Securities Act File No. __________
As filed with the Securities and Exchange Commission on August 4, 2006
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-14
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [X]
Pre-Effective Amendment No. [ ]
Post-Effective Amendment No. [ ]
TRANSAMERICA IDEX MUTUAL FUNDS
(Exact Name of Registrant as Specified in Charter)
570 Carillon Parkway, St. Petersburg, Florida 33716
(Address of Principal Executive Offices) (Zip Code)
(727) 299-1800
(Registrant's Area Code and Telephone Number)
John K. Carter, Esq.
P.O. Box 9012
Clearwater, FL 33758-5068
(Name and Address of Agent for Service)
Approximate Date of Proposed Public Offering: As soon as practicable after this
Registration Statement becomes effective.
It is proposed that this filing will become effective on September 3, 2006
pursuant to Rule 488 under the Securities Act of 1933.
No filing fee is required because an indefinite number of shares has previously
been registered pursuant to Rule 24f-2 under the Investment Company Act of 1940,
as amended.
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Transamerica IDEX Mutual Funds
570 Carillon Parkway
St. Petersburg, Florida 33716
(Toll Free) 1-888-233-4339
September_____, 2006
Dear Shareholder:
Recently, Great Companies, LLC ("Great Companies"), the former investment
sub-adviser of TA IDEX Great Companies - America(SM) (the "Acquired Fund"),
entered into a transaction that resulted in the termination of Great Companies'
investment sub-advisory agreement to manage the Acquired Fund. Effective upon
the date of that transaction, the Board of Trustees (the "Board") of
Transamerica IDEX Mutual Funds ("TA IDEX") approved the appointment of
Transamerica Investment Management, LLC ("TIM") as investment sub-adviser of the
Acquired Fund on an interim basis only, pending shareholder consideration of a
longer-term appointment. The Board also approved an Agreement and Plan of
Reorganization relating to the proposed reorganization of the Acquired Fund into
TA IDEX Transamerica Equity (the "Acquiring Fund"), another series of TA IDEX
which currently is sub-advised by TIM, subject to shareholder approval.
The Board has called a special meeting of shareholders of the "Acquired Fund" to
be held on October 18, 2006 at 11:00 a.m. (Eastern time), as adjourned from time
to time (the "Special Meeting"), at the offices of TA IDEX, 570 Carillon
Parkway, St. Petersburg, Florida 33716 so that shareholders can vote on these
matters. At the Special Meeting, shareholders of the Acquired Fund will be asked
to vote on:
(1) a proposed Plan of Reorganization ("Reorganization Plan") regarding
the Acquired Fund; and
(2) an investment sub-advisory agreement appointing TIM as investment
sub-adviser to the Acquired Fund (the "TIM Sub-Advisory Agreement").
The Board has approved the reorganization of the Acquired Fund into the
Acquiring Fund and the TIM Sub-Advisory Agreement. Transamerica Fund Advisors,
Inc. and TIM serve as investment adviser and sub-adviser, respectively, to the
Acquired and Acquiring Funds, and the Acquired Fund has investment objectives
and policies that are similar in many respects to those of the Acquiring Fund.
After careful consideration, the Board unanimously approved and recommends that
shareholders of the Acquired Fund vote "FOR" these proposals. Accordingly, you
are asked to approve the Reorganization Plan relating to the proposed
reorganization and the TIM Sub-Advisory Agreement.
A Proxy Statement/Prospectus that describes these proposals in detail is
enclosed. We urge you to vote your shares by completing and returning the
enclosed proxy in the envelope provided, or vote by Internet or telephone, at
your earliest convenience.
YOUR VOTE IS IMPORTANT REGARDLESS OF THE NUMBER OF SHARES YOU OWN. IN ORDER TO
AVOID THE ADDED COST OF FOLLOW-UP SOLICITATIONS AND POSSIBLE ADJOURNMENTS,
PLEASE TAKE A FEW MINUTES TO READ THE PROXY STATEMENT/PROSPECTUS AND CAST YOUR
VOTE.
We appreciate your participation and prompt response in this matter and thank
you for your continued support.
Sincerely,
----------------------------------------
John K. Carter
President, Chief Executive Officer,
General Counsel and Secretary
Transamerica IDEX Mutual Funds
570 Carillon Parkway
St. Petersburg, Florida 33716
(Toll Free) 1-888-233-4339
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS OF
TA IDEX GREAT COMPANIES - AMERICA(SM)
TO BE HELD ON OCTOBER 18, 2006
To the Shareholders:
The Board of Trustees of Transamerica IDEX Mutual Funds ("TA IDEX") has called a
special meeting of shareholders of TA IDEX Great Companies - America(SM), a
series of TA IDEX, to be held on October 18, 2006 at 11:00 a.m. (Eastern time)
as adjourned from time to time (the "Special Meeting"), at the offices of TA
IDEX, 570 Carillon Parkway, St. Petersburg, Florida 33716.
At the Special Meeting you will be asked to consider the following proposals:
1. To approve a Plan of Reorganization providing for the acquisition of all of
the assets and liabilities of TA IDEX Great Companies - America(SM) (the
"Acquired Fund") by TA IDEX Transamerica Equity (the "Acquiring Fund"), a
series of TA IDEX, solely in exchange for shares of the Acquiring Fund,
followed by the complete liquidation of the Acquired Fund;
2. To approve an investment sub-advisory agreement between Transamerica Fund
Advisors, Inc. ("TFAI") and Transamerica Investment Management, LLC ("TIM")
pursuant to which TIM will be appointed as investment sub-adviser to the
Acquired Fund; and
3. To transact such other business as may properly come before the Special
Meeting.
Shareholders of record at the close of business on August 4, 2006 are entitled
to notice of, and to vote at, the Special Meeting. Your attention is called to
the accompanying Proxy Statement/Prospectus. Shareholders who do not expect to
attend the Special Meeting in person are requested to complete, date, and sign
the enclosed proxy card and return it promptly in the envelope provided for that
purpose. Your proxy card also provides instructions for voting via telephone or
the Internet, if you wish to take advantage of these voting options. Proxies may
be revoked at any time by executing and submitting a revised proxy, by giving
written notice of revocation to TA IDEX, or by voting in person at the Special
Meeting.
By Order of the Board of Trustees
----------------------------------------
John K. Carter
President, Chief Executive Officer
General Counsel and Secretary
[__________, 2006]
TABLE OF CONTENTS
INTRODUCTION ............................................................. 3
SUMMARY OF THE PROPOSALS ................................................. 5
PROPOSAL I - APPROVAL OF REORGANIZATION PLAN ............................. 7
Comparison of Investment Objectives, Principal Investment Strategies,
Risks and Management of the Acquired and Acquiring Funds .............. 7
Principal Risks of in Investing in the Funds .......................... 9
Comparison of Portfolio Characteristics ............................... 9
COMPARISON OF FEES AND EXPENSES FOR ACQUIRED AND ACQUIRING FUNDS ......... 10
General Information ................................................... 10
Operating Expenses .................................................... 11
MANAGEMENT AND PERFORMANCE OF THE ACQUIRING FUND ......................... 13
The Investment Adviser and Sub-Adviser ................................ 13
Principal Investment Strategies ....................................... 13
Performance of the Acquiring Fund ..................................... 14
INFORMATION ABOUT THE REORGANIZATION ..................................... 15
The Reorganization Plan ............................................... 15
Reasons for the Reorganization ........................................ 15
Tax Considerations .................................................... 15
Expenses of the Reorganization ........................................ 16
Board Considerations .................................................. 16
The Proposed Reorganization of TA IDEX Janus Growth into the
Acquiring Fund ..................................................... 17
ADDITIONAL INFORMATION ABOUT THE FUNDS ................................... 17
Form of Organization .................................................. 17
Dividends and Other Distributions ..................................... 17
Disclosure of Portfolio Holdings ...................................... 17
Capitalization of the Funds ........................................... 17
PROPOSAL II - APPROVAL OF TIM SUB-ADVISORY AGREEMENT ..................... 18
The Acquired Fund's Investment Advisory Arrangement ................... 18
The TIM Sub-Advisory Agreement ........................................ 19
Board Considerations .................................................. 19
Other Information ..................................................... 21
GENERAL INFORMATION ...................................................... 21
Investment Adviser, Administrator and Principal Underwriter ........... 21
Other Business ........................................................ 21
Shareholder Reports ................................................... 21
Proxy Solicitation .................................................... 21
Shareholder Voting .................................................... 22
Vote Required ......................................................... 22
Shareholder Proposals ................................................. 22
Information about the Funds ........................................... 22
MORE INFORMATION REGARDING THE ACQUIRING FUND ............................ 24
Investment Advisory Arrangements ...................................... 24
Regulatory Proceedings ................................................ 24
Class A, B and C Shares ............................................... 25
Choosing a Share Class ................................................ 34
Waivers and/or Reductions of Charges .................................. 37
I Shares............................................................... 37
Distribution of Shares ................................................ 37
Other Distribution or Service Arrangements ............................ 38
Underwriting Agreement ................................................ 39
Distributions and Taxes ............................................... 40
FINANCIAL HIGHLIGHTS FOR THE ACQUIRING FUND .............................. 40
INDEX OF APPENDICES ...................................................... 43
b
PROXY STATEMENT/PROSPECTUS
Transamerica IDEX Mutual Funds
570 Carillon Parkway
St. Petersburg, Florida 33716
(Toll Free) 1-888-233-4339
INTRODUCTION
Recently, Great Companies, LLC ("Great Companies"), the former investment
sub-adviser of TA IDEX Great Companies - America(SM) (the "Acquired Fund"),
entered into a transaction that resulted in the termination of Great Companies'
investment sub-advisory agreement to manage the Acquired Fund. Effective upon
the date of that transaction, the Board of Trustees (the "Board") of
Transamerica IDEX Mutual Funds ("TA IDEX") approved the appointment of
Transamerica Investment Management, LLC ("TIM") as investment sub-adviser of the
Acquired Fund on an interim basis only, pending shareholder consideration of a
longer-term appointment. The Board also approved a Plan of Reorganization
("Reorganization Plan") relating to the proposed reorganization of the Acquired
Fund into TA IDEX Transamerica Equity (the "Acquiring Fund"), a comparable TA
IDEX fund which currently is sub-advised by TIM, subject to shareholder
approval.
This Proxy Statement/Prospectus provides you with information about the proposed
reorganization of the Acquired Fund into the Acquiring Fund (collectively, the
"Funds"), both of which are series of TA IDEX, as well as the proposed
appointment of TIM as investment sub-adviser to the Acquired Fund pursuant to an
investment sub-advisory agreement between Transamerica Fund Advisors, Inc.
("TFAI") and TIM (the "TIM Sub-Advisory Agreement").
If the proposed reorganization is approved, the Acquired Fund will transfer all
of its assets and liabilities to the Acquiring Fund in exchange solely for
shares of the Acquiring Fund (the "Reorganization"). Following the transfer of
its assets and liabilities to the Acquiring Fund in exchange for shares of the
Acquiring Fund, the Acquired Fund will distribute to you your portion of shares
of the Acquiring Fund that the Acquired Fund receives in the Reorganization. You
will receive Class A, B, C or I shares of the Acquiring Fund having an aggregate
value equal to the aggregate value of that class of shares of the Acquired Fund
held by you immediately prior to the Reorganization. Following the
Reorganization, the Acquired Fund will liquidate.
If each of the proposed TIM Sub-Advisory Agreement and the Reorganization Plan
are approved, TIM will be appointed as investment sub-adviser shortly before the
Reorganization of the Acquired Fund into the Acquiring Fund, and it will be paid
for the investment sub-advisory services it rendered while it served as an
interim sub-adviser to the Acquired Fund the amount of investment sub-advisory
fees provided for under an interim investment sub-advisory arrangement between
TFAI and TIM (the "Interim Sub-Advisory Agreement"), which has been kept in
escrow during the interim period. If the proposed TIM Sub-Advisory Agreement is
not approved but the Reorganization Plan is approved, TIM will be paid for the
investment sub-advisory services it rendered while it served as an interim
sub-adviser to the Acquired Fund in the amount of the lesser of its costs in
performing such services or the amount held in escrow, but the Reorganization
will be consummated. If the proposed TIM Sub-Advisory Agreement is approved but
the Reorganization Plan is not, TIM will continue to provide investment
sub-advisory services to the Acquired Fund. If neither proposal is approved, the
Board will consider various options with respect to the Acquired Fund.
This Proxy Statement/Prospectus solicits your vote in connection with a special
meeting of shareholders, to be held on October 18, 2006, at 11:00 a.m. (Eastern
time), as adjourned from time to time ("Special Meeting"), at which shareholders
of the Acquired Fund will vote on: (1) the Reorganization Plan through which the
Reorganization will be accomplished, and (2) the TIM Sub-Advisory Agreement.
Because you, as a shareholder of the Acquired Fund, are being asked to approve
the Reorganization Plan, that will result in your holding shares of the
Acquiring Fund, this document also serves as a prospectus for the Acquiring
Fund, whose investment objective is to maximize long-term growth.
This Proxy Statement/Prospectus, which you should retain for future reference,
contains important information about the Acquiring Fund that you should know
before investing. A Statement of Additional Information ("SAI") dated August 1,
2006 relating to this Proxy Statement/Prospectus, and containing additional
information about the Reorganization and the parties thereto, has been filed
with the U.S. Securities and Exchange Commission ("SEC") and is incorporated
herein by reference. For a more detailed discussion of the investment
objectives, policies, restrictions and risks of each of the Funds, see the TA
IDEX Prospectus and Statement of Additional Information dated March 1, 2006, as
supplemented, each of which is incorporated herein by reference and is
available, without charge, by calling 1-888-233-4339 or by writing to the
address above. The TA IDEX Great Companies-America(SM) and TA IDEX Transamerica
Equity annual reports dated October 31, 2005 and semi-annual reports dated April
30, 2006 also are incorporated herein by reference.
You may also obtain proxy materials, reports and other information filed by TA
IDEX from the SEC's Public Reference Section (1-202-942-8090) in Washington,
D.C., or from the SEC's internet website at www.sec.gov. Copies of materials may
also be obtained, after paying a duplicating fee, by electronic request at the
following e-mail address: publicinfo@sec.gov, or by writing the
3
SEC's Public Reference Branch, Office of Consumer Affairs and Information
Services, Securities and Exchange Commission, Washington, D.C. 20549-0102.
THE SEC HAS NOT APPROVED OR DISAPPROVED THESE SECURITIES, OR DETERMINED THAT
THIS PROXY STATEMENT/PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE.
DATE: [________, 2006]
4
SUMMARY OF THE PROPOSALS
You should read this entire Proxy Statement/Prospectus carefully. For additional
information, you should consult the TA IDEX Prospectus dated March 1, 2006, as
supplemented from time to time, the Reorganization Plan (a form of which is
attached hereto as Appendix A), and the TIM Sub-Advisory Agreement (a form of
which is attached hereto as Appendix E).
THE PROPOSED REORGANIZATION
At a meeting held on July 18-19, 2006, the Board approved the Reorganization
Plan with respect to each of the Funds. Subject to the approval of shareholders
of the Acquired Fund, the Reorganization Plan provides for:
- - the transfer of all of the assets of the Acquired Fund to the Acquiring
Fund, in exchange for shares of the Acquiring Fund;
- - the assumption by the Acquiring Fund of all of the liabilities of the
Acquired Fund;
- - the distribution of shares of the Acquiring Fund to the shareholders of the
Acquired Fund; and
- - the complete liquidation of the Acquired Fund as a series of TA IDEX.
The Reorganization is expected to be effective immediately after the close of
business on October 31, 2006, or on a later date as the parties may agree (the
"Closing"). As a result of the Reorganization, each shareholder of the Acquired
Fund will become a shareholder of the Acquiring Fund. Each shareholder will
hold, immediately after the Closing, shares of the same class of the Acquiring
Fund having an aggregate value equal to the aggregate value of the same class of
shares of the Acquired Fund held by that shareholder as of the close of business
on the date of the Closing.
The reorganization of the Acquired Fund is intended, among other things, to
eliminate duplication of costs and other inefficiencies arising from having
comparable mutual funds within the same family of funds, as well as to assist in
achieving economies of scale. Neither Fund will bear any of the costs associated
with the Reorganization.
Approval of the Reorganization Plan requires the affirmative vote of a majority
of the outstanding voting securities of the Acquired Fund. In the event that the
shareholders of the Acquired Fund do not approve the Reorganization Plan, the
Acquired Fund will continue to operate as a separate entity, and the Board will
determine what further action, if any, to take (which could include liquidation
of the Acquired Fund).
AFTER CAREFUL CONSIDERATION, THE BOARD UNANIMOUSLY APPROVED THE REORGANIZATION
PLAN. THE BOARD RECOMMENDS THAT YOU VOTE "FOR" THE PROPOSED REORGANIZATION PLAN.
In considering whether to approve the Reorganization Plan, you should note that:
- - The Acquired Fund has an investment objective, investment policies,
investment restrictions and a share class structure that are similar in
many respects to the investment objective, investment policies, investment
restrictions and share class structure of the Acquiring Fund with one
significant exception: the Acquired Fund is "non-diversified" while the
Acquiring Fund is "diversified." The Investment Company Act of 1940 ("1940
Act") classifies investment companies such as the Funds as either
diversified or non-diversified - diversification is the practice of
spreading a fund's assets over a number of issuers to reduce risk.
- - Despite some differences in investment strategies, to the extent both the
Acquired Fund and the Acquiring Fund are domestic equity funds, the
proposed Reorganization will reduce some overlap in the offerings of the TA
IDEX fund family.
- - The Funds have the same investment adviser and current sub-adviser, TFAI
and TIM, respectively. TFAI will continue to oversee the investment program
of the Acquiring Fund and the performance of TIM, the Acquiring Fund's
sub-adviser, after consummation of the Reorganization.
