of the fund's total assets would be lent to other parties, except (i)
through the purchase of debt securities in accordance with its investment
objective, policies and limitations or (ii) by engaging in repurchase agreements
with respect to portfolio securities;
4. Purchase or sell real estate (but this shall not prevent the fund from
investing in securities or other instruments backed by real estate, including
mortgage-backed securities, or securities of companies engaged in the real
estate business);
5. Invest 25% or more of the fund's assets in the securities of issuers
primarily engaged in the same industry, provided that there shall be no
limitation on the purchase of obligations issued or guaranteed by the U.S.
Government or its agencies or instrumentalities;
6. Act as an underwriter of securities issued by others, except to the
extent that it may be deemed an underwriter in connection with the disposition
of its portfolio securities;
7. Purchase or sell physical commodities unless acquired as a result of
ownership of securities or other instruments provided this limitation shall not
prohibit the fund from purchasing or selling options and futures contracts or
investing in securities or other instruments backed by physical commodities; and
17
8. The fund may not issue senior securities, except to the extent that
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senior securities may be deemed to arise from bank borrowings and purchases of
- ------------------------------------------------------------------------------
government securities on a "when-issued" or "delayed delivery" basis.
- --------------------------------------------------------------------
Furthermore, the fund has adopted the following non-fundamental restrictions
that may be changed by the Board of Trustees of the fund without shareholder
approval:
(A) The fund may not purchase additional investment securities at any time
during which outstanding borrowings exceed 5% of the total assets of the fund;
(B) The fund may not purchase any security or enter into a repurchase
agreement if, as a result, more than 15% of its net assets would be invested in
illiquid securities. Illiquid securities include repurchase agreements not
entitling the holder to payment of principal and interest within seven days, and
securities that are illiquid by virtue of legal or contractual restrictions on
resale or the absence of a readily available market;
(C) The fund may not sell securities short, except short sales "against the
box";
(D) The fund may not purchase securities on margin, except to obtain such
short-term credits as are necessary for the clearance of transactions, and
provided that margin payments in connection with futures contracts and options
on futures contracts shall not constitute purchasing securities on margin;
(E) The fund may enter into futures contracts and write and buy put and
call options relating to futures contracts. The fund may not, however, enter
into leveraged futures transactions if it would be possible for the fund to lose
more money than it invested; and
(F) The fund may invest a portion of its assets in the securities of
issuers with limited operating histories. An issuer is considered to have a
limited operating history if that issuer has a record of less than three years
of continuous operation. Periods of capital formation, incubation,
consolidations, and research and development may be considered in determining
whether a particular issuer has a record of three years of continuous operation.
(G) Invest for purposes of exercising control.
In addition to the above, as a fundamental policy, the fund may, notwithstanding
any other investment policy or limitation (whether or not fundamental), invest
all of its assets in the securities of a single open-end management investment
company with substantially the same fundamental investment objectives, policies
and limitations as such fund (which might result in duplication of certain fees
and expenses).
INVESTMENT RESTRICTIONS OF IDEX GABELLI GLOBAL GROWTH
IDEX Gabelli Global Growth may not, as a matter of fundamental policy:
1. With respect to 75% of the fund's total assets, purchase the securities
of any one issuer (other than cash items and "Government Securities" as defined
in the 1940 Act) if immediately after and as a result of such purchase (a) the
value of the holdings of the fund in the securities of such issuer exceeds 5% of
the value of the fund's total assets, or (b), the fund owns more than 10% of the
outstanding voting securities of any one class of securities of such issuer;
2. Issue senior securities, except to the extent that senior securities may
be deemed to arise from bank borrowings and purchases of government securities
on a "when-issued" or "delayed delivery" basis, as described in the prospectus;
3. Borrow money except (a) the portfolio may borrow from banks (as defined
in the 1940 Act) or through reverse repurchase agreements, (b) the portfolio
may, to the extent permitted by applicable law, borrow up to an additional 5% of
its total assets for temporary purposes (not for leveraging or borrowing), (c)
or pledge its assets other than to secure such issuances or in connection with
hedging transactions, short-sales, when-issued and forward commitment
transactions and similar investment strategies;
4. Make loans except (i) by purchasing fixed-income securities and or by
entering into repurchase agreements or (ii) by lending the portfolio securities
to banks, brokers, dealers and other financial institutions so long as such
loans are not inconsistent with the 1940 Act or the rules and regulations or
interpretations of the SEC thereunder;
5. Act as underwriter of securities issued by others, except to the extent
that it may be deemed an underwriter in connection with the disposition of its
portfolio securities;
6. Invest in companies for the purpose of exercising control or management;
7. Invest directly in real estate or interests in real estate, including
limited partnership interests; however
18
the portfolio may own debt or equity securities issued by companies engaged in
those businesses;
8. Purchase or sell physical commodities unless acquired as a result of
ownership of securities or other instruments;
9. Invest 25% or more of the fund's assets in the securities of issuers
primarily engaged in the same industry. Utilities will be divided according to
their services; for example, gas, gas transmission, electric and telephone, and
each will be considered a separate industry for purposes of this restriction,
provided that there shall be no limitation on the purchase of obligations issued
or guaranteed by the U.S. Government or its agencies or instrumentalities, or of
certificates of deposit and bankers' acceptances.
Furthermore, the fund has adopted the following non-fundamental investment
restrictions, which may be changed by the Board of Trustees of the Fund without
shareholder or policyowner approval:
(A) The fund may not invest more than 15% of its net assets in illiquid
securities. This does not include securities eligible for resale pursuant to
Rule 144A under the 1933 or any other securities as to which a determination as
to liquidity has been made pursuant to guidelines adopted by the Board of
Trustees as permitted under the 1940 Act;
(B) The fund may not mortgage, pledge or hypothecate any of its assets,
provided that this shall not apply to the transfer of securities in connection
with any permissible borrowing or to collateral arrangements in connection with
permissible activities; and
(C) The fund may not purchase securities on margin, provided that the fund
may obtain short-term credits necessary for the clearance of purchases and sales
of securities, and further provided that the fund may make margin deposits in
connection with its use of financial futures, forward contracts, or derivative
instruments.
In addition to the above, as a fundamental policy, the fund may, notwithstanding
any other investment policy or limitation (whether or not fundamental), invest
all of its assets in the securities of a single open-end management investment
company with substantially the same fundamental investment objectives, policies
and limitations as such fund (which might result in duplication of certain fees
and expenses).
INVESTMENT RESTRICTIONS OF IDEX GE INTERNATIONAL EQUITY
IDEX GE International Equity may not, as a matter of fundamental policy:
1. With respect to 75% of the fund's total assets, purchase the securities
of any one issuer (other than government securities as defined in the 1940 Act)
if immediately after and as a result of such purchase (a) the value of the
holdings of the fund in the securities of such issuer exceeds 5% of the value of
the fund's total assets, or (b) the fund owns more than 10% of the outstanding
voting securities of any one class of securities of such issuer. All securities
of a foreign government and its agencies will be treated as a single issuer for
purposes of this restriction;
2. Invest 25% or more of the value of the fund's total assets in any
particular industry (other than U.S. government securities). For purposes of
this restriction, the term industry shall include (a) the government of any one
country other than the U.S., but not the U.S. government and (b) all
supranational organizations;
3. Purchase or sell physical commodities other than foreign currencies
unless acquired as a result of ownership of securities (but this restriction
shall not prevent the fund from purchasing or selling options, futures
contracts, caps, floors and other derivative instruments, engaging in swap
transactions or investing in securities or other instruments backed by physical
commodities);
4. Invest directly in real estate or interests in real estate, including
limited partnership interests; however, the fund may own securities or other
instruments backed by real estate, including mortgage-backed securities, or debt
or equity securities issued by companies engaged in those businesses;
5. Act as an underwriter of securities issued by others, except to the
extent that it may be deemed an underwriter in connection with the disposition
of portfolio securities of the fund;
6. Lend any security or make any other loan if, as a result, more than 30%
of its total assets would be lent to other parties (but this limitation does not
apply to purchases of commercial paper, debt securities or to repurchase
agreements);
7. The fund may borrow money only for temporary or emergency purposes (not
for leveraging or investment) in an amount not exceeding 33 1/3 of the value of
the fund's total assets (including the amount borrowed) less liabilities (other
than borrowings). Any borrowings that exceed 33 1/3 of the value of the fund's
total assets by reason of a decline in net assets will be reduced within three
business days to the extent necessary to comply with the 33 1/3 limitation. This
policy shall not prohibit reverse repurchase agreements or deposits of assets to
provide margin or guarantee positions in connection with transactions in
options, futures contracts,
19
swaps, forward contracts, or other derivative instruments or the segregation of
assets in connection with such transactions; and
8. Issue senior securities, except as permitted by the 1940 Act.
Furthermore, the fund has adopted the following non-fundamental investment
restrictions which may be changed by the Board of Trustees without shareholder
approval:
(A) The fund may not, as a matter of non-fundamental policy (i) enter into
any futures contracts or options on futures contracts for purposes other than
bona fide hedging transactions within the meaning of Commodity Futures Trading
Commission regulations if the aggregate initial margin deposits and premiums
required to establish positions in futures contracts and related options that do
not fall within the definition of bona fide hedging transactions would exceed 5%
of the fair market value of the fund's net assets, after taking into account
unrealized profits and losses on such contracts it has entered into and (ii)
enter into any futures contracts or options on futures contracts if the
aggregate amount of the fund's commitments under outstanding futures contracts
positions and options on futures contracts would exceed the market value of its
total assets;
(B) The fund may not mortgage or pledge any securities owned or held by the
fund in amounts that exceed, in the aggregate, 15% of the fund's net assets,
provided that this limitation does not apply to reverse repurchase agreements or
in the case of assets deposited to provide margin or guarantee positions in
options, futures contracts, swaps, forward contracts or other derivative
instruments or the segregation of assets in connection with such transactions;
(C) The fund may not sell securities short, unless it owns or has the right
to obtain securities equivalent in kind and amount to the securities sold short,
and provided that transactions in options, futures contracts, swaps, forward
contracts and other derivative instruments are not deemed to constitute selling
securities short;
(D) The fund may not purchase securities on margin, except that the fund
may obtain such short-term credits as are necessary for the clearance of
transactions, and provided that margin payments and other deposits made in
connection with transactions in options, futures contracts, swaps, forward
contracts, and other derivative instruments shall not be deemed to constitute
purchasing securities on margin;
(E) The fund may not invest more than 15% of its net assets in illiquid
securities. This does not include securities eligible for resale pursuant to
Rule 144A under the 1933 Act, or any successor to such Rule, Section 4(2)
commercial paper or other securities for which the Board of Trustees has made a
determination of liquidity, as permitted under the 1940 Act;
(F) The fund may not (i) purchase securities of other investment companies,
except in the open market where no commission except the ordinary broker's
commission is paid, or (ii) purchase or retain securities issued by other
open-end investment companies. Limitations (i) and (ii) do not apply to money
market funds or to securities received as dividends, through offers of exchange,
or as a result of consolidation, merger or other reorganization. The fund may
also invest in the GEI Short-Term Investment Fund, an investment fund advised by
GE Asset Management Incorporated ("GEAM"), created specifically to serve as a
vehicle for the collective investment of cash balances of the fund and other
accounts advised by GEAM or General Electric Investment Corporation. Investments
in GEI Short-Term Investment Fund are not considered investments in another
investment company for the purposes of this restriction;
(G) The fund may not invest directly in oil, gas or other mineral
development or exploration programs or leases; however, the fund may own debt or
equity securities of companies engaged in those businesses; and
(H) The fund may not invest in companies for the purpose of exercising
control or management.
With respect to investment restriction No. 2 above, the fund may use the
industry classifications reflected by the S&P 500 Composite Stock Index, if
applicable at the time of determination. For all other fund holdings the fund
may use the Directory of Companies Required to File Annual Reports with the SEC
and Bloomberg, Inc. In addition, the fund may select its own industry
classifications, provided such classifications are reasonable.
In addition to the above, as a fundamental policy, the fund may, notwithstanding
any other investment policy or limitation (whether or not fundamental), invest
all of its assets in the securities of a single open-end management investment
company with substantially the same fundamental investment objectives, policies
and limitations as such fund (which might result in duplication of certain fees
and expenses).
20
INVESTMENT RESTRICTIONS OF IDEX GREAT COMPANIES -- GLOBAL/2/
IDEX Great Companies -- Global/2/ may not, as a matter of fundamental policy:
1. With respect to 75% of the fund's total assets, purchase the securities
of any one issuer (other than government securities as defined in the 1940 Act),
if immediately after and as a result of such purchase: (a) the value of the
holdings of the fund in the securities of such issuer exceeds 5% of the value of
the fund's total assets; or (b) the fund owns more than 10% of the outstanding
voting securities of any one class of securities of such issuer;
2. Invest 25% or more of the fund's assets in the securities of issuers
primarily engaged in the same industry. Utilities will be divided according to
their services; for example, gas, gas transmission, electric and telephone, and
each will be considered a separate industry for purposes of this restriction,
provided that there shall be no limitation on the purchase of obligations issued
or guaranteed by the U.S. Government or its agencies or instrumentalities, or of
certificates of deposit and bankers' acceptances;
3. Purchase or sell physical commodities other than foreign currencies
unless acquired as a result of ownership of securities (but this shall not
prevent the fund from purchasing or selling options, futures, swaps and forward
contracts or from investing in securities or other instruments backed by
physical commodities);
4. Invest directly in real estate or interests in real estate; however,
the fund may own debt or equity securities issued by companies engaged in those
businesses;
5. Lend any security or make any other loan if, as a result, more than 25%
of its total assets would be lent to other parties (but this limitation does not
apply to purchases of commercial paper, debt securities or to repurchase
agreements);
6. Act as an underwriter of securities issued by others, except to the
extent that it may be deemed an underwriter in connection with the disposition
of its fund securities;
7. Borrow money, except for temporary or emergency purposes (not for
leveraging or investment) in an amount exceeding 25% of the value of the fund's
total assets (including the amount borrowed) less liabilities (other than
borrowings). Any borrowings that exceed 25% of the value of the fund's total
assets by reason of a decline in net assets will be reduced within three
business days to the extent necessary to comply with the 25% limitation. This
policy shall not prohibit reverse repurchase agreements or deposits of assets to
margin or guarantee positions in futures, options, swaps or forward contracts,
or the segregation of assets in connection with such contracts; and
8. Issue senior securities, except to the extent that senior securities may
be deemed to arise from bank borrowings and purchases of government securities
on a "when-issued" or "delayed delivery" basis, as described in the prospectus.
Furthermore, the fund has adopted the following non-fundamental investment
restrictions, which may be changed by the Board of Trustees of the Fund without
shareholder or policyowner approval:
(A) The fund may not (i) enter into any futures contracts or options on
futures contracts for purposes other than bona fide hedging transactions within
the meaning of Commodity Futures Trading Commission regulations if the aggregate
initial margin deposits and premiums required to establish positions in futures
contracts and related options that do not fall within the definition of bona
fide hedging transactions would exceed 5% of the fair market value of the fund's
net assets, after taking into account unrealized profits and losses on such
contracts it has entered into and (ii) enter into any futures contracts or
options on futures contracts if the aggregate amount of the fund's commitments
under outstanding futures contracts positions and options on futures contracts
would exceed the market value of its total assets;
(B) The fund may not sell securities short, unless it owns or has the right
to obtain securities equivalent in kind and amount to the securities sold short
and provided that transactions in options, swaps and forward futures contracts
are not deemed to constitute selling securities short;
(C) The fund may not purchase securities on margin, except that the fund
may obtain such short-term credits as are necessary for the clearance of
transactions, provided that margin payments and other deposits in connection
with transactions in options, futures, swaps and forward contracts shall not be
deemed to constitute purchasing securities on margin; and
(D) The fund may not (i) purchase securities of other investment companies,
except in the open market where no commission except the ordinary broker's
commission is paid, or (ii) purchase or retain securities issued by other
open-end investment companies. (Limitations (i) and (ii) do no apply to money
market funds or
21
to securities received as dividends, through offers of exchange, or as a result
of a consolidation, merger or other reorganization);
(E) The fund may not mortgage or pledge any securities owned or held by the
fund in amounts that exceed, in the aggregate, 15% of the fund's net assets,
provided that this limitation does not apply to reverse repurchase agreements or
in the case of assets deposited to margin or guarantee positions in futures,
options, swaps or forward contracts or the segregation of assets in connection
with such contracts;
(F) The fund may not invest more than 15% of its net assets in illiquid
securities. This does not include securities eligible for resale pursuant to
Rule 144A under the Securities Act of 1933 or any other securities as to which
the Board of Directors has made a determination as to liquidity, as permitted
under the 1940 Act; and
(G) The fund may not invest in companies for the purpose of exercising
control or management. In addition to the above, as a fundamental policy, the
fund may, notwithstanding any other investment policy or limitation (whether or
not fundamental), invest all of its assets in the securities of a single
open-end management investment company with substantially the same fundamental
investment objectves, policies and limitations as such fund (which might result
in duplication of certain fees and expenses).
In addition to the above, as a fundamental policy, the fund may, notwithstanding
any other investment policy or limitation (whether or not fundamental), invest
all of its assets in the securities of a single open-end management investment
company with substantially the same fundamental investment objectives, policies
and limitations as such fund (which might result in duplication of certain fees
and expenses).
INVESTMENT RESTRICTIONS OF IDEX JANUS GLOBAL
(This fund is closed to new investors effective September 1, 2000.)
IDEX Janus Global may not, as a matter of fundamental policy:
1. Own more than 10% of the outstanding voting securities of any one
issuer and, as to seventy-five percent (75%) of the value of its total assets,
purchase the securities of any one issuer (except cash items and "government
securities" as defined under the 1940 Act), if immediately after and as a result
of such purchase, (a) the value of the holdings of the fund in the securities of
such issuer exceeds 5% of the value of the fund's total assets;
2. Invest more than 25% of the value of its assets in any particular
industry (other than government securities);
3. Invest directly in real estate or interests in real estate; however,
the fund may own debt or equity securities issued by companies engaged in those
businesses;
4. Purchase or sell physical commodities other than foreign currencies
unless acquired as a result of ownership of securities (but this shall not
prevent the fund from purchasing or selling options, futures, swaps and forward
contracts or from investing in securities or other instruments backed by
physical commodities);
5. Lend any security or make any other loan if, as a result, more than 25%
of its total assets would be lent to other parties (but this limitation does not
apply to purchases of commercial paper, debt securities or to repurchase
agreements);
6. Act as an underwriter of securities issued by others, except to the
extent that it may be deemed an underwriter in connection with the disposition
of its portfolio securities;
7. The fund may borrow money only for temporary or emergency purposes
(not for leveraging or investment) in an amount not exceeding 25% of the value
of the fund's total assets (including the amount borrowed) less liabilities
(other than borrowings). Any borrowings that exceed 25% of the value of the
fund's total assets by reason of a decline in net assets will be reduced within
three business days to the extent necessary to comply with the 25% limitation.
This policy shall not prohibit reverse repurchase agreements or deposits of
assets to margin or guarantee positions in futures, options, swaps or forward
contracts, or the segregation of assets in connection with such contracts; and
8. Issue senior securities, except as permitted by the 1940 Act.
Furthermore, the fund has adopted the following non-fundamental investment
restrictions which may be changed by the Board of Trustees without shareholder
approval:
(A) The fund may not (i) enter into any futures contracts or options on
futures contracts for purposes other than bona fide hedging transactions within
the meaning of Commodity Futures Trading Commission regulations if the aggregate
initial margin deposits and premiums required to establish positions in futures
contracts and related options that do not fall within the definition of
22
bona fide hedging transactions would exceed 5% of the fair market value of the
fund's net assets, after taking into account unrealized profits and losses on
such contracts it has entered into; and (ii) enter into any futures contracts or
options on futures contracts if the aggregate amount of the fund's commitments
under outstanding futures contracts positions and options on futures contracts
would exceed the market value of its total assets;
(B) The fund may not sell securities short, unless it owns or has the
right, without the payment of any additional compensation, to obtain securities
equivalent in kind and amount to the securities sold short, and provided that
transactions in options, swaps and forward futures contracts are not deemed to
constitute selling securities short;
(C) The fund may not purchase securities on margin, except that the fund
may obtain such short-term credits as are necessary for the clearance of
transactions, and provided that margin payments and other deposits in connection
with transactions in options, futures, swaps and forward contracts shall not be
deemed to constitute purchasing securities on margin;
(D) The fund may not (i) purchase securities of other investment
companies, except in the open market where no commission except the ordinary
broker's commission is paid, or (ii) purchase or retain securities issued by
other open-end investment companies. Limitations (i) and (ii) do not apply to
money market funds or to securities received as dividends, through offers of
exchange, or as a result of a consolidation, merger or other reorganization;
(E) The fund may not mortgage or pledge any securities owned or held by
the fund in amounts that exceed, in the aggregate, 15% of the fund's net assets,
provided that this limitation does not apply to reverse repurchase agreements or
in the case of assets deposited to provide margin or guarantee positions in
options, futures contracts, swaps, forward contracts or other derivative
instruments or the segregation of assets in connection with such transactions;
(F) The fund may not invest directly in oil, gas or other mineral
development or exploration programs or leases; however, the fund may own debt or
equity securities of companies engaged in those businesses;
(G) The fund may not invest more than 15% of its net assets in illiquid
securities. This does not include securities eligible for resale pursuant to
Rule 144A under the 1933 Act, or any successor to such Rule, Section 4(2)
commercial paper or any other securities as to which the Board of Trustees have
made a determination as to liquidity, as permitted under the 1940 Act; and
(H) The fund may not invest in companies for the purpose of exercising
control or management.
In addition to the above, as a fundamental policy, the fund may, notwithstanding
any other investment policy or limitation (whether or not fundamental), invest
all of its assets in the securities of a single open-end management investment
company with substantially the same fundamental investment objectives, policies
and limitations as such fund (which might result in duplication of certain fees
and expenses).
INVESTMENT RESTRICTIONS OF IDEX AMERICAN CENTURY INCOME & GROWTH
IDEX American Century Income & Growth fund may not, as a matter of fundamental
policy:
1. With respect to 75% of the fund's total assets, purchase the securities
of any one issuer (other than government securities as defined in the 1940 Act)
if immediately after and as a result of such purchase (a) the value of the
holdings of the fund in the securities of such issuer exceeds 5% of the value of
the fund's total assets, or (b), the fund owns more than 10% of the outstanding
voting securities of any one class of securities of such issuer;
2. Borrow money except for temporary or emergency purposes (not for
leveraging or investment) in an amount exceeding 331/3% of the value of the
fund's total assets (including amount borrowed) less liabilities (other than
borrowings). Any borrowings that exceed 331/3% of the value of the fund's total
assets by reason of a decline in net assets will be reduced within three
business days to the extent necessary to comply with the 331/3% limitation. This
policy shall not prohibit reverse repurchase agreements or deposits of assets to
margin account to guarantee positions in futures, options, swaps or forward
contracts, or the segregation of assets in connection with such contracts;
3. Lend any security or make any other loan if, as a result, more than
33 1/3% of the fund's total assets would be lent to other parties, except (i)
through the purchase of debt securities in accordance with its investment
objective, policies and limitations or (ii) by engaging in repurchase agreements
with respect to portfolio securities;
4. Purchase or sell real estate (but this shall not prevent the fund from
investing in securities or other instruments backed by real estate, including
mortgage-backed securities, or securities of companies engaged in the real
estate business);
5. Invest 25% or more of the fund's assets in the securities of issuers
primarily engaged in the same
23
industry, provided that there shall be no limitation on the purchase of
obligations issued or guaranteed by the U.S. Government or its agencies or
instrumentalities;
6. Act as an underwriter of securities issued by others, except to the
extent that it may be deemed an underwriter in connection with the disposition
of its fund securities;
7. Purchase or sell physical commodities unless acquired as a result of
ownership of securities or other instruments provided this limitation shall not
prohibit the fund from purchasing or selling options and futures contracts or
investing in securities or other instruments backed by physical commodities; and
8. Issue senior securities, except to the extent that senior securities
may be deemed to arise from bank borrowings and purchases of government
securities on a "when-issued" or "delayed delivery" basis.
Furthermore, the fund has adopted the following non-fundamental restrictions
that may be changed by the Board of Trustees of the fund without shareholder
approval:
(A) The fund may not purchase additional investment securities at any time
during which outstanding borrowings exceed 5% of the total assets of the fund;
(B) The fund may not purchase any security or enter into a repurchase
agreement if, as a result, more than 15% of its net assets would be invested in
illiquid securities. Illiquid securities include repurchase agreements not
entitling the holder to payment of principal and interest within seven days, and
securities that are illiquid by virtue of legal or contractual restrictions on
resale or the absence of a readily available market;
(C) The fund may not sell securities short, except short sales "against the
box"; and
(D) The fund may not purchase securities on margin, except to obtain such
short-term credits as are necessary for the clearance of transactions, and
provided that margin payments in connection with futures contracts and options
on futures contracts shall not constitute purchasing securities on margin.
(E) Invest for purposes of exercising control.
In addition to the above, as a fundamental policy, the fund may, notwithstanding
any other investment policy or limitation (whether or not fundamental), invest
all of its assets in the securities of a single open-end management investment
company with substantially the same fundamental investment objectives, policies
and limitations as such fund (which might result in duplication of certain fees
and expenses).
INVESTMENT RESTRICTIONS OF IDEX GE U.S. EQUITY
IDEX GE U.S. Equity may not, as a matter of fundamental policy:
1. Borrow money, except that a fund may enter into reverse repurchase
agreements and may borrow from banks for temporary or emergency (not leveraging)
purposes, including the meeting of redemption requests and cash payments of
dividends and distributions that might otherwise require the untimely
disposition of securities, in an amount not to exceed 331/3% of the value of the
fund's total assets (including the amount borrowed) valued at market less
liabilities (not including the amount borrowed) at the time the borrowing is
made. Whenever borrowings, including reverse repurchase agreements, of 5% or
more of a fund's total assets are outstanding, the fund will not make any
additional investments;
2. Lend its assets or money to other persons, except through (a)
purchasing debt obligations, (b) lending portfolio securities in an amount not
to exceed 30% of the fund's total assets taken at market value, (c) entering
into repurchase agreements, (d) trading in financial futures contracts, index
futures contracts, securities indexes and options on financial futures
contracts, options on index futures contracts, options on securities and options
on securities indexes and (e) entering into variable rate demand notes;
3. Purchase securities (other than Government Securities) of any issuer
if, as a result of the purchase, more than 5% of the fund's total assets would
be invested in the securities of the issuer, except that up to 25% of the value
of the total assets of the fund may be invested without regard to this
limitation. All securities of a foreign government and its agencies will be
treated as a single issuer for purposes of this restriction;
4. Purchase more than 10% of the voting securities of any one issuer, or
more than 10% of the outstanding securities of any class of issuer, except that
(a) this limitation is not applicable to a fund's investments in Government
Securities and (b) up to 25% of the value of the assets of the fund may be
invested without regard to these 10% limitations. All securities of a foreign
government and its agencies will be treated as a single issuer for purposes of
this restriction;
5. Invest more than 25% of the value of its total assets in securities of
issuers in any one industry. For purposes of this restriction, the term industry
will be
24
deemed to include (a) the government of any one country other than the United
States, but not the U.S. Government and (b) all supra-national organizations;
6. Underwrite any issue of securities, except to the extent that the sale
of portfolio securities in accordance with the fund's investment objective,
policies and limitations may be deemed to be an underwriting, and except that
the fund may acquire securities under circumstances in which, if the securities
were sold, the fund might be deemed to be an underwriter for purposes of the
Securities Act of 1933, as amended;
7. Purchase or sell real estate or real estate limited partnership
interests, or invest in oil, gas or mineral leases, or mineral exploration or
development programs, except that a fund may (a) invest in securities secured by
real estate, mortgages or interests in real estate or mortgages, (b) purchase
securities issued by companies that invest or deal in real estate, mortgages or
interests in real estate or mortgages, (c) engage in the purchase and sale of
real estate as necessary to provide it with an office for the transaction of
business or (d) acquire real estate or interests in real estate securing an
issuer's obligations in the event of a default by that issuer;
8. Make short sales of securities or maintain a short position, unless at
all times when a short position is open, the fund owns an equal amount of the
securities or securities convertible into or exchangeable for, without payment
of any further consideration, securities of the same issue as, and equal in
amount to, the securities sold short;
9. Purchase securities on margin, except that a fund may obtain any
short-term credits necessary for the clearance of purchases and sales of
securities. For purposes of this restriction, the deposit or payment of initial
or variation margin in connection with futures contracts, financial futures
contracts or related options, and options on securities, options on securities
indexes and options on currencies will not be deemed to be a purchase of
securities on margin by a fund;
10. Invest in commodities, except that each non-money market fund may
invest in futures contracts (including financial futures contracts, index
futures contracts or securities index futures contracts) and related options and
other similar contracts (including foreign currency forward, futures and options
contracts) as described in this Statement of Additional Information and in the
Prospectus;
11. Invest in companies for the purpose of exercising control or
management;
12. Issue senior securities except as otherwise permitted by the 1940 Act
and as otherwise permitted herein.
Furthermore, the fund has adopted the following non-fundamental investment
restrictions, which may be changed by the Board of Trustees of the Fund without
shareholder approval:
(A) The fund may not purchase illiquid securities if more than 15% of the
net assets of the fund would be invested in illiquid securities. For purposes of
this restriction, illiquid securities are securities that cannot be disposed of
by a fund within seven days in the ordinary course of business at approximately
the amount at which the fund has valued the securities;
(B) The fund may not purchase restricted securities if more than 10% of the
total assets of the fund would be invested in restricted securities. Restricted
securities are securities that are subject to contractual or legal restrictions
on transfer, excluding for purposes of this restriction, restricted securities
that are eligible for resale pursuant to Rule 144A under the Securities Act of
1933, as amended ("Rule 144A Securities"), that have been determined to be
liquid by the Trust's Board of Trustees based upon the trading markets for the
securities; and
(C) The fund may not purchase securities of other investment companies,
other than a security acquired in connection with a merger, consolidation,
acquisition, reorganization or offer of exchange except as otherwise permitted
under the 1940 Act. Investments by the fund in GEI Short-Term Investment Fund, a
private investment fund advised by GE Asset Management Incorporated ("GEAM"),
created specifically to serve as a vehicle for the collective investment of cash
balances of the fund and other accounts advised by GEAM or General Electric
Investment Corporation ("GEIC"), are not subject to this restriction, pursuant
to and in accordance with necessary regulatory approvals.
