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INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE
SECURITIES EXCHANGE ACT OF 1934
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[ ] Soliciting Material Pursuant to Rule 14a-12
THE DIVERSIFIED INVESTORS FUNDS GROUP
THE DIVERSIFIED INVESTORS FUNDS GROUP II
DIVERSIFIED INVESTORS STRATEGIC VARIABLE FUNDS
DIVERSIFIED INVESTORS PORTFOLIOS
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LOGO
Diversified Investment Advisors, Inc. ("Diversified") is pleased to
announce the proposed consolidation of its investment management and fund
administration resources with those of Transamerica Fund Advisors, Inc.
("TFAI"), another wholly owned subsidiary of AEGON.
The change will position the Diversified family of mutual funds as part of
a larger complex of investment companies with TFAI serving as the investment
adviser. The anticipated consolidation will create an over $50 billion fund
complex offering more than 120 funds.
The Diversified Funds' sub-advised, manager-of-managers investment
structure will not change. Since TFAI uses a similar structure, we believe that
consolidating the two fund complexes into a significantly larger one presents
opportunities and advantages to investors such as:
- Access to a larger investment team, with significant experience and
depth;
- Additional resources for enhanced investment due diligence and monitoring
of sub-advisors;
- The ability to attract additional sub-advisors due to greater economies
of scale;
- Streamlined oversight of the Funds through the election of a new Board,
comprised of members currently serving and familiar with either
Diversified's or TFAI's investment management and fund administration
organizations; and
- The simplification and modernization of certain policies that will allow
the Funds to respond more favorably and quickly to change.
Diversified will continue to provide the superior retirement plan services
and expertise that plan sponsors and their participants have come to expect. In
addition, many other important aspects related to the Funds WILL REMAIN
UNCHANGED as a result of the consolidation, including:
- The sub-advisors of each of the Funds;
- Investment objectives, strategies and risk factors of each Fund;
- The contractual investment advisory fees paid by the Funds; and
- The maximum 12b-1 fees payable under the Rule 12b-1 plan.
All Fund shareholders of record as of August 15, 2007 will be receiving a
Proxy Statement outlining the proposed changes. We are excited about the
opportunity to enhance our mutual fund complex and encourage all shareholders to
cast a vote in favor of the proposals discussed in the Proxy Statement.
A list of question and answers explaining the proposals is attached. We
hope you will find it helpful. If you have additional questions or require more
information, please do not hesitate to contact your Diversified Account
Executive.
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(DIVERSIFIED INVESTMENT ADVISORS LOGO)
We hope you find the following Q&A helpful in addressing questions you may
have about the proposed consolidation of Diversified's and TFAI's investment
management and fund administration functions. If you have additional questions
or require more information, please do not hesitate to contact your Account
Executive.
Q: WHY AM I GETTING THE PROXY STATEMENT?
The Proxy Statement provides you with the information necessary to vote on
the proposed changes and must be delivered to all current shareholders of funds
within the Diversified family of mutual funds (the "Funds"). Most retirement
plan sponsors with assets currently invested in the Funds are recognized as
shareholders. Participants in non-ERISA 403(b) plans and IRAs who have invested
in the Funds are also recognized as shareholders. In addition, participants in
our registered variable annuities will be receiving the proxy statement and an
instruction card to direct their vote.
Q: WHEN WILL I GET THE PROXY STATEMENT?
Proxy Statements will be mailed via the U.S. Postal Service during the week
of August 27, 2007.
Q: WHAT DATE IS MY PROXY ON THE PROPOSALS DUE?
We request that shareholders cast their votes by sending back their proxy
cards as soon as possible, but in any event no later than the shareholder
meetings to be held on October 30, 2007. Shareholders may also vote by telephone
or over the Internet.
Q. WHAT PROPOSALS WILL SHAREHOLDERS BE ASKED TO APPROVE IN THE PROXY STATEMENT?
Shareholders will be asked to approve the following proposals:
- The election of a new Board comprised of both Diversified Fund and TFAI
fund members to oversee the consolidated fund complex.
- A new investment advisory agreement between TFAI and each of the
Diversified Funds.
- An amendment to the organizational documents of the Funds to allow the
Board to make modifications to the declarations of trust in a timely and
cost-efficient manner.
- Modification of the fundamental investment policies of each Fund to
standardize and simplify these documents.
- Amended Rule 12b-1 plans for certain Funds.
Q: WHY ARE THESE PROPOSALS BEING UNDERTAKEN?
These proposals are in line with our commitment to broaden the spectrum of
investment solutions we offer to our clients and we are very excited about the
opportunities that this strategic move presents. The combined strength of our
expertise and experience will allow us to take advantage of synergies and
further hone "best practices" in sub-advisor selection and monitoring. In
addition, the pooling of our resources will enable us to make additional
strategic investments and strengthen our highly qualified investment management
team.
Q. DO THESE PROPOSALS MEAN THAT DIVERSIFIED IS MERGING WITH TRANSAMERICA?
No, Diversified and TFAI will remain separate entities. However, the
Diversified Funds will become part of the larger fund complex with TFAI serving
as the investment adviser. Diversified will continue to focus on its core
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business -- providing premier retirement plan services to help your participants
save and invest wisely for and through retirement. Other AEGON entities,
including Transamerica Retirement Services ("TRS"), Transamerica Retirement
Management ("TRM") and Transamerica Investment Management ("TIM") are not part
of this consolidation.