- - The share purchase, exchange and redemption provisions for each Fund are
the same. For additional information on purchase and redemption provisions,
see "More Information Regarding the Acquiring Fund."
- - The Funds expect that the Reorganization should be considered a tax-free
reorganization within the meaning of section 368(a)(1) of the Internal
Revenue Code of 1986 (the "Code"). As such, shareholders of the Funds
should not recognize gain or loss as a result of the Reorganization. See
"Information About the Reorganization - Tax Considerations."
THE TIM SUB-ADVISORY AGREEMENT
TFAI is the Acquired Fund's investment adviser. Prior to August 1, 2006, TFAI
retained Great Companies to serve as investment sub-adviser to the Acquired
Fund. Great Companies recently entered into a transaction that resulted in
affiliates of TFAI and
5
TIM acquiring all of the interests of Great Companies and the cessation of Great
Companies' operation as a business. The transaction was deemed to constitute a
change of control of Great Companies under the 1940 Act that terminated the
sub-advisory agreement between TFAI and Great Companies.
To avoid a potential "orphanage" of the Acquired Fund, TFAI proposed, and the
Board approved, the Interim Sub-Advisory Agreement pursuant to which TIM was
appointed as interim sub-adviser for a maximum period of 150 days following the
termination of the sub-advisory agreement between TFAI and Great Companies. The
Interim Sub-Advisory Agreement provides that the compensation payable thereunder
to TIM is to be held in an escrow account with the Acquired Fund's custodian,
pending shareholder consideration of the TIM Sub-Advisory Agreement. If Acquired
Fund shareholders approve the TIM Sub-Advisory Agreement, TIM will be paid for
its services under the Interim Sub-Advisory Agreement in the amount held in the
escrow account. If Acquired Fund shareholders reject the TIM Sub-Advisory
Agreement, TIM will be paid for the investment sub-advisory services it rendered
while it served as an interim sub-adviser in the amount of the lesser of its
costs in performing such services or the amount held in escrow (i.e., the amount
of compensation payable under the terms of the Interim Sub-Advisory Agreement).
In addition, if shareholders reject the agreement, TIM would not be able to
continue serving as investment sub-adviser to the Acquired Fund past the end of
the 150 day interim period, and the Board would consider various options with
respect to the Acquired Fund, which may include liquidation and dissolution of
the Acquired Fund, or the appointment of a new investment sub-adviser in
accordance with applicable law.
THE BOARD RECOMMENDS THAT YOU VOTE "FOR" THE TIM SUB-ADVISORY AGREEMENT.
6
PROPOSAL I - APPROVAL OF REORGANIZATION PLAN
COMPARISON OF INVESTMENT OBJECTIVES, PRINCIPAL INVESTMENT STRATEGIES, RISKS AND
MANAGEMENT OF THE ACQUIRED AND ACQUIRING FUNDS
The investment objectives, principal investment strategies, and risks of the
Funds are similar in many respects. Each Fund is managed by the same investment
adviser and sub-adviser. The charts and summaries below describe important
similarities and differences between the Funds' investment objectives, principal
investment strategies and principal risks. There can be no assurance that a Fund
will achieve its stated objective.
ACQUIRED FUND ACQUIRING FUND
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OBJECTIVE Long-term growth of capital. Maximizing long-term growth.
PRINCIPAL INVESTMENT POLICIES Investing in common stocks of large, Investing at least 80% of fund assets in a
established, U.S. based companies. The diversified portfolio of domestic common
sub-adviser seeks common stocks that have stocks. The sub-adviser buys securities
outstanding shareholder returns defined as of companies it believes have the defining
having outperformed the Standard & Poor's features of premier growth companies that
500 Composite Stock Price Index over a set are undervalued in the stock market.
period of time.
INVESTOR PROFILE The Fund may be appropriate for investors This Fund may be appropriate for long-term
who seek long-term growth of capital and who investors who have the perspective,
can tolerate significant fluctuations patience and financial ability to take on
inherent in stock investing. above-average price volatility in pursuit
of long-term capital growth.
INVESTMENT ADVISER AND ADVISORY FEES Transamerica Fund Advisors, Inc. Transamerica Fund Advisors, Inc.
TFAI receives monthly compensation from the TFAI receives monthly compensation from the
Fund at the following annual rates (as a Fund at the following annual rates (as a
specified percentage of the Fund's average specified percentage of the Fund's average
daily net assets): 0.75% for the first $500 daily net assets): 0.75% for the first $500
million, 0.70% of assets over $500 million million and 0.70% of assets over $500
up the $1 billion and 0.65% of assets in million. TFAI recently agreed to reduce
excess of $1 billion. (For the fiscal year its fee to 0.65% of average daily net
ended October 31, 2005, the Fund paid, assets in excess of $2.5 billion, effective
pursuant to a different fee arrangement, an November 1, 2006. (For the fiscal year
advisory fee equal to 0.775% of the Fund's ended October 31, 2005, the Fund paid an
average daily net assets.) advisory fee equal to 0.75% of the Fund's
average daily net assets.)
7
ACQUIRED FUND ACQUIRING FUND
-------------------------------------------- -------------------------------------------
SUB-ADVISER AND SUB-ADVISORY FEES TIM, 11111 Santa Monica Boulevard, Suite 820, TIM, 11111 Santa Monica Boulevard, Suite
Los Angeles, California 90025, has served as 820, Los Angeles, California 90025, is the
interim investment sub-adviser to the Fund Fund's sub-adviser. TIM receives monthly
since August 1, 2006. Prior to that date, compensation from TFAI at the following
the Fund's investment sub-adviser was Great annual rates (as a specified percentage of
Companies, L.L.C., 635 Court Street, Suite the Fund's average daily net assets): 0.35%
100, Clearwater, Florida 33756. of the first $500 million and 0.30% of
assets in excess of $500 million. TIM
Under the terms of the Interim Sub-Advisory recently agreed, effective November 1,
Agreement and the TIM Sub-Advisory 2006, to reduce its sub-advisory fee to
Agreement, TIM is entitled to receive the 0.25% of average daily nets in excess of
same monthly compensation as Great $2.5 billion, less 50% of any amount
Companies. The sub-adviser is entitled to reimbursed pursuant to the Fund's expense
receive compensation from TFAI at the limitation arrangements, and to combine the
following annual rates (as a specified Acquiring Fund's assets with those of
percentage of the Fund's average daily net another mutual fund for purposes of
assets): 0.30% of the first $500 million and calculating the fee and applicable
0.25% of assets in excess of $500 million. breakpoints.
PORTFOLIO MANAGER Gary U. Rolle Gary U. Rolle
COMPARISON OF PRINCIPAL INVESTMENT STRATEGIES
SIMILARITIES - Each Fund principally invests in common stocks of U.S. companies.
- Each Fund primarily invests in growth stocks.
- Each Fund may be appropriate for investors who seek long-term capital growth.
- Under adverse or unstable market conditions, each Fund could invest some or all of its
assets in cash, repurchase agreements and money market instruments.
DIFFERENCES - The Acquired Fund seeks to invest in - The Acquiring Fund's sub-adviser, TIM,
common stocks of large, established, uses a "bottom-up" approach to
United States based companies. Stocks investing and builds the fund's
for this fund are selected by TIM from portfolio one company at a time by
a group of companies that are investing fund assets principally in
identified as being "great companies." equity securities.
- The sub-adviser seeks common stocks - TIM generally invests at least 80% of
that have outstanding shareholder the fund's assets in a diversified
returns defined as having outperformed portfolio of domestic common stocks.
the Acquired Fund's benchmark over a TIM believes in long term investing
set period of time. and does not attempt to time the
market. Each company passes through
- To determine how to allocate Acquired TIM's rigorous research process and
Fund assets among the "great companies" stands on its own merits as a premier
the sub-adviser has identified, the company.
sub-adviser uses intrinsic value
investing. - TIM buys securities of companies it
believes have the defining features of
- Additionally, the sub-adviser premier growth companies that are
determines optimum sector weightings undervalued in the stock market.
for the different sectors. Once optimum
sector weightings have been determined, - While TIM invests principally in
stocks are allocated among the sectors. domestic common stocks, the Acquiring
Sector weightings are adjusted as the Fund may, to a lesser extent, invest
investing environment dictates. in other securities or use other
investment strategies in pursuit of
- The Acquired Fund is non-diversified. its investment objective.
- The Acquiring Fund is diversified.
8
COMPARISON OF PRINCIPAL RISKS OF INVESTING IN THE FUNDS
The discussion below provides more information about the principal risks of
investing in the Acquiring Fund, and how these risks compare to those posed by
an investment in the Acquired Fund. Each Fund may invest in various types of
securities or use certain investment techniques to achieve its objective. The
following is a summary of the principal risks associated with such securities
and investment techniques. As with any security, an investment in a Fund
involves certain risks, including loss of principal. The Funds are subject to
varying degrees of risk. An investment in the Funds is not a deposit of a bank
and is not insured by the Federal Deposit Insurance Corporation or any other
government agency. The fact that a particular risk is not identified means only
that it is not a principal risk of investing in the Funds, but it does not mean
that a Fund is prohibited from investing its assets in securities that give rise
to that risk. Please refer to Appendix B, "Explanation of Strategies and Risks,"
for more detailed description of risks and information about additional
investment techniques that the Funds may utilize and related risks.
Each of the Acquiring Fund and the Acquired Fund is subject to the following
risks:
- COMMON STOCK INVESTING. Each Fund principally invests in common stocks
of U.S. companies. This type of investment involves risks. While
stocks have historically outperformed other investments over the long
term, their prices tend to go up and down more dramatically over the
shorter term. These price movements may result from factors affecting
individual companies, industries or the securities market as a whole.
Because the stocks each Fund holds fluctuate in price, the value of
your investment in the Fund will go up and down.
- GROWTH STOCK INVESTING. Each Fund invests in growth stocks.
Investments in growth stocks involve risks. Growth stocks can be
volatile for several reasons. Since growth companies usually reinvest
a high proportion of their earnings in their own businesses, they may
lack the dividends often associated with value stocks that could
cushion their decline in a falling market. Also, since investors buy
growth stocks because of their expected superior earnings growth,
earnings disappointments often result in sharp price declines. Certain
types of growth stocks, particularly technology stocks, can be
extremely volatile and subject to greater price swings than the
broader market.
- VALUE INVESTING. Each Fund also may use a value approach to investing.
This approach carries the risk that the market will not recognize a
security's intrinsic value for a long time, or that a stock considered
to be undervalued may actually be appropriately priced.
- MARKET RISK. Each Fund is subject to market risks. The value of
securities owned by a Fund may go up or down, sometimes rapidly or
unpredictably. Such securities may decline in value due to factors
affecting securities markets generally or particular industries or
issuers.
- TEMPORARY DEFENSIVE INVESTMENTS. Each Fund could, under adverse or
unstable market conditions, invest some or all of its assets in cash,
repurchase agreements and money market instruments. Although a Fund
would do this only in seeking to avoid losses, the Fund may be unable
to pursue its investment objective during that time, and it could
reduce the benefit from any upswing in the market.
The Acquiring and Acquired Funds also may entail risks that are not common
between the Funds, including (among others):
- DIVERSIFICATION. The Acquired Fund is non-diversified, while the
Acquiring Fund is diversified. 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 more
widely diversified fund and may be subject to greater loss with
respect to its portfolio securities.
COMPARISON OF PORTFOLIO CHARACTERISTICS
The following tables compare certain characteristics of the portfolios of the
Funds as of April 30, 2006:
ACQUIRED FUND ACQUIRING FUND
------------- --------------
Net Assets (thousands) $86,492 $680,681
Number of Holdings 82 64
Portfolio Turnover Rate 65% 3%
9
As a percentage of Net Assets
- - Common Stocks 97.7% 96.2%
- - Securities Lending Collateral 4.6% 7.5%
- - Liabilities in excess of other
assets -2.3% -3.7%
100.0% 100.0%
TOP 10 HOLDINGS (AS A % OF NET ASSETS)
ACQUIRED FUND %
- ------------------------------- ---
United Technologies Corp. 3.6%
PepsiCo. Inc 3.5%
American Express Co. 3.2%
Prudential Financial, Inc. 3.1%
T. Rowe Price Group, Inc. 3.1%
Morgan Stanley 3.0%
BJ Services Co. 2.9%
Coach, Inc. 2.9%
Weatherford International, Ltd. 2.7%
Corning, Inc. 2.6%
ACQUIRING FUND %
- ---------------------------- ---
QUALCOMM, Inc. 5.3%
Chicago Mercantile Exchange 4.4%
Schlumberger, Ltd. 4.1%
United Parcel Service, Inc. 4.1%
- - Class B
Caterpillar, Inc. 3.9%
Expeditors International of 3.5%
Washington, Inc.
McGraw-Hill Cos., Inc. (The) 3.4%
Jacobs Engineering Group, 3.3%
Inc.
Genentech, Inc. 3.3%
Marriott International, 3.2%
Inc. - Class A
COMPARISON OF FEES AND EXPENSES FOR ACQUIRED AND ACQUIRING FUNDS
The following describes and compares the fees and expenses that you may pay if
you buy and hold shares of each Fund. It is expected that combining the Funds in
the manner proposed in the Reorganization Plan would allow shareholders of the
Acquired Fund and Acquiring Fund to realize economies of scale. For further
information on the fees and expenses of the Acquiring Fund, please see "More
Information Regarding the Acquiring Fund" in this Proxy Statement/Prospectus.
GENERAL INFORMATION
Class A shares of the Acquiring Fund issued to a shareholder in connection with
the Reorganization will not be subject to any initial sales charge. Class B and
Class C shares of the Acquiring Fund issued to a shareholder in connection with
the Reorganization will be subject to the same contingent deferred sales charge
("CDSC"), if any, applicable to the corresponding shares of the Acquired Fund
held by that shareholder immediately prior to the Reorganization. In addition,
the period that the shareholder held shares of the Acquired Fund would be
included in the holding period of the Acquiring Fund's shares for purposes of
calculating any applicable CDSC. Similarly, Class B shares of the Acquiring Fund
issued to a shareholder in connection with the Reorganization will convert to
Class A shares eight years after the date that the corresponding Class B shares
of the Acquired Fund were purchased by shareholders. Class I shares issued in
connection with the Reorganization will not be subject to any initial sales
charge or CDSC.
Purchases of shares of the Acquiring Fund after the Reorganization will be
subject to the charges described in the table below. This is the same structure
that is currently in effect for the Acquired Fund.
10
SHAREHOLDER FEES (FEES PAID DIRECTLY FROM YOUR INVESTMENT)
CLASS A CLASS B CLASS C CLASS I
SHARES SHARES SHARES SHARES
-------- -------- -------- -------
Maximum Sales Charge Imposed on Purchases
(as a percentage of offering price) 5.50% None None None
Maximum Deferred Sales Charge (as a percentage of original
purchase price or redemption proceeds, whichever is lower) None(a) 5.00%(b) 1.00%(c) None
Redemption fee on shares held 5 trading days or less (as a
percentage of amount redeemed) 2.00% 2.00% 2.00% None
(a) Certain purchases of Class A shares in amounts of $1 million or more are
subject to a 1% CDSC for 24 months after purchase.
(b) Purchases of Class B shares are subject to a declining CDSC if redeemed
during the first 5 years of purchase (5% - 1st year; 4% - 2nd year; 3% -
3rd year; 2% - 4th year; and 1% - 5th year).
(c) Purchases of Class C shares are subject to a 1% CDSC if redeemed during the
first 12 months of purchase.
OPERATING EXPENSES
The current expenses of each Fund and estimated pro forma expenses after giving
effect to the proposed Reorganization are shown in the table below. Pro forma
fees and expenses show estimated fees and expenses of the Acquiring Fund after
giving effect to the proposed Reorganization as of October 31, 2005. Pro forma
numbers are estimated in good faith and are hypothetical.
ANNUAL FUND OPERATING EXPENSES
(as a percentage of each Fund's average daily net assets)
Distribution Total Annual
Management & Service Other Fund Operating Expense Net Operating
Fees (12b-1) Fees Expenses Expenses Reduction Expenses
---------- ------------ -------- -------------- --------- -------------
ACQUIRING FUND(A)
Class A Shares 0.75% 0.35% 0.58% 1.68% 0.16%(b) 1.52%
Class B Shares 0.75% 1.00% 0.74% 2.49% 0.32%(b) 2.17%
Class C Shares 0.75% 1.00% 0.46% 2.21% 0.04%(b) 2.17%
Class I Shares 0.75% N/A 0.07% 0.82% 0.00%(b) 0.82%
ACQUIRED FUND(C)
Class A Shares 0.75% 0.35% 0.46% 1.56% 0.06%(d) 1.50%
Class B Shares 0.75% 1.00% 0.48% 2.23% 0.08%(d) 2.15%
Class C Shares 0.75% 1.00% 0.46% 2.21% 0.06%(d) 2.15%
Class I Shares 0.75% N/A 0.11% 0.86% 0.00%(d) 0.86%
PRO FORMA
Class A Shares 0.74% 0.35% 0.32% 1.41% 0.00%(b) 1.41%
Class B Shares 0.74% 1.00% 0.68% 2.42% 0.25%(b) 2.17%
Class C Shares 0.74% 1.00% 0.46% 2.20% 0.03%(b) 2.17%
Class I Shares 0.74% N/A 0.08% 0.82% 0.00%(b) 0.82%
(a) Annual fund operating expenses are estimates based upon the Acquiring
Fund's expenses for the fiscal year ended October 31, 2005, restated to
reflect current expenses, contractual advisory fees, and/or expense limits
and, for Class I shares, the estimated expenses of Class I shares (which
commenced operations on November 15, 2005).
(b) Contractual arrangements had been made with the Acquiring Fund's investment
adviser, TFAI, through March 1, 2007, to waive fees and/or reimburse fund
expenses to the extent that the Acquiring Fund's total expenses exceed
1.17% of average daily net assets, excluding 12b-1 fees and certain
extraordinary expenses.