The percentage limitations in the restrictions listed above apply at the time of
purchases of securities. For purposes of investment restriction number 5, the
fund may use the industry classifications reflected by the S&P 500 Composite
Stock Index, if applicable at the time of determination. For all other portfolio
holdings, the fund may use the Directory of Companies Required to File Annual
Reports with the SEC and Bloomberg Inc. In addition, the fund may select its own
industry classifications, provided such classifications are reasonable.
In addition to the above, as a fundamental policy, the fund may, notwithstanding
any other investment policy or limitation (whether or not fundamental), invest
all of its
25
assets in the securities of a single open-end management investment company with
substantially the same fundamental investment objectives, policies and
limitations as such fund (which might result in duplication of certain fees and
expenses).
INVESTMENT RESTRICTIONS OF IDEX JANUS GROWTH & INCOME
IDEX Janus Growth & Income may not, as a matter of fundamental policy:
1. With respect to 75% of the fund's total assets, purchase the securities
of any one issuer (other than cash items and government securities as defined in
the 1940 Act), if immediately after and as a result of such purchase (a) the
value of the holdings of the fund in the securities of such issuer exceeds 5% of
the value of the fund's total assets, or (b) the fund owns more than 10% of the
outstanding voting securities of any one class of securities of such issuer. All
securities of a foreign government and its agencies will be treated as a single
issuer for purposes of this restriction;
2. Invest 25% or more of the value of its total assets in any particular
industry (other than U.S. government securities). For purposes of this
limitation only, industrial development bonds issued by nongovernmental users
shall not be deemed to be municipal obligations. Industrial development bonds
shall be classified according to the industry of the entity that has the
ultimate responsibility for the payment of principal and interest on the
obligation;
3. Invest directly in real estate or interests in real estate; however, the
Fund may own debt or equity securities issued by companies engaged in those
businesses;
4. Purchase or sell physical commodities other than foreign currencies
unless acquired as a result of ownership of securities (but this limitation
shall not prevent the fund from purchasing or selling options, futures, swaps
and forward contracts or from investing in securities or other instruments
backed by physical commodities);
5. Lend any security or make any other loan if, as a result, more than 25%
of the fund's total assets would be lent to other parties (but this limitation
does not apply to purchases of commercial paper, debt securities or repurchase
agreements);
6. Underwrite securities issued by other persons, except to the extent
that the fund may be deemed to be an underwriter within the meaning of the
Securities Act of 1933 in connection with the purchase and sale of the fund's
portfolio securities; and
7. Borrow money but the fund may borrow money for temporary or emergency
purposes (not for leveraging or investment) in an amount not exceeding 25% of
the value of its respective total assets (including the amount borrowed) less
liabilities (other than borrowings). If the borrowings exceed 25% of the value
of the fund's total assets by reason of a decline in net assets, the fund will
reduce its borrowings within three business days to the extent necessary to
comply with the 25% limitation. This policy shall not prohibit reverse
repurchase agreements, deposits of assets to margin or guarantee positions in
futures, options, swaps or forward contracts, or the segregation of assets in
connection with such contracts.
Furthermore, the fund has adopted the following non-fundamental restrictions,
which may be changed by the Board of Trustees of the fund without shareholder
approval:
(A) The fund may not sell securities short, unless they own or have the
right to obtain securities equivalent in kind and amount to the securities sold
short without the payment of any additional consideration therefor, and provided
that transactions in futures, options, swaps and forward contracts are not
deemed to constitute selling securities short.
In addition to the above, the fund may, notwithstanding any other investment
policy or limitation (whether or not fundamental), invest all of its assets in
the securities of a single open-end management company with substantially the
same fundamental investment objectives, policies and limitations as such fund
(which might result in duplication of certain fees and expenses).
INVESTMENT RESTRICTIONS OF IDEX DEAN ASSET ALLOCATION
IDEX Dean Asset Allocation may not, as a matter of fundamental policy:
1. With respect to 75% of the fund's total assets, purchase the securities
of any one issuer (other than government securities as defined in the 1940 Act)
if immediately after and as a result of such purchase (a) the value of the
holdings of the fund in the securities of such issuer exceeds 5% of the value of
the fund's total assets, or (b) the fund owns more than 10% of the outstanding
voting securities of such issuer;
2. Invest more than 25% of the fund's assets in the securities of issuers
primarily engaged in the same industry. Utilities will be divided according to
their services, for example, gas, gas transmission, electric and telephone, and
each will be considered a separate industry for purposes of this restriction. In
addition, there
26
shall be no limitation on the purchase of obligations issued or guaranteed by
the U.S. government or its agencies or instrumentalities, or of certificates of
deposit and bankers' acceptances;
3. Purchase or sell physical commodities unless acquired as a result of
ownership of securities or other instruments (but this limitation shall not
prevent the fund from investing in securities or other instruments backed by
physical commodities);
4. Purchase or sell real estate (but this shall not prevent the fund from
investing in securities or other instruments backed by real estate, including
mortgage-backed securities, or securities of companies engaged in the real
estate business);
5. Lend any security or make any other loan if, as a result, more than 25%
of its total assets would be lent to other parties (but this limitation does not
apply to purchases of commercial paper or debt securities);
6. Act as an underwriter of securities issued by others, except to the
extent that it may be deemed an underwriter in connection with the disposition
of its portfolio securities;
7. The fund may borrow money only for temporary or emergency purposes (not
for leveraging or investment) in an amount not exceeding 25% of the value of the
fund's total assets (including the amount borrowed) less liabilities (other than
borrowings). Any borrowings that exceed 25% of the value of the fund's total
assets by reason of a decline in net assets will be reduced within three
business days to the extent necessary to comply with the 25% limitation; and
8. Issue senior securities, except as permitted by the 1940 Act.
Furthermore, the fund has adopted the following non-fundamental investment
restrictions which may be changed by the Board of Trustees without shareholder
approval:
(A) The fund may not sell securities short, unless it owns or has the right
to obtain securities equivalent in kind and amount to the securities sold short,
and provided that margin payments and other deposits in connection with
transactions in options, swaps and forward and futures contracts are not deemed
to constitute selling securities short;
(B) The fund may not purchase securities on margin, except that the fund
may obtain such short-term credits as are necessary for the clearance of
transactions, and provided that margin payments and other deposits in connection
with transactions in options, futures, swaps and forward contracts shall not be
deemed to constitute purchasing securities on margin;
(C) The fund may not (i) purchase securities of other investment companies,
except in the open market where no commission except the ordinary broker's
commission is paid, or (ii) purchase or retain securities issued by other
open-end investment companies. Limitations (i) and (ii) do not apply to money
market funds or to securities received as dividends, through offers of exchange,
or as a result of a consolidation, merger or other reorganization;
(D) The fund may not mortgage or pledge any securities owned or held by the
fund in amounts that exceed, in the aggregate, 15% of the fund's net assets,
provided that this limitation does not apply to reverse repurchase agreements,
deposits of assets to margin, guarantee positions in futures, options, swaps or
forward contracts or segregation of assets in connection with such contracts;
(E) The fund may not invest directly in oil, gas, or other mineral
development or exploration programs or leases; however, the fund may own debt or
equity securities of companies engaged in those businesses;
(F) The fund may not invest in companies for the purpose of exercising
control or management; and
(G) The fund may not invest more than 15% of its net assets in illiquid
securities. This does not include securities eligible for resale pursuant to
Rule 144A under the 1933 Act, or any successor to such Rule, Section 4(2)
commercial paper or any other securities as to which the Board of Trustees has
made a determination as to liquidity, as permitted under the 1940 Act.
In addition to the above, as a fundamental policy, the fund may, notwithstanding
any other investment policy or limitation (whether or not fundamental), invest
all of its assets in the securities of a single open-end management investment
company with substantially the same fundamental investment objectives, policies
and limitations as such fund (which might result in duplication of certain fees
and expenses).
INVESTMENT RESTRICTIONS OF IDEX LKCM STRATEGIC TOTAL RETURN
IDEX LKCM Strategic Total Return may not, as a matter of fundamental policy:
1. With respect to 75% of the fund's total assets, purchase the securities
of any one issuer (other than
27
government securities as defined in the 1940 Act) if immediately after and as a
result of such purchase (a) the value of the holdings of the fund in the
securities of such issuer exceeds 5% of the value of the fund's total assets, or
(b) the fund owns more than 10% of the outstanding voting securities of such
issuer;
2. Invest more than 25% of the fund's assets in the securities of issuers
primarily engaged in the same industry. Utilities will be divided according to
their services; for example: gas, gas transmission, electric and telephone, and
each will be considered a separate industry for purposes of this restriction. In
addition, there shall be no limitation on the purchase of obligations issued or
guaranteed by the U.S. government or its agencies or instrumentalities, or of
certificates of deposit and bankers' acceptances;
3. Purchase or sell real estate (but this shall not prevent the fund from
investing in securities or other instruments backed by real estate, including
mortgage-backed securities, or securities of companies engaged in the real
estate business);
4. Purchase or sell physical commodities unless acquired as a result of
ownership of securities or other instruments (but this shall not prevent the
fund from investing in securities or other instruments backed by physical
commodities);
5. Lend any security or make any other loan if, as a result, more than 25%
of its total assets would be lent to other parties (but this limitation does not
apply to purchases of commercial paper or debt securities);
6. Act as an underwriter of securities issued by others, except to the
extent that it may be deemed an underwriter in connection with the disposition
of its portfolio securities;
7. The fund may borrow money only for temporary or emergency purposes (not
for leveraging or investment) in an amount not exceeding 25% of the value of the
fund's total assets (including the amount borrowed) less liabilities (other than
borrowings). Any borrowings that exceed 25% of the value of the fund's total
assets by reason of a decline in net assets will be reduced within three
business days to the extent necessary to comply with the 25% limitation; and
8. Issue senior securities, except as permitted by the 1940 Act.
Furthermore, the fund has adopted the following non-fundamental investment
restrictions which may be changed by the Board of Trustees without shareholder
approval:
(A) The fund may not mortgage or pledge any securities owned or held by the
fund in amounts that exceed, in the aggregate, 15% of the fund's net assets,
provided that this limitation does not apply in the case of assets deposited to
margin or guarantee positions in options, futures contracts and options on
futures contracts or placed in a segregated account in connection with such
contracts;
(B) The fund may not sell securities short, unless it owns or has the right
to obtain securities equivalent in kind and amount to the securities sold short,
and provided that margin payments and other deposits in connection with
transactions in options, swaps and forward futures contracts are not deemed to
constitute selling securities short;
(C) The fund may not purchase securities on margin, except that the fund
may obtain such short-term credits as are necessary for the clearance of
transactions, and provided that margin payments and other deposits in connection
with transactions in options, futures, swaps and forward contracts shall not be
deemed to constitute purchasing securities on margin;
(D) The fund may not (i) purchase securities of other investment companies,
except in the open market where no commission except the ordinary broker's
commission is paid, or (ii) purchase or retain securities issued by other
open-end investment companies. Limitations (i) and (ii) do not apply to money
market funds or to securities received as dividends, through offers of exchange,
or as a result of a consolidation, merger or other reorganization;
(E) The fund may not invest directly in oil, gas, or other mineral
development or exploration programs or leases; however, the fund may own debt or
equity securities of companies engaged in those businesses;
(F) The fund may not invest more than 15% of its net assets in illiquid
securities. This does not include securities eligible for resale pursuant to
Rule 144A under the 1933 Act, or any successor to such Rule, Section 4(2)
commercial paper or any other securities as to which the Board of Trustees has
made a determination as to liquidity, as permitted under the 1940 Act;
(G) The fund may not invest in companies for the purpose of exercising
control or management; and
(H) The fund may not invest in securities of foreign issuers denominated in
foreign currency and not publicly traded in the United States if at the time of
acquisition more than 10% of the fund's total assets would be invested in such
securities.
28
In addition to the above, as a fundamental policy, the fund may, notwithstanding
any other investment policy or limitation (whether or not fundamental), invest
all of its assets in the securities of a single open-end management investment
company with substantially the same fundamental investment objectives, policies
and limitations as such fund (which might result in duplication of certain fees
and expenses).
INVESTMENT RESTRICTIONS OF IDEX AEGON INCOME PLUS
IDEX AEGON Income Plus may not, as a matter of fundamental policy:
1. Borrow money, except from a bank for temporary or emergency purposes
(not for leveraging or investment) in an amount not to exceed one-third of the
current value of the fund's total assets (including the amount borrowed) less
liabilities (not including the amount borrowed) at the time the borrowing is
made. If at any time the fund's borrowings exceed this limitation due to a
decline in net assets, such borrowings will be reduced within 3 business days to
the extent necessary to comply with the limitation. The fund will borrow only to
facilitate redemptions requested by shareholders which might otherwise require
untimely disposition of portfolio securities and will not purchase securities
while borrowings are outstanding;
2. Pledge assets, except that the fund may pledge not more than one-third
of its total assets (taken at current value) to secure borrowings made in
accordance with paragraph 1 above. Initial margin deposits under interest rate
futures contracts, which are made to guarantee the fund's performance under such
contracts, shall not be deemed a pledging of fund assets for the purpose of this
investment restriction. As a matter of non-fundamental operating policy, in
order to permit the sale of shares of the fund under certain state laws, the
fund will not pledge its assets in excess of an amount equal to 10% of its net
assets unless such state restrictions are changed;
3. Invest more than 25% of its assets, measured at the time of investment,
in a single industry (which term shall not include governments or their
political subdivisions), outside the industries of the fund's public utilities
portfolio concentration, except that the fund may, for temporary defensive
purposes, invest more than 25% of its total assets in the obligations of banks;
4. Purchase the securities (other than government securities) of any
issuer if, as a result, more than 5% of the fund's total assets would be
invested in the securities of such issuer, provided that up to 25% of the fund's
total net assets may be invested without regard to this 5% limitation and in the
case of certificates of deposit, time deposits and bankers' acceptances, up to
25% of total fund assets may be invested without regard to such 5% limitation,
but shall instead be subject to a 10% limitation;
5. Invest in mineral leases;
6. Invest in bank time deposits with maturities of over 7 calendar days,
or invest more than 10% of the fund's total assets in bank time deposits with
maturities of from 2 business days through 7 calendar days;
7. Issue senior securities, except to the extent that senior securities
may be deemed to arise from bank borrowings and purchases of government
securities on a "when-issued" or "delayed delivery" basis, as described in the
prospectus;
8. Underwrite any issue of securities, except to the extent the fund may
be deemed to be an underwriter in connection with the sale of its portfolio
securities, although the fund may purchase securities directly from the issuers
thereof for investment in accordance with the fund's investment objective and
policies;
9. Purchase or sell commodities or commodity contracts, except that the
fund may purchase and sell interest rate futures contracts for hedging purposes
as set forth in the prospectus;
10. Purchase securities on margin or sell "short," but the fund may obtain
such short-term credits as may be necessary for the clearance of purchases and
sales of securities. (Initial and maintenance margin deposits and payment with
respect to interest rate futures contracts are not considered the purchase of
securities on margin);
11. Purchase or retain the securities of any issuer, if, to the fund's
knowledge, those officers and directors of the manager and sub-adviser who
individually own beneficially more than 0.5% of the outstanding securities of
such issuer together own beneficially more than 5% of such outstanding
securities;
12. Invest in securities of other investment companies, except in the event
of merger or reorganization with another investment company;
13. Make loans, except to the extent the purchase of notes, bonds, bankers'
acceptances or other evidence of indebtedness or the entry into repurchase
agreements or deposits (including time deposits and certificates of deposit)
with banks may be considered loans;
29
14. Invest in companies for the purpose of exercising management control;
15. Invest in oil, gas or other mineral exploration or development
programs;
16. Purchase or hold any real estate or mortgage loans thereon, except that
the fund may invest in securities secured by real estate or interests therein or
issued by persons (such as real estate investment trusts) which deal in real
estate or interests therein; and
17. Purchase the securities (other than government securities) of any
issuer if, as a result, the fund would hold more than 10% of any class of
securities (including any class of voting securities) of such issuer; for this
purpose, all debt obligations of an issuer, and all shares of stock of an issuer
other than common stock, are treated as a single class of securities.
Furthermore, the fund has adopted the following non-fundamental investment
restrictions which may be changed by the Board of Trustees without shareholder
approval:
(A) Write or purchase put, call, straddle or spread options, or
combinations thereof;
(B) Invest more than 10% of its net assets in illiquid securities;
(C) Invest in real estate limited partnerships;
(D) Invest more than 25% of its net assets at the time of purchase in the
securities of foreign issuers and obligors; and
(E) Purchase or sell interest rate futures contracts (a) involving
aggregate delivery or purchase obligations in excess of 30% of the fund's net
assets, or aggregate margin deposits made by the fund in excess of 5% of the
fund's net assets, (b) which are not for hedging purposes only, or (c) which are
executed under custodial, reserve and other arrangements inconsistent with
regulations and policies adopted or positions taken (i) by the Securities and
Exchange Commission for exemption from enforcement proceedings under Section
17(f) or 18(f) of the 1940 Act, (ii) by the Commodity Futures Trading Commission
("CFTC") for exemption of investment companies registered under the 1940 Act
from registration as "commodity pool operators" and from certain provisions of
Subpart B of Part 4 of the CFTC's regulations, or (iii) by state securities
commissioners or administrators in the states in which the fund's shares have
been qualified for public offering.
In addition to the above, as a fundamental policy, the fund may, notwithstanding
any other investment policy or limitation (whether or not fundamental), invest
all of its assets in the securities of a single open-end management investment
company with substantially the same fundamental investment objectives, policies
and limitations as such fund (which might result in duplication of certain fees
and expenses).
INVESTMENT RESTRICTIONS OF IDEX FEDERATED TAX EXEMPT (formerly IDEX AEGON Tax
Exempt)
IDEX Federated Tax Exempt may not, as a matter of fundamental policy:
1. With respect to 75% of the fund's total assets, purchase the securities
of any one issuer (other than government securities as defined in the 1940 Act)
if immediately after and as a result of such purchase (a) the value of the
holdings of the fund in the securities of such issuer exceeds 5% of the value of
the fund's total assets, or (b) the fund owns more than 10% of the outstanding
voting securities of any one class of securities of such issuer. All securities
of a foreign government and its agencies will be treated as a single issuer for
purposes of this restriction;
2. Underwrite any issue of securities, except to the extent the fund may
be deemed to be an underwriter in connection with the sale of its portfolio
securities, although the fund may purchase Municipal Obligations directly from
the issuers thereof for investment in accordance with the fund's investment
objective and policies;
3. Make investments that will result in the concentration of its
investments in the securities of issuers primarily engaged in the same industry,
provided that the fund may invest more than 25% of the value of its assets in
industrial development bonds. Government securities, municipal securities and
bank instruments will not be deemed to constitute an industry. As to industrial
development bonds, the fund may purchase securities of an issuer resulting in
the ownership of more than 25% of the fund's assets in one industry, and the
fund reserves the right to invest more than 25% of its assets in industrial
development bonds in the same state;
4. Purchase securities on margin or sell "short," but the fund may obtain
such short-term credits as may be necessary for the clearance of purchases and
sales of securities;
5. Purchase or hold any real estate or mortgage loans thereon, except that
the fund may invest in securities secured by real estate or interests therein or
issued by persons (such as real estate investment trusts) which deal in real
estate or interests therein;
30
6. Invest in securities of other investment companies, except in the event
of merger or reorganization with another investment company;
7. Make loans, except to the extent the purchase of notes, bonds, or other
evidences of indebtedness or the entry into repurchase agreements or deposits
with banks may be considered loans;
8. Invest in companies for the purpose of exercising management or
control;
9. The fund may not purchase or sell physical commodities, provided that
the fund may purchase securities of companies that deal in commodities. For
purposes of this restriction, investments in transactions involving futures
contracts and options, forward currency contracts, swap transactions and other
financial contracts that settle by payment of cash are not deemed to be
investments in commodities; and
10. The fund may borrow money only for temporary or emergency purposes (not
for leveraging or investment) in an amount not exceeding one-third of the
current value of the fund's total assets (including the amount borrowed) less
liabilities (not including the amount borrowed at the time the borrowing is
made). For purposes of this limitation, reverse repurchase agreements would not
constitute borrowings.
Furthermore, the fund has adopted the following non-fundamental restrictions
which may be changed by the Board of Trustees without shareholder approval:
(A) The fund may not invest more than 15% of its net assets in illiquid
securities. This does not include securities eligible for resale
pursuant to Rule 144A under the 1933 or any other securities as to
which a determination as to liquidity has been made pursuant to
guidelines adopted by the Board of Trustees as permitted under the
1940 Act;
(B) The fund may not mortgage, pledge or hypothecate any of its assets,
provided that this shall not apply to the transfer of securities in
connection with any permissible borrowing or to collateral
arrangements in connection with permissible activities; and
(C) The fund may not purchase securities on margin, provided that the fund
may obtain short-term credits necessary for the clearance of purchases
and sales of securities, and further provided that the fund may make
margin deposits in connection with its use of financial options and
futures, forward and spot currency contracts, swap transactions and
other financial contracts or derivative instruments.
To conform to the current view of the SEC staff that only domestic bank
instruments may be excluded from industry concentration limitations, the fund
will not exclude foreign bank instruments from industry concentration tests as
long as the policy of the SEC remains in effect.
As a matter of fundamental policy, the fund will invest 80% of its assets in tax
exempt securities that are not subject to alternate minimum tax. Except with
respect to borrowing money, if a percentage limitation set forth above is
complied with at the time of the investment, a subsequent change in the
percentage resulting from any change in value of the net assets of any of the
funds will not result in a violation of such restriction. Additional limitations
on borrowing that are imposed by state law and regulations may apply.
In addition to the above, as a fundamental policy, the fund may, notwithstanding
any other investment policy or limitation (whether or not fundamental), invest
all of its assets in the securities of a single open-end management investment
company with substantially the same fundamental investment objectives, policies
and limitations as such fund (which might result in duplication of certain fees
and expenses).
31
OTHER POLICIES AND PRACTICES OF THE FUNDS
FUTURES, OPTIONS AND OTHER DERIVATIVE INSTRUMENTS
The following investments are subject to limitations as set forth in each fund's
investment restrictions and policies.
Futures Contracts. A fund may enter into futures contracts. Futures contracts
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are for the purchase or sale, for future delivery, of equity or fixed-income
securities, foreign currencies or contracts based on financial indices,
including indices of U.S. government securities, foreign government securities
and equity or fixed-income securities. The IDEX AEGON Income Plus may enter into
interest rate futures contracts. These contracts are for the purchase or sale of
fixed-income securities. U.S. futures contracts are traded on exchanges which
have been designated "contract markets" by the Commodity Futures Trading
Commission ("CFTC") and must be executed through a Futures Trading Commission
merchant ("FTCM"), or brokerage firm, which is a member of the relevant contract
market. Through their clearing corporations, the exchanges guarantee performance
of the contracts as between the clearing members of the exchange.
When a fund buys or sells a futures contract, it must receive or deliver the
underlying instrument (or a cash payment based on the difference between the
underlying instrument's closing price and the price at which the contract was
entered into) at a specified price on a specified date. Transactions in futures
contracts may be made to attempt to hedge against potential changes in interest
or currency exchange rates, or the price of a security or a securities index
which might correlate with, or otherwise adversely affect, either the value of
the fund's securities or the prices of securities which the fund is considering
buying at a later date.
The buyer or seller of a futures contract is not required to deliver or pay for
the underlying instrument unless the contract is held until the delivery date.
However, both the buyer and seller are required to deposit "initial margin" for
the benefit of the FTCM when the contract is entered into. Initial margin
deposits are equal to a percentage of the contract's value, as set by the
exchange on which the contract is traded, and may be maintained in cash or
liquid assets by the fund's custodian for the benefit of the FTCM. Initial
margin payments are similar to good faith deposits or performance bonds.
Unlike margin extended by a securities broker, initial margin payments do not
constitute purchasing securities on margin for purposes of a fund's investment
limitations. If the value of either party's position declines, that party will
be required to make additional "variation margin" payments with the FTCM to
settle the change in value on a daily basis. The party that has a gain may be
entitled to receive all or a portion of this amount. In the event of the
bankruptcy of the FTCM that holds margin on behalf of a fund, that fund may be
entitled to return of the margin owed to such fund only in proportion to the
amount received by the FTCM's other customers. The fund's sub-adviser will
attempt to minimize the risk by careful monitoring of the creditworthiness of
the FTCMs with which a fund does business and by segregating margin payments
with the custodian.
Although a fund would segregate with the custodian cash and liquid assets in an
amount sufficient to cover its open futures obligations, the segregated assets
would be available to that fund immediately upon closing out the futures
position, while settlement of securities transactions could take several days.
However, because a fund's cash that may otherwise be invested would be held
uninvested or invested in liquid assets so long as the futures position remains
open, such fund's return could be diminished due to the opportunity losses of
foregoing other potential investments.
The acquisition or sale of a futures contract may occur, for example, when a
fund holds or is considering purchasing equity or debt securities and seeks to
protect itself from fluctuations in prices or interest rates without buying or
selling those securities. For example, if stock or debt prices were expected to
decrease, a fund might sell equity index futures contracts, thereby hoping to
offset a potential decline in the value of equity securities in the fund by a
corresponding increase in the value of the futures contract position held by
that fund and thereby preventing the fund's net asset value from declining as
much as it otherwise would have.
Similarly, if interest rates were expected to rise, a fund might sell bond index
futures contracts, thereby hoping to offset a potential decline in the value of
debt securities in the fund by a corresponding increase in the value of the
futures contract position held by the fund. A fund also could seek to protect
against potential price declines by selling fund securities and investing in
money market instruments. However, since the futures market is more
32
liquid than the cash market, the use of futures contracts as an investment
technique allows a fund to maintain a defensive position without having to sell
fund securities.
Likewise, when prices of equity securities are expected to increase, or interest
rates are expected to fall, futures contracts may be bought to attempt to hedge
against the possibility of having to buy equity securities at higher prices.
This technique is sometimes known as an anticipatory hedge. Since the
fluctuations in the value of futures contracts should be similar to those of
equity securities, a fund could take advantage of the potential rise in the
value of equity or debt securities without buying them until the market has
stabilized. At that time, the futures contracts could be liquidated and such
fund could buy equity or debt securities on the cash market. To the extent a
fund enters into futures contracts for this purpose, the segregated assets
maintained to cover such fund's obligations (with respect to futures contracts)
will consist of liquid assets from its portfolio in an amount equal to the
difference between the contract price and the aggregate value of the initial and
variation margin payments made by that fund.
The ordinary spreads between prices in the cash and futures markets, due to
differences in the nature of those markets, are subject to distortions.
First, all participants in the futures market are subject to initial margin and
variation margin requirements. Rather than meeting additional variation margin
requirements, investors may close out futures contracts through offsetting
transactions which could distort the normal price relationship between the cash
and futures markets.
Second, the liquidity of the futures market depends on participants entering
into offsetting transactions rather than making or taking delivery. To the
extent participants decide to make or take delivery, liquidity in the futures
market could be reduced and prices in the futures market distorted.
Third, from the point of view of speculators, the margin deposit requirements in
the futures market are less onerous than margin requirements in the securities
market. Therefore, increased participation by speculators in the futures market
may cause temporary price distortions.
Due to the possibility of the foregoing distortions, a correct forecast of
general price trends by the fund manager still may not result in a successful
use of futures contracts.
Futures contracts entail risks. Although each of the funds that invests in such
contracts believes that their use will benefit the fund, if the fund
sub-adviser's investment judgment proves incorrect, the fund's overall
performance could be worse than if the fund had not entered into futures
contracts.
For example, if a fund has hedged against the effects of a possible decrease in
prices of securities held in its fund and prices increase instead, that fund may
lose part or all of the benefit of the increased value of the securities because
of offsetting losses in the fund's futures positions. In addition, if a fund has
insufficient cash, it may have to sell securities from its fund to meet daily
variation margin requirements. Those sales may, but will not necessarily, be at
increased prices which reflect the rising market and may occur at a time when
the sales are disadvantageous to the fund.
The prices of futures contracts depend primarily on the value of their
underlying instruments. Because there are a limited number of types of futures
contracts, it is possible that the standardized futures contracts available to a
fund will not exactly match that fund's current or potential investments. A fund
may buy and sell futures contracts based on underlying instruments with
different characteristics from the securities in which it typically invests. For
example, by hedging investments in fund securities with a futures contract based
on a broad index of securities may involve a risk that the futures position will
not correlate precisely with such performance of the fund's investments.
Futures prices can also diverge from the prices of their underlying instruments,
even if the underlying instruments correlate with a fund's investments. Futures
prices are affected by factors such as: current and anticipated short-term
interest rates; changes in volatility of the underlying instruments; and the
time remaining until expiration of the contract. Those factors may affect
securities prices differently from futures prices.
Imperfect correlations between a fund's investments and its futures positions
may also result from: differing levels of demand in the futures markets and the
securities markets; from structural differences in how futures and securities
are traded; and from imposition of daily price fluctuation limits for futures
contracts.
A fund may buy or sell futures contracts with a greater or lesser value than the
securities it wishes to hedge or is considering purchasing in order to attempt
to compensate for differences in historical volatility between the futures
contract and the securities. This may not be successful in all cases. If price
changes in a fund's futures positions are poorly correlated with its other
investments, its futures positions may fail to produce desired
33
gains or may result in losses that are not offset by the gains in that fund's
other investments.
Because futures contracts are generally settled within a day from the date they
are closed out, compared with a settlement period of seven days for some types
of securities, the futures markets can provide superior liquidity to the
securities markets. Nevertheless, there is no assurance a liquid secondary
market will exist for any particular futures contract at any particular time.
In addition, futures exchanges may establish daily price fluctuation limits for
futures contracts and may halt trading if a contract's price moves upward or
downward more than the limit in a given day. On volatile trading days when the
price fluctuation limit is reached, it may be impossible for a fund to enter
into new positions or close out existing positions. If the secondary market for
a futures contract is not liquid because of price fluctuation limits or
otherwise, the fund may not be able to promptly liquidate unfavorable futures
positions and potentially could be required to continue to hold a futures
position until the delivery date, regardless of changes in its value. As a
result, such fund's access to other assets held to cover its futures positions
also could be impaired.