Q: HOW WILL THESE CHANGES IMPACT THE OVERSIGHT OF THE DIVERSIFIED SUB-ADVISORS
AND FUNDS?
The investment selection and monitoring functions will be consolidated
under TFAI in St. Petersburg, Florida, headed up by Chris Staples, CFA, Senior
Vice President and Chief Investment Officer. Combining these functions will
create efficiencies within the due diligence process, allowing for greater
access to sub-advisors and investment strategies.
Q: WHAT IS THE EXPERIENCE AND BACKGROUND OF THE TFAI INVESTMENT SELECTION AND
MONITORING TEAM?
All members of the research team have significant and specific experience
in the area of manager research and analysis. As a demonstration of their
commitment to the industry, each member of the team has their Chartered
Financial Analyst (CFA) designation.
Q: WHAT DOES THIS CONSOLIDATION MEAN TO OUR PLAN?
This consolidation is intended to provide greater consistency across the
larger fund complex and enhance the efficiency of our investment oversight
operations. We expect that the consolidation will be seamless to our retirement
plan clients and their participants. The day-to-day management of the Funds will
not be affected, as none of the sub-advisors are being changed as a result of
this consolidation and each Fund will continue to be managed according to its
stated investment objectives.
Q: WILL MY INVESTMENT CONTACT CHANGE?
No, your investment contact at Diversified will not change. Diversified has
continued to enhance its staff and resources around client investment services
to ensure that we provide your plan with the highest level of attention it
requires.
Q: WILL THE DIVERSIFIED FUNDS BE RENAMED?
Not at this time. Diversified is in the process of evaluating this
initiative and will keep you informed of the developments as we proceed. If any
Fund is renamed at some point in the future, your participants will be notified
via Diversified Direct Online(SM) and through statement messages.
Q: HOW WILL THIS CONSOLIDATION IMPACT MY PARTICIPANTS AND HOW WILL THE CHANGES
BE COMMUNICATED?
Your participants' overall service experience with Diversified will not
change as a result of these proposals. Participants will have access to
Diversified Direct Online(SM) and the call center to obtain more information
about these proposed changes. They will also have access to our proxy
solicitation firm Computershare. Computershare is available to answer questions
regarding the proxy statement at 866-436-6101.
Q: WILL MY ADVISORY FEES CHANGE AS A RESULT OF THIS CONSOLIDATION?
No, the maximum contractual advisory fees payable by the Funds will not
change as a result of these initiatives.
Q: WILL THE DIVERSIFIED FUNDS CONTINUE TO BE OFFERED SOLELY TO RETIREMENT PLAN
INVESTORS?
For the time being, the Diversified Funds will only be available to
qualified retirement plan investors. As part of future strategic initiatives,
Diversified and TFAI may consider opening the Funds to additional distribution
channels to grow assets and benefit from scale advantages. Of course, we will
carefully consider the needs of our retirement plan investors before undertaking
any such initiatives.
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Q: WILL THE CURRENT SUB-ADVISORY SELECTION AND MONITORING PROCESSES AND
PROCEDURES REMAIN INTACT FOR THE DIVERSIFIED FUNDS?
Yes, the investment philosophies of Diversified and TFAI are quite similar.
Both organizations use a combination of qualitative and quantitative factors to
select and monitor sub-advisors and both seek to employ an investment approach
that emphasizes consistency of returns and risk control. We see this
consolidation as an excellent opportunity to implement best practices for the
benefit of our clients and their participants.
Q: DO YOU EXPECT THERE TO BE CONSOLIDATION OF FUNDS AND/OR SUB-ADVISORS?
Each Fund and sub-advisor will be evaluated on a case-by-case basis. Where
feasible, we may consolidate to remove duplicative Funds and/or strategies.
Q: WHAT IS CHANGING ABOUT THE RULE 12B-1 PLAN?
We are seeking shareholder approval to amend the Rule 12b-1 plan for the
Diversified Investors Funds and the Diversified Institutional Funds. The amended
12b-1 plans are intended to enable these Funds to promote sales of their shares
and to create economies of scale. The maximum 12b-1 fees payable under the
current plans and the amended 12b-1 plans are the same. One difference in the
amended Rule 12b-1 plan is that the Funds are changing to a "compensation plan,"
meaning that the distributor will receive the distribution fee of 0.25% even if
the actual distribution expenses are higher or lower than this amount. Under the
Funds' current "reimbursement plan," the fees for distribution services are
reimbursed based upon the actual expenses incurred by the distributor up to a
maximum of 0.25%. Historically, under the current plan, the distribution
expenses incurred have exceeded this maximum amount.
Q. HOW WILL COLLECTIVE TRUSTS AND/OR SEPARATE ACCOUNTS BE IMPACTED BY THESE
CHANGES?
Since the collective trusts and separate accounts are invested in the
Diversified Investors Portfolios, investors in these vehicles will benefit from
these changes. Plan sponsors with collective trusts or separate accounts are not
registered shareholders of the Diversified Investors Portfolios and therefore
are not legally entitled to vote on the proposals. However, a separate
communication will be sent to them the week of September 4th. This communication
will seek direction from the plan sponsor on how the legal owner should vote
their plan's ownership interests.
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