(c) Annual Fund operating expenses are estimates based upon the Acquired Fund's
expenses for the fiscal year ended October 31, 2005, restated to reflect
current expenses, contractual advisory fees, and/or expense limits and, for
Class I shares, the estimated expenses of Class I shares (which commenced
operations on November 15, 2005).
(d) Contractual arrangements have been made with the Acquired Fund's investment
adviser, TFAI through March 1, 2007, to waive fees and/or reimburse fund
expenses to the extent that the Acquired Fund's total expenses exceed 1.15%
of average daily net assets, excluding 12b-1 fees and certain extraordinary
expenses. TFAI is entitled to reimbursement by the Acquired Fund of fees
waived or expenses reduced during any of the previous 36 months beginning
on the date of the expense limitation agreement if on any day the estimated
annualized Acquired Fund operating expenses are less than 1.15% of average
daily assets, excluding 12b-1 fees and certain extraordinary expenses.
11
EXAMPLE
This example is intended to help you compare the cost of investing in the Funds
and in the Acquiring Fund (after the Reorganization) on a pro forma basis. Your
actual costs may be higher or lower. The example assumes that you invest $10,000
in each Fund and in the surviving Fund after the Reorganization for the time
periods indicated. The Example also assumes that your investment has a 5% return
each year and that each Fund's operating expenses remain the same. The return is
for illustration purposes only and is not guaranteed.
Based on the above assumptions, you would pay the following expenses if you
redeemed your shares at the end of each period:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
ACQUIRING FUND
Class A Shares $696 $1,036 $1,398 $2,415
Class B Shares(a) $720 $1,045 $1,397 $2,602
Class C Shares $320 $ 687 $1,181 $2,541
Class I Shares $ 84 $ 262 N/A N/A
ACQUIRED FUND
Class A Shares $694 $1,010 $1,348 $2,300
Class B Shares(a) $718 $ 990 $1,288 $2,389
Class C Shares $318 $ 685 $1,179 $2,539
Class I Shares $ 88 $ 274 N/A N/A
PRO FORMA
Class A Shares $686 $ 972 $1,279 $2,148
Class B Shares $720 $1,031 $1,368 $2,486
Class C Shares $320 $ 685 $1,177 $2,532
Class I Shares $ 84 $ 262 N/A N/A
(a) Examples for Class B shares assume conversion to Class A shares eight years
after purchase.
Based on the above assumptions, you would pay the following expenses if you did
not redeem your shares:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
ACQUIRING FUND
Class A Shares $696 $1,036 $1,398 $2,415
Class B Shares(a) $220 $ 745 $1,297 $2,602
Class C Shares $220 $ 687 $1,181 $2,541
Class I Shares $ 84 $ 262 N/A N/A
ACQUIRED FUND
Class A Shares $694 $1,010 $1,348 $2,300
Class B Shares(a) $218 $ 690 $1,188 $2,389
Class C Shares $218 $ 685 $1,179 $2,539
Class I Shares $ 88 $ 274 N/A N/A
PRO FORMA
Class A Shares $686 $ 972 $1,279 $2,148
Class B Shares $220 $ 731 $1,268 $2,486
Class C Shares $220 $ 685 $1,177 $2,532
Class I Shares $ 84 $ 262 N/A N/A
(a) Examples for Class B shares assume conversion to Class A shares eight years
after purchase.
12
MANAGEMENT AND PERFORMANCE OF THE ACQUIRING FUND
THE INVESTMENT ADVISER AND SUB-ADVISER
TFAI has overall responsibility for the management of the Acquiring Fund. For
such services, the Acquiring Fund currently pays an investment advisory fee
monthly at the annual rate of 0.75% of the first $500 million of the Acquiring
Fund's average daily net assets and 0.70% of the average daily net assets over
$500 million. Effective November 1, 2006, TFAI will reduce its investment
advisory fee to 0.65% of average daily net assets in excess of $2.5 billion. For
more information about TFAI, see "More Information Regarding the Acquiring Fund
- - Investment Advisory Arrangements" below.
TFAI has entered into a sub-advisory agreement with TIM to provide investment
advisory services to the Acquiring Fund. TIM is an investment adviser registered
as such with the U.S. Securities and Exchange Commission. As of June 30, 2006,
TIM has approximately $19 billion in assets under management. The name, address
and principal occupation of the principal executive officer and each managing
member of TIM are set forth in Appendix G.
Pursuant to the Acquiring Fund's sub-advisory agreement, TIM furnishes
investment advisory, statistical and research facilities, supervises and
arranges for the purchase and sale of securities on behalf of the Acquiring Fund
and provides for the compilation and maintenance of records pertaining to such
investment advisory services, subject to the control and supervision of TA
IDEX's Board and TFAI. For such services, TFAI currently pays TIM 0.35% of the
first $500 million of average daily net assets and 0.30% of average daily net
assets over $500 million, less 50% of any amount reimbursed pursuant to the
fund's expense limitation arrangement. Effective November 1, 2006, TIM will
reduce its investment sub-advisory fee to 0.25% of average daily net assets in
excess of $2.5 billion. In addition, also effective November 1, 2006, for
purposes of calculating investment sub-advisory fees and applicable breakpoints,
TIM will combine the Acquiring Fund's assets with those of AEGON/Transamerica
Series Trust - Transamerica Equity, a series of another mutual fund.
A discussion regarding the basis of the Board's approval of the Acquiring Fund's
investment advisory arrangements is available in the Acquiring Fund's
semi-annual report for the period ended April 30, 2006.
The following individual has responsibility for the day-to-day management of the
Acquiring Fund:
GARY U. ROLLE, CFA, is President, Chief Investment Officer and Portfolio Manager
at TIM. He joined TIM's predecessor in 1967. He also manages sub-advised funds
and institutional separate accounts in the Large Growth Equity discipline. From
1980 to 1982 he served as the Chief Investment Officer for SunAmerica then
returned to Transamerica as Chief Investment Officer. Mr. Rolle holds a B.S. in
chemistry and economics from the University of California at Riverside.
The Acquiring Fund's Statement of Additional Information, dated March 1, 2006,
as supplemented from time to time, provides additional information about the
portfolio manager's compensation, other accounts managed, and ownership of
Acquiring Fund shares. It is available upon request.
PRINCIPAL INVESTMENT STRATEGIES
The Acquiring Fund's sub-adviser, 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. TIM generally invests at least 80% of the
Fund's assets in a diversified portfolio of domestic common stocks. TIM believes
in long term investing and does not attempt to time the market. Each company
passes through TIM's rigorous research process and stands on its own merits as a
premier company.
TIM buys securities of companies it believes have the defining features of
premier growth companies that are undervalued 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
13
While TIM invests principally in domestic common stocks, the Acquiring Fund may,
to a lesser extent, invest in other securities or use other investment
strategies in pursuit of its investment objective.
Under adverse or unstable market conditions, the Acquiring Fund could invest
some or all of its assets in cash, repurchase agreements and money market
instruments. Although the Acquiring Fund would do this only in seeking to avoid
losses, the Acquiring Fund may be unable to pursue its investment objective
during that time, and it could reduce the benefit from any upswing in the
market.
PERFORMANCE OF THE ACQUIRING FUND
The bar chart and tables below provide some indication of the risks of investing
in the Acquiring Fund by showing changes in the Acquiring Fund's Class A share
performance from year to year and by showing how the Acquiring Fund's average
annual total returns for different periods compare to those of broad measures of
market performance, the Russell 1000 Growth Index (Russell 1000 Growth), which
measures the performance of those Russell 1000 companies with higher
price-to-book rates and higher forecasted growth values, and the Standard &
Poors' 500 Composite Stock Price Index (S&P 500 Index), a widely recognized
index of market performance which is composed of 500 widely held common stocks
that measures the general performance of the market.
The bar chart does not reflect the impact of taxes or sales charge which, if
reflected, would lower the returns. The table, which shows average annual total
returns for each class of shares of the Acquiring Fund, except Class I, includes
deductions of applicable sales charges. Absent limitation of the Acquiring
Fund's expenses, total returns would be lower.
Performance information for Class I shares is not available, since the class did
not commence operations until November 15, 2005. However, the performance of
Class A shares should be substantially similar to that of Class I shares because
both share classes are invested in the same portfolio of securities. The returns
for Class A shares will vary from Class I shares to the extent that the classes
do not have the same expenses and Class I shares are not subject to sales
charges (which are reflected in the performance information about Class A shares
in the table). As with all mutual funds, past performance (before and after
taxes) is not a prediction of future results.
TA IDEX TRANSAMERICA EQUITY - CLASS A
YEAR-BY-YEAR TOTAL RETURN
HIGHEST AND LOWEST RETURNS (as of 12/31 each year)
- -------------------------- ------------------------------------------
HIGHEST QUARTER Class A Shares
12/31/2001 12.85%
(17.53%), (23.39%), 29.78%, 14.07%, 15.29%
LOWEST QUARTER 2001 2002 2003 2004 2005
09/30/2001 (18.39)% [Bar Chart]
The year-to-date return for the period ended June 30, 2006 is 2.49%.
AVERAGE ANNUAL TOTAL RETURNS(1)
(as of 12/31/05)
Life of the
1 Year 5 Years Fund(2)
------ ------- -----------
Class A
Return Before Taxes 8.95% 0.38% (1.91%)
Return After Taxes on Distributions(3) 8.82% 0.31% (1.97%)
Return After Taxes on Distributions and Sale of Fund Shares(3) 6.00% 0.32% (1.61%)
Class B 9.30% 0.57% (1.69%)
Class C 13.43% N/A 18.64%
Russell 1000 Growth Index
(reflects no deduction for fees, expenses or taxes) 5.26% (3.58%) (7.20%)
(1) Actual returns may depend on the investor's individual tax situation.
After-tax returns may not be relevant if the investment is made through a
tax-exempt or tax-deferred account, such as a 401(k) plan. After-tax
returns are presented for only one class and returns for other classes will
vary.
(2) The Fund commenced offering Class A and Class B shares on March 1, 2000.
Class C shares commenced operations on November 11, 2002.
(3) The after-tax returns are calculated using the historic highest individual
federal marginal income tax rates and do not reflect the impact of state
and local taxes.
A $25 annual fee is imposed on accounts open for over 12 months that are below a
minimum balance. See the section titled "More Information Regarding the
Acquiring Fund" below.
14
For additional information about the Acquiring Fund's performance, including a
discussion about market conditions and investment strategies that significantly
affected its performance during its last fiscal year, please refer to Appendix
C.
15
INFORMATION ABOUT THE REORGANIZATION
THE REORGANIZATION PLAN
The Reorganization Plan provides for the transfer of all of the assets and
liabilities of the Acquired Fund to the Acquiring Fund solely in exchange for
Class A, B, C and I shares of the Acquiring Fund. The Acquired Fund will
distribute the shares of the Acquiring Fund received in the exchange to its
shareholders, and then the Acquired Fund will be liquidated.
After the Reorganization, each shareholder of the Acquired Fund will own shares
in the Acquiring Fund having an aggregate value equal to the aggregate value of
shares of the Acquired Fund held by that shareholder as of the close of business
on the business day preceding the Closing. Class A, B, C and I shareholders of
the Acquired Fund will receive shares of the corresponding class of the
Acquiring Fund.
Generally, the liquidation and distribution will be accomplished by opening
accounts on the books of the Acquiring Fund in the names of the shareholders of
the Acquired Fund and transferring to those shareholders' accounts the same
class shares representing such shareholders' interests previously credited to
the account of the Acquired Fund. No sales charges or fees of any kind will be
charged to the shareholders of the Acquired Fund in connection with their
receipt of shares of the Acquiring Fund in the Reorganization.
Until the Closing, shareholders of the Acquired Fund will continue to be able to
redeem their shares. Redemption requests received after the Closing will be
treated as requests for the redemption of Acquiring Fund shares received by the
shareholder in the Reorganization.
The obligations of the Funds under the Reorganization Plan are subject to
various conditions, including approval of the shareholders of the Acquired Fund.
The Reorganization Plan also requires that the Funds take, or cause to be taken,
all actions, and do or cause to be done, all things reasonably necessary, proper
or advisable to consummate and make effective the transactions contemplated by
the Reorganization Plan. The Reorganization Plan may be terminated by mutual
agreement of the parties or on certain other grounds. For a complete description
of the terms and conditions of the Reorganization, see the Reorganization Plan
at Appendix A, which qualifies in its entirety the foregoing summary of the
Reorganization Plan.
REASONS FOR THE REORGANIZATION
The Funds have investment objectives, strategies and risks that are comparable
in many respects. Because the Acquired Fund may invest in similar types of
securities as the Acquiring Fund, the Funds are somewhat duplicative. In
addition, the Reorganization would create a larger Acquiring Fund, also managed
by TIM, which should benefit shareholders of the Funds by allowing shareholders
of the Acquired Fund to continue to participate in a professionally managed
portfolio. Also, a larger Acquiring Fund offers the potential benefit of a more
diversified portfolio of securities, may improve trading efficiency, and may
realize economies of scale and lower operating expenses.
TFAI may be deemed to have a material interest in the proposed Reorganization
due to the higher advisory fees payable to it by the Acquiring Fund, as compared
to the Acquired Fund, on fund assets of $1-$2.5 billion, after which the Funds
would pay the same advisory fee rate. However, TFAI currently receives a higher
effective advisory fee (i.e., after payment of sub-advisory fees) from the
Acquired Fund on fund assets up to $1 billion, after which it receives the same
net advisory fees as it receives with respect to the Acquiring Fund. Each Fund
had net assets of less than $1 billion as of a recent date. In addition,
combination of the Funds will relieve TFAI of its obligation to limit the total
operating expenses of the Acquired Fund, which resulted in TFAI waiving fees
and/or reimbursing expenses in the amount of $79,582 during the Acquired Fund's
last fiscal year, although it will continue to limit the total operating
expenses of the Acquiring Fund, which resulted in TFAI waiving fees and/or
reimbursing expenses in the amount of $241,182 during the Acquiring Fund's last
fiscal year. Finally, TIM may be deemed to have a material interest in the
proposed Reorganization because it is entitled to a higher sub-advisory fee
payable with respect to the Acquiring Fund on assets of up to $2.5 billion,
after which it would receive the same sub-advisory fee as would be payable with
respect to the Acquired Fund.
TAX CONSIDERATIONS
The Reorganization is intended to qualify for Federal income tax purposes as a
tax-free reorganization under Section 368 of the Internal Revenue Code of 1986,
as amended (the "Code"). Accordingly, pursuant to this treatment, neither the
Acquired Fund, the Acquiring Fund, nor the shareholders will recognize any gain
or loss for federal income tax purposes from the transactions contemplated by
the Reorganization Plan. As a condition to the Closing, the Funds will receive
an opinion from the law firm of Dechert LLP to the effect that the
Reorganization will qualify as a tax-free reorganization for Federal income tax
purposes. That opinion will be based in part upon certain assumptions and upon
certain representations made by the Funds.
16
Immediately prior to the Reorganization, the Acquired Fund will pay a dividend
or dividends which, together with all previous dividends, will have the effect
of distributing to the shareholders all of the Acquired Fund's investment
company taxable income for taxable years ending on or prior to the
Reorganization (computed without regard to any deduction for dividends paid) and
all of its net capital gains, if any, realized in taxable years ending on or
prior to the Reorganization (after reduction for any available capital loss
carryforward). Such dividends will be included in the taxable income of the
Acquired Fund's shareholders.
As of October 31, 2005, TA IDEX Great Companies - America(SM), had accumulated
capital loss carryforwards in the amount of approximately $11,518 (in
thousands). The Acquired Fund's capital loss carryforwards may be used to
offset, at least in part, any capital gains realized by the Acquired Fund prior
to the Reorganization. After the Reorganization, these losses may be available
to the Acquiring Fund to offset its capital gains, although the amount of these
losses which may offset the Acquiring Fund's capital gains in any given year may
be limited. As a result of this limitation, it is possible that the Acquiring
Fund may not be able to use these losses as rapidly as the Acquired Fund might
have, and part of these losses may not be useable at all. The ability of the
Acquiring Fund to absorb losses in the future depends upon a variety of factors
that cannot be known in advance, including the existence of capital gains
against which these losses may be offset. In addition, the benefits of any
capital loss carryforwards currently are available only to shareholders of the
Acquired Fund. After the Reorganization, however, these benefits will inure to
the benefit of all shareholders of the Acquiring Fund.
EXPENSES OF THE REORGANIZATION
TFAI and/or its affiliates will bear all of the expenses relating to the
Reorganization, including but not limited to the costs of the proxy
solicitation. The costs of the Reorganization include, but are not limited to,
costs associated with preparation of the Acquiring Fund's registration
statement, printing and distributing the Acquiring Fund's prospectus and the
Acquired Fund's proxy materials, legal fees, accounting fees, securities
registration fees, and expenses of holding the Special Meeting.
It is anticipated that certain portfolio holdings of the Acquired Fund may be
liquidated in connection with the Reorganization or after completion of the
Reorganization as part of the rationalization of the Acquiring Fund's
post-Reorganization portfolio. The timing and extent of such transactions is
difficult to predict, but portfolio holdings liquidation is not expected to
exceed 50% of the Acquired Fund's pre-Reorganization portfolio. The commission
rates per share associated with liquidation of such a percentage of the Acquired
Fund's portfolio as of April 30, 2006 are estimated to be 0.03%. Such brokerage
transactions will generate taxable capital gains and may negatively affect
performance.
BOARD CONSIDERATIONS
The proposed Reorganization was presented to the Board for consideration and
approval at a meeting held on July 18-19, 2006. For the reasons discussed below,
the Trustees, including all of the Trustees who are not "interested persons" (as
defined in the 1940 Act) (the "Independent Trustees"), of TA IDEX determined
that the interests of the shareholders of the respective Funds would not be
diluted as a result of the proposed Reorganization, and that the proposed
Reorganization was in the best interests of each of the Funds and its
shareholders.