Although futures contracts by their terms call for the delivery or acquisition
of the underlying commodities, or a cash payment based on the value of the
underlying commodities, in most cases the contractual obligation is offset
before the delivery date of the contract. This is accomplished by buying, in the
case of a contractual obligation to sell, or selling, in the case of a
contractual obligation to buy, an identical futures contract on a commodities
exchange. Such a transaction cancels the obligation to make or take delivery of
the commodities.
If applicable, each fund intends to comply with guidelines of eligibility for
exclusion from the definition of the term "commodity pool operator" with the
CFTC and the National Futures Association, which regulate trading in the futures
markets. The funds will use futures contracts and related options primarily for
bona fide hedging purposes within the meaning of CFTC regulations. In addition,
the funds may hold positions in futures contracts and related options that do
not fall within the definition of bona fide hedging transactions, provided that
the aggregate initial margin and premiums required to establish such positions
will not exceed 5% of the fair market value of a fund's net assets, after taking
into account unrealized profits and unrealized losses on any such contracts it
has entered into.
IDEX Alger Aggressive Growth may not enter into a futures contract or related
option (except for closing transactions) if, immediately thereafter, the sum of
the amount of its initial margin and premiums on open futures contracts and
options thereon would exceed 5% of IDEX Alger Aggressive Growth's total assets
(taken at current value); however, in the case of an option that is
"in-the-money" at the time of the purchase, the "in-the-money" amount may be
excluded in calculating the 5% limitation. An "in-the-money" call option is any
whose strike price is lower than the current price of the underlying stock. (The
strike price per share for which the underlying stock may be purchased (in the
case of a call) by the option buyer upon exercise of the option contract.)
Options on Futures Contracts. A fund may buy and write put and call options on
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futures contracts. An option on a futures contract gives a fund the right (but
not the obligation) to buy or sell the contract at a specified price on or
before a specified date. Transactions in options on futures contracts may be
made to attempt to hedge against potential changes in interest rates or currency
exchange rates, or the price of a security or a securities index which might
correlate with, or otherwise adversely affect, either the value of the fund's
securities or the prices of securities which the fund is considering buying at a
later date. Transactions in options on future contracts will not be made for
speculation.
The purchase of a call option on a futures contract is similar in some respects
to the purchase of a call option on an individual security. Depending on the
pricing of the option compared to either the price of the futures contract upon
which it is based or the price of the underlying instrument, ownership of the
option may or may not be less risky than ownership of the futures contract or
the underlying instrument. As with the purchase of futures contracts, when a
fund is not fully invested it may buy a call option on a futures contract to
hedge against a market advance.
The writing of a call option on a futures contract constitutes a partial hedge
against declining prices of the security or foreign currency which is
deliverable under, or of the index comprising, the futures contract. If the
futures price at the expiration of the option is below the exercise price, a
fund will retain the full amount of the option premium which provides a partial
hedge against any decline that may have occurred in such fund's holdings.
The writing of a put option on a futures contract constitutes a partial hedge
against increasing prices of the security or foreign currency which is
deliverable under, or of the index comprising, the futures contract. If the
futures price at expiration of the option is higher than the
34
exercise price, a fund will retain the full amount of the option premium which
provides a partial hedge against any increase in the price of securities which
that fund is considering buying.
If a call or put option a fund has written is exercised, such fund will incur a
loss which will be reduced by the amount of the premium it received. Depending
on the degree of correlation between the change in the value of its fund
securities and changes in the value of the futures positions, that fund's losses
from existing options on futures may to some extent be reduced or increased by
changes in the value of fund securities.
The purchase of a put option on a futures contract is similar in some respects
to the purchase of protective put options on fund securities. For example, a
fund may buy a put option on a futures contract to hedge its fund securities
against the risk of falling prices or rising interest rates.
The amount of risk a fund assumes when it buys an option on a futures contract
is the premium paid for the option plus related transaction costs. In addition
to the correlation risks discussed above, the purchase of an option also entails
the risk that changes in the value of the underlying futures contract will not
be fully reflected in the value of the options bought.
Options on Securities. In an effort to increase current income and to reduce
- ---------------------
fluctuations in net asset value, each of the funds, other than IDEX Federated
Tax Exempt and IDEX AEGON Income Plus, may write covered put and call options
and buy put and call options on securities that are traded on United States and
foreign securities exchanges, and over-the-counter. A fund also may write call
options that are not covered for cross-hedging purposes. A fund may write and
buy options on the same types of securities that the fund may purchase directly.
There are no specific limitations on a fund's writing and buying of options on
securities.
A put option gives the holder the right, upon payment of a premium, to deliver a
specified amount of a security to the writer of the option on or before a fixed
date at a predetermined price. A call option gives the holder the right, upon
payment of a premium, to call upon the writer to deliver a specified amount of a
security on or before a fixed date at a predetermined price.
A put option written by a fund is "covered" if the fund: (i) segregates cash not
available for investment or other liquid assets with a value equal to the
exercise price with its custodian; or (ii) continues to own an equivalent number
of puts of the same "series" (that is, puts on the same underlying securities
having the same exercise prices and expiration dates as those written by the
fund), or an equivalent number of puts of the same "class" (that is, puts on the
same underlying securities) with exercise prices greater than those it has
written (or if the exercise prices of the puts it holds are less than the
exercise prices of those it has written, the difference is segregated with the
custodian).
The premium paid by the buyer of an option will reflect, among other things, the
relationship of the exercise price to the market price and the volatility of the
underlying security, the remaining term of the option, supply and demand and
interest rates.
A call option written by a fund is "covered" if the fund owns the underlying
security covered by the call or has an absolute and immediate right to acquire
that security without additional cash consideration (or has segregated
additional cash with its custodian) upon conversion or exchange of other
securities held in its fund. A call option written by a fund is also deemed to
be covered: (i) if that fund holds a call at the same exercise price for the
same exercise period and on the same securities as the call written; (ii) in the
case of a call on a stock index, if the fund owns a fund of securities
substantially replicating the movement of the index underlying the call option;
or (iii) if at the time the call is written an amount of cash, U.S. government
securities or other liquid assets equal to the fluctuating market value of the
optioned securities is segregated with the custodian.
A fund may also write call options that are not covered for cross-hedging
purposes. A fund collateralizes its obligation under a written call option for
cross-hedging purposes by segregating cash or other liquid assets in an amount
not less than the market value of the underlying security, marked-to-market
daily. A fund would write a call option for cross-hedging purposes, instead of
writing a covered call option, when the premium to be received from the
cross-hedge transaction would exceed that which would be received from writing a
covered call option and the fund manager believes that writing the option would
achieve the desired hedge.
If a put or call option written by a fund were exercised, the fund would be
obligated to buy or sell the underlying security at the exercise price. Writing
a put option involves the risk of a decrease in the market value of the
underlying security, in which case the option could be exercised and the
underlying security would then be sold by the option holder to the fund at a
higher price than its current market value. Writing a call option involves the
risk of an increase in the market value of the underlying security, in which
case the option could be exercised and
35
the underlying security would then be sold by the fund to the option holder at a
lower price than its current market value. Those risks could be reduced by
entering into an offsetting transaction. A fund retains the premium received
from writing a put or call option whether or not the option is exercised.
The writer of an option may have no control when the underlying security must be
sold, in the case of a call option, or bought, in the case of a put option,
since with regard to certain options, the writer may be assigned an exercise
notice at any time prior to the termination of the obligation. Whether or not an
option expires unexercised, the writer retains the amount of the premium.
This amount, of course, may, in the case of a covered call option, be offset by
a decline in the market value of the underlying security during the option
period. If a call option is exercised, the writer experiences a profit or loss
from the sale of the underlying security. If a put option is exercised, the
writer must fulfill the obligation to buy the underlying security at the
exercise price, which will usually exceed the then market value of the
underlying security.
The writer of an option that wishes to terminate its obligation may effect a
"closing purchase transaction." This is accomplished by buying an option of the
same series as the option previously written. The effect of the purchase is that
the writer's position will be canceled by the clearing corporation. However, a
writer may not effect a closing purchase transaction after being notified of the
exercise of an option. Likewise, an investor who is the holder of an option may
liquidate its position by effecting a "closing sale transaction." This is
accomplished by selling an option of the same series as the option previously
bought. There is no guarantee that either a closing purchase or a closing sale
transaction can be effected.
In the case of a written call option, effecting a closing transaction will
permit a fund to write another call option on the underlying security with
either a different exercise price or expiration date or both. In the case of a
written put option, such transaction will permit the fund to write another put
option to the extent that the exercise price thereof is secured by other
deposited liquid assets. Effecting a closing transaction also will permit the
cash or proceeds from the concurrent sale of any securities subject to the
option to be used for other fund investments. If a fund desires to sell a
particular security on which the fund has written a call option, such fund will
effect a closing transaction prior to or concurrent with the sale of the
security.
A fund will realize a profit from a closing transaction if the price of a
purchase transaction is less than the premium received from writing the option
or the price received from a sale transaction is more than the premium paid to
buy the option. The fund will realize a loss from a closing transaction if the
price of the purchase transaction is more than the premium received from writing
the option or the price received from a sale transaction is less than the
premium paid to buy the option. Because increases in the market price of a call
option will generally reflect increases in the market price of the underlying
security, any loss resulting from the repurchase of a call option is likely to
be offset in whole or in part by appreciation of the underlying security owned
by the fund.
An option position may be closed out only where a secondary market for an option
of the same series exists. If a secondary market does not exist, a fund may not
be able to effect closing transactions in particular options and that fund would
have to exercise the options in order to realize any profit. If a fund is unable
to effect a closing purchase transaction in a secondary market, it will not be
able to sell the underlying security until the option expires or it delivers the
underlying security upon exercise. Reasons for the absence of a liquid secondary
market may include the following: (i) there may be insufficient trading interest
in certain options; (ii) restrictions may be imposed by a national securities
exchange on which the option is traded ("Exchange") on opening or closing
transactions or both; (iii) trading halts, suspensions or other restrictions may
be imposed with respect to particular classes or series of options or underlying
securities; (iv) unusual or unforeseen circumstances may interrupt normal
operations on an Exchange; (v) the facilities of an Exchange or the Options
Clearing Corporation ("OCC") may not at all times be adequate to handle current
trading volume; or (vi) one or more Exchanges could, for economic or other
reasons, decide or be compelled at some future date to discontinue the trading
of options (or a particular class or series of options). In that case, the
secondary market on that Exchange (or in that class or series of options) would
cease to exist, although outstanding options on that Exchange that had been
issued by the OCC as a result of trades on that Exchange would continue to be
exercisable in accordance with their terms.
A fund may, subject to its investment restrictions, write options in connection
with buy-and-write transactions. In other words, the fund may buy a security and
then write a call option against that security. The exercise price of such call
36
option may be below ("in-the-money"), equal to ("at-the-money"), or above
("out-of-the-money") the current value of the underlying security at the time
the option is written.
Buy-and-write transactions using "in-the-money" call options may be used when it
is expected that the price of the underlying security will remain flat or
decline moderately during the option period. Buy-and-write transactions using
"at-the-money" call options may be used when it is expected that the price of
the underlying security will remain fixed or advance moderately during the
option period. Buy-and-write transactions using "out-of-the-money" call options
may be used when it is expected that the premiums received from writing the call
option plus the appreciation in the market price of the underlying security up
to the exercise price will be greater than the appreciation in the price of the
underlying security alone.
If the call options are exercised in such transactions, the fund's maximum gain
will be the premium received by it for writing the option, adjusted upwards or
downwards by the difference between that fund's purchase price of the security
and the exercise price. If the options are not exercised and the price of the
underlying security declines, the amount of such decline will be offset by the
amount of premium received.
The writing of covered put options is similar in terms of risk and return
characteristics to buy-and-write transactions. If the market price of the
underlying security rises or otherwise is above the exercise price, the put
option will expire worthless and a fund's gain will be limited to the premium
received. If the market price of the underlying security declines or otherwise
is below the exercise price, a fund may elect to close the position or take
delivery of the security at the exercise price and that fund's return will be
the premium received from the put options minus the amount by which the market
price of the security is below the exercise price.
A fund may buy put options to hedge against a decline in the value of its fund.
By using put options in this way, a fund will reduce any profit it might
otherwise have realized in the underlying security by the amount of the premium
paid for the put option and by transaction costs.
A fund may buy call options to hedge against an increase in the price of
securities that it may buy in the future. The premium paid for the call option
plus any transaction costs will reduce the benefit, if any, realized by such
fund upon exercise of the option, and, unless the price of the underlying
security rises sufficiently, the option may expire worthless to that fund.
In purchasing an option, a fund would be in a position to realize a gain if,
during the option period, the price of the underlying security increased (in the
case of a call) or decreased (in the case of a put) by an amount in excess of
the premium paid. The fund would realize a loss if the price of the underlying
security did not increase (in the case of a call) or decrease (in the case of a
put) during the period by more than the amount of the premium. If a put or call
option purchased by a fund were permitted to expire without being sold or
exercised, the fund would lose the amount of the premium.
Although they entitle the holder to buy equity securities, warrants on and
options to purchase equity securities do not entitle the holder to dividends or
voting rights with respect to the underlying securities, nor do they represent
any rights in the assets of the issuer of those securities.
In addition to options on securities, a fund may also purchase and sell call and
put options on securities indexes. A stock index reflects in a single number the
market value of many different stocks. Relative values are assigned to the
stocks included in an index and the index fluctuates with changes in the market
values of the stocks. The options give the holder the right to receive a cash
settlement during the term of the option based on the difference between the
exercise price and the value of the index. By writing a put or call option on a
securities index, a fund is obligated, in return for the premium received, to
make delivery of this amount. A fund may offset its position in stock index
options prior to expiration by entering into a closing transaction on an
exchange or it may let the option expire unexercised.
Use of options on securities indexes entails the risk that trading in the
options may be interrupted if trading in certain securities included in the
index is interrupted. A fund will not purchase these options unless a fund's
sub-adviser is satisfied with the development, depth and liquidity of the market
and believes the options can be closed out.
Price movements in a fund's securities may not correlate precisely with
movements in the level of an index and, therefore, the use of options on indexes
cannot serve as a complete hedge and will depend, in part, on the ability of its
sub-adviser to predict correctly movements in the direction of the stock market
generally or of a particular industry. Because options on securities indexes
require settlement in cash, a fund's sub-adviser may be forced to liquidate fund
securities to meet settlement obligations.
37
The amount of risk a fund assumes when it buys an option on a futures contract
is the premium paid for the option plus related transaction costs. In addition
to the correlation risks discussed above, the purchase of an option also entails
the risk that changes in the value of the underlying futures contract will not
be fully reflected in the value of the options bought.
Options on Foreign Currencies. Subject to any investment restrictions, a fund
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may buy and write options on foreign currencies in a manner similar to that in
which futures contracts or forward contracts on foreign currencies will be
utilized. For example, a decline in the U.S. dollar value of a foreign currency
in which fund securities are denominated will reduce the U.S. dollar value of
such securities, even if their value in the foreign currency remains constant.
In order to protect against such diminutions in the value of fund securities, a
fund may buy put options on the foreign currency. If the value of the currency
declines, such fund will have the right to sell such currency for a fixed amount
in U.S. dollars and will offset, in whole or in part, the adverse effect on its
portfolio.
Conversely, when a rise in the U.S. dollar value of a currency in which
securities to be acquired are denominated is projected, thereby increasing the
cost of such securities, a fund may buy call options thereon. The purchase of
such options could offset, at least partially, the effects of the adverse
movements in exchange rates. As in the case of other types of options, however,
the benefit to a fund from purchases of foreign currency options will be reduced
by the amount of the premium and related transaction costs. In addition, if
currency exchange rates do not move in the direction or to the extent desired, a
fund could sustain losses on transactions in foreign currency options that would
require such fund to forego a portion or all of the benefits of advantageous
changes in those rates. In addition, in the case of other types of options, the
benefit to the fund from purchases of foreign currency options will be reduced
by the amount of the premium and related transaction costs.
A fund may also write options on foreign currencies. For example, in attempting
to hedge against a potential decline in the U.S. dollar value of foreign
currency denominated securities due to adverse fluctuations in exchange rates, a
fund could, instead of purchasing a put option, write a call option on the
relevant currency. If the expected decline occurs, the option will most likely
not be exercised and the diminution in value of fund securities will be offset
by the amount of the premium received.
Similarly, instead of purchasing a call option to attempt to hedge against a
potential increase in the U.S. dollar cost of securities to be acquired, a fund
could write a put option on the relevant currency which, if rates move in the
manner projected, will expire unexercised and allow that fund to hedge the
increased cost up to the amount of premium. As in the case of other types of
options, however, the writing of a foreign currency option will constitute only
a partial hedge up to the amount of the premium. If exchange rates do not move
in the expected direction, the option may be exercised and a fund would be
required to buy or sell the underlying currency at a loss which may not be
offset by the amount of the premium. Through the writing of options on foreign
currencies, a fund also may lose all or a portion of the benefits which might
otherwise have been obtained from favorable movements in exchange rates.
A fund may write covered call options on foreign currencies. A call option
written on a foreign currency by a fund is "covered" if that fund owns the
underlying foreign currency covered by the call or has an absolute and immediate
right to acquire that foreign currency without additional cash consideration (or
for additional cash consideration that is segregated by its custodian) upon
conversion or exchange of other foreign currency held in its fund. A call option
is also covered if: (i) the fund holds a call at the same exercise price for the
same exercise period and on the same currency as the call written; or (ii) at
the time the call is written, an amount of cash, U.S. government securities or
other liquid assets equal to the fluctuating market value of the optioned
currency is segregated with the custodian.
A fund may write call options on foreign currencies for cross-hedging purposes
that would not be deemed to be covered. A call option on a foreign currency is
for cross-hedging purposes if it is not covered but is designed to provide a
hedge against a decline due to an adverse change in the exchange rate in the
U.S. dollar value of a security which the fund owns or has the right to acquire
and which is denominated in the currency underlying the option. In such
circumstances, a fund collateralizes the option by segregating cash or other
liquid assets in an amount not less than the value of the underlying foreign
currency in U.S. dollars marked-to-market daily.
Forward Contracts. A forward contract is an agreement between two parties in
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which one party is obligated to deliver a stated amount of a stated asset at a
specified time in the future, and the other party is obligated to pay a
specified invoice amount for the assets at the time of delivery. A fund may
enter into forward contracts to purchase and sell government securities, foreign
currencies
38
or other financial instruments. Forward contracts generally are traded in an
interbank market conducted directly between traders (usually large commercial
banks) and their customers. Unlike futures contracts, which are standardized
contracts, forward contracts can be specifically drawn to meet the needs of the
parties that enter into them. The parties to a forward contract may agree to
offset or terminate the contract before its maturity, or may hold the contract
to maturity and complete the contemplated exchange.
The following discussion summarizes a fund's principal uses of forward foreign
currency exchange contracts ("forward currency contracts").
A fund may enter into forward currency contracts with stated contract values of
up to the value of that fund's assets. A forward currency contract is an
obligation to buy or sell an amount of a specified currency for an agreed upon
price (which may be in U.S. dollars or another currency). A fund will exchange
foreign currencies for U.S. dollars and for other foreign currencies in the
normal course of business.
They may buy and sell currencies through forward currency contracts in order to
fix a price for securities it has agreed to buy or sell ("transaction hedge"). A
fund also may hedge some or all of its investments denominated in foreign
currency, or exposed to foreign currency fluctuations against a decline in the
value of that currency relative to the U.S. dollar. This is accomplished by
entering into forward currency contracts to sell an amount of that currency (or
a proxy currency whose performance is expected to replicate or exceed the
performance of that currency relative to the U.S. dollar) approximating the
value of some or all of its fund securities denominated in that currency
("position hedge"), or by participating in options or futures contracts with
respect to the currency.
A fund also may enter into a forward currency contract with respect to a
currency where such fund is considering the purchase or sale of investments
denominated in that currency but has not yet selected the specific investments
("anticipatory hedge"). In any of these circumstances a fund may, alternatively,
enter into a forward currency contract to purchase or sell one foreign currency
for a second currency that is expected to perform more favorably relative to the
U.S. dollar if the fund's sub-adviser believes there is a reasonable degree of
correlation between movements in the two currencies ("cross-hedge").
These types of hedging seek to minimize the effect of currency appreciation as
well as depreciation, but do not eliminate fluctuations in the underlying U.S.
dollar equivalent value of the proceeds of, or rates of return on, a fund's
foreign currency denominated fund securities.
The matching of the increase in value of a forward currency contract and the
decline in the U.S. dollar equivalent value of the foreign currency denominated
asset that is the subject of the hedge generally will not be precise. Shifting a
fund's currency exposure from one foreign currency to another removes that
fund's opportunity to profit from increases in the value of the original
currency and involves a risk of increased losses to such fund if the fund's
sub-adviser's position projection of future exchange rates is inaccurate. Proxy
hedges and cross-hedges may result in losses if the currency used to hedge does
not perform similarly to the currency in which hedged securities are
denominated. Unforeseen changes in currency prices may result in poorer overall
performance for a fund than if it had not entered into such contracts.
A fund will cover outstanding forward currency contracts by maintaining liquid
fund securities denominated in the currency underlying the forward contract or
the currency being hedged. To the extent that a fund is not able to cover its
forward currency positions with underlying fund securities, its custodian will
segregate cash or other liquid assets having a value equal to the aggregate
amount of such fund's commitments under forward contracts entered into with
respect to position hedges, cross-hedges and anticipatory hedges. If the value
of the securities used to cover a position or the value of segregated assets
declines, the fund will find alternative cover or segregate additional cash or
other liquid assets on a daily basis so that the value of the covered and
segregated assets will be equal to the amount of a fund's commitments with
respect to such contracts.
As an alternative to segregating assets, a fund may buy call options permitting
the fund to buy the amount of foreign currency being hedged by a forward sale
contract, or a fund may buy put options permitting it to sell the amount of
foreign currency subject to a forward buy contract.
While forward currency contracts are not currently regulated by the CFTC, the
CFTC may in the future assert authority to regulate forward currency contracts.
In such event, a fund's ability to utilize forward currency contracts may be
restricted. In addition, a fund may not always be able to enter into forward
currency contracts at attractive prices and may be limited in its ability to use
these contracts to hedge its assets.
39
Swaps and Swap-Related Products. In order to attempt to protect the value of its
- -------------------------------
investments from interest rate or currency exchange rate fluctuations, a fund
may, subject to its investment restrictions, enter into interest rate and
currency exchange rate swaps, and may buy or sell interest rate and currency
exchange rate caps and floors. A fund's sub-adviser may enter into these
transactions primarily to attempt to preserve a return or spread on a particular
investment or portion of its portfolio. A fund also may enter into these
transactions to attempt to protect against any increase in the price of
securities the fund may consider buying at a later date.
The funds do not intend to use these transactions as a speculative investment.
Interest rate swaps involve the exchange by a fund with another party of their
respective commitments to pay or receive interest, e.g., an exchange of floating
----
rate payments for fixed rate payments. The exchange commitments can involve
payments to be made in the same currency or in different currencies. The
purchase of an interest rate cap entitles the purchaser, to the extent that a
specified index exceeds a predetermined interest rate, to receive payments of
interest on a contractually based principal amount from the party selling the
interest rate cap. The purchase of an interest rate floor entitles the
purchaser, to the extent that a specified index falls below a predetermined
interest rate, to receive payments of interest on a contractually based
principal amount from the party selling the interest rate floor.
A fund, subject to its investment restrictions, enters into interest rate swaps,
caps and floors on either an asset-based or liability-based basis, depending
upon whether it is hedging its assets or its liabilities, and will usually enter
into interest rate swaps on a net basis (i.e., the two payment streams are
----
netted out, with a fund receiving or paying, as the case may be, only the net
amount of the two payments). The net amount of the excess, if any, of a fund's
obligations over its entitlements with respect to each interest rate swap, will
be calculated on a daily basis. An amount of cash or other liquid assets having
an aggregate net asset at least equal to the accrued excess will be segregated
by its custodian.
If a fund enters into an interest rate swap on other than a net basis, it will
maintain a segregated account in the full amount accrued on a daily basis of its
obligations with respect to the swap. A fund will not enter into any interest
rate swap, cap or floor transaction unless the unsecured senior debt or the
claims-paying ability of the other party thereto is rated in one of the three
highest rating categories of at least one nationally recognized statistical
rating organization at the time of entering into such transaction. A fund's
sub-adviser will monitor the creditworthiness of all counterparties on an
ongoing basis. If there is a default by the other party to such a transaction,
the fund will have contractual remedies pursuant to the agreements related to
the transaction.
The swap market has grown substantially in recent years with a large number of
banks and investment banking firms acting both as principals and as agents
utilizing standardized swap documentation. The sub-advisers have determined
that, as a result, the swap market has become relatively liquid. Caps and floors
are more recent innovations for which standardized documentation has not yet
been developed and, accordingly, they are less liquid than swaps. To the extent
a fund sells (i.e., writes) caps and floors, it will segregate cash or other
----
liquid assets having an aggregate net asset value at least equal to the full
amount, accrued on a daily basis, of its obligations with respect to any caps or
floors.
There is no limit on the amount of interest rate swap transactions that may be
entered into by a fund, unless so stated in its investment objectives, although
none of the funds presently intends to engage in such transactions in excess of
5% of its total assets. These transactions may in some instances involve the
delivery of securities or other underlying assets by a fund or its counterparty
to collateralize obligations under the swap.
Under the documentation currently used in those markets, the risk of loss with
respect to interest rate swaps is limited to the net amount of the interest
payments that a fund is contractually obligated to make. If the other party to
an interest rate swap that is not collateralized defaults, a fund would risk the
loss of the net amount of the payments that it contractually is entitled to
receive. A fund may buy and sell (i.e., write) caps and floors without
----
limitation, subject to the segregation requirement described above.
In addition to the instruments, strategies and risks described in this SAI and
in the prospectus, there may be additional opportunities in connection with
options, futures contracts, forward currency contracts and other hedging
techniques that become available as a fund's sub-adviser develops new
techniques, as regulatory authorities broaden the range of permitted
transactions, and as new instruments are developed. The funds' sub-advisers may
use these opportunities to the extent they are consistent with each fund's
investment objective and as are permitted by a fund's investment limitations and
applicable regulatory requirements.
40
Index Options. In seeking to hedge all or a portion of its investments, a fund
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may purchase and write put and call options on securities indices listed on U.S.
or foreign securities exchanges or traded in the over-the-counter market, which
indices include securities held in the funds. The funds with such option writing
authority may write only covered options. A fund may also use securities index
options as a means of participating in a securities market without making direct
purchases of securities.
A securities index measures the movement of a certain group of securities by
assigning relative values to the securities included in the index. Options on
securities indices are generally similar to options on specific securities.
Unlike options on securities, however, options on securities indices do not
involve the delivery on an underlying security; the option in the case of an
option on a securities index represents the holder's right to obtain from the
writer in cash a fixed multiple of the amount by which the exercise price
exceeds (in the case of a call) or is less than (in the case of a put) the
closing value of the underlying securities index on the exercise date. A fund
may purchase and write put and call options on securities indices or securities
index futures contracts that are traded on a U.S. exchange or board of trade or
a foreign exchange, to the extent permitted under rules and interpretations of
the CFTC, as a hedge against changes in market conditions and interest rates,
and for duration management, and may enter into closing transactions with
respect to those options to terminate existing positions. A securities index
fluctuates with changes in the market values of the securities included in the
index. Securities index options may be based on a broad or narrow market index
or on an industry or market segment.
The delivery requirements of options on securities indices differ from options
on securities. Unlike a securities option, which contemplates the right to take
or make delivery of securities at a specified price, an option on a securities
index gives the holder the right to receive a cash "exercise settlement amount"
equal to (i) the amount, if any, by which the fixed exercise price of the option
exceeds (in the case of a put) or is less than (in the case of a call) the
closing value of the underlying index on the date of exercise, multiplied by
(ii) a fixed "index multiplier." Receipt of this cash amount will depend upon
the closing level of the securities index upon which the option is based being
greater than, in the case of a call, or less than, in the case of a put, the
exercise price of the option. The amount of cash received will be equal to the
difference between the closing price of the index and the exercise price of the
option expressed in dollars times a specified multiple. The writer of the option
is obligated, in return for the premium received, to make delivery of this
amount. The writer may offset its position in securities index options prior to
expiration by entering into a closing transaction on an exchange or it may allow
the option to expire unexercised.
The effectiveness of purchasing or writing securities index options as a hedging
technique will depend upon the extent to which price movements in the portion of
a securities portfolio being hedged correlate with price movements of the
securities index selected. Because the value of an index option depends upon
movements in the level of the index rather than the price of a particular
security, whether a fund realizes a gain or loss from the purchase of writing of
options on an index depends upon movements in the level of prices in the market
generally or, in the case of certain indices, in an industry or market segment,
rather than movements in the price of a particular security. As a result,
successful use by a fund of options on securities indices is subject to the
sub-adviser's ability to predict correctly movements in the direction of the
market generally or of a particular industry. This ability contemplates
different skills and techniques from those used in predicting changes in the
price of individual securities.
Securities index options are subject to position and exercise limits and other
regulations imposed by the exchange on which they are traded. The ability of a
fund to engage in closing purchase transactions with respect to securities index
options depends on the existence of a liquid secondary market. Although a fund
will generally purchase or write securities index options only if a liquid
secondary market for the options purchased or sold appears to exist, no such
secondary market may exist, or the market may cease to exist at some future
date, for some options. No assurance can be given that a closing purchase
transaction can be effected when the sub-adviser desires that a fund engage in
such a transaction.
WEBS and Other Index-Related Securities. Subject to limitations under the 1940
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Act, a fund may invest in shares of an investment company whose shares are known
as "World Equity Benchmark Shares" or "WEBS." WEBS have been listed for trading
on the American Stock Exchange, Inc. The funds also may invest in the
CountryBaskets Index Fund, Inc., or another fund the shares of which are the
substantial equivalent of WEBS. A fund may invest in S&P Depositary Receipts, or
"SPDRs." SPDRs are securities that represent ownership in a long-term unit
investment trust that holds a portfolio of common stocks designed to
41
track the performance of the S&P 500 Index. A fund investing in a SPDR would be
entitled to the dividends that accrue to the S&P 500 stocks in the underlying
portfolio, less trust expenses. Investing in these securities may result in
duplication of certain fees and expenses paid by these securities in addition to
the advisory fees and expenses paid by the fund.