The Board, in recommending approval of the Reorganization Plan, considered a
number of factors, including the following:
1. expense ratios and information regarding fees and expenses of the Acquired
Fund and the Acquiring Fund, which indicated that current shareholders of
the Acquired Fund will benefit from the Reorganization by getting a
comparable investment at comparable net expense level to investors. The
Board noted in this regard TFAI's and TIM's agreement to reduce the
advisory fees and sub-advisory fees payable with respect to Acquiring Fund
assets in excess of $2.5 billion to the benefit of investors;
2. the Reorganization would allow shareholders of the Acquired Fund to
continue to participate in a professionally-managed portfolio. As
shareholders of the Acquiring Fund, these shareholders would continue to be
able to exchange into other mutual funds in the TA IDEX fund complex that
offer the same class of shares in which shareholders currently invest;
3. the Reorganization would not dilute the interests of any Fund's current
shareholders;
4. TIM's demonstrated capacity to competently manage money in an equity growth
style, and the stronger relative investment performance of the Acquiring
Fund as compared to the Acquired Fund over the past five years as of April
30, 2006;
5. the comparability of the Acquired Fund's investment objectives, policies
and restrictions and share class structure to those of the Acquiring Fund,
which indicates that Acquired Fund shareholders will continue in a similar
investment vehicle;
6. the process employed by TA IDEX management to evaluate potential acquiring
TA IDEX series and ultimately recommend the Acquiring Fund as the most
appropriate acquiring series for the Acquired Fund and its shareholders;
7. elimination of duplication of costs and inefficiencies of having two
comparable Funds;
8. the tax-free nature of the Reorganization to each Fund and its
shareholders;
17
9. the Acquiring Fund's prior sub-adviser, Great Companies, has ceased
operations, and both Acquiring and Acquired Funds are sub-advised currently
by TIM; and
10. TFAI and/or its affiliates will bear all of the expenses relating to the
Reorganization.
The Board also considered the future potential benefits to the Acquiring Fund in
that its expense ratio may be reduced if the Reorganization Plan is approved.
THE BOARD RECOMMENDS THAT SHAREHOLDERS OF THE ACQUIRED FUND APPROVE THE
REORGANIZATION PLAN.
THE PROPOSED REORGANIZATION OF TA IDEX JANUS GROWTH INTO THE ACQUIRING FUND
The Reorganization may occur at or around the same time that another series of
TA IDEX, TA IDEX Janus Growth, is reorganized into the Acquiring Fund. Like the
Acquired and Acquiring Funds, TA IDEX Janus Growth is advised by TFAI. Pursuant
to TA IDEX Janus Growth's reorganization plan, if approved by its shareholders,
TA IDEX Janus Growth will be reorganized into the Acquiring Fund on or around
the date of the Closing. As a result of this reorganization, each shareholder of
TA IDEX Janus Growth will become a shareholder of the Acquiring Fund and will
hold, immediately after the closing of this reorganization, shares of the same
class of the Acquiring Fund having an aggregate value equal to the aggregate
value of the same class of shares of TA IDEX Janus Growth held by that
shareholder as of the close of business on the date of the closing of this
reorganization. TA IDEX Janus Growth's reorganization is not dependent on the
Reorganization, and vice versa. TA IDEX Janus Growth's reorganization could
potentially further benefit the Acquiring Fund in that its per share operating
expenses may be reduced, which could also benefit shareholders of the Acquired
Fund if the Reorganization is consummated.
ADDITIONAL INFORMATION ABOUT THE FUNDS
FORM OF ORGANIZATION
Each Fund is a series of TA IDEX, a Delaware statutory trust registered as an
open-end management investment company. TA IDEX is governed by the Board, which
currently consists of twelve (12) trustees, eleven (11) of whom are not
"interested persons" (as defined in the 1940 Act).
DIVIDENDS AND OTHER DISTRIBUTIONS
Each Fund pays dividends from net investment income, and each distributes net
capital gains, if any, at least annually. Dividends and distributions of each
Fund are automatically reinvested in additional shares of the Fund unless
otherwise directed by shareholders. There are no fees or sales charges on
reinvestments.
If the Reorganization Plan is approved by shareholders of the Acquired Fund,
then as soon as practicable before the Closing, the Acquired Fund will pay its
shareholders a cash distribution of all undistributed net investment income and
undistributed realized net capital gains.
DISCLOSURE OF PORTFOLIO HOLDINGS
A detailed description of the Funds' policies and procedures with respect to the
disclosure of the Funds' portfolio securities is available in the TA IDEX
Statement of Additional Information. In addition, investors should note that
each Fund publishes its holdings on its website at www.transamericaidex.com 30
days after the end of each calendar quarter. Such information will generally
remain online for six months or as otherwise consistent with applicable
regulations.
CAPITALIZATION OF THE FUNDS
The following table shows on an unaudited basis the capitalization of each Fund
and on a pro forma basis, each as of April 30, 2006, after giving effect to the
Reorganization.
NET ASSETS NET ASSET VALUE SHARES OUTSTANDING
(THOUSANDS) PER SHARE (THOUSANDS)
----------- --------------- ------------------
ACQUIRING FUND
Class A Shares $ 86,366 $9.84 8,780
Class B Shares $ 54,678 $9.39 5,826
Class C Shares $ 26,775 $9.39 2,850
Class I Shares $512,862 $9.87 51,972
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NET ASSETS NET ASSET VALUE SHARES OUTSTANDING
(THOUSANDS) PER SHARE (THOUSANDS)
----------- --------------- ------------------
ACQUIRED FUND
Class A Shares $ 26,937 $10.01 2,692
Class B Shares $ 35,571 $ 9.62 3,697
Class C Shares $ 15,559 $ 9.62 1,617
Class I Shares $ 8,425 $10.03 840
PRO FORMA - ACQUIRING FUND
INCLUDING ACQUIRED FUND(1)
Class A Shares $113,303 $ 9.84 11,518
Class B Shares $ 90,249 $ 9.39 9,614
Class C Shares $ 42,334 $ 9.39 4,507
Class I Shares $521,287 $ 9.87 52,826
(1) The net assets of the Acquired Fund will be converted to shares based on
the Acquiring Fund's net asset value per share.
PROPOSAL II - APPROVAL OF TIM SUB-ADVISORY AGREEMENT
THE ACQUIRED FUND'S INVESTMENT ADVISORY ARRANGEMENT
TFAI serves as the investment adviser to the Acquired Fund pursuant to an
investment advisory agreement dated as of June 15, 2000. TFAI is authorized to
hire sub-advisers to furnish investment advice and recommendations in connection
with its management of the Fund. TFAI previously hired Great Companies as
sub-adviser, and has recently hired TIM as interim sub-adviser, to the Fund. In
return for its services for the Acquired Fund, TFAI receives compensation,
calculated daily and paid monthly, from the fund as follows: 0.75% of the first
$500 million of average daily net assets; 0.70% of average daily net assets in
excess of $500 million up to $1 billion; and 0.65% of average daily net assets
in excess of $1 billion. For more information, see "More Information Regarding
the Acquiring Fund - Investment Advisory Arrangements" below.
THE PRIOR SUB-ADVISORY AGREEMENT. Until August 1, 2006, Great Companies served
as the Acquired Fund's sub-adviser pursuant to a sub-advisory agreement between
TFAI and Great Companies dated June 15, 2000, which was last submitted to a vote
of the Acquired Fund shareholders on June 15, 2000. Pursuant to the sub-advisory
agreement, Great Companies received monthly compensation from TFAI at the annual
rate of a specified percentage of the Acquired Fund's average daily net assets
as follows: 0.30% of the first $500 million of average daily net assets, and
0.25% of average daily net assets in excess of $500 million. During the Acquired
Fund's most recently completed fiscal year ended October 31, 2005, Great
Companies received an aggregate total of $398,628 from TFAI for services
rendered to the Acquired Fund.
ACQUISITION OF GREAT COMPANIES' INTERESTS. The acquisition was deemed to result
in an "assignment" (as that term is used for regulatory purposes) which resulted
in the termination of the sub-advisory agreement between TFAI and Great
Companies.
Section 15(f) of the 1940 Act provides that an investment adviser (such as Great
Companies) to a registered investment company (such as the Acquired Fund) may
receive any amount or benefit in connection with a sale of any interest in such
investment adviser that results in an "assignment" of an advisory contract
(which could be deemed to be the case with respect to Great Companies' former
investment sub-advisory agreement) if the following two conditions are
satisfied: (1) for a period of three years after such assignment, at least 75%
of the board of directors/trustees of the investment company cannot be
"interested persons" (as defined in the 1940 Act) of the new investment adviser
or its predecessor; and (2) no "unfair burden" (as defined in the 1940 Act) may
be imposed on the investment company as a result of the assignment or any
express or implied terms, conditions or understandings applicable to the
transaction. The Board has been advised by TFAI that it is not aware of any
circumstances arising from the arrangement described above that might result in
an unfair burden being imposed on the Acquired Fund. With respect to the other
condition, management will use its reasonable efforts to cause the Acquired Fund
to comply with the requirements of Section 15(f) and to assure that after at
least 75% of the members of the Board of TA IDEX are not "interested persons"
for the applicable periods following the acquisition.
THE INTERIM SUB-ADVISORY AGREEMENT. As previously noted, in connection with the
acquisition of Great Companies' interests, the Board approved, upon management's
recommendation, the appointment of TIM on an interim basis as investment
sub-adviser to the Acquired Fund. Such appointment was done in accordance with
Rule 15a-4 under the 1940 Act which, in relevant part, permits the appointment
of an investment adviser or sub-adviser such as TIM on an interim basis without
shareholder approval where such shareholder approval otherwise would be
required, subject to certain conditions. Of primary importance, Rule 15a-4
requires, among other things, that the interim arrangement provide that the
compensation payable thereunder will be held in an interest-bearing escrow
account with the custodian and will be paid to the adviser if shareholders
approve a longer-term agreement with the adviser/sub-adviser within 150 days. If
shareholders reject the agreement, the adviser/sub-adviser is paid only the
lesser of its costs in
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performing the interim arrangements or the amount in the escrow account. The
Interim Sub-Advisory Agreement is intended to comply with Rule 15a-4. In
addition, the substantive provisions of the Interim Sub-Advisory Agreement,
including investment sub-advisory fees payable thereunder, are identical to
those of the prior investment sub-advisory agreement with Great Companies,
except for the identity of the parties, the terms, and provisions required by
Rule 15a-4. The Interim Sub-Advisory Agreement will expire at the earlier of 150
days after August 1, 2006, the approval of the TIM Sub-Advisory Agreement, or
the replacement of TIM by another investment sub-adviser in compliance with
applicable law.
THE TIM SUB-ADVISORY AGREEMENT
The following summary of the TIM Sub-Advisory Agreement is qualified in its
entirety by reference to the agreement, a form of which is attached as Appendix
E.
The terms of the TIM Sub-Advisory Agreement are substantially similar to those
of the prior sub-advisory agreement with Great Companies, except for the
effective dates of the agreements and the parties thereto. The TIM Sub-Advisory
Agreement provides that, subject to TFAI's and the Board's supervision, TIM is
responsible for managing the investment operations of the Acquired Fund and for
making investment decisions and placing orders to purchase and sell securities
for the Acquired Fund, all in accordance with the investment objective and
policies of the Acquired Fund as reflected in its current prospectus and
statement of additional information and as may be adopted from time to time by
the Board. In accordance with the requirements of the 1940 Act, TIM will also
maintain, and provide TFAI with, all books and records relating to the
transactions it executes or that are otherwise required under the 1940 Act, and
render to the Trustees such periodic and special reports as the Board may
reasonably request. The TIM Sub-Advisory Agreement provides that, in the absence
of willful misfeasance, bad faith, gross negligence in the performance of its
duties, or reckless disregard of its obligations and duties thereunder, TIM will
not be liable for any act or omission in connection with its activities as
sub-adviser to the Acquired Fund.
Under its terms, the TIM Sub-Advisory Agreement will remain in full force and
effect for a period of up to two years from the date of its execution, and will
continue thereafter as long as its continuance is approved at least annually by
the Board or by vote of a majority of the outstanding shares of the Fund, as
well as by a majority of the Independent Trustees by vote cast in person at a
meeting called for that purpose. However, the TIM Sub-Advisory Agreement may be
terminated at any time upon 60 days' written notice without the payment of any
penalty, either by vote of the Board or by vote of a majority of the outstanding
voting securities of the Acquired Fund. Additionally, the TIM Sub-Advisory
Agreement will terminate immediately in the event of its assignment (within the
meaning of the 1940 Act) or upon the termination of the Acquired Fund's Advisory
Agreement with TFAI, and the TIM Sub-Advisory Agreement may be terminated at any
time by TIM or TFAI on 60 days' written notice to the other. If the
Reorganization discussed above in Proposal I is approved, the TIM Sub-Advisory
Agreement effectively will terminate when the Acquired Fund is liquidated in
accordance with the terms of the Reorganization Plan. If the Reorganization is
rejected but the TIM Sub-Advisory Agreement is approved, TIM will continue to
provide investment sub-advisory services to the Acquired Fund pursuant to the
terms of the TIM Sub-Advisory Agreement, and changes to the Acquired Fund's
investment program could be made.
Compensation payable by TFAI to TIM under the TIM Sub-Advisory Agreement equals
the compensation payable under the sub-advisory agreement with Great Companies
and the Interim Sub-Advisory Agreement.
For more information about TIM, see "Management and Performance of the Acquiring
Fund - The Investment Adviser and Sub-Adviser" above.
BOARD CONSIDERATIONS
On July 18-19, 2006, at an in-person meeting of the Board, at which a majority
of the Trustees, including a majority of the Independent Trustees were in
attendance, the Board determined whether the Interim Sub-Advisory and TIM
Sub-Advisory Agreements should be approved for an interim period (in the case of
the Interim Sub-Advisory Agreement) and for a two-year period, subject to
shareholder approval, in the case of the TIM Sub-Advisory Agreement. Following
their review, the Trustees determined that the agreements would enable
shareholders of the Acquired Fund to obtain high quality services at a cost that
is appropriate, reasonable, and in the best interests of shareholders. The
Board, including the Independent Trustees, approved the agreements. In reaching
their decision, the Trustees requested and obtained from TFAI and TIM such
information as they deemed reasonably necessary to evaluate the proposed
agreements. The Trustees also carefully considered the information that they had
received about the acquisition of Great Companies, the proposed Reorganization
of the Acquired Fund, and the necessity to appoint an interim sub-adviser to
avoid the orphanage of the Acquired Fund, as well as information received
throughout the year as part of their regular oversight of the Acquired Fund
(including information from TFAI and Great Companies), as well as information
about TIM, which serves as investment sub-adviser to other series of TA IDEX.
The Trustees also obtained and reviewed certain comparative information
regarding performance of the Acquiring Fund relative to performance of the
Acquired Fund as well as of a peer group of other comparable mutual funds. In
considering the agreements, the Trustees evaluated a number of considerations
that they believed, in light of the legal advice furnished to them by TA IDEX
counsel and independent legal counsel and their own business judgment, to be
relevant. They based their decisions on the following considerations, among
others, although they did not identify any consideration or particular
information that was controlling of their decisions:
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THE NATURE, EXTENT AND QUALITY OF THE ADVISORY SERVICE TO BE PROVIDED. The Board
considered the nature and quality of the sub-advisory services anticipated to be
provided by TIM to the Acquired Fund (including the ability to pursue the
Acquired Fund's investment program unchanged during the interim period), and the
services that TIM currently provides to other series of TA IDEX. The Board
concluded that TIM is capable of providing high quality services to the Acquired
Fund, as indicated by the nature and quality of services provided to other
series managed by TIM, TIM's management capabilities demonstrated with respect
to these other series, the experience, capability and integrity of TIM's
management, the financial resources of TIM, and the professional qualifications
and experience of TIM's portfolio management team to manage the Acquired Fund.
The Trustees also concluded that TIM proposed to provide services that are
appropriate in scope and extent in light of the Acquired Fund's current
operations, and the competitive landscape of the investment company business and
investor needs.
THE INVESTMENT PERFORMANCE OF THE ACQUIRED FUND. The Board reviewed comparative
information prepared by Strategic Insight Simfund from data compiled by Lipper
Analytics regarding TIM's performance in managing the Acquiring Fund, relative
to the Acquired Fund's performance and the performance of a peer group of other
comparable mutual funds. The Board noted that the Acquiring Fund had
consistently outperformed the Acquired Fund and most of its peers over the
trailing one-, three- and five-year periods ended April 30, 2006, and had
consistently achieved performance that was in the top third of comparable funds.
The Board concluded, based on the Trustees' assessment of the nature, extent and
quality of investment sub-advisory services expected to be provided by TIM and
TIM's historical performance in managing the Acquiring Fund, that TIM is capable
of generating a level of investment performance for the Acquired Fund that is
appropriate in light of the Acquired Fund's investment objective, policies and
strategies and competitive with other investment companies, as demonstrated by
TIM with respect to other series of TA IDEX for which it serves as sub-adviser.
The Board also concluded, in light of the past performance of the Acquired Fund,
that TIM offered a reasonable prospect for improved overall Acquired Fund
performance during the interim period, and thereafter if the Reorganization Plan
is not approved and TIM continues to serve as the sub-adviser to the Acquired
Fund.
THE COST OF SUB-ADVISORY SERVICES PROVIDED AND THE LEVEL OF PROFITABILITY. The
Board concluded that the level of anticipated investment sub-advisory fees
payable under the TIM Sub-Advisory Agreement is appropriate in light of the
proposed sub-advisory fee schedule, the estimated expense ratio of the Acquired
Fund (which also is expected to remain unchanged), the competitiveness of the
Acquired Fund's expenses when compared to the expense ratios of comparable
investment companies (based on information prepared by Lipper Analytics, and the
anticipated profitability of the relationship between the Acquired Fund, TFAI,
TIM and their affiliates.
WHETHER FEE LEVELS REFLECT ECONOMIES OF SCALE AND THE EXTENT TO WHICH ECONOMIES
OF SCALE WOULD BE REALIZED AS THE ACQUIRED FUND GROWS. The Board concluded that
the existence of asset-based breakpoints in the Acquired Fund's advisory and
sub-advisory fee schedules appropriately benefits investors by realizing
economies of scale in the form of lower management and sub-advisory fees as the
level of assets grows. In addition, the Board concluded that the Acquired Fund's
management fees appropriately reflect the Acquired Fund's current size, the
current economic environment for TFAI and TIM, the competitive nature of the
investment company market, and TFAI's pricing strategy. The Trustees also
concluded that they will have the opportunity to periodically reexamine whether
the Acquired Fund has achieved economies of scale and the appropriateness of
sub-advisory fees payable by TFAI (as well as the management fees that the
Acquired Fund pays to TFAI) in the future if the Reorganization is not approved.
BENEFITS (SUCH AS SOFT DOLLARS) TO TIM AND ITS AFFILIATES FROM THEIR
RELATIONSHIP WITH THE ACQUIRED FUND. The Board concluded that other benefits
derived by TIM and its affiliates (including TFAI) from their relationship with
the Acquired Fund are reasonable and fair, and are consistent with industry
practice and the best interests of the Acquired Fund and its shareholders. In
this regard, the Board noted that TIM participates (as did Great Companies) in a
program pursuant to which a portion of brokerage commissions paid by the
Acquired Fund is recaptured for the benefit of the Acquired Fund and its
shareholders, thus limiting the amount of "soft-dollar" arrangements TIM may
engage in with respect to the Acquired Fund's brokerage transactions. In
addition, the Trustees determined that the management, administration, fund
accounting and other fees paid by the Acquired Fund to TFAI and affiliates of
TFAI and TIM are reasonable, fair and in the best interests of shareholders in
light of the nature and quality of the services provided, the associated costs
to these affiliates of providing the services, the impact of the costs of such
services on the Acquired Fund's overall operating expenses, and the necessity of
the services for the Acquired Fund's operations.
OTHER CONSIDERATIONS. In evaluating how to respond to the potential orphaning of
the Acquired Fund that would be occasioned by Great Companies' impending
cessation of operations, the Board discussed at length with TA IDEX management
the process by which management proposed the retention of TIM as sub-adviser to
the Acquired Fund. Following management's explanation of the process by which
prospective sub-advisers were initially screened and further evaluated, the
Board concluded that the evaluation process was reasonably designed to identify
a prospective sub-adviser with the resources necessary to manage the Acquired
Fund in the best interests of shareholders, and without regard to affiliations
with TFAI. In approving the Interim Sub-Advisory Agreement and the TIM
Sub-Advisory Agreement, the Board also considered the high quality of TIM's
portfolio management personnel and TIM's overall portfolio management
capabilities, as demonstrated with respect to other series of TA IDEX, and
determined that TIM has made a substantial commitment to the recruitment and
retention of high quality personnel, and has the financial and operational
21
resources reasonably necessary to manage the Acquired Fund. The Board considered
the terms of the arrangements pursuant to which the interests of Great Companies
are being acquired, and the affiliations existing between TFAI, TIM and Great
Companies, and determined that the acquisition and proposed Reorganization were
consistent with (and not adverse to) shareholders' interests. The Board also
noted TIM's willingness to serve during an interim period, and that compensation
payable under the Interim Sub-Advisory Agreement would be held in escrow and
would not be paid until the TIM Sub-Advisory Agreement is considered by the
shareholders.
OTHER INFORMATION
AFFILIATIONS AND AFFILIATED BROKERAGE. During the fiscal year ended October 31,
2005, the Acquired Fund paid commissions on portfolio brokerage transactions to
brokers who may be deemed to be affiliated persons of the Acquired Fund, TFAI,
Great Companies, TIM or affiliated persons of such persons ("Affiliated
Brokers"). Information about (i) the aggregate amount of commissions paid to any
Affiliated Brokers, (ii) the percentage of the Acquired Fund's aggregate
brokerage commissions paid to any such Affiliated Broker and (iii) the identity
of each Affiliated Broker (and the relationship that causes the broker to be
"affiliated") is shown on Appendix H of this Proxy Statement/Prospectus.
GENERAL INFORMATION
INVESTMENT ADVISER, ADMINISTRATOR AND PRINCIPAL UNDERWRITER
TFAI, the Funds' investment adviser, is located at 570 Carillon Parkway, St.
Petersburg, Florida 33716. Transamerica Fund Services, Inc. ("TFS") is the
Acquired and Acquiring Funds' administrator and transfer agent, and AFSG
Securities Corp. ("AFSG") is the Acquired and Acquiring Funds'
distributor/principal underwriter. TFS is located at 570 Carillon Parkway, St.
Petersburg, Florida 33716. AFSG is located at 4333 Edgewood Road NE, Cedar
Rapids, Iowa 52494. During the fiscal year ended October 31, 2005, the Acquired
Fund paid TFS $390,081 for administrative and transfer agent services and the
Acquired Fund paid AFSG $888,999.82 for distribution services. If the proposed
TIM Sub-Advisory Agreement is approved, TFAI, TFS and AFSG will continue to
render the same services as they currently render. TFAI, TIM, Great Companies,
TFS and AFSG are affiliates of AEGON, NV, a Netherlands corporation.
OTHER BUSINESS
The Trustees do not know of any matters to be presented at the Special Meeting
other than those set forth in this Proxy Statement/Prospectus. If other business
should properly come before the Special Meeting, proxies will be voted in
accordance with the judgment of the persons named in the accompanying proxy.
SHAREHOLDER REPORTS
Shareholders can find important information about the Funds in the Annual Report
dated October 31, 2005 and Semi-Annual Report dated April 30, 2006, which have
been previously mailed to shareholders. You may obtain copies of these reports
without charge by writing to the Funds, or by calling the Funds at the address
and telephone number shown on the first page of this Proxy Statement/Prospectus.
PROXY SOLICITATION
The principal solicitation of proxies will be by the mailing of this Proxy
Statement/Prospectus beginning on or about September 11, 2006, but proxies may
also be solicited by mail, telephone and/or in person by representatives of TA
IDEX, regular employees of TFS, their affiliate(s), or Computershare, a private
proxy services firm. The estimated costs of retaining Computershare is
approximately $21,754, which will be paid by TFAI. If we have not received your
vote as the date of the Special Meeting approaches, you may receive a call from
these parties to ask for your vote. Arrangements will be made with brokerage
houses and other custodians, nominees and fiduciaries to forward proxies and
proxy materials to their principals.
The cost of the Special Meeting, including the preparation and mailing of the
notice, Proxy Statement/Prospectus and the solicitation of proxies, including
reimbursement to broker-dealer and others who forwarded proxy materials to their
clients, will be borne by TFAI and/or its affiliates.
SHAREHOLDER VOTING
Shareholders of record of the Acquired Fund at the close of business on August
4, 2006 (the "Record Date") are entitled to notice of, and to vote at, the
Special Meeting. Shareholders are entitled to one vote for each share held and
fractional votes for fractional shares held. As of the Record Date, there were
issued and outstanding shares of the TA IDEX Great Companies - America(SM).
22
The persons owning of record or beneficially 5% or more of the outstanding
shares of the Acquired Fund (and the Acquiring Fund) as of the Record Date, are
set forth in Appendix D. As of the Record Date, the Trustees and officers, as a
group, owned less than 1.00% of the outstanding shares of either Fund. As of the
Record Date,there were no persons who were known to control either Fund.
Thirty-three and one-third percent (33-1/3%) of the Acquired Fund's shares,
represented in person or by proxy, will constitute a quorum for the Special
Meeting and must be present for the transaction of business at the Special
Meeting. Only proxies that are voted, abstentions and "broker non-votes" will be
counted toward establishing a quorum. "Broker non-votes" are shares held by a
broker or nominee as to which instructions have not been received from the
beneficial owners or persons entitled to vote, and the broker or nominee does
not have discretionary voting power. In the event that a quorum is not present
at the Special Meeting, or a quorum is present but sufficient votes to approve a
proposal are not received, the persons named as proxies may propose one or more
adjournments of the Special Meeting to permit further solicitation of proxies.
Any such adjournment will require the affirmative vote of a majority of the
Acquired Fund shares represented at the Special Meeting in person or by proxy
(excluding abstentions and broker non-votes). The persons named as proxies will
vote those proxies that they are entitled to vote FOR the Reorganization in
favor of an adjournment of the Special Meeting, and will vote those proxies
required to be voted AGAINST the proposal against such adjournment. A
shareholder vote may be taken on any proposal prior to any such adjournment if
sufficient votes have been received and it is otherwise appropriate.
The individuals named as proxies on the enclosed proxy card will vote in
accordance with your directions, if your proxy is received properly executed. If
we receive your proxy, and it is executed properly, but you give no voting
instructions with respect to any proposal, your shares will be voted FOR each
proposal. The duly appointed proxies may, in their discretion, vote upon such
other matters as may properly come before the Special Meeting.
In order that your shares may be represented at the Special Meeting, you are
requested to vote your shares by mail, the Internet or by telephone by following
the enclosed instructions. If you vote by telephone or Internet, please do not
return your proxy card, unless you later elect to change your vote. You may
revoke your proxy: (a) at any time prior to its exercise by written notice of
its revocation to the secretary of TA IDEX prior to the Special Meeting; (b) by
the subsequent execution and return of another proxy prior to the Special
Meeting; or (c) by being present and voting in person at the Special Meeting and
giving oral notice of revocation to the chairman of the Special Meeting.
However, attendance in-person at the Special Meeting, by itself, will not revoke
a previously-tendered proxy.
VOTE REQUIRED
Approval of either the Reorganization Plan or the TIM Sub-Advisory Agreement
requires, if a quorum is present at the Special Meeting, the vote of a "majority
of the outstanding voting securities" of the Acquired Fund, which means the
lesser of (a) the vote of 67% or more of the shares that are present at the
Special Meeting, if the holders of more than 50% of the outstanding shares are
present or represented by proxy, or (b) the vote of more than 50% of the
Acquired Fund's outstanding shares. Accordingly, assuming the presence of a
quorum, abstentions and broker non-votes have the effect of a negative vote on
the Reorganization and the TIM Sub-Advisory Agreement.
SHAREHOLDER PROPOSALS
As a general matter, TA IDEX does not hold annual meetings of shareholders.
Shareholders wishing to submit proposals for inclusion in a proxy statement for
a subsequent meeting (if any) should send their written proposals to the
secretary of TA IDEX, 570 Carillon Parkway, St. Petersburg, Florida 33716.
Proposals must be received a reasonable time prior to the date of a meeting of
shareholders to be considered for inclusion in the proxy materials for the
meeting. Timely submission of a proposal does not, however, necessarily mean
that the proposal will be included. Persons named as proxies for any subsequent
shareholders' meeting will vote in their discretion with respect to proposals
submitted on an untimely basis.
INFORMATION ABOUT THE FUNDS
TA IDEX is subject to the informational requirements of the Securities Exchange
Act of 1934, as amended and certain other federal securities statutes, and files
reports and other information with the SEC. Proxy materials, reports and other
information filed by the Funds can be inspected and copied at the Public
Reference Facilities maintained by the SEC at 100 F Street, NE, Washington, DC
20549. The SEC maintains an Internet web site (at http://www.sec.gov) which
contains other information about the Funds.
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TO ENSURE THE PRESENCE OF A QUORUM AT THE SPECIAL MEETING, WE REQUEST PROMPT
EXECUTION AND RETURN OF THE ENCLOSED PROXY. A SELF-ADDRESSED, POSTAGE-PAID
ENVELOPE IS ENCLOSED FOR YOUR CONVENIENCE.
By Order of the Board of Trustees,
/s/ John K. Carter
----------------------------------------
President, Chief Executive Officer
General Counsel, and Secretary
Transamerica IDEX Mutual Funds
[__________], 2006
570 Carillon Parkway
St. Petersburg, Florida 33716
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MORE INFORMATION REGARDING THE ACQUIRING FUND
The following information applies to both the Acquired and Acquiring Funds.
INVESTMENT ADVISORY ARRANGEMENTS
The assets of the Funds are managed by TFAI pursuant to an investment advisory
agreement (the "Advisory Agreement") dated as of March 1, 2000, as amended. The
Advisory Agreement was initially approved by the Board for a term of two years
and is approved annually thereafter in accordance with the terms of the 1940
Act. The Advisory Agreement was last approved by the Trustees, including a
majority of the Independent Trustees, on November 2, 2005, and was last approved
by shareholders on March 1, 2000. TFAI selects sub-advisers, which employ the
portfolio manager(s) in connection with its management of the Funds. All such
advisers to the Funds are supervised by the Board. You can find additional
information about the TA IDEX Trustees and officers in the Statement of
Additional Information of TA IDEX, dated March 1, 2006. The names, addresses and
principal occupations of the principal executive officer and each director of
TFAI are set forth in Appendix F, as is information regarding its ownership.
TFAI hires sub-advisers to furnish investment advice and recommendations and has
entered into sub-advisory agreements with each sub-adviser, including TIM and
Great Companies. The investment adviser also monitors the sub-advisers' buying
and selling of securities and administration of the Funds. For these services,
TFAI is paid an advisory fee. This fee is calculated on the average daily net
assets of each Fund, and is paid at the rates previously shown in this Proxy
Statement/Prospectus.
TFAI is directly-owned by Western Reserve Life Assurance Co. of Ohio (77%)
(Western Reserve) and AUSA Holding Company (23%) ("AUSA"), both of which are
indirect, wholly owned subsidiaries of AEGON N.V. Great Companies, L.L.C., a
sub-adviser to certain funds, is a 47.5% owned indirect subsidiary of AUSA. AUSA
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. Great Companies and TIM are affiliates of TFAI and TA IDEX.
TFAI and/or its affiliates may pay, out of its own resources and not out of fund
assets, for distribution and/or administrative services provided by
broker-dealers and other financial intermediaries. See the subsection titled
"Other Distribution or Service Arrangements" in this section of this Proxy
Statement/Prospectus.
TA IDEX may rely on an Order from the Securities and Exchange Commission
(Release IC-23379 dated August 5, 1998) that permits TA IDEX and its investment
adviser, TFAI, subject to certain conditions, and without the approval of
shareholders to:
(1) employ a new unaffiliated sub-adviser for a fund pursuant to the terms
of a new investment sub-advisory agreement, either as a replacement
for an existing sub-adviser or as an additional sub-adviser;
(2) materially change the terms of any sub-advisory agreement; and
(3) continue the employment of an existing sub-adviser on sub-advisory
contract terms where a contract has been assigned because of a change
of control of the sub-adviser.
In such circumstances, shareholders would receive notice and information about
the new sub-adviser within ninety (90) days after the hiring of any new
sub-adviser.
REGULATORY PROCEEDINGS
There continues to be significant federal and state regulatory activity relating
to financial services companies, particularly mutual fund companies and their
investment advisers. As part of an ongoing investigation regarding potential
market timing, recordkeeping and trading compliance issues and matters affecting
TFAI, the investment adviser for TA IDEX, and certain affiliates and former
employees of TFAI, the SEC staff has indicated that it is likely to take some
action against TFAI and certain of its affiliates at the conclusion of the
investigation. The potential timing and the scope of any such action is
difficult to predict. Although the impact of any action brought against TFAI
and/or its affiliates is difficult to assess at the present time, the TA IDEX
funds currently believe that the likelihood that it will have a material adverse
impact on them is remote. It is important to note that the TA IDEX funds are not
aware of any allegation of wrongdoing against them and their board at the time
this Proxy Statement/Prospectus is printed. Although it is not anticipated that
these developments will have an adverse impact on the funds, there can be no
assurance at this time. TFAI and its affiliates are actively working with the
SEC in regard to this matter; however, the exact resolution cannot be determined
at this time. TFAI will take such actions that it deems necessary or appropriate
to continue providing management services to the funds and to bring all matters
to an appropriate conclusion.
25
TFAI and/or its affiliates, and not the TA IDEX funds, will bear the costs
regarding these regulatory matters.
CLASS A, B AND C SHARES
OPENING AN ACCOUNT
Fill out the New Account Application which is included in the prospectus or
available on our website. TA IDEX requires all applications to include an
investment representative or an approved broker/dealer of record. An approved
broker/dealer is one that is providing services under a valid dealer sales
agreement with the funds' distributor.
IRAs and other retirement plan accounts require different applications, which
you can request by calling 1-888-233-4339 or visiting www.transamericaidex.com.
Note: To help the U.S. Government fight the funding of terrorism and money
laundering activities, the USA PATRIOT Act requires all financial institutions
to obtain, verify, and record information that identifies each person or entity
that opens an account. On your application, be sure to include your name, date
of birth (if an individual), residential address and Social Security Number or
taxpayer identification number. If there are authorized traders on your account,
please provide this information for each trader. If you do not provide this
information, your account will not be established. If TA IDEX cannot verify your
identity within 30 days from the date your account is established, your account
may be closed based on the next calculated Net Asset Value ("NAV") per share.
Minimum Investment*
MINIMUM MINIMUM
INITIAL SUBSEQUENT
INVESTMENT INVESTMENT
(PER FUND (PER FUND
TYPE OF ACCOUNT ACCOUNT) ACCOUNT)**
- --------------- ---------- ----------
Regular Accounts $1,000 $50
IRA, Roth IRA or Coverdell ESA $1,000 $50
Employer-sponsored Retirement Plans (includes 403(b), SEP and SIMPLE IRA plans) $1,000 $50
Uniform Gift to Minors (UGMA) or Transfer to Minors (UTMA) $1,000 $50
Automatic Investment Plans $ 500 $50
Payroll Deduction $ 500 $50
* TA IDEX reserves the right to change the amount of these minimums from time
to time or to waive them in whole or in part.