Euro Instruments. The funds may each make investments in Euro instruments. Euro
- ----------------
instruments are U.S. dollar-denominated futures contracts, or options thereon,
which are linked to the London Interbank Offered Rate (the "LIBOR"), although
foreign currency-denominated instruments are available from time to time. Euro
futures contracts enable purchasers to obtain a fixed rate for the lending of
funds, and sellers to obtain a fixed rate for borrowings. A fund might use Euro
futures contracts and options thereon to hedge against changes in LIBOR, which
may be linked to many interest rate swaps and fixed income instruments.
Special Investment Considerations and Risks. The successful use of the
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investment practices described above with respect to futures contracts, options
on futures contracts, forward contracts, options on securities, options on
foreign currencies and swaps and swap-related products draws upon skills and
experience which are different from those needed to select the other instruments
in which a fund may invest. Should interest or exchange rates, or the prices of
securities or financial indices move in an unexpected manner, a fund may not
achieve the desired benefits of the foregoing instruments or may realize losses
and thus be in a worse position than if such strategies had not been used.
Unlike many exchange-traded futures contracts and options on futures contracts,
there are no daily price fluctuation limits with respect to options on
currencies, forward contracts and other negotiated or over-the-counter
instruments, and adverse market movements could therefore continue to an
unlimited extent over a period of time. In addition, the correlation between
movements in the price of the securities and currencies hedged or used for cover
will not be perfect and could produce unanticipated losses.
A fund's ability to dispose of its positions in the foregoing instruments will
depend on the availability of liquid markets in the instruments. Markets in a
number of the instruments are relatively new and still developing, and it is
impossible to predict the amount of trading interest that may exist in those
instruments in the future.
Particular risks exist with respect to the use of each of the foregoing
instruments and could result in such adverse consequences to a fund as: the
possible loss of the entire premium paid for an option bought by a fund; the
inability of the fund, as the writer of a covered call option, to benefit from
the appreciation of the underlying securities above the exercise price of the
option; and the possible need to defer closing out positions in certain
instruments to avoid adverse tax consequences. As a result, no assurance can be
given that a fund will be able to use those instruments effectively for their
intended purposes.
In connection with certain of its hedging transactions, a fund must segregate
assets with the fund's custodian bank to ensure that such fund will be able to
meet its obligations pursuant to these instruments. Segregated assets generally
may not be disposed of for so long as a fund maintains the positions giving rise
to the segregation requirement. Segregation of a large percentage of a fund's
assets could impede implementation of that fund's investment policies or its
ability to meet redemption requests or other current obligations.
Additional Risks of Options on Foreign Currencies, Forward Contracts and Foreign
- --------------------------------------------------------------------------------
Instruments. Unlike transactions entered into by a fund in futures contracts,
- -----------
options on foreign currencies and forward contracts are not traded on contract
markets regulated by the CFTC or (with the exception of certain foreign currency
options) by the SEC. To the contrary, such instruments are traded through
financial institutions acting as market-makers, although foreign currency
options are also traded on certain national securities exchanges, such as the
Philadelphia Stock Exchange and the Chicago Board Options Exchange, subject to
SEC regulation.
Options on currencies may be traded over-the-counter. In an over-the-counter
trading environment, many of the protections afforded to exchange participants
will not be available. For example, there are no daily price fluctuation limits,
and adverse market movements could therefore continue to an unlimited extent
over a period of time. Although the buyer of an option cannot lose more than the
amount of the premium plus related transaction costs, this entire amount could
be lost. Moreover, an option writer and a buyer or seller of futures or forward
contracts could lose amounts substantially in excess of any premium received or
initial margin or collateral posted due to the potential additional margin and
collateral requirements associated with such positions.
Options on foreign currencies traded on national securities exchanges are within
the jurisdiction of the SEC, as are other securities traded on such exchanges.
As a result, many of the protections provided to traders on organized exchanges
will be available with respect to such transactions. In particular, all foreign
currency
42
option positions entered into on a national securities exchange are cleared and
guaranteed by the OCC, thereby reducing the risk of counterparty default.
Further, a liquid secondary market in options traded on a national securities
exchange may be more readily available than in the over-the-counter market,
potentially permitting a fund to liquidate open positions at a profit prior to
exercise or expiration, or to limit losses in the event of adverse market
movements.
The purchase and sale of exchange-traded foreign currency options, however, is
subject to the risks of the availability of a liquid secondary market described
above, as well as the risks regarding adverse market movements, margining of
options written, the nature of the foreign currency market, possible
intervention by governmental authorities and the effects of other political and
economic events.
In addition, exchange-traded options on foreign currencies involve certain risks
not presented by the over-the-counter market. For example, exercise and
settlement of such options must be made exclusively through the OCC, which has
established banking relationships in applicable foreign countries for this
purpose. As a result, the OCC may, if it determines that foreign government
restrictions or taxes would prevent the orderly settlement of foreign currency
option exercises, or would result in undue burdens on the OCC or its clearing
member, impose special procedures on exercise and settlement. These include such
things as technical changes in the mechanics of delivery of currency, the fixing
of dollar settlement prices or prohibitions on exercise.
In addition, options on U.S. government securities, futures contracts, options
on futures contracts, forward contracts and options on foreign currencies may be
traded on foreign exchanges and over-the-counter in foreign countries. Such
transactions are subject to the risk of governmental actions affecting trading
in or the prices of foreign currencies or securities. The value of such
positions also could be adversely affected by: (i) other complex foreign
political and economic factors; (ii) less availability than that available in
the United States of data on which to make trading decisions; (iii) delays in a
fund's ability to act upon economic events occurring in foreign markets during
non-business hours in the United States; (iv) the imposition of different
exercise and settlement terms and procedures and margin requirements than in the
United States; and (v) low trading volume.
SOVEREIGN DEBT SECURITIES (IDEX GABELLI GLOBAL GROWTH)
The IDEX Gabelli Global Growth portfolio may invest in securities issued or
guaranteed by any country and denominated in any currency. The fund expects that
it generally will invest in developed countries including Australia, Canada,
Finland, France, Germany, the Netherlands, Japan, Italy, New Zealand, Norway,
Spain, Sweden, the United Kingdom and the United States. The obligations of
governmental entities have various kinds of government support and include
obligations issued or guaranteed by governmental entities with taxing power.
These obligations may or may not be supported by the full faith and credit of a
government. Debt securities issued or guaranteed by foreign governmental
entities have credit characteristics similar to those of domestic debt
securities but include additional risks. These additional risks include those
resulting from devaluation of currencies, future adverse political and economic
developments and other foreign governmental laws.
The fund may also purchase securities issued by semi-governmental or
supranational agencies such as the Asian Developmental Bank, the International
Bank for Reconstruction and Development, the Export-Import Bank and the European
Investment Bank. The governmental members, or "stockholders," usually make
initial capital contributions to the supranational entity and in many cases are
committed to make additional capital contributions if the supranational entity
is unable to repay its borrowings. The fund will not invest more than 25% of its
assets in the securities of supranational entities.
OTHER INVESTMENT COMPANIES
Subject to its investment restrictions, a fund may invest in securities issued
by other investment companies as permitted. A fund may indirectly bear a portion
of any investment advisory fees and expenses paid by funds in which it invests,
in addition to the advisory fees and expenses paid by the fund.
GEI Short-Term Investment Fund
The IDEX GE International Equity fund and IDEX GE U.S. Equity fund may invest in
the GEI Short-Term Investment Fund (the "Investment Fund"), an investment fund
created specifically to serve as a vehicle for the collective investment of cash
balances of accounts advised by GEAM or its affiliate, GEIC. The Investment
43
Fund invests exclusively in certain money market instruments. More particularly,
the Investment Fund may invest in: (i) securities issued or guaranteed by the
U.S. government or one of its agencies or instrumentalities; (ii) debt
obligations of banks, savings and loan institutions, insurance companies and
mortgage bankers; (iii) commercial paper and notes, including those with
variable and floating rates of interest; (iv) debt obligations of foreign
branches of foreign banks; (v) debt obligations issued or guaranteed by one or
more foreign governments or any of their political subdivisions, agencies or
instrumentalities, including obligations of supranational entities; (vi) debt
securities issued by foreign issuers; and (vii) repurchase agreements. The
Investment Fund is advised by GEAM. No advisory fee is charged by GEAM to the
Investment Fund, nor will the IDEX GE International Equity fund and IDEX GE U.S.
Equity fund incur any sales charge, redemption fee, distribution fee or service
fee in connection with its investments in the Investment Fund. There may be a
duplication of certain other fees and expenses.
WHEN-ISSUED, DELAYED SETTLEMENT AND FORWARD DELIVERY SECURITIES
Securities may be purchased and sold on a "when-issued," "delayed settlement,"
or "forward (delayed) delivery" basis.
"When-issued" or "forward delivery" refers to securities whose terms are
available, and for which a market exists, but which are not available for
immediate delivery. When-issued or forward delivery transactions may be expected
to occur a month or more before delivery is due.
A fund may engage in when-issued transactions to obtain what is considered to be
an advantageous price and yield at the time of the transaction. When a fund
engages in when-issued or forward delivery transactions, it will do so for the
purpose of acquiring securities consistent with its investment objective and
policies and not for the purpose of investment leverage.
"Delayed settlement" is a term used to describe settlement of a securities
transaction in the secondary market which will occur sometime in the future. No
payment or delivery is made by a fund until it receives payment or delivery from
the other party for any of the above transactions.
The fund will segregate with its custodian cash, U.S. government securities or
other liquid assets at least equal to the value or purchase commitments until
payment is made. The segregated securities will either mature or, if necessary,
be sold on or before the settlement date. Typically, no income accrues on
securities purchased on a delayed delivery basis prior to the time delivery of
the securities is made, although a fund may earn income on securities it has
segregated to collateralize its delayed delivery purchases.
New issues of stocks and bonds, private placements and U.S. government
securities may be sold in this manner.
RISK FACTORS
At the time of settlement, the market value of the security may be more or less
than the purchase price. A fund bears the risk of such market value
fluctuations. These transactions also involve the risk that the other party to
the transaction may default on its obligation to make payment or delivery. As a
result, the fund may be delayed or prevented from completing the transaction and
may incur additional costs as a consequence of the delay.
ZERO COUPON, PAY-IN-KIND AND STEP COUPON SECURITIES
Subject to its investment restrictions, a fund may invest in zero coupon,
pay-in-kind and step-coupon securities. Zero-coupon bonds are issued and traded
at a discount from their face value. They do not entitle the holder to any
periodic payment of interest prior to maturity. Step coupon bonds trade at a
discount from their face value and pay coupon interest. The coupon rate is low
for an initial period and then increases to a higher coupon rate thereafter. The
discount from the face amount or par value depends on the time remaining until
cash payments begin, prevailing interest rates, liquidity of the security and
the perceived credit quality of the issuer. Pay-in-kind bonds give the issuer an
option to pay cash at a coupon payment date or give the holder of the security a
similar bond with the same coupon rate and a face value equal to the amount of
the coupon payment that would have been made. The IDEX Janus Flexible Income may
also invest in "strips," which are debt securities that are stripped of their
interest after the securities are issued, but otherwise are comparable to zero
coupon bonds.
Current federal income tax law requires holders of zero-coupon securities and
step-coupon securities to report the portion of the original issue discount on
such securities that accrues that year as interest income, even though the
holders receive no cash payments of interest during the year. In order to
qualify as a "regulated investment company" under the Internal Revenue Code of
1986 ("Code"), a fund must distribute its investment
44
company taxable income, including the original issue discount accrued on
zero-coupon or step-coupon bonds. Because it will not receive cash payments on a
current basis in respect of accrued original-issue discount on zero-coupon bonds
or step-coupon bonds during the period before interest payments begin, in some
years a fund may have to distribute cash obtained from other sources in order to
satisfy the distribution requirements under the Code. A fund might obtain such
cash from selling other portfolio holdings. These actions may reduce the assets
to which fund expenses could be allocated and may reduce the rate of return for
such fund. In some circumstances, such sales might be necessary in order to
satisfy cash distribution requirements even though investment considerations
might otherwise make it undesirable for a fund to sell the securities at the
time.
Generally, the market prices of zero-coupon bonds and strip securities are more
volatile than the prices of securities that pay interest periodically in cash
and they are likely to respond to changes in interest rates to a greater degree
than other types of debt securities having similar maturities and credit
quality.
INCOME PRODUCING SECURITIES
IDEX Janus Flexible Income focuses its investments in income-producing
securities.
IDEX Janus Flexible Income will purchase defaulted securities only when the
sub-adviser believes, based upon analysis of the financial condition, results of
operations and economic outlook of an issuer, that there is potential for
resumption of income payments and that the securities offer an unusual
opportunity for capital appreciation. Notwithstanding the sub-adviser's belief
as to the resumption of income payments, however, the purchase of any security
on which payment of interest or dividends is suspended involves a high degree of
risk. Such risk includes, among other things, the following:
Financial and Market Risks. Investments in securities that are in default
--------------------------
involve a high degree of financial and market risks that can result in
substantial, or at times even total, losses. Issuers of defaulted
securities may have substantial capital needs and may become involved in
bankruptcy or reorganization proceedings. Among the problems involved in
investments in such issuers is the fact that it may be difficult to obtain
information about the condition of such issuers. The market prices of such
securities also are subject to abrupt and erratic movements and above
average price volatility, and the spread between the bid and asked prices
of such securities may be greater than normally expected.
Disposition of Fund Securities. IDEX Janus Flexible Income generally
------------------------------
intends to purchase securities for which its sub-adviser expects an active
market to be maintained, defaulted securities may be less actively traded
than other securities making it more difficult to dispose of substantial
holdings of such securities at prevailing market prices. IDEX Janus
Flexible Income will limit its holdings of any such securities to amounts
that the sub-adviser believes could be readily sold, and its holdings of
such securities would, in any event, be limited so as not to limit IDEX
Janus Flexible Income's ability to readily dispose of its securities to
meet redemptions.
Other. Defaulted securities require active monitoring and may, at times,
-----
require participation in bankruptcy or receivership proceedings on behalf
of the IDEX Janus Flexible Income.
Other types of income producing securities that the funds may purchase include,
but are not limited to, the following:
Variable and Floating Rate Obligations. These types of securities are
--------------------------------------
relatively long-term instruments that often carry demand features
permitting the holder to demand payment of principal at any time or at
specified intervals prior to maturity.
Standby Commitments. These instruments, which are similar to a put, give a
-------------------
fund the option to obligate a broker, dealer or bank to repurchase a
security held by a fund at a specified price.
Tender Option Bonds. Tender option bonds are relatively long-term bonds
-------------------
that are coupled with the agreement of a third party (such as a broker,
dealer or bank) to grant the holders of such securities the option to
tender the securities to the institution at periodic intervals.
Inverse Floaters. Inverse floaters are instruments whose interest bears an
----------------
inverse relationship to the interest rate on another security. The funds
will not invest more than 5% of their respective assets in inverse
floaters.
The funds will purchase instruments with demand features, standby commitments
and tender option bonds primarily for the purpose of increasing the liquidity of
their portfolios.
. Risk Factors
These investments are subject to credit risk and market risk. Credit risk
relates to the party's ability to make payment upon demand; market risk relates
to the fact that the value of the security will be impacted by the rise and fall
of interest rates.
45
LENDING OF FUND SECURITIES
Subject to any applicable investment restriction relating to lending, a fund may
lend securities from its portfolio. Under applicable regulatory requirements
(which are subject to change), the following conditions apply to securities
loans: a) the loan must be continuously secured by liquid assets maintained on a
current basis in an amount at least equal to the market value of the securities
loaned; b) a fund must receive any dividends or interest paid by the issuer on
such securities; c) a fund must have the right to call the loan and obtain the
securities loaned at any time upon notice of not more than five business days,
including the right to call the loan to permit voting of the securities; and d)
a fund must receive either interest from the investment of collateral or a fixed
fee from the borrower. Securities loaned by a fund remain subject to
fluctuations in market value. A fund may pay reasonable finders, custodian and
administrative fees in connection with a loan. Securities lending, as with other
extensions of credit, involves the risk that the borrower may default. Although
securities loans will be fully collateralized at all times, a fund may
experience delays in, or be prevented from, recovering the collateral. During a
period that a fund seeks to enforce its rights against the borrower, the
collateral and the securities loaned remain subject to fluctuations in market
value. A fund may also incur expenses in enforcing its rights. If a fund has
sold the loaned security, it may not be able to settle the sale of the security
and may incur potential liability to the buyer of the security on loan for its
costs to cover the purchase. A fund will not lend securities to any adviser or
sub-adviser to the funds or their affiliates. By lending its securities, a fund
can increase its income by continuing to receive interest or dividends on the
loaned securities as well as by either investing the cash collateral in
short-term securities or by earning income in the form of interest paid by the
borrower when U.S. government securities are used as collateral.
JOINT TRADING ACCOUNTS
IDEX Janus Growth, IDEX Janus Global, IDEX Janus Flexible Income and IDEX Janus
Growth & Income, IDEX Janus Balanced, IDEX Janus Capital Appreciation, and other
clients of Janus and its affiliates, may place assets in joint trading accounts
for the purpose of making short-term investments in money market instruments.
The Board of Trustees must approve the participation of each of these funds in
these joint trading accounts and procedures pursuant to which the joint accounts
will operate. The joint trading accounts are to be operated pursuant to an
exemptive order issued to Janus and certain of its affiliates by the SEC. All
joint account participants, including these funds, will bear the expenses of the
joint trading accounts in proportion to their investments. Financial
difficulties of other participants in the joint accounts could cause delays or
other difficulties for the funds in withdrawing their assets from joint trading
accounts.
ILLIQUID SECURITIES
Subject to its investment restrictions, a fund may invest its assets in illiquid
securities (i.e., securities that are not readily marketable). The Board of
---
Trustees has authorized the sub-advisers to make liquidity determinations with
respect to its securities, including Rule 144A securities, commercial paper and
municipal lease obligations in accordance with the guidelines established by the
Board of Trustees. Under the guidelines, the sub- adviser will consider the
following factors in determining whether a Rule 144A security or a municipal
lease obligation is liquid: 1) the frequency of trades and quoted prices for the
security; 2) the number of dealers willing to purchase or sell the security and
the number of other potential purchasers; 3) the willingness of dealers to
undertake to make a market in the security; and 4) the nature of the marketplace
trades, including the time needed to dispose of the security, the method of
soliciting offers and the mechanics of the transfer. With respect to municipal
lease obligations, the sub-adviser of IDEX Federated Tax Exempt and IDEX Janus
Flexible Income will also consider factors unique to municipal lease obligations
including the general creditworthiness of the municipality, the importance of
the property covered by the lease obligation and the likelihood that the
marketability of the obligation will be maintained throughout the time the
obligation is held by the fund. The sale of illiquid securities often requires
more time and results in higher brokerage charges or dealer discounts and other
selling expenses than does the sale of securities eligible for trading on
national securities exchanges or in the over-the-counter markets. A fund may be
restricted in its ability to sell such securities at a time when the sub-adviser
deems it advisable to do so. In addition, in order to meet redemption requests,
a fund may have to sell other assets, rather than such illiquid securities, at a
time which is not advantageous.
SECURITIES SUBJECT TO REORGANIZATION (IDEX GABELLI GLOBAL GROWTH)
The IDEX Gabelli Global Growth fund may invest in securities for which a tender
or exchange offer has been made or announced and in securities of companies for
which a merger, consolidation, liquidation or reorganization proposal has been
announced if, in the judgment of Gabelli, there is a reasonable prospect of high
total
46
return significantly greater than the brokerage and other transaction expenses
involved.
In general, securities which are the subject of such an offer or proposal sell
at a premium to their historic market price immediately prior to the
announcement of the offer or may also discount what the stated or appraised
value of the security would be if the contemplated transaction were approved or
consummated.
Such investments may be advantageous when the discount significantly overstates
the risk of the contingencies involved; significantly undervalues the
securities, assets or cash to be received by shareholders of the prospective
portfolio company as a result of the contemplated transaction; or fails
adequately to recognize the possibility that the offer or proposal may be
replaced or superseded by an offer or proposal of greater value. The evaluation
of such contingencies requires unusually broad knowledge and experience on the
part of the sub-adviser which must appraise not only the value of the issuer and
its component businesses as well as the assets or securities to be received as a
result of the contemplated transaction but also the financial resources and
business motivation of the offer and the dynamics and business climate when the
offer of the proposal is in process. Since such investments are ordinarily
short-term in nature, they will tend to increase the turnover ratio of the
portfolio thereby increasing its brokerage and other transaction expenses.
Gabelli intends to select investments of the type described which, in its view,
have a reasonable prospect of capital appreciation which is significant in
relation to both risk involved and the potential of available alternate
investments
EQUITY EQUIVALENTS
(IDEX American Century Income & Growth)
In addition to investing in common stocks, the funds may invest in other equity
securities and equity equivalents, including securities that permit a fund to
receive an equity interest in an issuer, the opportunity to acquire an equity
interest in an issuer, or the opportunity to receive a return on its investment
that permits the fund to benefit from the growth over time in the equity of an
issuer. Examples of equity securities and equity equivalents include preferred
stock, convertible preferred stock and convertible debt securites.
The fund will limit its holdings of convertible debt securities to those that,
at the time of purchase, are rated at least B- by S&P or B3 by Moody's, or, if
not rated by S&P or Moody's, are of equivalent investment quality as determined
by the sub-adviser. A fund's investments in convertible debt securities and
other high-yield, non-convertible debt securites rated below investment-grade
will comprise less than 35% of the fund's net assets. Debt securities rated
below the four highest categories are not considered "investment-grade"
obligations. These securities have speculative characteristics and present more
credit risk than investment-grade obligations. Equity equivalents also may
include securities whose value or return is derived from the value or return of
a different security. Depositary receipts, are an example of the type of
derivative security in which the fund might invest.
REPURCHASE AND REVERSE REPURCHASE AGREEMENTS
Subject to its investment restrictions, a fund may enter into repurchase and
reverse repurchase agreements. Reverse repurchase agreements are also subject to
the applicable restrictions regarding senior securities. In a repurchase
agreement, a fund purchases a security and simultaneously commits to resell that
security to the seller at an agreed upon price on an agreed upon date within a
number of days (usually not more than seven) from the date of purchase. The
resale price reflects the purchase price plus an agreed upon incremental amount
which is unrelated to the coupon rate or maturity of the purchased security. A
repurchase agreement involves the obligation of the seller to pay the agreed
upon price, which obligation is in effect secured by the value (at least equal
to the amount of the agreed upon resale price and marked-to-market daily) of the
underlying security or collateral. A fund may engage in a repurchase agreement
with respect to any security in which it is authorized to invest. While it does
not presently appear possible to eliminate all risks from these transactions
(particularly the possibility of a decline in the market value of the underlying
securities, as well as delays and costs to a fund in connection with bankruptcy
proceedings), it is the policy of each fund to limit repurchase agreements to
those parties whose creditworthiness has been reviewed and found satisfactory by
the sub-adviser for that fund and approved by the Board of Trustees. In
addition, the funds currently intend to invest primarily in repurchase
agreements collateralized by cash, U.S. government securities, or money market
instruments whose value equals at least 100% of the repurchase price,
marked-to-market daily.
In a reverse repurchase agreement, a fund sells a portfolio instrument to
another party, such as a bank or broker-dealer, in return for cash and agrees to
repurchase the instrument at a particular price and time. While a reverse
repurchase agreement is outstanding, a fund will segregate with its custodian
cash and appropriate liquid assets with the funds' custodian to cover its
47
obligation under the agreement. The funds will enter into reverse repurchase
agreements only with parties the investment sub-adviser for each fund deems
creditworthy and that have been reviewed by the Board of Trustees.
The IDEX Goldman Sachs Growth may, together with other registered investment
companies managed by GSAM or its affiliates, transfer uninvested cash balances
into a single joint account, the daily aggregate balance of which will be
invested in one or more repurchase agreements.
Repurchase agreements involve the risk that the seller will fail to repurchase
the security, as agreed. In that case, a fund will bear the risk of market value
fluctuations until the security can be sold and may encounter delays and incur
costs in liquidating the security. In the event of bankruptcy or insolvency of
the seller, delays and costs are incurred.
Reverse repurchase agreements may expose a fund to greater fluctuations in the
value of its assets.
PASS-THROUGH SECURITIES
Each of the funds may, in varying degrees, invest in various types of
pass-through securities, such as mortgage-backed securities, asset-backed
securities and participation interests. A pass-through security is a share or
certificate of interest in a pool of debt obligations that has been repackaged
by an intermediary, such as a bank or broker-dealer. The purchaser receives an
undivided interest in the underlying pool of securities. The issuers of the
underlying securities make interest and principal payments to the intermediary
which are passed through to purchasers, such as the funds.
The most common type of pass-through securities are mortgage-backed securities.
Government National Mortgage Association ("GNMA") Certificates are mortgage-
backed securities that evidence an undivided interest in a pool of mortgage
loans. GNMA Certificates differ from traditional bonds in that principal is paid
back monthly by the borrowers over the term of the loan rather than returned in
a lump sum at maturity. A fund will generally purchase "modified pass-through"
GNMA Certificates, which entitle the holder to receive a share of all interest
and principal payments paid and owned on the mortgage pool, net of fees paid to
the "issuer" and GNMA, regardless of whether or not the mortgagor actually makes
the payment. GNMA Certificates are backed as to the timely payment of principal
and interest by the full faith and credit of the U.S. government.
The Federal Home Loan Mortgage Corporation ("FHLMC") issues two types of
mortgage pass-through securities: mortgage participation certificates ("PCs")
and guaranteed mortgage certificates ("GMCs"). PCs resemble GNMA Certificates in
that each PC represents a pro rata share of all interest and principal payments
made and owned on the underlying pool. FHLMC guarantees timely payments of
interest on PCs and the full return of principal. GMCs also represent a pro rata
interest in a pool of mortgages. However, these instruments pay interest
semi-annually and return principal once a year in guaranteed minimum payments.
This type of security is guaranteed by FHLMC as to timely payment of principal
and interest, but is not backed by the full faith and credit of the U.S.
government.
The Federal National Mortgage Association ("FNMA") issues guaranteed mortgage
pass-through certificates ("FNMA Certificates"). FNMA Certificates resemble GNMA
Certificates in that each FNMA Certificate represents a pro rata share of all
interest and principal payments made and owned on the underlying pool. This type
of security is guaranteed by FNMA as to timely payment of principal and
interest, but it is not backed by the full faith and credit of the U.S.
government.
Each of the mortgage-backed securities described above is characterized by
monthly payments to the holder, reflecting the monthly payments made by the
borrowers who received the underlying mortgage loans. The payments to the
security holders (such as a fund), like the payments on the underlying loans,
represent both principal and interest. Although the underlying mortgage loans
are for specified periods of time, such as 20 or 30 years, the borrowers can,
and typically do, pay them off sooner. Thus, the security holders frequently
receive prepayments of principal in addition to the principal that is part of
the regular monthly payments. A borrower is more likely to prepay a mortgage
that bears a relatively high rate of interest. This means that in times of
declining interest rates, some of a fund's higher yielding mortgage-backed
securities may be converted to cash. That fund will then be forced to accept
lower interest rates when that cash is used to purchase additional securities in
the mortgage-backed securities sector or in other investment sectors. Mortgage
and asset-backed securities may have periodic income payments or may pay
interest at maturity (as is the case with Treasury bills or zero-coupon bonds).
Asset-backed securities represent interests in pools of consumer loans and are
backed by paper or accounts receivables originated by banks, credit card
companies or other providers of credit. Generally, the originating bank
48
or credit provider is neither the obligor or guarantor of the security and
interest and principal payments ultimately depend upon payment of the underlying
loans by individuals. Tax-exempt asset-backed securities include units of
beneficial interests in pools of purchase contracts, financing leases, and sales
agreements that may be created when a municipality enters into an installment
purchase contract or lease with a vendor. Such securities may be secured by the
assets purchased or leased by the municipality; however, if the municipality
stops making payments, there generally will be no recourse against the vendor.
The market for tax-exempt asset-backed securities is still relatively new. These
obligations are likely to involve unscheduled prepayments of principal.
HIGH YIELD/HIGH-RISK BONDS
High-yield/high-risk bonds, below investment grade securities (commonly known as
"junk bonds") involve significant credit and liquidity concerns and fluctuating
yields, and are not suitable for short-term investing. Higher yields are
ordinarily available on fixed-income securities which are unrated or are rated
in the lower rating categories of recognized rating services such as Moody's and
Standard & Poor's.
Valuation risks. Lower rated bonds also involve the risk that the issuer will
not make interest or principal payments when due. In the event of an
unanticipated default, a fund owning such bonds would experience a reduction in
its income, and could expect a decline in the market value of the securities so
affected. Such funds, furthermore, may incur additional costs in seeking the
recovery of the defaulted securities. More careful analysis of the financial
condition of each issuer of lower rated securities is therefore necessary.
During an economic downturn or substantial period of rising interest rates,
highly leveraged issuers may experience financial stress which would adversely
affect their ability to service their principal and interest payments
obligations, to meet projected business goals and to obtain additional
financing.
The market prices of lower grade securities are generally less sensitive to
interest rate changes than higher rated investments, but more sensitive to
adverse economic or political changes or individual developments specific to the
issuer. Periods of economic or political uncertainty and change can be expected
to result in volatility of prices of these securities. Past experience with
high-yield securities in a prolonged economic downturn may not provide an
accurate indication of future performance during such periods.
Liquidity risks. Lower rated securities also may have less liquid markets than
higher rated securities, and their liquidity as well as their value may be more
severely affected by adverse economic conditions. Adverse publicity and investor
perceptions as well as new or proposed laws may also have a greater negative
impact on the market for lower rated bonds.
Unrated securities are not necessarily of lower quality than rated securities,
but the markets for lower rated and nonrated securities are more limited than
those in which higher rated securities are traded. In addition, an economic
downturn or increase in interest rates is likely to have a greater negative
effect on: (i) the market for lower rated and nonrated securities; (ii) the
value of high yield debt securities held by a fund; (iii) the new asset value of
a fund holding such securities; and (iv) the ability of the bonds' issuers to
repay principal and interest, meet projected business goals and obtain
additional financing than on higher rated securities.
WARRANTS AND RIGHTS
Subject to its investment restrictions, a fund may invest in warrants and
rights. A warrant is a type of security that entitles the holder to buy a
proportionate amount of common stock at a specified price, usually higher than
the market price at the time of issuance, for a period of years or to
perpetuity. In contrast, rights, which also represent the right to buy common
shares, normally have a subscription price lower than the current market value
of the common stock and a life of two to four weeks.
U.S. GOVERNMENT SECURITIES
Examples of the types of U.S. government securities that a fund may hold
include, in addition to those described in the prospectus and direct obligations
of the U.S. Treasury, the obligations of the Federal Housing Administration,
Farmers Home Administration, Small Business Administration, General Services
Administration, Central Bank for Cooperatives, Federal Farm Credit Banks,
Federal Home Loan Bank, Federal Intermediate Credit Banks, Federal Land Banks
and Maritime Administration. U.S. government securities may be supported by the
full faith and credit of the U.S. government (such as securities of the Small
Business Administration); by the right of the issuer to borrow from the Treasury
(such as securities of the Federal Home Loan Bank); by the discretionary
authority of the U.S. government to purchase the agency's obligations (such as
securities of the Federal National Mortgage Association); or only by the credit
of the issuing agency.
49
TEMPORARY DEFENSIVE POSITION
For temporary defensive purposes, a portfolio may, at times, choose to hold some
portion of its net assets in cash, or to invest that cash in a variety of debt
securities. This may be done as a defensive measure at times when desirable
risk/reward characteristics are not available in stocks or to earn income from
otherwise uninvested cash. When a fund increases its cash or debt investment
position, its income may increase while its ability to participate in stock
market advances or declines decrease. Furthermore, when a fund assumes a
temporary defensive position it may not be able to achieve its investment
objective.
MONEY MARKET RESERVES
(IDEX T. Rowe Price Small Cap and IDEX T. Rowe Price Dividend Growth)
It is expected that these funds will invest their cash reserves primarily in a
money market fund established for the exclusive use of the T. Rowe Price family
of mutual funds and other clients of T. Rowe Price and Price-Fleming. The
Reserve Investment Fund ("RIF") and Government Reserve Investment Fund ("GRIF")
are series of Reserve Investment Funds, Inc. Additional series may be created in
the future. These funds were created and operate pursuant to an Exemptive Order
issued by the SEC (Investment Company Act Release No. IC-22770, July 29, 1997).
The funds must comply with the requirements of Rule 2a-7 under the 1940 Act
governing money market funds. To that end, the RIF invests at least 95% of its
total assets in prime money market instruments receiving the highest credit
rating from at least one Nationally Recognized Statistical Rating Organization.
The GRIF invests primarily in a portfolio of U.S. Government-backed securities,
primarily U.S. Treasuries, and repurchase agreements thereon.
The RIF and GRIF provide very efficient means of managing the cash reserves of
the funds. While the RIF does not pay an advisory fee to the investment manager,
they will incur other expenses. However, the RIF and GRIF are expected by T.
Rowe Price to operate at very low expense ratios. The funds will only invest in
the RIF or GRIF to the extent it is consistent with their objectives and
programs and the terms of the Exemptive Order issued by the SEC.
The RIF and GRIF are not insured or guaranteed by the U.S. government, and there
is no assurance they will maintain a stable net asset value of $1.00 per share.
Investing in these securities may result in duplication of certain fees and
expenses.
50
48
TURNOVER RATE
Fund* October 31, 2000
----- ----------------
IDEX Alger Aggressive Growth 107.81%
IDEX GE International Equity 108.37%
IDEX Janus Capital Appreciation 103.64%
IDEX Janus Global 52.51%
IDEX Janus Growth 40.71%
IDEX Jennison Equity Opportunity** 244.18%
IDEX NWQ Value Equity 49.75%
IDEX LKCM Strategic Total Return 56.08%
IDEX Dean Asset Allocation 28.15%
IDEX Janus Balanced 70.87%
IDEX Janus Flexible Income 165.55%
IDEX AEGON Income Plus 11.37%
IDEX Federated Tax Exempt*** 67.32%
IDEX Goldman Sachs Growth 25.10%
IDEX T. Rowe Price Dividend Growth 58.32%
IDEX T. Rowe Price Small Cap 52.97%
IDEX Salomon All Cap 91.39%
IDEX Pilgrim Baxter Mid Cap Growth 129.20%
IDEX Pilgrim Baxter Technology 142.19%
IDEX GE U.S. Equity 110.96%
IDEX Transamerica Small Company 18.58%
IDEX Transamerica Equity 12.86%
IDEX Great Companies -- AmericaSM 2.11%
IDEX Great Companies -- TechnologySM 11.25%
IDEX Great Companies -- Global2 15.15%
IDEX Gabelli Global Growth --
- ----------
* Information is not included for IDEX Janus Growth & Income and IDEX Munder
Net50, as they commenced operations on December 15, 2000 and for IDEX
American Century Income & Growth, IDEX American Century International and
IDEX Isabelle Small Cap Value as they commence operations on April 2, 2001.
** Prior to December 1, 2000, C.A.S.E. Management, Inc. served as sub-adviser
to this fund and the fund was named IDEX C.A.S.E. Growth.
*** Prior to June 15, 2000, AEGON USA Investment Management, Inc. served as
sub-adviser to this fund.
As stated in the prospectus, each of the funds generally intends to purchase and
sell securities as deemed appropriate by the fund's sub-adviser to further a
fund's stated investment objective, and the rate of fund turnover is not
expected to be a limiting factor when changes are deemed to be appropriate. Fund
transactions for IDEX Federated Tax Exempt and IDEX AEGON Income Plus are
ordinarily undertaken to achieve each fund's investment objective in light of
anticipated movements in the level of interest rates. The investment policies of
IDEX Federated Tax Exempt and IDEX AEGON Income Plus may lead to frequent
changes in investments, particularly in periods of rapidly fluctuating interest
rates.
These percentages are calculated by dividing the lesser of purchases or sales of
fund securities during the fiscal year by the monthly average of the value of
such securities (excluding from the computation all securities, including
options, with maturities at the time of acquisition of one year or less). For
example, a fund turnover rate of 100% would mean that all of a fund's securities
(except those excluded from the calculation) were replaced once in a period of
one year. A high rate of fund turnover generally involves correspondingly
greater brokerage commission expenses.
Turnover rates may vary greatly from year to year, as well as within a
particular year, and may also be affected by cash requirements for redemptions
of a fund's shares and by requirements, the satisfaction of which enable the
fund to receive favorable tax treatment. Because the rate of fund turnover is
not a limiting factor, particular holdings may be sold at any time if investment
judgment or fund operations make a sale advisable. As a result, the annual fund
turnover rate in future years may exceed the percentage shown above.
51
INVESTMENT ADVISORY AND OTHER SERVICES
IDEX Mutual Funds has entered into a Management and Investment Advisory
Agreement ("Advisory Agreement") on behalf of each fund with Idex Management,
Inc. ("IMI"), located at 570 Carillon Parkway, St. Petersburg, Florida 33716.
IMI supervises each respective fund's investments and conducts its investment
program.
The Advisory Agreement provides that IMI will perform the following services or
cause them to be performed by others: (i) furnish to the fund investment advice
and recommendations; (ii) supervise the purchase and sale of securities as
directed by appropriate fund officers, and (iii) be responsible for the
administration of each fund. For services to IDEX Janus Capital Appreciation,
IDEX Janus Global, IDEX Janus Growth and IDEX Janus Balanced, IMI receives an
annual fee, computed daily and paid monthly, equal to 1.00% of the first $750
million of each fund's average daily net assets, 0.90% of the next $250 million
of each fund's average daily net assets, and 0.85% of the average daily net
assets of that fund in excess of $1 billion. For services to IDEX Janus Growth &
Income, IMI receives an annual fee, computed daily and paid monthly, equal to
1.00% of the first $100 million of the fund's average daily net assets, 0.95% of
the next $400 million, and 0.85% of average daily net assets in excess of $500
million. For services to IDEX Pilgrim Baxter Technology, IMI receives 1.00% of
the first $500 million of the fund's average daily net assets and 0.90% of
average daily net assets over $500 million. For services to IDEX Janus Flexible
Income, IMI receives 0.90% of the first $100 million, 0.80% of the next $150
million, and 0.70% of the fund's average daily net assets over $250 million. For
services to IDEX AEGON Income Plus and IDEX Federated Tax Exempt, IMI receives
0.60% of each fund's average daily net assets. For services to IDEX Alger
Aggressive Growth, IDEX GE International Equity, IDEX Jennison Equity
Opportunity, IDEX NWQ Value Equity, IDEX LKCM Strategic Total Return, IDEX Dean
Asset Allocation, IDEX Goldman Sachs Growth, IDEX T. Rowe Price Dividend Growth,
IDEX Salomon All Cap, IDEX Pilgrim Baxter Mid Cap Growth, IDEX T. Rowe Price
Small Cap, IDEX GE U.S. Equity, IDEX Transamerica Small Company, IDEX
Transamerica Equity, IDEX Great Companies -- AmericaSM, IDEX Great Companies --
TechnologySM, and IDEX Great Companies -- Global2, IMI receives 0.80% of the
first $500 million of each fund's average daily net assets and 0.70% of each
fund's average daily net assets over $500 million. For services to IDEX Gabelli
Global Growth, IMI receives 1.00% of the first $500 million of the fund's
average daily net assets, 0.90% of average daily net assets from $500 million to
$1 billion, and 0.80% of average daily net assets over $1 billion. For services
to IDEX Munder Net50, IMI receives 1.00% of the first $1 billion of the fund's
average daily net assets and 0.95% of average daily net assets in excess of $1
billion. For services to IDEX American Century Income & Growth, IMI receives
0.90% of the first $100 million of the fund's average daily net assets, 0.85% of
the next $150 million, and 0.80% of average daily net assets in excess of $250
million. For services to IDEX American Century International, IMI receives 1.00%
of the first $50 million of the fund's average daily net assets, 0.95% of the
next $100 million, 0.90% of the next $350 million, and 0.85% of average daily
net assets in excess of $500 million. For services to IDEX Isabelle Small Cap
Value, IMI receives 0.90% of the first $200 million of the fund's average daily
net assets and 0.85% of average daily net assets in excess of $200 million.
The duties and responsibilities of the investment adviser are specified in the
Advisory Agreement. The Advisory Agreement was approved by the Board of Trustees
(including a majority of trustees who are not parties to the Advisory Agreement
or interested persons, as defined by the 1940 Act, of any such party). The
Advisory Agreement is not assignable and may be terminated without penalty upon
60 days' written notice at the option of either the Fund, IMI or by a vote of
shareholders of each fund. The Advisory Agreement provides that it can be
continued from year to year so long as such continuance is specifically approved
annually (a) by the Board of Trustees or by a majority of the outstanding shares
of each fund and (b) by a majority vote of the Trustees who are not parties to
the Advisory Agreement or interested persons of any such party cast in person at
a special meeting called for such purposes.
The Advisory Agreement also provides that IMI shall not be liable to the funds
or to any shareholder for any error of judgment or mistake of law or for any
loss suffered by a fund or by any shareholder in connection with matters to
which the Advisory Agreement relates, except for a breach of fiduciary duty or a
loss resulting from willful misfeasance, bad faith, gross negligence, or
reckless disregard on the part of IMI in the performance of its duties
thereunder.
The Advisory Agreement became effective as follows: IDEX Federated Tax Exempt,
IDEX Great Companies -- America and IDEX Great Companies -- Technology - June
15, 2000; IDEX AEGON Income Plus - April 22, 1992; IDEX Alger Aggressive Growth
and IDEX LKCM Strategic Total Return - September 30, 1994; IDEX Dean Asset
Allocation - June 1, 1995; IDEX Jennison Equity Opportunity - December 1, 2000;
IDEX NWQ Value
52
Equity - October 30, 1996; IDEX GE International Equity - February 1, 1997; IDEX
Janus Capital Appreciation, IDEX Janus Global, IDEX Janus Growth, IDEX Janus
Balanced and IDEX Janus Flexible Income - June 25, 1998; IDEX Pilgrim Baxter Mid
Cap Growth, IDEX T. Rowe Price Small Cap, IDEX Goldman Sachs Growth, IDEX T.
Rowe Price Dividend Growth, IDEX Salomon All Cap. - March 1, 1999; IDEX Pilgrim
Baxter Technology, IDEX GE U.S. Equity, IDEX Transamerica Small Company and IDEX
Transamerica Equity - March 1, 2000; IDEX Great Companies -- Global2 and IDEX
Gabelli Global Growth - September 1, 2000; IDEX Janus Growth & Income and IDEX
Munder Net50 -- December 1, 2000; and IDEX American Century Income & Growth,
IDEX American Century International, and IDEX Isabelle Small Cap Value -- March
1, 2001.
Each fund pays its allocable share of the fees and expenses of a fund's
non-interested trustees, custodian and transfer agent fees, brokerage
commissions and all other expenses in connection with the execution of its
portfolio transactions, administrative, clerical, recordkeeping, bookkeeping,
legal, auditing and accounting expenses, interest and taxes, expenses of
preparing tax returns, expenses of shareholders' meetings and preparing,
printing and mailing proxy statements (unless otherwise agreed to by the funds
or IMI, expenses of preparing and typesetting periodic reports to shareholders
(except for those reports the funds permit to be used as sales literature), and
the costs, including filing fees, of renewing or maintaining registration of
fund shares under federal and state law. The investment adviser will reimburse a
fund, or waive fees, or both, whenever, in any fiscal year, the total cost to a
fund of normal operating expenses chargeable to its income account, including
the investment advisory fee but excluding brokerage commissions, interest, taxes
and 12b-1 fees, exceeds, in the case of IDEX American Century International
1.60% of average daily net assets; in the case of the IDEX Janus Capital
Appreciation, IDEX Janus Growth, IDEX Janus Balanced, IDEX Isabelle Small Cap
Value, IDEX American Century Income & Growth, and IDEX Janus Flexible Income,
1.50% of each fund's average daily net assets; 1.40% for IDEX Pilgrim Baxter
Technology, IDEX Gabelli Global Growth, IDEX Janus Growth & Income and IDEX
Munder Net50, in the case of IDEX AEGON Income Plus, 1.25% of average daily net
assets; in the case of the IDEX Federated Tax Exempt, 1.00% of average daily net
assets and 1.20% of a fund's average daily net assets for all other funds. IDEX
Janus Global does not have an expense limitation.
Effective December 1, 2001, the expense limitation for IDEX Goldman Sachs
Growth, IDEX Jennison Equity Opportunity, IDEX Transamerica Equity, IDEX Pilgrim
Baxter Mid Cap Growth, IDEX Transamerica Small Company, IDEX T. Rowe Price Small
Cap, IDEX GE International Equity, IDEX GE U.S. Equity, and IDEX T. Rowe Price
Dividend Growth will be 1.40% of each fund's average daily net assets. Also
effective December 1, 2001, the Janus Growth & Income, IDEX Munder Net50 and
IDEX Pilgrim Baxter Technology will be 1.60% of the fund's average daily net
assets.
53
Advisory Fee After Reimbursement Advisory Fee Reimbursements
-------------------------------------------- ------------------------------------------
October 31 October 31
-------------------------------------------- ------------------------------------------
Fund* 2000 1999 1998 2000 1999 1998
- ----- ---- ---- ---- ---- ---- ----
IDEX Alger Aggressive Growth $ 1,761,732 $ 617,922 $ 344,018 $ 653,254 $ 318,097 $ 173,443
IDEX GE International Equity $ (115,004) $ (53,604) $ (64,180) $ 195,116 $ 114,536 $ 117,653
IDEX Janus Capital Appreciation $ 3,728,539 $ 466,930 $ 167,150 $ 163,326 $ 94,449 $ 107,861
IDEX Janus Global $ 15,073,838 $ 6,949,268 $ 3,907,062 $ -- $ -- $ --
IDEX Janus Growth $ 35,530,261 $ 21,381,062 $ 1,352,188 $ 1,140,848 $ 713,062 $ 0
IDEX Jennison Equity Opportunity** $ (32,744) $ (31,048) $ 36,124 $ 116,905 $ 103,977 $ 51,462
IDEX NWQ Value Equity $ 29,094 $ 35,123 $ 46,140 $ 121,416 $ 105,260 $ 93,563
IDEX LKCM Strategic Total Return $ 444,427 $ 393,829 $ 380,273 $ 89,610 $ 85,282 $ 30,860
IDEX Dean Asset Allocation $ 76,233 $ 237,931 $ 325,285 $ 108,974 $ 68,735 $ 8,119
IDEX Janus Balanced $ 3,379,359 $ 1,086,804 $ 206,736 $ 72,131 $ 6,324 $ 50,820
IDEX Janus Flexible Income $ 284,683 $ 184,981 $ 151,489 $ 8,128 $ 36,126 $ 186
IDEX AEGON Income Plus $ 424,701 $ 484,795 $ 441,912 $ -- $ -- $ --
IDEX Federated Tax Exempt*** $ 55,875 $ 122,580 $ 136,481 $ 68,638 $ 28,238 $ 10,071
IDEX Goldman Sachs Growth $ (21,647) $ (76,694) N/A $ 112,815 $ 88,276 N/A
IDEX T. Rowe Price Dividend Growth $ (33,460) $ (76,054) N/A $ 113,113 $ 87,719 N/A
IDEX Salomon All Cap $ (14,788) $ (70,744) N/A $ 213,177 $ 79,464 N/A
IDEX Pilgrim Baxter Mid Cap Growth $ 207,437 $ (67,394) N/A $ 373,224 $ 79,128 N/A
IDEX T. Rowe Price Small Cap $ (57,507) $ (70,793) N/A $ 153,190 $ 80,896 N/A
IDEX Pilgrim Baxter Technology $ 211,360 N/A N/A $ 229,341 N/A N/A
IDEX GE U.S. Equity $ (126,569) N/A N/A $ 149,065 N/A N/A
IDEX Transamerica Small Company $ (89,494) $ 91,494 N/A $ 125,027 N/A N/A
IDEX Transamerica Equity $ (95,571) N/A N/A $ 115,809 N/A N/A
IDEX Great Companies -- America(SM) $ (45,175) N/A N/A $ 80,181 N/A N/A
IDEX Great Companies -- Technology(SM) $ (66,721) N/A N/A $ 83,145 N/A N/A
IDEX Great Companies -- Global/2/ $ (61,529) N/A N/A $ 63,670 N/A N/A
IDEX Gabelli Global Growth $ (52,683) N/A N/A $ 64,458 N/A N/A
_____________________
* Information is not included for IDEX Janus Growth & Income and IDEX Munder
Net50 as they commenced operations on December 15, 2000 and for IDEX
American Century Income & Growth, IDEX American Century International, and
IDEX Isabelle Small Cap Value as they commence operations on April 2, 2001.
** Prior to December 1, 2000, C.A.S.E. Management, Inc. served as subadviser
to this fund and the fund was named IDEX C.A.S.E. Growth.
*** Prior to June 15, 2000, AEGON USA Investment Management, Inc. served as
sub-adviser to this fund.
Janus Capital Corporation ("Janus"), 100 Fillmore Street, Denver, CO 80206,
serves as sub-adviser to IDEX Janus Capital Appreciation, IDEX Janus Global,
IDEX Janus Growth, IDEX Janus Balanced and IDEX Janus Flexible Income pursuant
to an investment counsel agreement dated June 25, 1998 with IMI, and serves as
sub-adviser to IDEX Janus Growth & Income pursuant to an investment counsel
agreement dated December 1, 2000 with IMI.
Fred Alger Management, Inc. ("Alger"), 1 World Trade Center, Suite 9333, New
York, NY 10048, serves as sub-adviser to IDEX Alger Aggressive Growth pursuant
to an investment counsel Agreement dated September 30, 1994 with IMI.
Luther King Capital Management Corporation ("LKCM"), 301 Commerce Street, Suite
1600, Fort Worth, TX 76102, serves as sub-adviser to IDEX LKCM Strategic Total
Return pursuant to an investment counsel agreement dated September 30, 1994.
Dean Investment Associates ("Dean"), a Division of C.H. Dean and Associates,
Inc., 2480 Kettering Tower, Dayton, Ohio 45423-2480 serves as sub-adviser to
IDEX Dean Asset Allocation pursuant to an investment counsel agreement dated
June 30, 1995.
Jennison Associates, LLC ("Jennison"), 466 Lexington Avenue, New York, NY 10017,
serves as sub-adviser to IDEX Jennison equity Opportunity pursuant to an
investment counsel agreement dated December 1, 2000.
NWQ Investment Management Company, Inc. ("NWQ"), 2049 Century Park East, 4th
Floor, Los Angeles, CA 90067, serves as sub-adviser to IDEX NWQ Value Equity
pursuant to an investment counsel agreement dated October 30, 1996.
54
GE Asset Management Incorporated ("GEAM"), 3003 Summer Street, Stamford, CT
06905, serves as sub-adviser to IDEX GE International Equity and IDEX GE U.S.
Equity pursuant to sub-advisory agreements dated March 1, 2000.
T. Rowe Price Associates, Inc. ("T. Rowe Price"), 100 E. Pratt Street,
Baltimore, MD 21202 serves as sub-adviser to IDEX T. Rowe Price Dividend Growth
and IDEX T. Rowe Price Small Cap pursuant to an investment counsel agreement
dated March 1, 1999.
Salomon Brothers Asset Management Inc. ("SBAM"), 7 World Trade Center, New York,
NY 10048 serves as sub-adviser to IDEX Salomon All Cap pursuant to an investment
counsel agreement dated March 1, 1999.
Pilgrim Baxter & Associates, Ltd. ("Pilgrim Baxter"), 825 Dupportrail, Wayne, PA
19087 serves as sub-adviser to IDEX Pilgrim Baxter Mid Cap Growth pursuant to an
investment counsel agreement dated March 1, 1999 and as sub-adviser to IDEX
Pilgrim Baxter Technology pursuant to a sub-advisory agreement dated March 1,
2000.
Goldman Sachs Asset Management ("GSAM"), One New York Plaza, New York, NY 10004
serves as sub-adviser to IDEX Goldman Sachs Growth pursuant to an investment
counsel agreement dated March 1, 1999.
AEGON USA Investment Management, Inc. ("AIMI"), 4333 Edgewood Road, N.E., Cedar
Rapids, Iowa 52499 serves as sub-adviser to IDEX AEGON Income Plus pursuant to
an investment counsel agreement dated April 22, 1992.
Transamerica Investment Management, LLC, 1150 South Olive Street, Suite 2700,
Los Angeles, CA 90015 serves as sub-adviser to IDEX Transamerica Small Company
and IDEX Transamerica Equity pursuant to a sub-advisory agreement dated March 1,
2000.
Great Companies, L.L.C., 8550 Ulmerton Road, Largo, FL 33771 serves as
sub-adviser to IDEX Great Companies -- America(SM) and IDEX Great Companies --
Technology(SM) pursuant to a sub-advisory agreement dated June 15, 2000 and to
IDEX Great Companies -- Global2 pursuant to a sub-advisory agreement dated
September 1, 2000.
Federated Investment Management Company, Federated Investors Tower, Pittsburgh,
PA 15222-3779 serves as sub-adviser to IDEX Federated Tax Exempt pursuant to a
sub-advisory agreement dated June 15, 2000.
Gabelli Asset Management Company, One Corporate Center, Rye, New York 10580-1434
serves as sub-adviser to IDEX Gabelli Global Growth pursuant to a sub-advisory
agreement dated September 1, 2000.
Munder Capital Management, 480 Pierce Street, Birmingham, MI 48009 serves as
sub-adviser to IDEX Munder Net50 pursuant to a sub-advisory agreement dated
December 1, 2000.
American Century Investment Management, Inc. ("American Century"), American
Century Tower, 4500 Main Street, Kansas City, MO 64111 serves as sub-adviser to
IDEX American Century Income & Growth and IDEX American Century International
pursuant to a sub-advisory agreement dated March 1, 2001.
Ironwood Capital Management, LLC ("Ironwood"), 21 Custom House Street, Boston,
MA 02110 serves as sub-adviser to IDEX Isabelle Small Cap Value pursuant to a
sub-advisory agreement dated March 1, 2001.
The sub-advisers also serve as sub-advisers to certain portfolios of the WRL
Series Fund, Inc., a registered investment company. They may be referred to
herein collectively as the "sub-advisers" and individually as a "sub-adviser."
Fund Sub-Adviser Sub-Advisory Fee
- ---- ----------- ----------------
IDEX Jennison Equity Jennison Associates, LLC 0.40% of the first $500 million of average daily net
Opportunity assets; 0.35% of the average daily net assets over
$500 million
IDEX Great Companies -- Great Companies, L.L.C. 50% of the advisory fees received by IMI, less
America(SM) 50% of any amount reimbursed pursuant to its
expense limitation
IDEX Goldman Sachs Growth Goldman Sachs Asset 0.50% of the first $50 million of average daily net
Management assets; 0.45% of the next $50-$100 million
average daily net assets in assets; and 0.40% of
average daily net assets in excess of $100 million
55
Fund Sub-Adviser Sub-Advisory Fee
- ---- ----------- ----------------
IDEX Janus Growth Janus Capital Corporation 0.50% of the first $750 million of average daily net
assets; 0.45% of the next $250 million average daily net
assets; and 0.4250% of average daily net assets in
excess of $1 billion, less 50% of any amount reimbursed
pursuant to the fund's expense limitation
IDEX NWQ Value Equity NWQ Investment Manage- 50% of the fees received by IMI under the Advisory
ment Company, Inc. Agreement, less 50% of any amount reimbursed pursuant to
its expense limitation
IDEX Salomon All Cap Salomon Brothers Asset 0.30% of the first $20 million of average daily net
Management Inc assets; 0.50% of the next $20-$100 million of average
daily net assets; and 0.40% of average daily net assets
over $100 million
IDEX Transamerica Equity Transamerica Investment 50% of the fees received by IMI under the Advisory
Management LLC Agreement, less 50% of any amount reimbursed pursuant to
its expense limitation
IDEX Alger Aggressive Growth Fred Alger Management, 50% of the fees received by IMI under the Advisory
Inc. Agreement, less 40% of any amount reimbursed pursuant to
its expense limitation
IDEX Great Companies -- Great Companies, L.L.C. 50% of the advisory fees received by IMI, less 50% of
Technology(SM) any amount reimbursed pursuant to its expense limitation
IDEX Janus Capital Apprecia- Janus Capital Corporation 0.50% of the first $750 million of average daily net
tion assets; 0.45% of the next $250 million average daily net
assets; and 0.4250% of average daily net assets in
excess of $1 billion, less 50% of any amount reimbursed
pursuant to the fund's expense limitation
IDEX Munder Net50 Munder Capital Manage- 0.65% of the first $1 billion of average daily net
ment assets; and 0.60% of average daily net assets in excess
of $1 billion.
IDEX Pilgrim Baxter Mid Cap Pilgrim Baxter & Associ- 0.50% of the first $100 million of average daily net
Growth ates, Ltd. assets; 0.40% of average daily net assets in excess of
$100 million (from first dollar)
IDEX Pilgrim Baxter Technology Pilgrim Baxter & Associ- 0.55% of the first $500 million of average daily net
ates, Ltd. assets; 0.50% of average daily net assets in excess of
$500 million
IDEX Transamerica Small Transamerica Investment 50% of the fees received by IMI under the Advisory
Company Management, LLC Agreement, less 50% of any amount reimbursed pursuant to
its expense limitation
IDEX T. Rowe Price Small Cap T. Rowe Price Associates, 0.35% of average daily net assets
Inc.
IDEX Gabelli Global Growth Gabelli Asset Management 0.50% of the first $500 million of the fund's average
Company daily net assets; 0.40% of average daily net assets over
$500 million up to $1 billion; and 0.30% of average
daily net assets in excess of $1 billion
56
Fund Sub-Adviser Sub-Advisory Fee
- ---- ----------- ----------------
IDEX GE International Equity GE Asset Management, 50% of the fees received by IMI under the advisory
Inc. agreement
IDEX Great Companies -- Great Companies, L.L.C. 50% of the advisory fees received by IMI, less
Global/2/ 50% of any amount reimbursed pursuant to its
expense limitation
IDEX Janus Global Janus Capital Corporation 0.50% of the first $750 million of average daily net
assets; 0.45% of the next $250 million in average
daily net assets; and 0.4250% of average daily net
assets in excess of $1 billion
IDEX GE U.S. Equity GE Asset Management, 50% of the fees received by IMI under the advisory
Inc. agreement, less 50% of any amount reimbursed
pursuant to its expense limitation
IDEX Janus Growth & Income Janus Capital Corporation 0.55% of the first $100 million of the fund's
average daily net assets; 0.50% of the next $400
million of the fund's average daily net assets; and
0.45% of average daily net assets over $500
million
IDEX T. Rowe Price Dividend T. Rowe Price Associates, 0.50% of the first $100 million of average daily net
Growth Inc. assets and 0.40% of average daily net assets over
$100 million (from first dollar)
IDEX Dean Asset Allocation Dean Investment Associ- 50% of the fees received by IMI under the Advisory
ates Agreement, less 50% of any amount reimbursed
pursuant to its expense limitation
IDEX Janus Balanced Janus Capital Corporation 0.50% of the first $750 million of average daily net
assets; 0.45% of next $250 million in average daily
net assets; and 0.4250% of average daily net
assets in excess of $1 billion, less 50% of any
amount reimbursed pursuant to the fund's expense
limitation
IDEX LKCM Strategic Total Luther King Capital 50% of the fees received by IMI under the advisory
Return Management Corporation agreement, less 50% of any amount reimbursed
pursuant to its expense limitation
IDEX AEGON Income Plus AEGON USA Investment 50% of the fees received by IMI under the advisory
Management, Inc. agreement, less 50% of any amount reimbursed
pursuant to its expense limitation
IDEX Federated Tax Exempt Federated Investment 0.30% of the average daily net assets
Management Company
IDEX Janus Flexible Income Janus Capital Corporation 0.45% of the first $100 million of average daily net
assets; 0.40% of the next $150 million in average
daily net assets; and 0.35% of average daily net
assets in excess of $250 million, less 50% of any
amount reimbursed pursuant to the fund's expense
limitation
57
Fund Sub-Adviser Sub-Advisory Fee
- ---- ----------- ----------------
IDEX American Century Income American Century Invest- 0.50% of the first $100 million of the fund's
& Growth ment Management, Inc. average daily net assets 0.45% of the fund's
average daily net assets over $100 million up to
$250 million; and 0.40% of the fund's average daily
net assets in excess of $250 million.
IDEX American Century American Century Invest- 0.60% of the first $50 million of the fund's average
International ment Management, Inc. daily net assets; 0.55% of the fund's average daily
net assets over $50 million up to $150 million;
0.50% of the fund's average daily net assets over
$150 million up to $500 million; and 0.45% of the
fund's average daily assets in excess of $500
million.