** Minimum per monthly fund account investment.
Note: The minimum may be waived for certain employer sponsored plans and salary
deferral investments if a participant limits his or her salary deferral
contribution to one fund account.
By Mail
- - Send your completed application and check (made payable to Transamerica
Fund Services, Inc.) to: P.O. Box 219945, Kansas City, MO 64121-9945. For
overnight delivery: 330 W. 9th Street, Kansas City, MO 64105.
Through an Authorized Dealer
- - The dealer is responsible for opening your account and providing TA IDEX
with your taxpayer identification number.
BUYING SHARES
Investors may purchase shares of the funds at the "offering price" of the
shares, which is the net asset value ("NAV") plus any applicable initial sales
charge.
By Check
- - Make your check payable and send to Transamerica Fund Services, Inc., P.O.
Box 219945, Kansas City, MO 64121-9945.
- - For overnight delivery: 330 W. 9th Street, Kansas City, MO 64105.
- - If you are opening a new account, send your completed application along
with your check.
- - If you are purchasing shares in an existing account(s), please reference
your TA IDEX fund and account numbers.
26
- - All checks must be made payable to Transamerica Fund Services, Inc.
- - Redemption proceeds will be withheld for 15 calendar days from the date of
purchase for funds to clear. Certain exceptions may apply.
- - TA IDEX does not accept money orders, traveler's checks, credit card
convenience checks or cash. Cashier checks, starter checks and third-party
checks may be accepted, subject to approval by TA IDEX.
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. Due to your bank's requirements, please allow up to 30 days for
your AIP to begin. Investments may be made between the 3rd and 28th of each
month only, and will occur on the 15th if no selection is made. Call
Customer Service (1-888-233-4339) for information on how to establish an
AIP or visit our website at www.transamericaidex.com to obtain an AIP
request form.
By Telephone
- - The electronic funds transfer privilege must be established in advance,
when you open your account, or by adding this feature to your existing
account. Select "Electronic Bank Link" on the application or write to TA
IDEX. Due to your bank's requirements, please allow up to 30 days to
establish this option. Call Customer Service to invest by phone, either
through our automated system (1-888-233-4339), or by speaking directly with
a representative. Shares will be purchased via electronic funds when the
money is received by TA IDEX, usually 2-4 business days after the request.
- - TA IDEX reserves the right to terminate your electronic draft privileges if
the drafts are returned unpaid by your bank.
Through an Authorized Dealer
- - If your dealer has already established your account for you, no additional
documentation is needed. Call your dealer to place your order. TA IDEX must
receive your payment within three business days after your order is
accepted.
By the Internet
- - You may request a transfer of funds from your bank account to your TA IDEX
account. The electronic bank link option must be established in advance
before Automated Clearing House ("ACH") purchases will be accepted. (Call
Customer Service (1-888-233-4339) or visit our website at
www.transamericaidex.com for information on how to establish an electronic
bank link). Payment will be transferred from your bank account
electronically. Shares will be purchased via electronic funds when the
money is received by TA IDEX, usually 2-4 business days after the request.
By Payroll Deduction
- - You may have money transferred regularly from your payroll to your TA IDEX
account. Call Customer Service (1-888-233-4339) to establish this
deduction.
By Wire Transfer
- - You may request that your bank wire funds to your TA IDEX account (note
that your bank may charge a fee for such service). You must have an
existing account to make a payment by wire transfer. Ask your bank to send
your payment to: Bank of America, NA, Charlotte, NC, ABA# 026009593,
Credit: Transamerica IDEX Funds Acct # 3600622064, Ref: Shareholder name,
TA IDEX fund and account numbers.
- - Shares will be purchased at the next determined net asset value after
receipt of your wire if you have supplied all other required information.
Other Information
If your check, draft or electronic transfer is returned unpaid by your bank, you
will be charged a fee of $20 for each item that has been returned.
TA IDEX or its agents may reject a request for purchase of shares at any time,
in whole or in part, including any purchase under the exchange privilege and any
purchase request that does not include an investment representative or an
approved broker/dealer. To the
27
extent authorized by law, TA IDEX and each of the funds reserves the right to
discontinue offering shares at any time or to cease operating entirely.
SELLING SHARES
Selling shares is also referred to as "redeeming" shares. You can redeem your
shares at any time.
Proceeds from the redemption of your shares will usually be sent within three
business days after receipt in good order of your request for redemption (unless
you request to receive payment by wire or another option described below),
although TA IDEX has the right to take up to seven days to pay your redemption
proceeds, and may postpone payment under certain circumstances, as authorized by
law. In cases where shares have recently been purchased by personal checks (or
other circumstances where the purchase money has not yet been collected),
redemption proceeds will be withheld for 15 calendar days from the date of
purchase for funds to clear. Certain exceptions may apply. To avoid this
situation, shares may be purchased by wire.
TO REQUEST YOUR REDEMPTION AND RECEIVE PAYMENT BY:
Direct Deposit -- ACH
- - You may request an "ACH redemption" in writing, by phone or by internet
access to your account. The electronic bank link option must be established
in advance before ACH redemptions will be accepted. (Call Customer Service
(1-888-233-4339) or visit our website at www.transamericaidex.com for
information on how to establish an electronic bank link.) Maximum amount
over the phone per day is the lesser of your available balance or $50,000.
Redemptions over $50,000 must be in writing and those redemptions greater
than $100,000 require a written request with an original signature
guarantee by all shareholders. Payment should usually be received by your
bank account 3-5 banking days after your request is received in good order.
TA IDEX does not charge for this payment option. Certain IRAs and qualified
retirement plans may not be eligible for ACH redemptions. Call Customer
Service (1-888-233-4339) to verify that this feature is in place on your
account if you are unsure.
Direct Deposit -- Wire
- - You may request an "Expedited Wire Redemption" in writing, or by phone. The
electronic bank link must be established in advance. Otherwise, an original
signature guarantee will be required. (Call Customer Service
(1-888-233-4339) or visit our website at www.transamericaidex.com for
information on how to establish an electronic bank link). Maximum amount
over the phone per day is the lesser of your available balance or $50,000
(with a minimum of $1,000 per wire). Payment should be received by your
bank account the next banking day after your request is received in good
order. TA IDEX charges $10 for this service. Your bank may charge a fee as
well. Call Customer Service (1-888-233-4339) to be sure this feature is in
place on your account if you are unsure.
Check to Address of Record
- - WRITTEN REQUEST: Send a letter requesting a withdrawal to TA IDEX. Specify
the fund, account number, and dollar amount or number of shares you wish to
redeem. Mail to: Transamerica Fund Services, Inc., P.O. Box 219945, Kansas
City, MO 64121-9945. Attention: Redemptions. Be sure to include all
shareholders' signatures and any additional documents, as well as an
original signature guarantee(s) if required. If you are requesting a
distribution from an IRA, federal tax withholding of 10% will apply unless
you elect otherwise. If you elect to withhold, the minimum tax withholding
rate is 10%.
- - TELEPHONE OR INTERNET REQUEST: Call Customer Service (1-888-233-4339) and
make your request using the automated system, by person-to-person, or by
accessing your account on the internet. The electronic bank link option
must be established in advance before ACH redemptions will be accepted.
Call Customer Service (1-888-233-4339) or visit our website at
www.transamericaidex.com for information on how to establish an electronic
bank link. Maximum amount per day is the lesser of your available balance
or $50,000. Redemptions over $50,000 must be in writing and those
redemptions greater than $100,000 require a written request with an
original signature guarantee by all shareholders.
Check to Another Party/Address
- - This request must be in writing, regardless of amount, with all account
owners' signatures guaranteed (original). Mail to: Transamerica Fund
Services, Inc., P.O. Box 219945, Kansas City, MO 64121-9945. Attention:
Redemptions.
Systematic Withdrawal Plan (by direct deposit -- ACH or check)
- - You can establish a Systematic Withdrawal Plan ("SWP") either at the time
you open your account or at a later date. Call Customer Service at
(1-888-233-4339) for information on how to establish a SWP or visit our
website at
28
www.transamericaidex.com to obtain the appropriate form to complete.
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 TA IDEX
Customer Service (1-888-233- 4339) for assistance.
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 shareholder.
- - 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 an original signature guarantee by all shareholders.
- - A written request or original signature guarantee may be required if there
have been recent changes made to your account (such as an address change)
or other such circumstances. For your protection, if an address change was
made in the last 10 days, TA IDEX requires a redemption request in writing,
signed and an original signature guaranteed by all shareholders.
- - When redeeming all shares from an account with an active AIP, your AIP will
automatically be stopped. Please contact Customer Service (1-888-233-4339)
if you wish to re-activate your AIP.
- - Each fund reserves the right to refuse a telephone redemption request if it
is believed it is advisable to do so. The telephone redemption option may
be suspended or terminated at any time without advance notice.
- - Redemption proceeds will be withheld for 15 calendar days from the date or
purchase for funds to clear. 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 shareholders at its discretion. Please see the SAI for
more details.
- - If you request that a withdrawal check be delivered overnight, a $20
overnight fee will be charged; for Saturday delivery, a $30 overnight fee
will be charged.
Please see additional information relating to an original signature guarantees
later in this Proxy Statement/Prospectus.
EXCHANGING SHARES
- - You may request an exchange in writing, by phone, or by accessing your
account through the internet.
- - You can exchange shares in one fund for shares in the same class of another
fund offered in this prospectus.
- - The minimum exchange to a new fund account is $1,000 per fund account. This
minimum is reduced to $500 per fund account if you elect to establish an
AIP and invest a minimum of $50 per month, per fund account. If you want to
exchange between existing fund accounts, the required minimum will be $50
per fund account.
- - An exchange is treated as a redemption of a fund's shares, followed by a
purchase of the shares of the fund into which you exchanged. Prior to
making exchanges into a fund that you do not own, please read the
prospectus of that fund carefully.
- - If exchanging all shares, any active systematic plan will carry over unless
otherwise instructed.
Special Situations for Exchanging Shares
- - TA IDEX reserves the right to modify or terminate the exchange privilege at
any time upon 60 days written notice.
- - TA IDEX reserves the right to deny any request involving transactions
between classes of shares. Please review your individual circumstances with
your financial professional.
29
REDEMPTION FEES
Redemption Fee Assessment
A short-term trading redemption fee may be assessed on any fund shares in a fund
account that are redeemed (whether voluntarily or involuntarily, and including
redemptions that are part of an exchange transaction) during the first five (5)
New York Stock Exchange trading days following their purchase date. This
redemption fee will equal 2% of the amount redeemed (using standard rounding
criteria). Shares held the longest will be treated as being redeemed first and
shares held the shortest as being redeemed last. The redemption fee may be
collected by deduction from the redemption proceeds or, if assessed after the
redemption transaction, by billing you. The redemption fee is not assessed on
shares acquired through the reinvestment of dividends or distributions paid by a
fund.
This redemption fee is imposed to discourage short-term trading and is paid to a
fund to help offset any cost associated with such short-term trading. This
redemption fee is not intended to accommodate short-term trading and each fund
will monitor the assessment of redemption fees against your account. Based on
the frequency of redemption fees assessed against your account in a fund and/or
in your other TA IDEX fund accounts, TA IDEX may in its sole discretion
determine that your trading activity may be detrimental to a fund as described
in the "Market Timing/Excessive Trading" section and elect to (i) reject or
limit the amount, number, frequency or method for requesting future purchases
into the fund and/or (ii) limit the method for requesting future redemptions out
of the fund even if any such request would not exceed the guidelines described
in this Proxy Statement/Prospectus.
Redemptions through Financial Intermediaries
Except as otherwise provided, you are an investor subject to this 2% short-term
trading redemption fee whether you are a direct shareholder of a fund or you are
investing indirectly in a fund through a financial intermediary such as a
broker-dealer, a bank, an insurance company separate account, an investment
adviser, or an administrator or trustee of a savings plan (other than retirement
plans described in Section 401(a), 401(k), 401(m), 403(b) or 457 of the Internal
Revenue Code) or a 529 college savings plan that maintains a master account (an
"Omnibus Account") with the fund for trading on behalf of its customers.
Currently, only certain intermediaries have the ability to collect each fund's
redemption fee on the fund's behalf from their customers' accounts. As a result,
the ability of each fund to monitor trades that are placed by Omnibus Accounts
or other nominee accounts and assess redemption fees may be severely limited in
those instances in which a broker, administrator or other intermediary maintains
the record of each fund's underlying beneficial owners. Even in the case of
these intermediaries who are collecting the redemption fee, due to policy,
operational and/or systems' requirements and limitations, these intermediaries
may use criteria and methods for tracking, applying and/or calculating the fee
that may differ in some respects from that of a fund. Each fund will continue to
encourage all financial intermediaries to develop the capability to assess the
redemption fee from their customers who invest in the fund. If you are investing
in fund shares through a financial intermediary, you should contact your
financial intermediary for more information on any differences in how the
redemption fee is applied to your investments in a fund.
Waiver/Exceptions/Changes
Currently, TA IDEX does not impose redemption fees on redemption transactions
made by investors in retirement plans described in Section 401(a), 401(k),
401(m), 403(b) and 457 of the Internal Revenue Code.
Each fund reserves the right to waive the redemption fee at its discretion if
the fund's transfer agent believes such waiver is consistent with the best
interests of the fund and to the extent permitted or required by applicable law.
In addition, each fund reserves the right to modify or eliminate the redemption
fee or waivers at any time. You will receive 60 days' notice of any material
changes, unless otherwise provided by law.
Involuntary Redemptions
Each fund reserves the right to close your account if the account value falls
below the fund's minimum account balance, or you are deemed to engage in
activities that are illegal (such as late trading) or otherwise believed to be
detrimental to the fund (such as market timing or frequent small redemptions),
to the fullest extent permitted by law. Involuntary redemptions are subject to
applicable redemption fees unless TA IDEX provides a waiver.
FEATURES AND POLICIES
Market Timing/Excessive Trading
Some investors try to profit from various short-term or frequent trading
strategies known as market timing. Examples of market timing include switching
money into funds when their share prices are expected to rise and taking money
out when their share prices are expected to fall, and switching from one fund to
another and then back again after a short period of time. As money is shifted in
and out, a fund may incur expenses for buying and selling securities. Excessive
purchases, redemptions or exchanges of fund shares may disrupt portfolio
management, hurt fund performance and drive fund expenses higher. For example,
the fund may be forced to
30
liquidate investments as a result of short-term trading and incur increased
brokerage costs or realize taxable capital gains without attaining any
investment advantage. These costs are generally borne by all shareholders,
including long-term investors who do not generate these costs.
THE TA IDEX BOARD HAS APPROVED POLICIES AND PROCEDURES THAT ARE DESIGNED TO
DISCOURAGE MARKET TIMING OR EXCESSIVE TRADING WHICH INCLUDE LIMITATIONS ON THE
NUMBER OF TRANSACTIONS IN FUND SHARES AND REDEMPTION FEES, AS DESCRIBED IN THIS
PROXY STATEMENT/PROSPECTUS. IF YOU INTEND TO ENGAGE IN SUCH PRACTICES, WE
REQUEST THAT YOU DO NOT PURCHASE SHARES OF ANY OF THE FUNDS. Each fund reserves
the right to reject any request to purchase shares, including purchases in
connection with an exchange transaction, which it reasonably determines to be in
connection with market timing or excessive trading. The funds generally will
consider four or more exchanges between funds, or frequent purchases and
redemptions having a similar effect, during any rolling three-month period to be
evidence of market timing or excessive trading by a shareholder or by accounts
under common control (for example, related shareholders, or a financial adviser
with discretionary trading authority over multiple accounts). However, the funds
reserve the right to determine less active trading to be "excessive" or related
to market timing.
While the funds discourage market timing and excessive short-term trading, the
funds cannot always recognize or detect such trading, particularly if it is
facilitated by financial intermediaries or done through Omnibus Account
arrangements. In addition, implementation of the funds' restrictions against
market timing and excessive trading may require the cooperation of financial
intermediaries, which cannot necessarily be assured and there is no guarantee
that the procedures used by financial intermediaries will be able to curtail
frequent, short-term trading activity. For example, shareholders who seek to
engage in frequent, short-term trading activity may use a variety of strategies
to avoid detection, and the financial intermediaries' ability to deter such
activity may be limited by operational Due to the risk that the funds and
financial intermediaries may not detect all harmful trading activity, it is
possible that shareholders may bear the risks associated with such activity.
In the case of Class I shares, because the shares are sold only to certain asset
allocation funds, the funds' policies and procedures to discourage market timing
or excessive trading are enforced by the asset allocation funds rather than the
funds. Additional information about such policies and procedures are available
in the prospectus of the asset allocation funds. Furthermore, reallocations in
the funds by an asset allocation fund in furtherance of a portfolio's investment
objective are not considered to be market timing or excessive trading.
Customer Service
Occasionally, TA IDEX experiences high call volume due to unusual market
activity or other events that may make it difficult for you to reach a Customer
Service Representative by telephone. If you are unable to reach TA IDEX by
telephone, please consider visiting our website at www.transamericaidex.com. You
may also send instructions by mail or by using the in-touch line.
Uncashed Checks Issued on Your Account
If any check TA IDEX issues 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. If applicable, we will also change your account distribution
option from cash to reinvest. Interest does not accrue on amounts represented by
uncashed checks.
Minimum Dividend Check Amounts
To control costs associated with issuing and administering dividend checks, we
reserve the right not to 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.