IDEX Isabelle Small Cap Value Ironwood Capital Manage- 0.50% of the first $200 million of the fund's
ment, LLC average daily net assets; 0.45% of the fund's
average daily assets in excess of $200 million.
EXPENSE REIMBURSEMENT
IMI has entered into an expense limitation agreement with IDEX on behalf of
each applicable fund, pursuant to which IMI has agreed to reimburse a fund for
certain operating expenses so that the total annual operating expenses of each
applicable fund do not exceed the total operating expenses specified for that
fund (expense cap) in the fund's then-current SAI. IDEX, on behalf of an
applicable fund, will at a later date reimburse IMI for operation expenses
previously paid on behalf of such fund during the previous 36 months, but only
if, after such reimbursement, the fund's expense ratio does not exceed the
expense cap. The agreement has an initial term through April 30, 2001, and
continues automatically for one-year terms unless IMI provides written notice to
IDEX at least 30 days prior to the end of the then-current term. In addition,
the agreement will terminate upon termination of the Investment Advisory
Agreement, or may be terminated by IDEX, without payment of any penalty, upon
ninety (90) days' prior written notice to IMI.
The following funds are currently included in the Expense Reimbursement
Agreement:
IDEX Great Companies -- America(SM)
IDEX Great Companies -- Technology(SM)
IDEX Global/2/
IDEX Gabelli Global Growth
IDEX Isabelle Small Cap Value
IDEX Munder Net50
IDEX American Century International
IDEX American Century Income & Growth
IDEX Janus Growth & Income
58
SUB-ADVISORY FEES PAID*
(Net of Fees Reimbursed)
October 31
----------------------------------------------------------
Fund 2000 1999 1998
- ---- ----------- ----------- ----------
IDEX Alger Aggressive Growth $ 946,191 $ 342,362 $ 137,607
IDEX GE International Equity 40,056 $ -- $ --
IDEX Janus Capital Appreciation $ 1,901,803 $ 233,465 $ 83,575
IDEX Janus Global $ 6,907,199 $ 3,480,875 $1,953,531
IDEX Janus Growth $16,368,873 $11,063,717 $6,769,684
IDEX Jennison Equity Opportunity** $ -- $ -- $ 14,450
IDEX NWQ Value Equity $ 14,547 $ 16,106 $ 18,456
IDEX LKCM Strategic Total Return $ 222,213 $ 197,195 $ 152,109
IDEX Dean Asset Allocation $ 38,116 $ 119,012 $ 130,114
IDEX Janus Balanced $ 1,721,405 $ 545,519 $ 103,368
IDEX Janus Flexible Income $ 146,453 $ 95,664 $ 75,745
IDEX AEGON Income Plus $ 212,351 $ 242,397 $ 220,956
IDEX Federated Tax Exempt*** $ 45,076 $ 61,347 $ 68,241
IDEX Goldman Sachs Growth $ 57,224 $ 10,780 N/A
IDEX T. Rowe Price Dividend Growth $ 49,931 $ 10,862 N/A
IDEX Salomon All Cap $ 123,993 $ 4,872 N/A
IDEX Pilgrim Baxter Mid Cap Growth $ 364,829 $ 10,925 N/A
IDEX T. Rowe Price Small Cap $ 42,001 $ 6,615 N/A
IDEX Pilgrim Baxter Technology $ 363,126 N/A N/A
IDEX GE U.S. Equity $ -- N/A N/A
IDEX Transamerica Small Company $ -- N/A N/A
IDEX Transamerica Equity $ -- N/A N/A
IDEX Great Companies -- America(SM) $ -- N/A N/A
IDEX Great Companies -- Technology(SM) $ -- N/A N/A
IDEX Great Companies -- Global/2/ $ -- N/A N/A
IDEX Gabelli Global Growth $ 45,848 N/A N/A
_____________________
* Information is not included for IDEX Janus Growth & Income and IDEX Munder
Net50 as they commenced operations on December 15, 2000 and for IDEX
American Century Income & Growth, IDEX American Century International and
IDEX IsabelleSmall Cap as they commence operations on April 2, 2001.
** Prior to December 1, 2000, C.A.S.E. Management, Inc. served as sub-adviser
to this fund and this fund was named IDEX C.A.S.E. Growth.
*** Prior to June 15, 2000, AEGON USA Investment Management, Inc. served as
sub-adviser to this fund.
AUSA Holding Company ("AUSA") owns 100% of the outstanding stock of IMI. AUSA
also owns 100% of the outstanding shares of the Fund's distributor and transfer
agent. AUSA is wholly-owned by AEGON USA, Inc., a financial services holding
company located at 4333 Edgewood Road, N.E., Cedar Rapids, Iowa 52499. AEGON
USA, Inc. is a wholly-owned indirect subsidiary of AEGON N.V., a Netherlands
corporation and publicly traded international insurance group.
Each of the sub-advisers also serves as investment adviser or sub-adviser to
other funds and/or private accounts which may have investment objectives
identical or similar to that of the funds. Securities frequently meet the
investment objectives of one or all of these funds, the other funds and the
private accounts. In such cases, a sub-adviser's decision to recommend a
purchase to one fund or account rather than another is based on a number of
factors. The determining factors in most cases are the amounts available for
investment by each fund or account, the amount of securities of the issuer then
outstanding, the value of those securities and the market for them. Another
factor considered in the investment recommendations is other investments which
each fund or account presently has in a particular industry.
It is possible that at times identical securities will be held by more than one
fund or account. However, positions inthe same issue may vary and the length of
time that any fund or account may choose to hold its investment in the same
issue may likewise vary. To the extent that more than one of the funds or
private accounts served by a sub-adviser seeks to acquire or sell the same
security at about the same time, either the price obtained by the funds or the
amount of securities that may be purchased or sold by a fund at one time may be
adversely affected. On the other hand, if the same securities are bought or sold
at the same time by more than one fund or account, the resulting participation
in volume transactions could produce better executions for the funds. In the
event more than one fund or account purchases or sells the same security on a
given date, the purchase and sale transactions are allocated among the fund(s),
the other funds and the private accounts in a manner believed by the
sub-advisers to be equitable to each.
59
DISTRIBUTOR
Effective March 1, 2001 IDEX Mutual Funds entered into an Underwriting Agreement
with AFSG Securities Corporation ("AFSG"), located at 4333 Edgewood Rd. NE,
Cedar Rapids, Iowa 52494 to act as the principal underwriter of the shares of
the funds. (Prior to this date InterSecurities, Inc. ("ISI"), located at 570
Carillon Parkway, St. Petersburg, Florida 33716 served as the principal
underwriter.) The Underwriting Agreement will continue from year to year so long
as its continuance is approved at least annually in the same manner as the
investment advisory agreements discussed above. A discussion of AFSG's
responsibilities and charges as principal underwriter of fund shares is set
forth in the prospectus.
UNDERWRITING COMMISSIONS*
Commissions Received For the Period Ended Commissions Retained For the Period Ended
----------------------------------------- -----------------------------------------
October 31 October 31
----------------------------------------- -----------------------------------------
Fund 2000 1999 1998 2000 1999 1998
- ---- ----------- ----------- ----------- ----------- ----------- -----------
IDEX Alger Aggressive Growth $ 3,586,962 $ 1,519,511 $ 449,078 $ 3,139,748 $ 1,321,658 $ 64,099
IDEX GE International Equity $ 101,257 $ 21,901 $ 64,324 $ 87,254 $ 19,102 $ 9,250
IDEX Janus Capital Appreciation $ 5,588,693 $ 882,472 $ 164,358 $ 4,924,015 $ 772,645 $ 26,358
IDEX Janus Global $10,875,249 $ 4,132,880 $ 2,784,651 $ 9,773,728 $ 3,671,479 $ 401,257
IDEX Janus Growth $16,382,814 $11,290,051 $ 2,848,238 $14,469,497 $ 9,851,566 $ 424,803
IDEX Jennison Equity Opportunity** $ 69,027 $ 65,496 $ 70,063 $ 59,539 $ 57,639 $ 9,325
IDEX NWQ Value Equity $ 97,639 $ 117,549 $ 172,567 $ 84,923 $ 102,842 $ 25,433
IDEX LKCM Strategic Total Return $ 391,839 $ 416,127 $ 419,778 $ 332,691 $ 356,357 $ 67,470
IDEX Dean Asset Allocation $ 61,549 $ 111,737 $ 186,182 $ 52,858 $ 97,158 $ 28,499
IDEX Janus Balanced $ 3,227,896 $ 1,767,590 $ 344,872 $ 2,856,942 $ 1,566,316 $ 34,919
IDEX Janus Flexible Income $ 194,503 $ 131,918 $ 40,463 $ 175,265 $ 115,018 $ 1,530
IDEX AEGON Income Plus $ 122,834 $ 348,609 $ 165,033 $ 109,470 $ 296,635 $ 21,369
IDEX Federated Tax Exempt*** $ 47,089 $ 78,111 $ 30,201 $ 40,828 $ 66,807 $ 5,356
IDEX Goldman Sachs Growth $ 219,731 $ 57,489 $ 193,007 $ 50,035 N/A
IDEX T. Rowe Price Dividend Growth $ 157,894 $ 65,630 $ 136,415 $ 57,802 N/A
IDEX Salomon All Cap $ 743,190 $ 56,382 $ 652,950 $ 48,803 N/A
IDEX Pilgrim Baxter Mid Cap Growth $ 1,565,934 $ 66,207 $ 1,369,847 $ 57,809 N/A
IDEX T. Rowe Price Small Cap $ 238,585 $ 33,728 $ 208,316 $ 29,698 N/A
IDEX Pilgrim Baxter Technology $ 1,198,728 N/A N/A $ 1,054,289 N/A N/A
IDEX GE U.S. Equity $ 108,643 N/A N/A $ 92,206 N/A N/A
IDEX Transamerica Small Company $ 134,303 N/A N/A $ 120,311 N/A N/A
IDEX Transamerica Equity $ 63,833 N/A N/A $ 55,988 N/A N/A
IDEX Great Companies -- America(SM) $ 268,035 N/A N/A $ 231,303 N/A N/A
IDEX Great Companies -- Technology(SM) $ 119,790 N/A N/A $ 103,700 N/A N/A
IDEX Great Companies -- Global/2/ $ 34,500 N/A N/A $ 31,541 N/A N/A
IDEX Gabelli Global Growth $ 163,339 N/A N/A $ 144,103 N/A N/A
60
For the Period Ended October 31, 2000:
Net Underwriting Compensation on
Discounts and Redemptions and Brokerage Other
Fund Commissions Repurchases Commissions Compensation
- ---- ----------- ----------- ----------- ------------
IDEX Alger Aggressive Growth $ 3,139,748 $ 163,583 -- $ 3,010,720
IDEX GE International Equity $ 87,254 $ 2,056 -- $ 422,745
IDEX Janus Capital Appreciation $ 4,924,015 $ 310,402 -- $ 1,866,462
IDEX Janus Global $ 9,773,728 $ 461,708 -- $ 975,257
IDEX Janus Growth $14,469,497 $ 1,046,028 -- $16,270,737
IDEX Jennison Equity Opportunity** $ 59,539 $ 9,969 -- $ 727,509
IDEX NWQ Value Equity $ 84,923 $ 11,709 -- $ 172,708
IDEX LKCM Strategic Total Return $ 332,691 $ 32,823 -- $ 7,056,692
IDEX Dean Asset Allocation $ 52,858 $ 5,340 -- $ 1,724,150
IDEX Janus Balanced $ 2,856,942 $ 249,907 -- $ 2,783,585
IDEX Janus Flexible Income $ 175,265 $ 12,084 -- $ 999,418
IDEX AEGON Income Plus $ 109,470 $ 26,897 -- $ 310,606
IDEX Federated Tax Exempt*** $ 40,828 $ 1,622 -- $ 46,163
IDEX Goldman Sachs Growth $ 193,007 $ 7,836 -- $ 104,110
IDEX T. Rowe Price Dividend Growth $ 136,415 $ 7,524 -- $ 90,270
IDEX Salomon All Cap $ 652,950 $ 10,147 -- $ 138,425
IDEX Pilgrim Baxter Mid Cap Growth $ 1,369,847 $ 50,748 -- $ 485,230
IDEX T. Rowe Price Small Cap $ 208,316 $ 5,385 -- $ 50,559
IDEX Pilgrim Baxter Technology $ 1,054,289 $ 98,516 -- $ 34,921
IDEX GE U.S. Equity $ 92,206 $ 333 -- $ 355,612
IDEX Transamerica Small Company $ 120,311 $ 5,652 -- $ 27,477
IDEX Transamerica Equity $ 55,988 $ 695 -- $ 21,495
IDEX Great Companies -- America(SM) $ 231,303 $ 149 -- $ 28,565
IDEX Great Companies -- Technology(SM) $ 103,700 $ 133 -- $ 13,184
IDEX Great Companies -- Global/2/ $ 31,541 $ -- -- $ 2,031
IDEX Gabelli Global Growth $ 144,103 $ 740 -- $ 11,268
________________
* Information is not included for IDEX Janus Growth & Income and IDEX Munder
Net50 as they commenced operations on December 15, 2000 and for IDEX
American Century Income & Growth, IDEX American Century International, and
IDEX Isabelle Small Cap Value as they commence operations on April 2, 2001.
** Prior to December 1, 2000, C.A.S.E. Management, Inc. served as sub-adviser
to this fund and this fund was named IDEX C.A.S.E. Growth.
*** Prior to June 15, 2000, AEGON USA Investment Management, Inc. served as
sub-adviser to this fund.
ADMINISTRATIVE SERVICES
IMI is responsible for the supervision all of the administrative functions,
providing office space, and paying its allocable portion of the salaries, fees
and expenses of all Fund officers and of those trustees who are affiliated with
IMI. The costs and expenses, including legal and accounting fees, filing fees
and printing costs in connection with the formation of a fund and the
preparation and filing of a fund's initial registration statements under the
1933 Act and 1940 Act are also paid by the adviser. IMI has entered into
Administrative Services Agreements ("Administrative Agreement") with ISI
applicable to each fund. Under each Administrative Agreement, ISI carries out
and supervises all of the administrative functions of the funds and incurs IMI's
expenses related to such functions.
The administrative duties of ISI with respect to each fund include: providing
the fund with office space, telephones, office equipment and supplies; paying
the compensation of the Fund's officers for services rendered as such;
supervising and assisting in preparation of annual and semi-annual reports to
shareholders, notices of dividends, capital gain distributions and tax
information; supervising compliance by the Fund with the recordkeeping
requirements under the 1940 Act and regulations thereunder and with the state
regulatory requirements; maintaining books and records of the Fund (other than
those maintained by the Fund's custodian and transfer agent); preparing and
filing tax returns and reports; monitoring and supervising relationships with
the Fund's custodian and transfer agent; monitoring
61
the qualifications of tax deferred retirement plans providing for investment in
shares of each fund; authorizing expenditures and approving bills for payment on
behalf of each fund; and providing executive, clerical and secretarial help
needed to carry out its duties.
ADMINISTRATIVE FEES*
Fund 2000 1999
- ---- ---- ----
IDEX Janus Capital Appreciation $ 1,826,736 $ 227,137
IDEX Janus Global $ 8,166,639 $ 3,468,393
IDEX Janus Growth $ 19,161,388 $ 10,317,345
IDEX Janus Balanced $ 1,657,954 $ 541,285
IDEX Alger Aggressive Growth $ 815,541 $ 275,560
IDEX GE International Equity -- -0-
IDEX Jennison Equity Opportunity** -- -0-
IDEX NWQ Value Equity* $ 14,547 $ 19,017
IDEX LKCM Strategic Total Return* $ 222,214 $ 196,382
IDEX Dean Asset Allocation $ 38,117 $ 119,083
IDEX AEGON Income Plus $ 212,350 $ 242,398
IDEX Federated Tax Exempt*** $ 10,799 $ 61,347
IDEX Goldman Sachs Growth -- -0-
IDEX T. Rowe Price Dividend Growth -- -0-
IDEX Salomon All Cap -- -0-
IDEX Pilgrim Baxter Mid Cap Growth -- -0-
IDEX T. Rowe Price Small Cap -- -0-
IDEX Janus Flexible Income $ 138,230 $ 89,131
IDEX Transamerica Small Company -- N/A
IDEX Transamerica Equity -- N/A
IDEX GE U.S. Equity -- N/A
IDEX Great Companies -- America(SM) -- N/A
IDEX Great Companies -- Technology(SM) -- N/A
IDEX Great Companies -- Global/2/ -- N/A
IDEX Gabelli Global Growth -- N/A
_____________________
* No information is included for IDEX Janus Growth & Income and IDEX Munder
Net50 as they commenced operations on December 15, 2000 and for IDEX
American Century Income & Growth, IDEX American Century International, and
IDEX Isabelle Small Cap Value as they commence operations on April 2, 2001.
** Prior to December 1, 2000, C.A.S.E. Management, Inc. served as sub-adviser
to this fund, and this fund was named IDEX C.A.S.E. Growth.
*** Prior to June 15, 2000, AEGON USA Investment Management, Inc. served as
sub-adviser to this fund.
CUSTODIAN, TRANSFER AGENT AND OTHER AFFILIATES
State Street Bank & Trust, 801 Pennsylvania, Kansas City, Missouri 64105-1307,
is custodian for the fund. The custodian is not responsible for any of the
investment policies or decisions of a fund, but holds its assets in safekeeping,
and collects and remits the income thereon subject to the instructions of the
funds. Idex Investor Services, Inc. ("IIS"), P. O. Box 9015, Clearwater, Florida
33758-9015, is the transfer agent for each fund, withholding agent and dividend
disbursing agent. IIS is a wholly-owned subsidiary of AUSA Holding Company and
thus is an affiliate of IMI and AIMI. Each fund pays the transfer agent an
annual per-account
62
charge of $15.39 for each of its shareholder accounts in existence, $2.73 for
each new account opened and $1.63 for each closed account.
State Street Bank & Trust ("State Street") is a provider of data processing and
recordkeeping services for the Fund's transfer agent. Each fund may use another
affiliate of State Street as introducing broker for certain portfolio
transactions as a means to reduce expenses through a credit against transfer
agency fees with regard to commissions earned by such affiliate. (See "Fund
Transactions and Brokerage.") There were no brokerage credits received for the
periods ended October 31, 2000, 1999 and 1998.
TRANSFER AGENCY FEES*
Fees and Expenses Net of Brokerage Credits For the Period Ended
---------------------------------------------------------------
October 31
Fund 2000 1999 1998
- ---- ---------- ---------- ----------
IDEX Alger Aggressive Growth $1,478,370 $ 592,015 $ 311,310
IDEX GE International Equity $ 48,180 $ 29,790 $ 25,385
IDEX Janus Capital Appreciation $1,601,450 $ 209,550 $ 128,201
IDEX Janus Global $3,545,240 $1,662,198 $1,032,225
IDEX Janus Growth $5,886,062 $3,525,633 $2,628,305
IDEX Jennison Equity Opportunity** $ 69,775 $ 54,690 $ 46,730
IDEX NWQ Value Equity $ 92,410 $ 87,425 $ 71,985
IDEX LKCM Strategic Total Return $ 235,748 $ 199,815 $ 145,685
IDEX Dean Asset Allocation $ 110,065 $ 117,310 $ 107,100
IDEX Janus Balanced $ 818,615 $ 304,645 $ 81,805
IDEX Janus Flexible Income $ 83,955 $ 60,510 $ 32,859
IDEX AEGON Income Plus $ 133,815 $ 141,930 $ 119,036
IDEX Federated Tax Exempt*** $ 43,490 $ 31,360 $ 21,690
IDEX Goldman Sachs Growth $ 61,140 $ 12,130 NA
IDEX T. Rowe Price Dividend Growth $ 54,260 $ 12,370 NA
IDEX Salomon All Cap $ 140,935 $ 12,370 NA
IDEX Pilgrim Baxter Mid Cap Growth $ 476,335 $ 12,370 NA
IDEX T. Rowe Price Small Cap $ 90,020 $ 12,370 NA
IDEX Pilgrim Baxter Technology $ 221,630 N/A N/A
IDEX GE U.S. Equity $ 20,820 N/A N/A
IDEX Transamerica Small Company $ 26,140 N/A N/A
IDEX Transamerica Equity $ 16,510 N/A N/A
IDEX Great Companies -- America(SM) $ 17,535 N/A N/A
IDEX Great Companies -- Technology(SM) $ 15,435 N/A N/A
IDEX Great Companies -- Global/2/ $ 2,940 N/A N/A
IDEX Gabelli Global Growth $ 2,940 N/A N/A
_____________________
* Information is not included for IDEX Janus Growth & Income and IDEX Munder
Net50 as they commenced operations on December 15, 2000 and for IDEX
American Century Income & Growth, IDEX American Century International and
IDEX Isabelle Small Cap Value as they commence operations on April 2, 2001.
** Prior to December 1, 2000, C.A.S.E. Management, Inc. served as sub-adviser
to this fund, and this fund was named IDEX C.A.S.E. Growth.
*** Prior to June 15, 2000, AEGON USA Investment Management, Inc. served as
sub-adviser to this fund.
FUND TRANSACTIONS AND BROKERAGE
Decisions as to the assignment of fund business for each of the funds and
negotiation of commission rates are made by a fund's sub-adviser, whose policy
is to obtain the "best execution" (prompt and reliable execution at the most
favorable security price) of all fund transactions. The Investment Advisory
Agreement and Investment Counsel Agreement/Sub-Advisory Agreement for each fund
specifically provide that in placing portfolio transactions for a fund, the
fund's sub-adviser may agree to pay brokerage commissions for effecting a
securities transaction in an amount higher than another broker or dealer would
have charged for effecting that
63
transaction as authorized, under certain circumstances, by the Securities
Exchange Act of 1934.
In selecting brokers and dealers and in negotiating commissions, a fund's
sub-adviser considers a number of factors, including but not limited to:
The sub-adviser's knowledge of currently available negotiated commission
rates or prices of securities and other current transaction costs;
The nature of the security being traded;
The size and type of the transaction;
The nature and character of the markets for the security to be purchased or
sold;
The desired timing of the trade;
The activity existing and expected in the market for the particular
security;
The quality of the execution, clearance and settlement services;
Financial stability;
The existence of actual or apparent operational problems of any broker or
dealer; and
Research products and services provided.
In recognition of the value of the foregoing factors, the sub-adviser may place
portfolio transactions with a broker with whom it has negotiated a commission
that is in excess of the commission another broker would have charged for
effecting that transaction. This is done if the sub-adviser determines in good
faith that such amount of commission was reasonable in relation to the value of
the brokerage and research provided by such broker viewed in terms of either
that particular transaction or of the overall responsibilities of the
sub-adviser. Research provided may include:
Furnishing advice, either directly or through publications or writings, as
to the value of securities, the advisability of purchasing or selling
specific securities and the availability of securities or purchasers or
sellers of securities;
Furnishing seminars, information, analyses and reports concerning issuers,
industries, securities, trading markets and methods, legislative
developments, changes in accounting practices, economic factors and trends
and portfolio strategy;
Access to research analysts, corporate management personnel, industry
experts, economists and government officials; and
Comparative performance evaluation and technical measurement services and
quotation services, and other services (such as third party publications,
reports and analyses, and computer and electronic access, equipment,
software, information and accessories that deliver process or otherwise
utilize information, including the research described above) that assist
the sub-adviser in carrying out its responsibilities.
Most of the brokers and dealers used by the funds' sub-advisers provide research
and other services described above.
A sub-adviser may use research products and services in servicing other accounts
in addition to the funds. If a sub-adviser determines that any research product
or service has a mixed use, such that it also serves functions that do not
assist in the investment decision-making process, a sub-adviser may allocate the
costs of such service or product accordingly. The portion of the product or
service that a sub-adviser determines will assist it in the investment
decision-making process may be paid for in brokerage commission dollars. Such
allocation may be a conflict of interest for a sub-adviser.
When a fund purchases or sells a security in the over-the-counter market, the
transaction takes place directly with a principal market-maker without the use
of a broker, except in those circumstances where better prices and executions
will be achieved through the use of a broker.
A sub-adviser may also consider the sale or recommendation of a fund's shares by
a broker or dealer to its customers as a factor in the selection of brokers or
dealers to execute portfolio transactions. In placing portfolio business with
brokers or dealers, a sub-adviser will seek the best execution of each
transaction, and all such brokerage placement must be consistent with the Rules
of Fair Practice of the National Association of Securities Dealers, Inc.
A sub-adviser may place transactions for the purchase or sale of portfolio
securities with affiliates of IMI, AFSG or the sub-adviser, including DST
Securities, Inc., or Fred Alger & Company, Incorporated. It is anticipated that
Fred Alger & Company, Incorporated, an affiliate of Alger, will serve as IDEX
Alger Aggressive Growth's broker in effecting substantially all of IDEX Alger
Aggressive Growth's transactions on securities exchanges and will retain
commissions in accordance with certain regulations of the SEC. A sub-adviser may
place transactions if it reasonably believes that the quality of the transaction
and the associated commission are fair and reasonable, and if overall the
associated transaction costs, net of any credits described above under
"Custodian, Transfer
64
Agent and Other Affiliates," are lower than those that would otherwise be
incurred. Under rules adopted by the SEC, the Fund's Board of Trustees will
conduct periodic compliance reviews of such brokerage allocations and review
certain procedures adopted by the Board of Trustees to ensure compliance with
these rules and to determine their continued appropriateness.
For the fiscal year ended October 31, 2000, IDEX Alger Aggressive Growth paid
the following commissions to Fred Alger & Company, Incorporated:
Commissions Paid:
- -----------------
Fiscal 2000 $323,971
Fiscal 2000 Percentages:
Commissions with affiliates to
total commissions 0.99%
Value of brokerage transactions
with affiliates to value of total
brokerage transactions 0.99%
As of October 31, 2000, IDEX Janus Balanced owned $3,103,961 of the common stock
of Charles Schwab Corp. Charles Schwab Corp. is one of the ten brokers or
dealers that received the greatest dollar amount of brokerage commissions from
IDEX Janus Balanced during the fiscal year ended October 31, 2000.
As of October 31, 2000, IDEX Janus Balanced owned $2,144,625; IDEX T. Rowe Price
Dividend Growth owned $56,219; and IDEX GE U.S. Equity owned $100,391 of the
common stock of Morgan Stanley, Dean Witter, Discover and Company. Morgan
Stanley, Dean Witter, Discover and Company is one of the ten brokers or dealers
that received the greatest dollar amount of brokerage commissions from IDEX
Janus Balanced, IDEX T. Rowe Price Dividend Growth and IDEX GE U.S. Equity
during the fiscal year ended October 31, 2000.
As of October 31, 2000, IDEX LKCM Strategic Total Return owned $203,250; and
IDEX GE U.S. Equity owned $25,487 of the common stock of J.P. Morgan & Company,
Inc. J.P. Morgan & Company, Inc. is one of the ten brokers or dealers that
received the greatest dollar amount of brokerage commissions from IDEX LKCM
Strategic Total Return and IDEX GE U.S. Equity during the fiscal year ended
October 31, 2000.
As of October 31, 2000, IDEX Goldman Sachs Growth owned $88,200; and IDEX Great
Companies -- America(SM) owned $1,260,000 of the common stock of Merrill Lynch &
Company, Inc., Merrill Lynch & Company, Inc. is one of the ten brokers or
dealers that received the greatest dollar amount of brokerage commissions from
IDEX Goldman Sachs Growth and IDEX Great Companies -- America(SM) during the
fiscal year ended October 31, 2000.
BROKERAGE COMMISSIONS
IDEX Alger IDEX GE IDEX Janus IDEX Jennison IDEX NWQ
Brokerage Commissions Paid Aggressive International Capital IDEX Janus IDEX Janus Equity Value
(including Affiliated Brokerage) Growth Equity Appreciation Global Growth Opportunity* Equity
- -------------------------------- ------ ------ ------------ ------ ------ ------------ ------
October 31, 2000 $ 328,891 $ 40,872 $ 777,240 $2,817,562 $2,409,270 $ 61,467 $ 27,384
October 31, 1999 $ 136,673 $ 20,219 $ 179,054 $2,189,777 $2,668,652 $ 29,437 $ 13,580
October 31, 1998 $ 155,668 $ 17,998 $ 89,687 $ 954,707 $ 843,937 $ 38,910 $ 15,539
Affiliated Brokerage Paid
- -------------------------
October 31, 2000 $ 323,971 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0
October 31, 1999 $ 136,631 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0
October 31, 1998 $ 154,866 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0
IDEX LKCM IDEX Dean IDEX Janus IDEX AEGON
Brokerage Commissions Paid Strategic Asset IDEX Janus Flexible Income IDEX Federated**
(including Affiliated Brokerage) Total Return Allocation Balanced Income Plus Tax Exempt
- -------------------------------- ------------ ---------- -------- ------ ---- ----------
October 31, 2000 $ 69,258 $ 27,473 $ 577,167 $ 114,844 $ 0 $ 0
October 31, 1999 $ 62,337 $ 55,676 $ 376,364 $ 165,196 $ 0 $ 0
October 31, 1998 $ 39,334 $ 43,487 $ 46,796 $ 23,653 $ 0 $ 0
Affiliated Brokerage Paid
- -------------------------
October 31, 2000 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0
October 31, 1999 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0
October 31, 1998 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0
65
IDEX T. Rowe IDEX Pilgrim IDEX
IDEX Price IDEX Baxter IDEX T. Rowe Pilgrim
Brokerage Commissions Paid Goldman Sachs Dividend Salomon Mid Cap Price Small Baxter
(including Affiliated Brokerage) Growth Growth All Cap Growth Cap Technology
- -------------------------------- ------ ------ ------- ------ --- ----------
October 31, 2000 $21,070 $19,319 $177,869 $88,609 $16,287 $ 27,361
October 31, 1999 $ 5,614 $ 2,883 $ 11,258 $ 6,289 $ 2,752 $ N/A
October 31, 1998 $ N/A $ N/A $ N/A $ N/A $ N/A $ N/A
Affiliated Brokerage Paid
- -------------------------
October 31, 2000 $ 1,232 $ 0 $ 30 $ 0 $ 0 $ 0
October 31, 1999 $ 538 $ 0 $ 68 $ 0 $ 0 $ N/A
October 31, 1998 N/A N/A N/A N/A N/A N/A
IDEX
IDEX GE Transamerica IDEX IDEX Great IDEX Great IDEX Great
Brokerage Commissions Paid U.S. Small Transamerica Companies -- Companies -- Companies --
(including Affiliated Brokerage) Equity Company Equity America Technology Global/2/
- -------------------------------- ------ ------- ------ ------- ---------- ---------
October 31, 2000 $ 8,806 $ 6,929 $ 5,728 $15,100 $ 7,838 $ 3,310
October 31, 1999 N/A N/A N/A N/A N/A N/A
October 31, 1998 N/A N/A N/A N/A N/A N/A
Affiliated Brokerage Paid
- -------------------------
October 31, 2000 $ 0 $ 0 $ 0 $12,900 $ 7,174 $ 2,026
October 31, 1999 N/A N/A N/A N/A N/A N/A
October 31, 1998 N/A N/A N/A N/A N/A N/A
IDEX IDEX Janus IDEX
Brokerage Commissions Paid Gabelli Growth & Munder
(including Affiliated Brokerage) Global Growth Income Net50
-------------------------------- ------------- ------ -----
October 31, 2000 $ 9,059 N/A N/A
October 31, 1999 N/A N/A N/A
October 31, 1998 N/A N/A N/A
Affiliated Brokerage Paid
-------------------------
October 31, 2000 $ 0 N/A N/A
October 31, 1999 N/A N/A N/A
October 31, 1998 N/A N/A N/A
* Prior to December 1, 2000, C.A.S.E. Management, Inc. served as sub-adviser to
this fund, and the fund was named IDEX C.A.S.E. Growth.
** Prior to June 15, 2000, AEGON USA Investment Management, Inc. served as
sub-adviser to this fund.
IDEX Janus Global, IDEX Janus Growth, IDEX LKCM Strategic Total Return, IDEX
Janus Balanced, IDEX Janus Flexible Income and IDEX Janus Capital Appreciation
all experienced a significant increase in brokerage commissions paid as a result
of the increased volume of sales of the respective funds for fiscal year ended
October 31, 2000.
During the fiscal year ended October 31, 2000, IDEX Jennison Equity Opportunity
(formerly IDEX C.A.S.E. Growth), IDEX Dean Asset Allocation, IDEX NWQ Value
Equity, IDEX LKCM Strategic Total Return, IDEX Goldman Sachs Growth and IDEX
Pilgrim Baxter Mid Cap Growth had transactions that resulted in brokerage
commissions of $15,634.80, $6,630, $7,385.77, $21,588, $1,934.40 and $1,462,373,
respectively, that were directed to brokers for brokerage and research services
provided. IDEX GE International Equity, IDEX Janus Growth, IDEX Janus Global,
IDEX Janus Balanced, IDEX Janus Capital Appreciation, IDEX GE U.S. Equity, IDEX
T. Rowe Price Dividend Growth, IDEX Salomon All Cap, IDEX Pilgrim Baxter
Technology and IDEX T. Rowe Price Small Cap also had brokerage commissions in
the amounts of $1,454, $76,281, $18,012.25, $769.50, $2,402, $1,407, $559,
$6,514, $219,821 and $10, respectively, that were directed to brokers for
brokerage and research services provided.
66
TRUSTEES AND OFFICERS
DIRECTORS AND OFFICERS
The fund is governed by a Board of Trustees. Subject to the supervision of the
Board of Trustees, the assets of each fund are managed by an investment adviser
and sub-advisers, and by fund managers. The Board of Trustees is responsible for
managing the business and affairs of the Fund. It oversees the operation of the
Fund by its officers. It also reviews the management of the funds' assets by the
investment adviser and sub-advisers. Information about the Directors and
officers of the Fund is as follows:
Position(s)
Name, Address and Age held with the Fund Principal Occupation(s) During the past 5 years
- --------------------- ------------------ -----------------------------------------------
Peter R. Brown Vice Chairman and Vice Chairman, WRL Series Fund, Inc. (investment
(DOB 05/10/28) ----------------- company); Chairman of the Board, Peter Brown
11180 6/th/ Street East Trustee Construction Company, Largo, Florida (1963 - 2000);
Treasure Island, Florida 33706 ------- Rear Admiral (Ret.) U.S. Navy Reserve, Civil
Engineer Corps.
Daniel Calabria Trustee Trustee (1993 - present) and President (1993 - 1995)
(DOB 03/05/36) of the Florida Tax Free Funds (mutual funds);
7068 S. Shore Drive S., South President and Director (1995) of Sun Chiropractic
Pasadena, Florida 33707-4605 Clinics, Inc.; Executive Vice President (1993 -
1995) of William R. Hough & Co. (investment adviser,
municipal bond and underwriting firm).
James L Churcill Trustee Emeritus Trustee (1991 - 2001)
(DOB 05/07/30 (effective
15 Hawthorne Road March 27, 2001)
Bluffington, South Carolina
29910-4901
Charles C. Harris Trustee Director, WRL Series Fund, Inc. (investment company)
(DOB 07/15/30) (March, 1994 - present).
35 Winston Drive
Clearwater, Florida 33756
William W. Short, Jr. Trustee Director (September, 2000 - present), WRL Series
(DOB 02/25/36) Fund, Inc. (investment company); President and
12420 73/rd/ Court majority shareholder of Shorts, Inc. (men's retail
Largo, Florida 33773 apparel); Chairman of Southern Apparel Corporation,
S.A.C. Apparel Corporation and S.A.C. Distributors
(nationwide wholesale apparel distributors), Largo,
Florida.
Jack E. Zimmerman Trustee Director (December, 1987 - present) Western Reserve
(DOB 02/03/28) Life Assurance Co. of Ohio. Mr. Zimmerman is also
507 Saint Michael Circle the brother-in-law of John Kenney, Chairman and CEO
Kettering, Ohio 45429 of the Fund.
67
Position(s)
Name, Address and Age held with the Fund Principal Occupation(s) During the past 5 years
- --------------------- ---------------------- ------------------------------------------------------------------
Patrick S. Baird President and Trustee President (June, 2000 - present) and Director (December,
(DOB 01/19/54) 1999 - present), WRL Series Fund, Inc. (investment
4333 Edgewood Road, NE company); Director (March, 1991 - December, 1999),
Cedar Rapids, Iowa 52499 Western Reserve Life Assurance Co. of Ohio; Executive
Vice President (February, 1995 - present) and Chief
Operating Officer (February, 1996 - present), AEGON USA,
Inc. (financial services holding company, Cedar Rapids,
Iowa); Director (December, 1991 - present), Chief Operating
Officer (April, 1996 - present), and Senior Vice President
(April, 1995 - present), PFL Life Insurance Co.; President
(July, 1996 - present), and CFO (May, 1992 - present), AUSA
Holding Co.
John R. Kenney/(1,2)/ Chairman, Trustee Chairman of the Board (1986 - present) and President
(DOB 02/8/38) and Chief Executive (March, 1993 - June, 2000), WRL Series Fund, Inc.
Officer (investment company); Chairman of the Board, Director
and Co-CEO, (March, 2000 - present), Great Companies,
L.L.C. (investment adviser); Chairman of the Board
(August, 1987 - present), CEO (April, 1982 - present),
President (December, 1992 - December, 1999) and
Director (July, 1973 - present), Western Reserve Life
Assurance Co. of Ohio; Chairman of the Board (May,
1988 - present), Idex Investor Services, Inc. (transfer
agent); Director (December, 1990 - present), Idex Management,
Inc. (investment adviser); Director (January, 1987 - April, 1999)
and Chairman of the Board (May, 1988 - April, 1999), InterSecurities,
Inc. (broker-dealer/underwriter); Chairman of the Board (September,
1996 - present) and President (September, 1997 - present), WRL
Investment Management, Inc. (investment adviser); Chairman of the
Board and Director (September, 1996 - present), President
(September, 1997 - present), WRL Investment Services, Inc.
(transfer agent).
Jerome C. Vahl/(1,2)/ Executive Vice Executive Vice President (September, 2000 - present),
(DOB 04/24/56) President WRL Series Fund, Inc. (investment company); President
and Director (December, 1999 - present), Executive Vice President
(June, 1998 - December, 1999) and Vice President (December,
1995 - June, 1998), Western Reserve Life Assurance Co. of Ohio;
Director (March, 2000 - present), Great Companies L.L.C.
(investment adviser); Vice President (1986 - present), AEGON USA,Inc.
(financial services holding company, Cedar Rapids, Iowa); Director
(November, 1999 - present), Idex Investor Services, Inc. (transfer
agent), WRL Investment Services, Inc. (transfer agent), and WRL
Investment Management, Inc. (investment adviser); Director
(June, 1998 - present), Idex Management, Inc. (investment adviser);
Vice President (February, 2000 - present), AUSA Holding Co.
66
Position(s)
Name, Address and Age held with the Fund Principal Occupation(s) During the past 5 years
- --------------------- --------------------- ------------------------------------------------------------------
Thomas R. Moriarty/(1,2)/ Executive Vice Senior Vice President (March, 1995 - September, 2000),
(DOB 05/03/51) President, Treasurer IDEX Mutual Funds (investment company); Chairman
and Principal (November, 1999 - present), President and CEO (April,
Financial Officer 1999 - present) and Senior Vice President (June, 1991 -
April, 1999), InterSecurities (broker-dealer/underwriter); Senior
Vice President (September, 2000 - present) and Vice President
(April, 1993 - September, 2000), Western Reserve Life Assurance Co.
of Ohio; Director (April, 1994 - present), President and CEO (November,
1999 - present) and Senior Vice President (June, 1991 - November,
1999), Idex Investor Services, Inc. (transfer agent); Director
(June, 1998 - present), President and CEO (November, 1999 - present)
and Vice President (November, 1990 - November, 1999), Idex Management,
Inc. (investment adviser); Vice President (December, 1999 - present),
AFSG Securities Corp. (underwriter).
David Bullock/(1,2)/ Executive Vice President (March, 1999 - April, 2000), AEGON Distributors;
(DOB 04/25/56) President AEGON Equity Group; Executive Vice President (September, 1998 -
September, 2000), Western Reserve Life Assurance Co.
of Ohio; Director (August, 1999 - present), Chairman
(December, 1999 - present), President and CEO (October, 1999 -
present), Transamerica Capital, Inc. (broker-dealer, formerly
Endeavor Group); Director (August, 1999 - present), Endeavor
Management Co.; prior to 1998, Senior Vice President, National
Sales Manager and Division Vice President of GE Financial Assurance.
69
Position(s)
Name, Address and Age held with the Fund Principal Occupation(s) During the past 5 years
- --------------------- ------------------ -----------------------------------------------
John K. Carter/(1,2)/ Vice President, Assistant Vice President, Assistant Secretary and Counsel
(DOB 04/24/61) Secretary and (June, 1999 - December, 1999), IDEX Mutual Funds (investment
Counsel company); Vice President, Secretary and Counsel (December,
1999 - present) and Assistant Vice President, Assistant
Secretary and Counsel (June, 1999 - December, 1999), WRL
Series Fund, Inc. (investment company); Vice President and
Counsel (June, 2000 - present) and Assistant Vice President
and Counsel (September, 1999 - June, 2000), Western Reserve
Life Assurance Co. of Ohio; Vice President (December 2000 -
present), AFSG Securities Corp. (underwriter); Vice
President, Counsel and Assistant Secretary (April, 2000 -
present), AEGON Asset Management Services, Inc.; Vice
President, Counsel and Assistant Secretary (April, 2000 -
present), Idex Investor Services, Inc. (transfer agent) and
WRL Investment Services, Inc. (transfer agent); Vice
President, Counsel, Compliance Officer and Assistant
Secretary (April, 2000 - present), Idex Management, Inc.
(investment adviser) and WRL Investment Management, Inc.
(investment adviser); Assistant Secretary (April, 1999 -
present); Vice President and Counsel (March, 1997 - May,
1999), Salomon Smith Barney; Assistant Vice President,
Associate Corporate Counsel and Trust Officer (September,
1993 - March, 1997), Franklin Templeton Mutual Funds.
Thomas E. Pierpan/(1,2)/ Vice President and Associate General Counsel and Secretary (December, 1997 -
(DOB 10/18/43) Assistant Secretary December, 1999), IDEX Mutual Funds (investment company);
Vice President (March, 1995 - present), Assistant Secretary
(March, 1995 - December, 1997 and December, 1999 - present)
and Associate General Counsel and Secretary (December, 1997
- December, 1999), WRL Series Fund (investment company);
Senior Vice President and General Counsel (December, 1999 -
present), Assistant Secretary (March, 1996 - present),
Associate General Counsel (January, 1997 - December, 1999),
Vice President (December, 1993 - December, 1999) and Counsel
(April, 1995 - January, 1997), Western Reserve Life
Assurance Co. of Ohio; Assistant Vice President and
Assistant Secretary (December, 1998 - present), AFSG
Securities Corp. (underwriter).
Christopher G. Roetzer/(1,2)/ Vice President, Assistant Vice President (November, 1990 - March, 1997),
(DOB 01/11/63) Assistant Treasurer IDEX Mutual Funds (investment company); Vice President
and Principal Ac- (December 2000 - present), AFSG Securities Corp.
counting Officer (underwriter); Vice President, Fund Financial Reporting and
Control (October, 1996 - present) and Assistant Vice
President (May, 1988 - October, 1996), Idex Investor
Services, Inc. (transfer agent); Vice President (November,
1990 - April, 2000), Index Management, Inc. (investment
adviser); Assistant Vice President (May, 1988 - present),
InterSecurities, Inc. (broker-dealer/underwriter).
70
Position(s)
Name, Address and Age held with the Fund Principal Occupation(s) During the past 5 years
- --------------------- ------------------ -------------------------------------------------
Julian Lerner Trustee Emeritus Currently retired; Trustee of American Skandia
(DOB 11/12/24) effective January 1, Trust; Director of American Skandia Advisory
One Spurling Plaza 2000) Funds; Trustee of American Skandia Master Trust;
Suite 208 Investment Consultant (1995-1996) and Senior Vice
12850 Spurling Road President (1987-1995), Aim Capital Management
Dallas, Texas 75230 (investment adviser).
(1) The principal business address is P.O. Box 9015 , Clearwater, Florida
33758-9015.
(2) Interested Person, as defined in the 1940 Act, and affiliated person of
Investment Adviser.
The Fund pays no salaries or compensation to any of its officers, all of whom
are officers or employees of either ISI, IMI or their affiliates. Disinterested
Trustees (i.e., Trustees who are not affiliated with ISI, IMI or any of the
----
sub-advisers) receive for each regular Board meeting: (a) a total annual
retainer fee of $20,000 from the funds, of which the funds pay a pro rata share
allocable to each fund based on the relative assets of the fund; plus (b) $4,000
and incidental expenses per meeting attended. Three of the Disinterested
Trustees have been elected to serve on the Fund's Audit Committee, which meets
twice annually. Each Audit Committee member receives a total of $2,500 per Audit
Committee meeting attended in addition to the regular meetings attended. In the
case of a Special Board Meeting, each of the Disinterested Trustees receives a
fee of $2,500 plus incidental expenses per special meeting attended, in addition
to the regular meetings attended. Any fees and expenses paid to Trustees who are
affiliates of IMI or ISI are paid by IMI and/or ISI and not by the funds.
Commencing on January 1, 1996, a non-qualified deferred compensation plan (the
"Plan") became available to Trustees who are not interested persons of the Fund.
Under the Plan, compensation may be deferred that would otherwise be payable by
the Fund and/or WRL Series Fund, Inc., to a Disinterested Trustee or Director on
a current basis for services rendered as Trustee or Director. Deferred
compensation amounts will accumulate based on the value of Class A shares of a
fund (without imposition of sales charge), as elected by the Trustee. It is not
anticipated that the Plan will have any impact on the funds.
The following table provides compensation amounts paid to Disinterested Trustees
of the Fund for the fiscal year ended October 31, 2000.
COMPENSATION TABLE
Aggregate Pension Or Retirement Total Compensation Paid to
Compensation From Benefits Accrued As Part of Trustees from Fund
Name of Person, Position IDEX Mutual Funds * Fund Expenses Complex**
- ------------------------ ----------------------- --------------------------- --------------------------
For Year Ended 10/31/00 As of 10/31/00 10/31/00
Peter R. Brown, Trustee $ 43,500 $ 9,000 $ 67,000
Daniel Calabria, Trustee $ 38,500 $ 4,693 $ 38,500
James L. Churchill, Trustee/(1)/ $ 38,500 $24,300 $ 38,500
Charles C. Harris, Trustee $ 43,500 $ 6,900 $ 66,000
Julian A. Lerner, Trustee*** $ 9,000 $ -- $ 9,000
William W. Short, Jr., Trustee $ 43,500 $34,875 $ 62,000
Jack E. Zimmerman, Trustee $ 38,500 $ -- $ 38,500
-------- ------- --------
Total $255,000 $79,768 $319,500
_______________________
* Of this aggregate compensation, the total amounts deferred (including
earnings) and accrued for the benefit of the participating Trustees for the
year ended October 31, 2000 were as follows: Peter R. Brown, $19,776;
Daniel Calabria, $14,318; James L. Churchill, $34,094; William W. Short,
Jr., $37,555; Charles Harris, $6,900 and Jack E. Zimmerman, $3,761.
** The Fund Complex consists of IDEX Mutual Funds and WRL Series Fund, Inc.
*** Effective January 1, 2000, Mr. Lerner became a Trustee Emeritus.
(1) Mr. Churchill resigned from the Board effective March 27, 2001 and is now
serving as Trustee Emeritus.
71
The Board of Trustees has adopted a policy whereby any Disinterested Trustee of
the Fund in office on September 1, 1990 who has served at least three years as a
trustee may, subject to certain limitations, elect upon his resignation to serve
as a trustee emeritus for a period of two years. A trustee emeritus has no
authority, power or responsibility with respect to any matter of the Fund. While
serving as such, a trustee emeritus is entitled to receive from the Fund an
annual fee equal to one-half the fee then payable per annum to Disinterested
Trustees of the Fund, plus reimbursement of expenses incurred for attendance at
Board meetings.
The Fund has an Executive Committee whose members currently are John R. Kenney,
Pat Baird and Peter R. Brown. The Executive Committee may perform all of the
functions which may be performed by the Board of Trustees, except as set forth
in the Declaration of Trust and By-Laws of the Fund or as prohibited by
applicable law.
During the fiscal year ended October 31, 2000, the Fund paid $356,945 in
trustees fees and expenses and $7,500 in trustee emeritus fees or expenses. As
of January 30, 2001, the trustees and officers held in the aggregate less than
1% of the outstanding shares of each of the funds.
PURCHASE OF SHARES
As stated in the prospectus, each fund offers investors a choice of four classes
of shares. (IDEX Janus Growth also includes a fifth class, Class T shares, which
are not available for new investors.) Class A, Class B, Class C or Class M
shares of a fund can be purchased through ISI or through broker-dealers or other
financial institutions that have sales agreements with ISI. Shares of each fund
are sold at the net asset value per share as determined at the close of the
regular session of business on the New York Stock Exchange next occurring after
a purchase order is received and accepted by the fund. (The applicable sales
charge is added in the case of Class A, Class M and Class T shares.) The
prospectus contains detailed information about the purchase of fund shares.
DEALER REALLOWANCES
IDEX sells shares of its funds both directly and through authorized dealers.
When you buy shares, your fund receives the entire NAV of the shares you
purchase. AFSG keeps the sales charge, then "reallows" a portion to the dealers
through which shares were purchased. This is how dealers are compensated.
From time to time, AFSG will create special promotions in which dealers earn
larger reallowances in return for selling significant amounts of shares or for
certain training services. Sometimes, these dealers may earn virtually the
entire sales charge; at those times, they may be deemed underwriters as
described in the 1933 Act.
Promotions may also involve non-cash incentives such as prizes or merchandise.
Non-cash compensation may also be in the form of attendance at seminars
conducted by AFSG, including lodging and travel expenses, in accordance with the
rules of the NASD.
Reallowances may also be given to financial institutions to compensate them for
their services in connection with Class A share sales and servicing of
shareholder accounts.
AFSG may also pay dealers or financial institutions from its own funds or
administrative services for larger accounts.
72
Class A Share Dealer Reallowances
(all funds except IDEX Janus Flexible Income, IDEX AEGON Income Plus
and IDEX Federated Tax Exempt)
Reallowance to Dealers as a %
Amount of Purchase of Offering Price
- ------------------ -----------------
Under $50 Thousand 4.75%
$50 Thousand to under $100 Thousand 4.00%
$100 Thousand to under $250 Thousand 2.75%
$250 Thousand to under $500 Thousand 2.25%
$500 Thousand to under $1 Million 1.75%
For purchases of $1 Million and above:
$1 Million to under $5 Million 1.00%
$5 Million to under $50 Million Plus 0.50%
$50 Million and above Plus 0.25%
Class A Share Dealer Reallowances
(IDEX Janus Flexible Income, IDEX AEGON Income Plus
and IDEX Federated Tax Exempt)
Reallowance to Dealers as a %
Amount of Purchase of Offering Price
- ------------------ -----------------
Under $50 Thousand 4.00%
$50 Thousand to under $100 Thousand 3.25%
$100 Thousand to under $250 Thousand 2.75%
$250 Thousand to under $500 Thousand 1.75%
$500 Thousand to under $1 Million 1.00%
For purchases of $1 Million and above:
$1 Million to under $5 Million 0.50%
$5 Million and above Plus 0.25%
Class B Share Dealer Reallowances
Reallowance to Dealers as a %
of Offering Price
-----------------
All purchases 5.00%*
* From time to time, AFSG may
reallow to a dealer an amount
less than 5% on sales of Class B
shares. In such circumstances,
AFSG will benefit directly to the
extent the reallowance percentage
is reduced below 5% on any
purchase of Class B shares.
Class M Share Dealer Reallowances
Reallowance to Dealers as a %
Amount of Purchase of Offering Price
- ------------------ -----------------
All purchases 2.00%
Class T Share Dealer Reallowances
(IDEX Janus Growth)
Reallowance to Dealers as a %
Amount of Purchase of Offering Price
- ------------------ -----------------
$1,000,000 and over 1.00%
73
DISTRIBUTION PLANS
As stated in the prospectus under "Investment Advisory and Other Services," each
fund has adopted a separate Distribution Plan pursuant to Rule 12b-1 under the
1940 Act (individually, a "Plan" and collectively, the "Plans"), applicable to
Class A, Class B, Class C and Class M shares of the fund. This Plan is
structured as a Compensation Plan. Class T shares of IDEX Janus Growth are not
subject to annual distribution and service fees.
In determining whether to approve the Distribution Plan and the Distribution
Agreements, the Trustees considered the possible advantages afforded
shareholders from adopting the Distribution Plans and Distribution Agreements.
The Trustees were informed by representatives of AFSG that reimbursements of
distribution-related expenses by the Fund under the Distribution Plans would
provide incentives to AFSG to establish and maintain an enhanced distribution
system whereby new investors will be attracted to the funds. The Trustees
believe that improvements in distribution services should result in increased
sales of shares in the funds. In turn, increased sales are expected to lead to
an increase in a fund's net asset levels, which would enable the funds to
achieve economies of scale and lower their per-share operating expenses. In
addition, higher net asset levels could enhance the investment management of the
funds, for net inflows of cash from new sales may enable a fund's investment
adviser and sub-adviser to take advantage of attractive investment
opportunities. Finally, reduced redemptions could eliminate the potential need
to liquidate attractive securities positions in order to raise the capital
necessary to meet redemption requests.
Under the Plans for Class A shares (the "Class A Plans"), a fund may pay AFSG an
annual distribution fee of up to 0.35% and an annual service fee of up to 0.25%
of the average daily net assets of a fund's Class A shares; however, to the
extent that a fund pays service fees, the amount which a fund may pay as a
distribution fee is reduced accordingly so that the total fees payable under the
Class A Plan may not exceed on an annualized basis 0.35% of the average daily
net assets of a fund's Class A shares.
Under the Plans for Class B shares (the "Class B Plans"), a fund may pay AFSG an
annual distribution fee of up to 0.75% and an annual service fee of up to 0.25%
of the average daily net assets of the fund's Class B shares.
Under the Plans for Class C shares (the "Class C Plans"), a fund may pay AFSG an
annual distribution fee of up to 0.75% and an annual service fee of up to 0.25%
of the average daily net assets of the fund's Class C shares.
Under the Plans for Class M shares (the "Class M Plans"), a fund may pay AFSG an
annual distribution fee of up to 0.75% and an annual service fee of up to 0.25%
of the average daily net assets of the fund's Class M shares; however, the total
fee payable pursuant to the Class M Plan may not, on an annualized basis, exceed
0.90% of the average daily net assets of the fund's Class M shares.
AFSG may use the fees payable under the Class A, Class B, Class C and Class M
Plans as it deems appropriate to pay for activities or expenses primarily
intended to result in the sale of the Class A, Class B, Class C or Class M
shares, respectively, or in personal service to and/or maintenance of these
shareholder accounts. For each class, these activities and expenses may include,
but are not limited to:
Compensation to employees of AFSG;
Compensation to and expenses of AFSG and other selected dealers who
engage in or otherwise support the distribution of shares or who service
shareholder accounts;
The costs of printing and distributing prospectuses, statements of
additional information and reports for other than existing shareholders;
and
The cost of preparing, printing and distributing sales literature and
advertising materials.
Under the Plans, as required by Rule 12b-1, the Board of Trustees will review,
at least quarterly, a written report provided by AFSG of the amounts expended by
AFSG in distributing and servicing Class A, Class B, Class C or Class M shares
of the funds and the purpose for which such expenditures were made. For so long
as the Plans are in effect, selection and nomination of the Trustees who are not
interested persons of the Fund shall be committed to the discretion of the
Trustees who are not interested persons of the Fund.
A Plan may be terminated as to a class of shares of a fund at any time by vote
of a majority of the Disinterested Trustees, or by vote of a majority of the
outstanding voting securities of the applicable class. A Plan may be amended by
vote of the Trustees, including a majority of the Disinterested Trustees of the
Fund and have no
74
direct or indirect financial interest in the operation of the Plan or any
agreement relating thereto, cast in person at a meeting called for that purpose.
Any amendment of a Plan that would materially increase the costs to a particular
class of shares of a fund requires approval by the shareholders of that class. A
Plan will remain in effect for successive one year periods, so long as such
continuance is approved annually by vote of the Fund's Trustees, including a
majority of the Disinterested Trustees, cast in person at a meeting called for
the purpose of voting on such continuance.
DISTRIBUTION FEES
Distribution related expenses incurred by ISI for the fiscal year ended October
31, 2000 are listed in the table below. These expenses have been partially
reimbursed to AFSG by a 12b-1 arrangement with the funds.