Minimum Account Balance
Due to the proportionately higher cost of maintaining customer accounts with
balances below the stated minimums for each class of shares, TA IDEX reserves
the right to close such accounts or assess an annual fee on such fund accounts
to help offset the costs. TA IDEX generally provides a 60-day notification to
the address of record prior to closing any fund accounts or assessing a minimum
account balance fee. The following describes the fees assessed to fund accounts
with balances below the stated minimum:
ACCOUNT BALANCE FEE ASSESSMENT
(PER FUND ACCOUNT) (PER FUND ACCOUNT)
------------------ ------------------
If your balance is below $25 fee assessed every year,
$1,000 per fund account until balance reaches $1,000
No fees will be charged on:
31
- - accounts opened within the preceding 12 months
- - accounts with an active monthly Automatic Investment Plan or payroll
deduction ($50 minimum per fund account)
- - accounts owned by an individual which, when combined by Social Security
Number, have a balance of $5,000 or more
- - accounts owned by individuals in the same household (by address) that have
a combined balance of $5,000 or more
- - UTMA/UGMA accounts
- - State Street Custodial Accounts
- - Coverdell ESA accounts
- - Omnibus and Network Level 3 accounts
- - B-share accounts whose shares have started to convert to A-share accounts
(as long as combined value of both accounts is at least $1,000)
Telephone Transactions
TA IDEX and its transfer agent, TFS, are not liable for complying with telephone
instructions that are deemed by them to be genuine. TA IDEX and TFS will employ
reasonable procedures to help ensure telephone instructions are genuine. In
situations where TA IDEX or TFS 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. TA IDEX reserves the right to
modify the telephone redemption privilege at any time.
Retirement and ESA State Street Account Maintenance Fees
Retirement plan and Coverdell ESA State Street accounts are subject to an annual
custodial fee of $15 per fund account, with a maximum fee of $30 per Social
Security Number. For example, an IRA in two fund accounts would normally be
subject to a $30 annual custodial fee. An A-share account which holds only
shares converted from a B-share account, shall be considered as part of the
original B share account for purposes of this fee. The fee is waived if the
total of the retirement plan and ESA account(s)' value per Social Security
Number is more than $50,000.
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 TA IDEX. Your financial professional
will answer any questions that you may have regarding such fees.
Signature Guarantee
An original signature guarantee assures that a signature is genuine so that you
are protected from unauthorized account transactions. Notarization is not an
acceptable substitute. Acceptable guarantors only include participants in the
Securities Transfer Agents Medallion Program (STAMP2000). Participants in
STAMP2000 may include financial institutions such as banks, savings and loan
associations, trust companies, credit unions, broker-dealers, and member firms
of a national securities exchange.
An original signature guarantee is required if any of the following is
applicable:
- - You request a redemption or distribution transaction totaling more than
$100,000 or, in the case of an IRA with a market value in excess of
$100,000, you request a custodian to custodian transfer.
- - You would like a check made payable to anyone other than the shareholder(s)
of record.
- - You would like a check mailed to an address which has been changed within
10 days of the redemption request.
- - You would like a check mailed to an address other than the address of
record.
- - You would like your redemption proceeds wired to a bank account other than
a bank account of record.
- - You are adding or removing a shareholder from an account.
32
- - You are changing ownership of an account.
The funds reserve the right to require an original signature guarantee under
other circumstances or to reject or delay a redemption on certain legal grounds.
An original signature guarantee may be refused if any of the following is
applicable:
- - It does not appear valid or in good form.
- - The transaction amount exceeds the surety bond limit of the original
signature guarantee.
- - The guarantee stamp has been reported as stolen, missing or counterfeit.
Employer Sponsored Accounts
If you participate in an employer sponsored retirement plan and wish to make an
allocation change to your current fund selection, you or your financial
professional must notify TA IDEX by phone or in writing. Please also remember to
inform your employer of the change(s) to your fund allocation. Documentation for
allocations submitted online or in writing from your employer will be used to
allocate your contributions. This documentation will supersede all other prior
instructions received from you or your financial professional. (Note: If you
perform a partial or complete exchange to a new fund selection, your current
fund allocation will remain unchanged for future contributions unless specified
otherwise.)
E-mail Communication
As e-mail communications may not be secure, and because we are unable to take
reasonable precautions to verify your shareholder and transaction information,
we cannot respond to account- specific requests received via email. For your
protection, we ask that all transaction requests be submitted only via
telephone, mail or through the secure link on our website.
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
contingent deferred sales charge (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. To take
advantage of the 90-day reinvestment privilege, a written request must accompany
your investment check.
Statements and Reports
TA IDEX will send you a confirmation statement after every transaction that
affects your account balance or registration (except that transactions necessary
to assess account fees (such as retirement plan maintenance fees or minimum
account fees) disclosed in this Proxy Statement/Prospectus will be shown in your
next regularly scheduled statement). Please review the confirmation statement
carefully and promptly notify TA IDEX in writing within 90 days 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 or Payroll Deduction, 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.
Please retain your statements. If you require historical statements, TA IDEX may
charge $10 per statement year up to a maximum of $50 per Social Security Number.
Financial reports for the funds, which include a list of the holdings, will be
mailed twice a year to all shareholders.
PRICING OF SHARES
HOW SHARE PRICE IS DETERMINED
The price at which shares are purchased or redeemed is the net asset value
("NAV") that is next calculated following receipt and acceptance of a purchase
order in good order or receipt of a redemption order in good order by the fund
or an authorized intermediary.
WHEN SHARE PRICE IS DETERMINED
The NAV of all funds is determined on each day the New York Stock Exchange
("NYSE") is open for business. The NAV is not determined on days when the NYSE
is closed (generally New Year's Day, Martin Luther King, Jr. Day, Presidents'
Day, Good Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving and
Christmas). Foreign securities may trade in
33
their primary markets on weekends or other days when a fund does not price its
shares (therefore, the NAV of a fund holding foreign securities may change on
days when shareholders will not be able to buy or sell shares of the funds).
Purchase orders received in good order and accepted, and redemption orders
received in good order, before the close of business on the NYSE, usually 4:00
p.m. Eastern Time, receive the NAV determined as of the close of the NYSE that
day (plus or minus applicable sales charges and/or redemption fees). Purchase
and redemption requests received after the NYSE is closed receive the NAV at the
close of the NYSE the next day the NYSE is open.
Orders for shares of the TA IDEX asset allocation funds and corresponding orders
for the TA IDEX underlying funds are priced on the same day when orders for
shares of the asset allocation funds are received. Consequently, receipt in good
order and acceptance of a purchase request or receipt in good order of a
redemption request for shares of the asset allocation funds before the close of
business on the NYSE is deemed to constitute receipt of a proportional order for
the corresponding TA IDEX underlying funds on the same day, so that both orders
generally will receive that day's NAV.
HOW NAV IS CALCULATED
The NAV of each fund (or class thereof) is calculated by taking the value of its
assets, less liabilities, and dividing by the number of shares of the fund (or
class) that are then outstanding.
In general, securities and other investments are valued at market value when
market quotations are readily available. Fund securities listed or traded on
domestic securities exchanges or the NASDAQ/NMS, including dollar-denominated
foreign securities or ADRs, are valued at the closing price on the exchange or
system where the security is principally traded. With respect to securities
traded on the NASDAQ/NMS, such closing price may be the last reported sale price
or the NASDAQ Official Closing Price ("NOCP"). If there have been no sales for
that day on the exchange or system where the security is principally traded,
then the value should be determined with reference to the last sale price, or
the NOCP, if applicable, on any other exchange or system. If there have been no
sales for that day on any exchange or system, a security is valued at the
closing bid quotes on the exchange or system where the security is principally
traded, or at the NOCP, if applicable. Foreign securities traded on U.S.
exchanges are generally priced using last sale price regardless of trading
activity. Securities traded over-the-counter are valued at the mean of the last
bid and asked prices. Investments in securities maturing in 60 days or less may
be valued at amortized cost. Foreign securities generally are valued based on
quotations from the primary market in which they are traded, and are converted
from the local currency into U.S. dollars using current exchange rates. Market
quotations for securities prices may be obtained from automated pricing
services. Shares of open-end investment companies are generally valued at the
NAV per share reported by that investment company.
When a market quotation for a security is not readily available (which may
include closing prices deemed to be unreliable because of the occurrence of a
subsequent event), a valuation committee appointed by the Board of Trustees may,
in good faith, establish a fair value for the security in accordance with
valuation procedures adopted by the Board. The types of securities for which
such fair value pricing may be required include, but are not limited to: foreign
securities, where a significant event occurs after the close of the foreign
market on which such security principally trades that is likely to have changed
the value of such security, or the closing value is otherwise deemed unreliable;
securities of an issuer that has entered into a restructuring; securities whose
trading has been halted or suspended; fixed income securities that have gone
into default and for which there is no current market value quotation; and
securities that are restricted as to transfer or resale.
Valuing securities at fair value involves greater reliance on judgment than
securities that have readily available market quotations. The valuation
committee makes such determinations in good faith in accordance with funds'
valuation procedures. Fair value determinations can also involve reliance on
quantitative models employed by a fair value pricing service. There can be no
assurance that a fund could obtain the fair value assigned to a security if it
were to sell the security at approximately the time at which the fund determines
its NAV per share.
CHOOSING A SHARE CLASS
TA IDEX offers three share classes, each with its own sales charge and expense
structure.
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 (except that Class
I shares are only currently available for sale to certain asset allocation
funds). 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 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 5 years), or Class C shares (if you plan to invest for
a period of less than 5 years).
TA IDEX may, at any time and in its sole discretion, add, delete, or change the
sales charges for any share class.
34
CLASS A SHARES -- FRONT LOAD
With Class A shares, you pay an initial sales charge only when you buy shares.
(The offering price includes the sales charge.) NOTE: There are 12b-1
distribution and service fees of up to 0.35% per year.
If you are investing $1 million or more, 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% Contingent Deferred Sales Charge,
unless they were purchased through a qualified retirement plan. Other
substantial investments may enable you to purchase Class A shares at a reduced
sales charge. See the subsection entitled "Waivers and/or Reductions of Charges"
in this section of the Proxy Statement/Prospectus.
CLASS B SHARES -- BACK LOAD
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 five years or less, as
described in the table below.
CONTINGENT DEFERRED SALES CHARGE -- CLASS B SHARES
AS A % OF DOLLAR
AMOUNT (SUBJECT
YEAR AFTER PURCHASING TO CHANGE)
- --------------------- ----------------
First 5%
Second 4%
Third 3%
Fourth 2%
Fifth 1%
Sixth and Later 0%
Class B shares purchased prior to March 1, 2004 are subject to a CDSC if
redeemed during the first 6 years of purchase (5%-1st year; 4%-2nd year; 3%-3rd
year; 2%-4th year; and 1%-5th and 6th years). There are 12b-1 distribution and
service fees of up to 1.00% per year.
Class B shares automatically convert to Class A shares after eight years,
lowering annual expenses after conversion.
Generally, the funds recommend that you do not make any additional purchases in
Class B shares when you already hold more than $100,000 of Class B shares of the
funds. The funds reserve the right to reject any request to purchase Class B
shares of the funds if, as a consequence of such investment, you will hold more
than $100,000 of Class B shares of the funds. While the funds generally reject
any requests to purchase shares beyond that threshold, the funds cannot always
recognize or detect such requests. In addition, when you make a request to
purchase Class B shares directly with TA IDEX or through a broker/dealer or
other financial intermediary, you may be asked to provide additional information
about other Class B shares that you hold in the funds.
CLASS C SHARES -- LEVEL LOAD
With Class C shares, you pay no initial sales charge. You will pay a 1.00% CDSC
if shares are redeemed during the first 12 months. There are 12b-1 distribution
and service fees of up to 1.00% per year. Class C shares (formerly Class L
shares) purchased prior to March 1, 2004 are subject to the prior CDSC fee
structure which was a 2% CDSC if shares are redeemed during the first 12 months,
and a 1% CDSC if redeemed during the second 12 months. Prior to March 1, 2004,
Class C shares were named Class L shares. On June 15, 2004, Class C2 shares were
merged into Class C shares; on September 24, 2004, Class M shares were merged
into Class C shares.
Investors who invested in Class C2 shares prior to the merger of Class C2 shares
into Class C shares can make additional investments in Class C shares through
their Class C2 shares accounts that converted into Class C share accounts
without being subject to a deferred sales charge. For shareholders who also own
Class C shares which converted from Class C2 shares, their Class C shares that
converted from Class M shares will not be subject to a contingent deferred sales
charge and will be subject to the same 12b-1 commission structure applicable to
their former Class C2 shares.
Currently, investors who purchase Class C shares of the funds through Merrill
Lynch, Pierce, Fenner & Smith Incorporated will not be subject to any CDSC
otherwise payable with respect to redemptions of such Class C shares of the
funds. This CDSC waiver may be terminated at any time.
The maximum purchase order in Class C shares is $999,999.99.
35
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. TA IDEX will always use the first in, first out method to fulfill
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.
WAIVERS AND/OR REDUCTIONS OF CHARGES
CLASS A SALES CHARGE REDUCTIONS
You can lower the sales charge percentage in the following ways:
- - Substantial investments receive lower sales charge rates (see tables
below).
- - The "rights of accumulation" allows you, your spouse and children under age
21 to include the value of your existing holdings in any class of shares of
the TA IDEX funds to determine your Class A sales charge. Breakpoints are
derived from the daily NAV at the market close, the current combined NAV
value at the time of the purchase and the gross amount of the new purchase.
- - A "Letter of Intent" ("LOI") allows you, your spouse and children under age
21 to count all share investments, up to a maximum of $1 million, in a TA
IDEX fund over the next 13 months, as if you were making them all at once,
to qualify for reduced sales charges on your Class A investments. Purchases
made up to 90 days prior to establishing your LOI will be counted toward
meeting the amount stated in your LOI, and the 13 month period will then
begin on the date of your first purchase within the 90 day period.
Purchases applied at NAV made after the establishment of your LOI (as a
result of another waiver or sales charge reduction) shall not count toward
meeting the amount stated in your LOI. TA IDEX will reserve a portion of
your shares to cover any additional sales charge that may apply if you do
not purchase the amount stated in your LOI.
- - By investing as part of a qualified group. An individual who is a member of
a qualified group may purchase Class A shares at the reduced sales charge
applicable to that group as a whole. A "qualified group" is one which has
at least ten members; has been in existence for at least six months; has
some purpose in addition to the purchase of mutual fund shares at a
discount; has agreed to include fund sales publications in mailings to
members; has arrangements made for access to the group which are
satisfactory to TA IDEX's transfer agent; has arrangements satisfactory to
TA IDEX's transfer agent established for verification that the group meets
these requirements; and the group's sole organizational nexus or connection
is not that the members are credit card holders of a company, policy
holders of an insurance company, customers of a bank or a broker-dealer,
clients of an investment adviser or security holders of a company. TA IDEX
reserves the right to waive the requirement that the group continue to meet
the minimum membership requirement or the requirement that an investor
continues to belong to the group in order to qualify for lower sales
charges (but not to waive either of these requirements initially). To
establish a group purchase program, both the group itself and each
participant must complete an application. Please contact Customer Service
(1-888- 233-4339) for further information and assistance. Qualified group
accounts are not eligible to be counted under a rights of accumulation or
LOI sales charge reduction or waiver with accounts other than accounts in
the qualified group.
- - By investing in a SIMPLE IRA plan, you and all plan participants will
receive a reduced sales charge on all plan contributions that exceed
quantity discount amounts. SIMPLE IRA plan accounts are not eligible to be
counted under a rights of accumulation or LOI sales charge reduction or
waiver with accounts other than accounts in the SIMPLE IRA plan.
CLASS A SHARE QUANTITY DISCOUNTS
SALES SALES
CHARGE AS CHARGE
% 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%
36
* The funds' distributor, AFSG Securities Corporation ("AFSG"), must be
notified when a purchase is made that qualifies under any of the above
provisions. Consequently, when a purchaser acquires shares directly from TA
IDEX, he/she must indicate in his/her purchase order that such purchase
qualifies under any of the above provisions, and must provide enough
information to substantiate that claim. When a purchaser acquires shares
through a dealer or other financial intermediary, he/she must inform
his/her dealer or other financial intermediary of any facts that may
qualify a purchase for any of the above provisions, such as, for example,
information about other holdings of Class A shares of the funds that the
purchaser has, directly with TA IDEX, or through other accounts with
dealers or financial intermediaries. To substantiate a claim, it may be
necessary for a purchaser to provide AFSG or his/her dealer or other
financial intermediary information or records regarding shares of TA IDEX
held in all accounts (e.g., retirement plan accounts) of the purchaser
directly with TA IDEX or with one or several dealers or other financial
intermediaries, including to substantiate "rights of accumulation" accounts
held by a spouse and children under age 21.
WAIVER OF CLASS A INITIAL SALES CHARGES
Class A shares may be purchased without a sales charge by:
- - Current or former TA IDEX trustees, directors, officers, full- time
employees or sales representatives of TA IDEX, TFAI, their affiliates, and
any of the sub-advisers, and immediate family members thereof.
- - Directors, officers, full-time employees and sales representatives of
dealers having a sales agreement with AFSG.
- - 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 TA IDEX or AFSG.
- - For qualified retirement plans only, TA IDEX will treat Class A share
purchases in an amount of less than $1 million that are sponsored by
employers with 100 or more eligible employees as if such purchases were
equal to an amount in excess of $1 million. These accounts are not eligible
to be counted under a rights of accumulation or LOI sales charge reduction
or waiver with accounts other than accounts in the qualified retirement
plan.
Persons eligible to buy Class A shares at NAV may not impose a sales charge when
they re-sell those shares.
WAIVER OF CLASS A, CLASS B, AND CLASS C CONTINGENT DEFERRED SALES 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.
The transfer agent will require satisfactory proof of death before it
determines to waive the CDSC fee.
- - 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). The transfer agent will require satisfactory
proof of disability before it determines to waive the CDSC fee.
- - On redemptions made under TA IDEX's systematic withdrawal plan (may not
exceed 12% of the account value per fund 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 per fund 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.
Information on sales charge reductions and/or waivers can also be found on the
TA IDEX website at www.transamericaidex.com.