IDEX Alger IDEX GE
Aggressive Growth International Equity
-------------------------------------------- ----------------------------------------
A B C** M*** A B C** M***
Shares Shares Shares Shares Shares Shares Shares Shares
--------- ------ ------ ------ ------ ------ ------ ------
Advertising $ 12,299 $ 10,738 $ 2,972 $ 2,827 $ 529 $ 538 $ 148 $ 79
Printing/mailing
prospectuses to other than
current shareholders $ 75,412 $ 65,841 $ 18,226 $ 17,335 $ 3,243 $ 3,297 $ 906 $ 484
Compensation to
underwriters $ 181,072 $ 32,396 $ 15,643 $ 9,761 $ 94,882 $ 21,757 $ 3,662 $ 1,676
Compensation to dealers $ 157,656 $ 86,513 $ 1,449 $ 33,254 $ 7,877 $ 13,899 $ $171 $ 1,633
Compensation to sales personnel $ 253,339 $221,184 $ 61,228 $ 58,235 $ 10,895 $ 11,075 $ 3,044 $ 1,626
Interest or other finance charges $ -- $ -- $ -- $ -- $ -- $ -- $ -- $ --
Travel $ 27,002 $ 23,575 $ 6,526 $ 6,207 $ 1,161 $ 1,180 $ 324 $ 173
Office expenses $ 67,486 $ 58,920 $ 16,310 $ 15,513 $ 2,902 $ 2,950 $ 811 $ 433
Administrative processing costs $ 14,827 $ 544 $ 1,058 $ 107 $ 2,686 $ 675 $ 47 $ 116
TOTAL $ 789,095 $499,711 $123,413 $143,239 $ 124,175 $ 55,371 $ 9,113 $ 6,222
IDEX Janus
Capital Appreciation IDEX Janus Global
-------------------------------------------- ------------------------------------------
A B C** M*** A B C** M***
Shares Shares Shares Shares Shares Shares Shares Shares
--------- ------ ------ ------ ------ ------ ------ ------
Advertising $ 18,402 $ 22,219 $ 8,186 $ 6,481 $ 35,149 $ 39,290 $ 19,864 $ 19,952
Printing/mailing
prospectuses to other than
current shareholders $ 112,835 $136,239 $ 50,197 $ 39,742 $ 215,523 $ 240,916 $121,799 $122,341
Compensation to
underwriters $ 895,525 $ 17,061 $ 2,272 $ 5,356 $ (195,378) $ 16,582 $ 5,301 $ 16,192
Compensation to dealers $ 64,986 $ 38,032 $ 1,732 $ 69,438 $ 217,101 $ 88,907 $ 1,682 $ 58,450
Compensation to sales personnel $ 379,057 $457,680 $168,630 $133,510 $ 724,024 $ 809,330 $409,170 $410,991
Interest or other finance charges $ -- $ -- $ -- $ -- $ -- $ -- $ -- $ --
Travel $ 40,402 $ 48,782 $ 17,974 $ 14,230 $ 77,171 $ 86,263 $ 43,612 $ 43,806
Office expenses $ 100,976 $121,920 $ 44,921 $ 35,565 $ 192,870 $ 215,595 $108,997 $109,483
Administrative processing costs $ 11,311 $ 12,255 $ 2,014 $ 481 $ 29,724 $ 11,063 $ 3,910 $ 780
TOTAL $1,623,494 $854,188 $295,925 $304,804 $1,296,183 $1,507,946 $714,334 $781,996
75
IDEX Jennison Equity
IDEX Janus Growth* Opportunity/(a)/
------------------------------------------------ -----------------------------------------------
A B C** M*** A B C** M***
Shares Shares Shares Shares Shares Shares Shares Shares
---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
Advertising $ 96,440 $ 85,005 $ 20,185 $ 28,038 $ 345 $ 301 $ 60 $ 48
Printing/mailing
prospectuses to other than
current shareholders $ 591,348 $ 521,230 $ 123,772 $ 171,922 $ 2,115 $ 1,848 $ 368 $ 292
Compensation to
underwriters $1,865,691 $ 115,362 $ (73) $ 63,013 $ 161,959 $ 14,744 $ 893 $ 14,617
Compensation to dealers $2,691,935 $ 301,575 $ 4,306 $ 135,797 $ 56,605 $ 72,646 $ 865 $ 6,687
Compensation to sales personnel $1,986,568 $1,751,015 $ 415,797 $ 577,551 $ 7,106 $ 6,207 $ 1,237 $ 980
Interest or other finance charges $ -- $ -- $ -- $ -- $ -- $ -- $ -- $ --
Travel $ 211,740 $ 186,633 $ 44,318 $ 61,559 $ 757 $ 662 $ 132 $ 104
Office expenses $ 529,195 $ 466,447 $ 110,763 $ 153,852 $ 1,893 $ 1,653 $ 329 $ 261
Administrative processing costs $ 61,065 $ 918 $ 4,010 $ 318 $ 2,010 $ 257 $ 38 $ 1,003
TOTAL $8,033,982 $3,428,184 $ 723,077 $1,192,049 $ 232,790 $ 98,317 $ 3,922 $ 23,993
IDEX NWQ Value Equity IDEX LKCM Strategic Total Return
------------------------------------------------ ---------------------------------------------
A B C** M*** A B C** M***
Shares Shares Shares Shares Shares Shares Shares Shares
---------- ---------- --------- ---------- ---------- ---------- -------- ---------
Advertising $ 437 $ 783 $ 139 $ 172 $ 6,437 $ 4,700 $ 410 $ 1,238
Printing/mailing
prospectuses to other than
current shareholders $ 2,683 $ 4,802 $ 851 $ 1,058 $ 39,469 $ 28,820 $ 2,512 $ 7,591
Compensation to
underwriters $ 34,774 $ 9,442 $ 848 $ 3,261 $ 201,371 $ 501,977 $ 10,735 $ 25,172
Compensation to dealers $ 8,254 $ 7,840 $ 1,432 $ 2,020 $ 12,318 $ 957,343 $ 27 $ 131,213
Compensation to sales personnel $ 9,012 $ 16,131 $ 2,860 $ 3,553 $ 132,593 $ 96,817 $ 8,439 $ 25,503
Interest or other finance charges $ -- $ -- $ -- $ -- $ -- $ -- $ -- $ --
Travel $ 961 $ 1,719 $ 305 $ 379 $ 14,133 $ 10,319 $ 899 $ 2,718
Office expenses $ 2,401 $ 4,297 $ 762 $ 947 $ 35,321 $ 25,791 $ 2,248 $ 6,794
Administrative processing costs $ 2,514 $ 317 $ 57 $ 784 $ 12,023 $ 720 $ 132 $ 637
TOTAL $ 61,033 $ 45,332 $ 7,254 $ 12,174 $ 453,665 $1,626,486 $ 25,403 $ 200,866
IDEX Dean Asset Allocation IDEX Janus Balanced
------------------------------------------------ ---------------------------------------------
A B C** M*** A B C** M***
Shares Shares Shares Shares Shares Shares Shares Shares
---------- ---------- ---------- ---------- ---------- ---------- -------- ---------
Advertising $ 553 $ 467 $ 88 $ 151 $ 33,437 $ 37,806 $ 7,044 $ 14,692
Printing/mailing
prospectuses to other than
current shareholders $ 3,388 $ 2,866 $ 537 $ 923 $ 205,029 $ 231,820 $ 43,191 $ 90,086
Compensation to
underwriters $ 67,729 $ 126,896 $ 2,351 $ 9,737 $ 624,117 $ 30,862 $ 11,670 $ 35,815
Compensation to dealers $ 156,824 $ 186,428 $ 920 $ 12,204 $ 897,146 $ 558,845 $ 372 $ 68,048
Compensation to sales personnel $ 11,382 $ 9,627 $ 1,803 $ 3,101 $ 688,772 $ 778,772 $145,097 $ 302,635
Interest or other finance charges $ -- $ -- $ -- $ -- $ -- $ -- $ -- $ --
Travel $ 1,213 $ 1,026 $ 192 $ 330 $ 73,413 $ 83,006 $ 15,465 $ 32,257
Office expenses $ 3,032 $ 2,564 $ 480 $ 826 $ 183,479 $ 207,454 $ 38,652 $ 80,618
Administrative processing costs $ 230 $ 314 $ 37 $ 649 $ 5,567 $ 7,835 $ 947 $ 412
TOTAL $ 244,352 $ 330,189 $ 6,408 $ 27,921 $2,710,961 $1,936,401 $262,438 $ 624,562
IDEX Janus Flexible Income IDEX AEGON Income Plus
--------------------------------------------- ------------------------------------------
A B C** M*** A B C** M***
Shares Shares Shares Shares Shares Shares Shares Shares
-------- ------ ------ ------ ------ ------ ------ ------
Advertising $ 1,214 $ 1,642 $ 1,325 $ 675 $ 6,693 $ 6,593 $ 174 $ 1,795
Printing/mailing
prospectuses to other than
current shareholders $ 7,446 $ 10,067 $ 8,122 $ 4,137 $ 41,040 $ 40,424 $ 1,064 $ 11,006
Compensation to
underwriters $ (65,024) $ 14,165 $ 26,149 $ 955 $ 58,870 $ 4,536 $ 11,121 $ 3,147
Compensation to dealers $ 583,343 $ 14,784 $ 128 $ 2,843 $ 34,529 $ 10,413 $ 20 $ 5,087
Compensation to sales personnel $ 25,014 $ 33,818 $ 27,284 $ 13,896 $ 137,871 $ 135,800 $ 3,574 $ 36,973
Interest or other finance charges $ -- $ -- $ -- $ -- $ -- $ -- $ -- $ --
Travel $ 2,666 $ 3,605 $ 2,908 $ 1,481 $ 14,695 $ 14,474 $ 381 $ 3,941
Office expenses $ 6,663 $ 9,009 $ 7,268 $ 3,702 $ 36,727 $ 36,175 $ 952 $ 9,849
Administrative processing costs $ 756 $ 568 $ 99 $ 154 $ 1,974 $ 56 $ 43 $ 107
TOTAL $ 562,078 $ 87,657 $ 73,282 $ 27,843 $ 332,399 $ 248,471 $ 17,329 $ 71,904
IDEX Federated Tax Exempt/(b)/ IDEX Goldman Sachs Growth
----------------------------------------- -----------------------------------------
A B C** M*** A B C** M***
Shares Shares Shares Shares Shares Shares Shares Shares
-------- -------- -------- -------- -------- -------- -------- --------
Advertising $ 5,000 $ 7,989 $ 52 $ 2,366 $ 3,643 $ 3,121 $ 2,430 $ 9,197
Printing/mailing
prospectuses to other than
current shareholders $ 30,657 $ 48,989 $ 319 $ 14,509 $ 22,339 $ 19,139 $ 14,903 $ 56,396
Compensation to
underwriters $ 4,222 $ 1,821 $ 2,509 $ 217 $ 20,364 $ 4,412 $ 2,642 $ 484
Compensation to dealers $ 5,848 $ 4,781 $ 274 $ 593 $ 1,319 $ 4,761 $ 3,699 $ 892
Compensation to sales personnel $102,989 $164,572 $ 1,070 $ 48,741 $ 75,045 $ 64,295 $ 50,065 $189,457
Interest or other finance charges $ -- $ -- $ -- $ -- $ -- $ -- $ -- $ --
Travel $ 10,977 $ 17,541 $ 114 $ 5,195 $ 7,999 $ 6,853 $ 5,336 $ 20,193
Office expenses $ 27,435 $ 43,840 $ 285 $ 12,984 $ 19,991 $ 17,127 $ 13,337 $ 50,469
Administrative processing costs $ 453 $ 27,276 $ 17 $ 463 $ 10,668 $ 448 $ 71 $ 178
TOTAL $187,581 $316,808 $ 4,640 $ 85,067 $161,367 $120,155 $ 92,484 $327,266
IDEX T. Rowe Price
Dividend Growth IDEX Salomon All Cap
----------------------------------------- -----------------------------------------
A B C** M*** A B C** M***
Shares Shares Shares Shares Shares Shares Shares Shares
-------- -------- -------- -------- -------- -------- -------- --------
Advertising $ 584 $ 955 $ 283 $ 214 $ 3,054 $ 4,656 $ 1,526 $ 1,424
Printing/mailing
prospectuses to other than
current shareholders $ 3,582 $ 5,853 $ 1,738 $ 1,315 $ 18,724 $ 28,551 $ 9,359 $ 8,730
Compensation to
underwriters $ 9,313 $ 394 $ 5,047 $ 2,417 $ 10,956 $ 4,520 $ 5,169 $ 1,013
Compensation to dealers $ 3,115 $ 1,606 $ 2,070 $ 988 $ 5,473 $ 4,591 $ 8,912 $ 1,114
Compensation to sales personnel $ 12,034 $ 19,663 $ 5,839 $ 4,418 $ 62,901 $ 95,914 $ 31,440 $ 29,326
Interest or other finance charges $ -- $ -- $ -- $ -- $ -- $ -- $ -- $ --
Travel $ 1,283 $ 2,096 $ 622 $ 471 $ 6,704 $ 10,223 $ 3,351 $ 3,126
Office expenses $ 3,206 $ 5,238 $ 1,556 $ 1,177 $ 16,756 $ 25,550 $ 8,375 $ 7,812
Administrative processing costs $ 60 $ 57 $ 83 $ 544 $ 2,931 $ 797 $ 198 $ 3,457
TOTAL $ 33,177 $ 35,861 $ 17,239 $ 11,545 $127,499 $174,803 $ 68,329 $ 56,000
77
IDEX Pilgrim Baxter Mid Cap Growth IDEX T. Rowe Price Small Cap
---------------------------------------- ---------------------------------------
A B C** M*** A B C** M***
Shares Shares Shares Shares Shares Shares Shares Shares
------ ------ ------ ------ ------ ------ ------ ------
Advertising $ 6,360 $ 8,710 $ 2,700 $ 1,790 $ 1,008 $ 1,083 $ 279 $ 269
Printing/mailing
prospectuses to other than
current shareholders $ 39,000 $ 53,407 $ 16,557 $ 10,977 $ 6,183 $ 6,641 $ 1,709 $ 1,652
Compensation to
underwriters $ 1,742 $ 19,938 $ 663 $ 202 $ 15,260 $ 2,576 $ 1,870 $ 584
Compensation to dealers $ 4,100 $ 33,317 $ 1,128 $ 27 $ 1,979 $ 569 $ 867 $ 6
Compensation to sales personnel $131,017 $179,416 $ 55,621 $ 36,876 $ 20,772 $ 22,308 $ 5,740 $ 5,549
Interest or other finance charges $ -- $ -- $ -- $ -- $ -- $ -- $ -- $ --
Travel $ 13,965 $ 19,123 $ 5,928 $ 3,930 $ 2,214 $ 2,378 $ 612 $ 591
Office expenses $ 34,901 $ 47,794 $ 14,817 $ 9,823 $ 5,533 $ 5,943 $ 1,529 $ 1,478
Administrative processing costs $ 37,365 $ 1,569 $ 587 $ 591 $ 274 $ 855 $ 115 $ 2,997
TOTAL $268,451 $363,274 $ 98,002 $ 64,217 $ 53,225 $ 42,352 $ 12,720 $ 13,126
IDEX Pilgrim Baxter Technology IDEX GE U.S. Equity
----------------------------------------- -----------------------------------------
A B C** M*** A B C** M***
Shares Shares Shares Shares Shares Shares Shares Shares
-------- -------- -------- -------- --------- -------- -------- --------
Advertising $ 4,292 $ 6,245 $ 2,357 $ 1,501 $ 402 $ 551 $ 322 $ 99
Printing/mailing
prospectuses to other than
current shareholders $ 26,320 $ 38,291 $ 14,450 $ 9,206 $ 2,467 $ 3,377 $ 1,972 $ 607
Compensation to
underwriters $ 1,564 $ -- $ 1,839 $ 353 $ 14,039 $ -- $ 11,464 $ 1,717
Compensation to dealers $ 1,187 $ -- $ -- $ 954 $ 21,300 $ -- -- $ 12,614
Compensation to sales personnel $ 88,419 $128,636 $ 48,543 $ 30,927 $ 8,288 $ 11,344 $ 6,626 $ 2,038
Interest or other finance charges $ -- $ -- $ -- $ -- $ -- $ -- $ -- $ --
Travel $ 9,424 $ 13,711 $ 5,174 $ 3,296 $ 883 $ 1,209 $ 706 $ 217
Office expenses $ 23,554 $ 34,267 $ 12,931 $ 8,238 $ 2,208 $ 3,022 $ 1,765 $ 543
Administrative processing costs $ 1,606 $ 1,962 $ 334 $ 525 $ 93 $ 134 $ 15 $ 41
TOTAL $156,366 $223,111 $ 85,627 $ 55,001 $ 49,681 $ 19,637 $ 22,871 $ 17,875
IDEX Transamerica Small Company IDEX Transamerica Equity
-------------------------------------- --------------------------------------
A B C** M*** A B C** M***
Shares Shares Shares Shares Shares Shares Shares Shares
-------- -------- --------- -------- -------- -------- -------- -------
Advertising $ 516 $ 550 $ 269 $ 273 $ 429 $ 431 $ 196 $ 169
Printing/mailing
prospectuses to other than
current shareholders $ 3,163 $ 3,370 $ 1,652 $ 1,673 $ 2,632 $ 2,643 $ 1,202 $ 1,038
Compensation to
underwriters $ 2,015 $ -- $ 582 $ 330 $ 1,443 $ -- $ 642 $ 624
Compensation to dealers $ 707 $ -- $ -- $ 514 $ 737 $ -- $ -- $ 785
Compensation to sales personnel $10,627 $11,322 $ 5,549 $ 5,620 $ 8,841 $ 8,878 $ 4,038 $ 3,487
Interest or other finance charges $ -- $ -- $ -- $ -- $ -- $ -- $ -- $ --
Travel $ 1,133 $ 1,207 $ 591 $ 599 $ 942 $ 946 $ 430 $ 372
Office expenses $ 2,831 $ 3,016 $ 1,478 $ 1,497 $ 2,355 $ 2,365 $ 1,076 $ 929
Administrative processing costs $ 134 $ 200 $ 44 $ 54 $ 72 $ 91 $ 13 $ 30
TOTAL $21,126 $19,664 $10,165 $10,559 $17,451 $15,353 $ 7,597 $ 7,433
78
IDEX Great Companies -- America(SM) IDEX Great Companies -- Technology(SM)
---------------------------------------- --------------------------------------
A B C** M*** A B C** M***
Shares Shares Shares Shares Shares Shares Shares Shares
------ ------ ------ ------ ------ ------ ------ ------
Advertising $ 1,770 $ 971 $ 433 $ 264 $ 919 $ 444 $ 214 $ 101
Printing/mailing
prospectuses to other than
current shareholders $10,855 $ 5,953 $ 2,658 $ 1,619 $ 5,632 $ 2,724 $ 1,311 $ 620
Compensation to
underwriters $ 4,006 $ -- $ 548 $ 339 $ 1,914 $ -- $ 264 $ 146
Compensation to dealers $ 2,067 $ -- $ -- $ 467 $ 1,084 $ -- $ -- $ 220
Compensation to sales personnel $36,467 $19,998 $ 8,929 $ 5,437 $18,921 $ 9,150 $ 4,403 $ 2,082
Interest or other finance charges $ -- $ -- $ -- $ -- $ -- $ -- $ -- $ --
Travel $ 3,887 $ 2,131 $ 952 $ 580 $ 2,017 $ 975 $ 469 $ 222
Office expenses $ 9,714 $ 5,327 $ 2,378 $ 1,448 $ 5,040 $ 2,437 $ 1,173 $ 554
Administrative processing costs $ 209 $ 137 $ 35 $ 21 $ 159 $ 107 $ 25 $ 14
TOTAL $68,975 $34,517 $15,933 $10,174 $35,685 $15,836 $ 7,858 $ 3,959
IDEX Great Companies -- Global/2/ IDEX Gabelli Global Growth
------------------------------------ --------------------------------------
A B C** M*** A B C** M***
Shares Shares Shares Shares Shares Shares Shares Shares
------ ------ ------ ------ ------ ------ ------ ------
Advertising $ 317 $ 84 $ 54 $ 127 $ 690 $ 1,007 $ 1,090 $ 349
Printing/mailing
prospectuses to other than
current shareholders $ 1,944 $ 515 $ 329 $ 776 $ 4,230 $ 6,176 $ 6,682 $ 2,139
Compensation to
underwriters $ 244 $ -- $ 202 $ -- $ 642 $ -- $ 339 $ --
Compensation to dealers $ -- $ -- $ -- $ -- $ -- $ -- $ -- $ --
Compensation to sales personnel $ 6,530 $ 1,729 $1,105 $2,607 $14,210 $20,748 $22,447 $ 7,185
Interest or other finance charges $ -- $ -- $ -- $ -- $ -- $ -- $ -- $ --
Travel $ 696 $ 184 $ 118 $ 278 $ 1,515 $ 2,211 $ 2,393 $ 766
Office expenses $ 1,739 $ 461 $ 294 $ 695 $ 3,785 $ 5,527 $ 5,980 $ 1,914
Administrative processing costs $ 12 $ 7 $ 2 $ 2 $ 44 $ 68 $ 24 $ 11
TOTAL $11,481 $ 2,979 $2,103 $4,484 $25,115 $35,737 $38,955 $12,363
* Class T shares of IDEX Janus Growth are not subject to annual distribution
and service fees.
** This class was established on November 1, 1999 and has different fees and
expenses than pre-March 1, 1999 C Shares.
*** All shares designated as Class C shares prior to March 1, 1999 were renamed
as Class M shares on that date.
(a) Prior to December 1, 2000, C.A.S.E. Management, Inc. served as sub-adviser
to this and this fund was named IDEX C.A.S.E. Growth.
(b) Prior to June 15, 2000, AEGON USA Investment Management, Inc. served as
sub-adviser to this fund.
Expenses are not listed for IDEX Janus Growth & Income and IDEX Munder Net50 as
they commenced operations on December 15, 2000, and for IDEX American Century
Income & Growth, IDEX American Century International and IDEX Isabelle Small Cap
Value as they commence operations on April 2, 2001.
NET ASSET VALUE DETERMINATION
Net asset value is determined separately for each class of shares of a fund on
each day as of the close of the regular session of business on the New York
Stock Exchange (the "Exchange"), currently 4:00 p.m. Eastern Time, Monday
through Friday, except on: (i) days on which changes in the value of portfolio
securities will not materially affect the net asset value of a particular class
of shares of the funds; (ii) days during which no shares of a fund are tendered
for redemption and no orders to purchase shares of that fund are received; or
(iii) customary national holidays on which the Exchange is closed. The per share
net asset value of each class of shares of a fund is determined by adding the
fund's total assets, subtracting liabilities and dividing by the number of
shares outstanding. The public offering price of a Class A, Class B, Class C,
Class M or Class T share of a fund is the net asset value per share plus, the
applicable sales charge in the case of Class A, Class M or Class T
79
shares. Investment securities are valued at the closing price for securities
traded on a principal securities exchange (U.S. or foreign), or on the NASDAQ
National Market. Investment securities traded on the over-the-counter market and
listed securities for which no sales are reported for the trading period
immediately preceding the time of determination are valued at the last bid
price. Foreign currency denominated assets and liabilities are converted into
U.S. dollars at the closing exchange rate each day. Other securities for which
quotations are not readily available are valued at fair values determined in
such manner as a fund's sub-adviser, under the supervision of the Board of
Trustees, decides in good faith. (Information is not included in the chart below
for IDEX Janus Growth & Income and IDEX Munder Net50 as they commenced
operations on December 15, 2000 and for IDEX American Century Income & Growth,
IDEX American Century International and IDEX Isabelle Small Cap Value as they
commence operations on April 2, 2001.
OFFERING PRICE PER SHARE CALCULATED AS FOLLOWS:
Net Asset Value Per Share Add Maximum Amount of Sales Offering Price
As of October 31, 2000 (net assets/shares outstanding) Selling Commission Charge Per Share
- ---------------------- ------------------------------- ------------------ ------ ---------
IDEX Alger Aggressive Growth
Class A $32.07 5.50% $1.87 $33.94
Class B $31.23 0.00% $ -- $31.23
Class C* $31.23 0.00% $ -- $31.23
Class M** $31.36 1.00% $0.32 $31.68
IDEX GE International Equity
Class A $12.76 5.50% $0.74 $13.50
Class B $12.53 0.00% $ -- $12.53
Class C* $12.53 1.00% $ -- $12.53
Class M** $12.57 1.00% $0.13 $12.70
IDEX Janus Capital Appreciation
Class A $32.08 5.50% $1.87 $33.95
Class B $31.25 0.00% $ -- $31.25
Class C* $31.25 0.00% $ -- $31.25
Class M** $31.38 1.00% $0.32 $31.70
IDEX Janus Global
Class A $40.20 5.50% $2.34 $42.54
Class B $38.97 0.00% $ -- $38.97
Class C* $38.98 0.00% $ -- $38.98
Class M** $38.94 1.00% $0.39 $39.33
80
Net Asset Value Per Share Add Maximum Amount of Sales Offering Price
As of October 31, 2000 (net assets/shares outstanding) Selling Commission Charge Per Share
- ---------------------- ------------------------------- ------------------ ------ ---------
IDEX Janus Growth
Class A $43.81 5.50% $2.55 $46.36
Class B $42.08 0.00% $ -- $42.08
Class C* $42.08 0.00% $ -- $42.08
Class M** $42.35 1.00% $0.43 $42.78
Class T $44.76 8.50% $4.16 $48.92
IDEX Jennison Equity Opportunity/(a)/
Class A $10.26 5.50% $0.60 $10.86
Class B $10.01 0.00% $ -- $10.01
Class C* $10.01 0.00% $ -- $10.01
Class M** $10.05 1.00% $0.10 $10.15
IDEX NWQ Value Equity
Class A $12.91 5.50% $0.75 $13.66
Class B $12.61 0.00% $ -- $12.61
Class C* $12.61 0.00% $ -- $12.61
Class M** $12.66 1.00% $0.13 $12.79
IDEX LKCM Strategic Total Return
Class A $17.02 5.50% $0.99 $18.01
Class B $17.01 0.00% $ -- $17.01
Class C* $17.01 0.00% $ -- $17.01
Class M** $17.01 1.00% $0.17 $17.18
IDEX Dean Asset Allocation
Class A $12.75 5.50% $0.74 $13.49
Class B $12.74 0.00% $ -- $12.74
Class C* $12.74 0.00% $ -- $12.74
Class M** $12.74 1.00% $0.13 $12.87
IDEX Janus Balanced
Class A $19.75 5.50% $1.15 $20.90
Class B $19.73 0.00% $ -- $19.73
Class C* $19.73 0.00% $ -- $19.73
Class M** $19.73 1.00% $0.20 $19.93
IDEX Janus Flexible Income
Class A $ 9.26 4.75% $0.46 $ 9.72
Class B $ 9.26 0.00% $ -- $ 9.26
Class C* $ 9.26 0.00% $ -- $ 9.26
Class M* $ 9.26 1.00% $0.09 $ 9.35
IDEX AEGON Income Plus
Class A $ 9.24 4.75% $0.46 $ 9.70
Class B $ 9.24 0.00% $ -- $ 9.24
Class C* $ 9.24 0.00% $ -- $ 9.24
Class M** $ 9.24 1.00% $0.09 $ 9.33
IDEX Federated Tax Exempt/(b)/
Class A $10.91 4.75% $0.54 $11.45
Class B $10.90 0.00% $ -- $10.90
Class C* $10.90 0.00% $ -- $10.90
Class M** $10.91 1.00% $0.11 $11.02
81
Net Asset Value Per Share Add Maximum Amount of Sales Offering Price
As of October 31, 2000 (net assets/shares outstanding) Selling Commission Charge Per Share
- ---------------------- ------------------------------- ------------------ ------ ---------
IDEX Goldman Sachs Growth
Class A $12.54 5.50% $0.73 $13.27
Class B $12.41 0.00% $ -- $12.41
Class C* $12.41 0.00% $ -- $12.41
Class M** $12.43 1.00% $0.13 $12.56
IDEX T. Rowe Price Dividend
Growth
Class A $10.64 5.50% $0.62 $11.26
Class B $10.63 0.00% $ -- $10.63
Class C* $10.63 0.00% $ -- $10.63
Class M** $10.63 1.00% $0.11 $10.74
IDEX Salomon All Cap
Class A $15.51 5.50% $0.90 $16.41
Class B $15.36 0.00% $ -- $15.36
Class C* $15.36 0.00% $ -- $15.36
Class M** $15.38 1.00% $0.16 $15.54
IDEX Pilgrim Baxter Mid Cap
Growth
Class A $20.94 5.50% $1.22 $22.16
Class B $20.76 0.00% $ -- $20.76
Class C* $20.76 0.00% $ -- $20.76
Class M** $20.79 1.00% $0.21 $21.00
IDEX T. Rowe Price Small Cap
Class A $13.17 5.50% $0.77 $13.94
Class B $13.05 0.00% $ -- $13.05
Class C* $13.05 0.00% $ -- $13.05
Class M** $13.07 1.00% $0.13 $13.20
IDEX Pilgrim Baxter Technology
Class A $ 6.78 5.50% $0.39 $ 7.17
Class B $ 6.73 0.00% $ -- $ 6.73
Class C* $ 6.73 0.00% $ -- $ 6.73
Class M** $ 6.74 1.00% $0.07 $ 6.81
IDEX GE U.S. Equity
Class A $10.83 5.50% $0.63 $11.46
Class B $10.79 0.00% $ -- $10.79
Class C* $10.79 0.00% $ -- $10.79
Class M** $10.79 1.00% $0.11 $10.90
IDEX Transamerica Small Company
Class A $ 8.70 5.50% $0.51 $ 9.21
Class B $ 8.66 0.00% $ -- $ 8.66
Class C* $ 8.66 0.00% $ -- $ 8.66
Class M** $ 8.67 1.00% $0.09 $ 8.76
IDEX Transamerica Equity
Class A $10.16 5.50% $0.59 $10.75
Class B $10.12 0.00% $ -- $10.12
Class C* $10.12 0.00% $ -- $10.12
Class M** $10.12 1.00% $0.10 $10.22
82
Net Asset Value Per Share Add Maximum Amount of Sales Offering Price
As of October 31, 2000 (net assets/shares outstanding) Selling Commission Charge Per Share
- ---------------------- ------------------------------- ------------------ ------ ---------
IDEX Great Companies --
America/SM/
Class A $10.58 5.50% $0.62 $11.20
Class B $10.56 0.00% $ -- $10.56
Class C* $10.56 0.00% $ -- $10.56
Class M** $10.56 1.00% $0.11 $10.67
IDEX Great Companies --
Technology/SM/
Class A $ 7.93 5.50% $0.46 $ 8.39
Class B $ 7.91 0.00% $ -- $ 7.91
Class C* $ 7.91 0.00% $ -- $ 7.91
Class M** $ 7.92 1.00% $0.08 $ 8.00
IDEX Great Companies -- Global/2/
Class A $ 9.81 5.50% $0.57 $10.38
Class B $ 9.80 0.00% $ -- $ 9.80
Class C* $ 9.80 0.00% $ -- $ 9.80
Class M** $ 9.80 1.00% $0.10 $ 9.90
IDEX Gabelli Global Growth
Class A $10.06 5.50% $0.59 $10.65
Class B $10.05 0.00% $ -- $10.05
Class C* $10.05 0.00% $ -- $10.05
Class M** $10.05 1.00% $0.10 $10.15
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* This class was established on November 1, 1999 and has different fees and
expenses than the pre-March, 1999 shares.
** All shares designated as Class C shares prior to March 1, 1999 were renamed
as Class M shares on that date. Effective November 1, 1999, each fund began
offering a new Class C share that has different fees and expenses than the
previous Class C share.
(a) Prior to December 1, 2000, C.A.S.E. Management, Inc. served as sub-adviser
to this fund and this was named IDEX C.A.S.E. Growth.
(b) Prior to June 15, 2000, AEGON USA Investment Management, Inc. served as
sub-adviser to this fund.
DIVIDENDS AND OTHER DISTRIBUTIONS
An investor may choose among several options with respect to dividends and
capital gains distributions payable to the investor. Dividends or other
distributions will be paid in full and fractional shares at the net asset value
determined as of the ex-dividend date unless the shareholder has elected another
distribution option as described in the prospectus. Transaction confirmations
and checks for payments designated to be made in cash generally will be mailed
on the payable date. The per share income dividends on Class B, Class C and
Class M shares of a fund are anticipated to be lower than the per share income
dividends on Class A shares of that fund (and Class T shares of IDEX Janus
Growth), as a result of higher distribution and service fees applicable to the
Class B, Class C and Class M shares.
SHAREHOLDER ACCOUNTS
Detailed information about general procedures for Shareholder Accounts and
specific types of accounts is set forth in the prospectus.
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RETIREMENT PLANS
The Fund offers several types of retirement plans that an investor may establish
to invest in shares of a fund with tax deductible dollars. Prototype retirement
plans for both corporations and self-employed individuals, and for Individual
Retirement Accounts, Code Section 401(k) Plans and Simplified Employee Pension
Plans are available by calling or writing IDEX Customer Service. These plans
require the completion of separate applications which are also available from
IDEX Customer Service. State Street Bank & Trust, Kansas City, Missouri, acts as
the custodian or trustee under these plans for which it charges an annual fee of
up to $15.00 on each such account with a maximum of $30.00 per tax
identification number. However, if your retirement plan is under custody of
State Street and your combined retirement account balances per taxpayer
identification number are more than $50,000, there is generally no fee. Shares
of a fund are also available for investment by Code Section 403(b)(7) retirement
plans for employees of charities, schools, and other qualifying employers. IDEX
Federated Tax Exempt is not well-suited as an investment vehicle for
tax-deferred retirement plans which cannot benefit from tax-exempt income and
whose distributed earnings are taxable to individual recipients as ordinary
income. To receive additional information or forms on these plans, please call
IDEX Customer Service at 1-888-233-4339 (toll free) or write to Idex Investor
Services, Inc. at P.O. Box 9015, Clearwater, Florida 33758-9015. No contribution
to a retirement plan can be made until the appropriate forms to establish the
plan have been completed. It is advisable for an investor considering the
funding of any retirement plan to consult with an attorney, retirement plan
consultant or financial or tax advisor with respect to the requirements of such
plans and the tax aspects thereof.
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