CLASS I SHARES
PURCHASE AND REDEMPTION OF SHARES
Class I shares of the Funds are currently offered for investment only to the
following TA IDEX fund of funds: TA IDEX Asset Allocation - Conservative
Portfolio; TA IDEX Asset Allocation - Growth Portfolio; TA IDEX Asset Allocation
- - Moderate Growth Portfolio; TA IDEX Asset Allocation - Moderate Portfolio and
TA IDEX Multi-Manager International, and the following fund of funds of
AEGON/Transamerica Series Trust (ATST): ATST Asset Allocation - Conservative
Portfolio; ATST Asset Allocation - Growth Portfolio; ATST Asset Allocation -
Moderate Growth Portfolio; ATST Asset Allocation - Moderate Portfolio; and ATST
Asset Allocation - International Moderate Growth Portfolio. Class I Shares of
the Funds may be made available to other investors in the future.
DISTRIBUTION OF SHARES
DISTRIBUTION PLANS
The Board of Trustees of TA IDEX has adopted a Rule 12b-1 Plan for certain
classes of shares.
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 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.
37
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%.
THE EFFECT OF RULE 12B-1. Because the funds have Rule 12b-1 Plans, even though
Class B and C shares do not carry up-front sales loads, 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 shares. In general, because Rule 12b-1 Plan
fees are paid on an ongoing basis, these fees will increase the cost of your
investment and may cost more than other types of sales charges. For a complete
description of the funds' Rule 12b-1 Plans, see the Statement of Additional
Information, dated March 1, 2006.
OTHER DISTRIBUTION OR SERVICE ARRANGEMENTS
Transamerica Capital, Inc. ("TCI"), a broker-dealer affiliated to TFAI, TIM and
AFSG, engages in wholesaling activities designed to support and maintain and
increase the number of, the financial intermediaries who sell shares of TA IDEX.
Wholesaling activities include, but are not limited to, recommending and
promoting, directly or through intermediaries, TA IDEX to financial
intermediaries and providing sales training, retail broker support and other
services. Such activities are financed by fees paid by TFAI and AFSG, and not
the TA IDEX funds. TCI (in connection with, or in addition to, wholesaling
services), TFAI, TIM and other fund sub-advisers, directly or through TCI, out
of their own resources and not out of fund assets (i.e., without additional cost
to the funds or their shareholders), may provide additional cash payments or
non-cash compensation to some, but not all, brokers and other financial
intermediaries who sell shares of the funds or render investor services to fund
shareholders. Such payments and compensation are in addition to the sales
charges, Rule 12b-1 Plan fees, service fees and other fees paid, directly or
indirectly, by the funds to such brokers and other financial intermediaries.
These arrangements are sometimes referred to as "revenue sharing" arrangements.
Revenue sharing arrangements are not financed by the funds, and thus, do not
result in increased fund expenses. They are not reflected in the fees and
expenses listed in the Fees and Expenses subsections of this Proxy
Statement/Prospectus, and they do not change the price paid by investors for the
purchase of a fund's shares or the amount received by a shareholder as proceeds
from the redemption of fund shares.
Such additional cash payments may be made to brokers and other financial
intermediaries that provide services to the funds and/or shareholders in the
funds, including (without limitation) shareholder servicing, marketing support
and/or access to sales meetings, sales representatives and management
representatives of the broker or other financial intermediary. Cash compensation
may also be paid to brokers and other financial intermediaries for inclusion of
the funds on a sales list, including a preferred or select sales list, in other
sales programs, or as an expense reimbursement or compensation in cases where
the broker or other financial intermediary provides services to fund
shareholders. To the extent permitted by applicable law, TCI and other parties
may pay or allow other incentives and compensation to brokers and other
financial intermediaries. TCI and the other parties making these payments
generally assess the advisability of continuing making these payments
periodically.
These payments may take a variety of forms, including (without limitation)
compensation for sales, "trail" fees for shareholder servicing and maintenance
of investor accounts, and finder's fees that vary depending on the fund or share
class and the dollar amount of shares sold. Revenue sharing payments may be
structured: (i) as a percentage of gross or net sales; (ii) as a percentage of
gross or net assets under management; and/or (iii) as a fixed or negotiated
dollar-amount. As of the date of this Proxy Statement/Prospectus, TCI may make
revenue sharing payments equal to a percentage of periodic sales, such as
monthly or quarterly sales, ranging from 5 basis points (0.05%) to 45 basis
points (0.45%). In addition, TCI participates in ticket charge programs with
Associated Securities, Securities America and Centaurus Financial, in which TCI
reimburses the broker/dealer for ticket charges or modifies its payment from $0
to $20, depending upon the amount of the ticket charge. TCI also pays flat
annual fees ranging from $5,000 to $17,500 to Centaurus Financial, Transamerica
Financial Advisors, and Associated Securities, Inc. TCI is also committed to pay
to participate in meetings and events of other broker/dealers and banks.
As of the date of this Proxy Statement/Prospectus, TCI has such revenue sharing
arrangements with over 20 brokers and other financial intermediaries, of which
some of the more significant include arrangements with The Advisors Group,
Associated Securities, Inc., Centaurus Financial, Compass Group, Duerr Financial
Corp, Hantz Financial Services, Harbour Investments, Investors Capital, Legg
Mason, Merrill Lynch, Morgan Stanley, PNC, Prudential Investments, RBC Dain
Rauscher, Securities America, Signator Investors, Transamerica Financial
Advisors, UBS Financial, US Bancorp and Wachovia Securities, and Ziegler.
For the calendar year ended December 31, 2005, TCI paid approximately $3.1
million to various brokers and other financial intermediaries in connection with
revenue sharing arrangements.
38
For the same period, TCI received revenue sharing payments ranging from $3,000
to $112,000 for a total of $605,041 from the following financial services firms
to participate in sales events: T. Rowe Price; American Century; Merrill Lynch;
Pacific Investment Management, LLC; Van Kampen Investments; Prudential; MFS;
Lehman Brothers; Great Companies; Franklin Templeton; Evergreen Investments;
Citigroup; Bank of America and Janus Capital Management.
In addition, while AFSG typically pays most of the sales charge applicable to
the sale of fund shares to brokers and other financial intermediaries through
which purchases are made, AFSG may, on occasion, pay the entire sales charge.
(Additional information about payments of sales charges to brokers is available
in the section titled "Dealer Reallowances" of the Statement of Additional
Information of TA IDEX dated March 1, 2006.)
From time to time, TCI, its affiliates and/or TFAI and/or fund sub-advisers may
also pay non-cash compensation to brokers and other financial intermediaries in
the form of, for example: (i) occasional gifts; (ii) occasional meals, tickets
or other entertainment; and/or (iii) sponsorship support of broker-marketing and
regional or national events. For example, representatives of TCI visit brokers
and other financial intermediaries on a regular basis to educate them about the
funds and to encourage the sale of fund shares to their clients. The costs and
expenses associated with these efforts may include travel, lodging, sponsorship
at educational seminars and conferences, entertainment and meals to the extent
permitted by law.
The compensation or reimbursement received by brokers and other financial
intermediaries through sales charges, other fees payable from the funds, and/or
revenue sharing arrangements for selling shares of the funds may be more or less
than the overall compensation or reimbursement on similar or other products and
may influence your broker or other financial intermediary to present and
recommend the funds over other investment options available in the marketplace.
In addition, depending on the arrangements in place at any particular time, your
broker or other financial intermediary may have a financial incentive for
recommending a particular class of fund shares over other share classes.
Shareholders may obtain more information about these arrangements, including the
conflicts of interests that such arrangements may create, from their brokers and
other financial intermediaries, and should so inquire if they would like
additional information. A shareholder may ask his/her broker or financial
intermediary how he/she will be compensated for investments made in the funds.
Although a fund may use financial firms that sell fund shares to effect
transactions for the fund's portfolio, the fund and its investment adviser or
sub-adviser will not consider the sale of fund shares as a factor when choosing
financial firms to effect those transactions.
UNDERWRITING AGREEMENT
TA IDEX has an Underwriting Agreement with AFSG. AFSG is an affiliate of TFAI
and TA IDEX. 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, or its agent, fees for its services. Of the distribution and
service fees it receives for Class A and B shares, AFSG, or its agent, reallows
or pays to brokers or dealers who sold them 0.25% of the average daily net
assets of those shares. In the case of Class C shares, AFSG or its agent
reallows its entire fee to those brokers or dealers.
DISTRIBUTIONS AND TAXES
TAXES ON DISTRIBUTIONS IN GENERAL
Each fund will distribute all or substantially all of its net investment income
and net capital gains to its shareholders each year. Although a fund will not
have to pay income tax on amounts it distributes to shareholders, most
shareholders will be taxed on amounts they receive. Shareholders who are not
subject to tax on their income, such as qualified retirement accounts and other
tax-exempt investors, generally will not be required to pay any tax on
distributions. If a fund declares a dividend in October, November, or December
but pays it in January, you will be taxed on the dividend as if you received it
in the previous year.
You normally will be taxed on distributions you receive from a fund, regardless
of whether they are paid to you in cash or are reinvested in additional fund
shares. A particular distribution generally will be taxable as either ordinary
income or as long-term capital gain. Distributions that are derived from net
long-term capital gains will typically be taxed as long-term capital gain. Other
distributions will usually be taxable as ordinary income. Except as described
below, the tax consequences of a distribution do not depend upon how long you
held your fund shares.
Current tax law generally provides for a maximum tax rate for individual
taxpayers of 15% on long-term capital gains and from certain qualifying
dividends on corporate stock. These rate reductions do not apply to corporate
taxpayers. The following are guidelines for how certain distributions by the
funds are generally taxed to individual taxpayers:
- - Distributions of earnings from qualifying dividends and qualifying
long-term capital gains will be taxed at a maximum rate of 15% (5% for
individuals in the 10% and 15% federal tax rate brackets).
39
- - Note that distributions of earnings from dividends paid by certain
"qualified foreign corporations" can also qualify for the lower tax rates
on qualifying dividends.
- - A shareholder will also have to satisfy a more than 60-day holding period
with respect to any distributions of qualifying dividends in order to
obtain the benefit of the lower tax rate.
- - Distributions of earnings from non-qualifying dividends, interest income,
other types of ordinary income and short-term capital gains will be taxed
at the ordinary income tax rate applicable to the taxpayer.
Each fund will send you a tax report annually summarizing the amount of and the
tax aspects of your distributions.
If you buy shares of a fund before it makes a distribution, the distribution
will be taxable to you even though it may actually be a return of a portion of
your investment. This is known as "buying a dividend."
Investors who invest through tax-deferred accounts, such as IRAs, 403(b)
accounts, and qualified retirement plans, will ordinarily not be subject to tax
until a distribution is made, at which time such distribution is generally taxed
as ordinary income. These accounts are subject to complex tax rules and each
tax-deferred account investor should consult their tax advisers regarding their
investments in a tax-deferred account.
TAXES ON THE SALE OR EXCHANGE OF SHARES
If you sell shares of a fund or exchange them for shares of another fund, you
generally will have a capital gain or loss, which will be long-term capital gain
if you held the shares for more than one year; otherwise it is a short-term
capital gain. Such gain or loss is computed by subtracting your tax basis in the
shares from the redemption proceeds (in the case of a sale) or the value of the
shares received (in the case of an exchange). Because your tax basis depends on
the original purchase price and on the price at which any dividends may have
been reinvested, you should be sure to keep account statements so that you or
your tax preparer will be able to determine whether a sale will result in a
taxable gain. If your tax basis in the shares exceeds your redemption proceeds
(or the value of the shares received in the case of an exchange), you will
recognize a taxable loss on the sale of shares of the fund. Any loss recognized
on shares held for six months or less will be treated as long-term capital loss
to the extent of any long-term capital gain distributions that were received
with respect to the shares.
Additionally, any loss realized on a sale of shares of a fund may be disallowed
under "wash sale" rules to the extent the shares disposed of are replaced with
other shares of that fund within a period of 61 days beginning 30 days before
and ending 30 days after the shares are disposed of, such as pursuant to a
dividend reinvestment in shares of that fund. If disallowed, the loss will be
reflected in an adjustment to the tax basis of the shares acquired.
If more than 50% of the value of the total assets of a fund consists of stock or
securities of foreign corporations at the close of a taxable year, the fund may
elect to treat certain foreign taxes paid by them as paid by their shareholders.
If a fund makes this election, the amount of the foreign taxes paid by the fund
will be included in its shareholders' income pro rata (in addition to taxable
distributions actually received by them), and its shareholders will be entitled
either (a) to credit their proportionate amounts of the foreign taxes paid by
the fund against their federal income tax liabilities, or (b) to deduct their
proportionate amounts from their federal taxable income under certain
circumstances.
WITHHOLDING TAXES
As with all mutual funds, a fund may be required to withhold U.S. federal income
tax at the fourth lowest tax rate applicable to unmarried individuals (currently
28%) of all taxable distributions payable to you if you fail to provide the fund
with your correct taxpayer identification number or to make required
certifications, or if you have been notified by the IRS that you are subject to
backup withholding. Backup withholding is not an additional tax, but is a method
by which the IRS ensures that it will collect taxes otherwise due. Any amounts
withheld may be credited against your U.S. federal income tax liability.
NON-RESIDENT ALIEN WITHHOLDING
If you are a non-U.S. investor, you must provide a U.S. mailing address to
establish an account unless your broker/dealer firm submits your account through
the National Securities Clearing Corporation. Your broker/dealer will be
required to submit a foreign certification form. Investors changing a mailing
address to a non-U.S. address will be required to have a foreign certification
form completed by their broker/dealer and returned to us before future purchases
can be accepted. Shareholders that are not U.S. investors under the federal tax
laws may be subject to U.S. withholding and are generally subject to U.S. tax
certification requirements. Additionally, the appropriate tax form (generally,
W-8BEN form) and documentary evidence is required if you are not a U.S. citizen
or U.S. resident alien.
40
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, and investment made in shares of the TA IDEX funds. More
information is provided in the Statement of Additional Information, dated March
1, 2006. You should also consult your own tax advisor for information regarding
all tax consequences applicable to your investments in the funds.
INVESTMENT POLICY CHANGES
TA IDEX Transamerica Equity invests at least 80% of its assets (defined as net
assets plus the amount of any borrowings for investment purposes) in certain
investments as indicated in this Proxy Statement/Prospectus. Shareholders will
be provided with at least 60 days' prior written notice of any changes in the
80% investment policy. Such notice will comply with the conditions set forth in
any applicable SEC rules then in effect.
NOTE: Unless expressly designated as fundamental, all policies and procedures of
the Funds may be changed by TA IDEX's Board without shareholder approval. To the
extent authorized by law, TA IDEX and each of the Funds reserve the right to
discontinue offering shares at any time, or to cease operations entirely.
FINANCIAL HIGHLIGHTS FOR THE ACQUIRING FUND
For a share of beneficial interest outstanding throughout each period:
The Financial Highlights table is intended to help you understand the Acquiring
Fund's performance for the past five years. 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. The information through October 31, 2005 has been derived from
financial statements audited by PricewaterhouseCoopers LLP, whose report, along
with the Acquiring Fund's financial statements, is included in the 2005 Annual
Report, which is available to you upon request. The information from November 1,
2005 through April 30, 2006 is unaudited.
41
TA IDEX Transamerica Equity
FINANCIAL HIGHLIGHTS
(UNAUDITED FOR THE PERIOD ENDED APRIL 30, 2006)
FOR A SHARE OF BENEFICIAL INTEREST OUTSTANDING THROUGHOUT EACH PERIOD
------------------------------------------------------------------------------------------------------------
Investment Operations Distributions
Net Asset ------------------------------------------- ------------------------------------- Net Asset
For the Value, Net Net Realized From Net From Net Value,
Period Beginning Investment and Unrealized Total Investment Realized Total End
Ended (d)(g) of Period Income (Loss) Gain (Loss) Operations Income Gains Distributions of Period
----------- --------- ------------- -------------- ---------- ---------- -------- ------------- ----------
Class A 4/30/2006 $ 8.87 $(0.03) $ 1.08 $ 1.05 $-- $(0.08) $(0.08) $9.84
10/31/2005 7.44 (0.02) 1.58 1.56 -- (0.13) (0.13) 8.87
10/31/2004 6.86 (0.07) 0.65 0.58 -- -- -- 7.44
10/31/2003 5.52 (0.05) 1.39 1.34 -- -- -- 6.86
10/31/2002 6.38 (0.07) (0.79) (0.86) -- -- -- 5.52
10/31/2001 10.16 (0.10) (3.68) (3.78) -- -- -- 6.38
Class B 4/30/2006 8.49 (0.06) 1.04 0.98 -- (0.08) (0.08) 9.39
10/31/2005 7.19 (0.08) 1.51 1.43 -- (0.13) (0.13) 8.49
10/31/2004 6.68 (0.11) 0.62 0.51 -- -- -- 7.19
10/31/2003 5.40 (0.09) 1.37 1.28 -- -- -- 6.68
10/31/2002 6.29 (0.12) (0.77) (0.89) -- -- -- 5.40
10/31/2001 10.12 (0.16) (3.67) (3.83) -- -- -- 6.29
Class C 4/30/2006 8.50 (0.06) 1.03 0.97 -- (0.08) (0.08) 9.39
10/31/2005 7.20 (0.08) 1.51 1.43 -- (0.13) (0.13) 8.50
10/31/2004 6.68 (0.11) 0.63 0.52 -- -- -- 7.20
10/31/2003 5.30 (0.09) 1.47 1.38 -- -- -- 6.68
Class I 4/30/2006 9.17 -(h) 0.78 0.78 -- (0.08) (0.08) 9.87
RATIOS/SUPPLEMENTAL DATA
--------------------------------------------------------------
Ratio of Expenses
Net Assets, to Average Net Investment
For the End of Net Assets (a) Income (Loss) Portfolio
Period Total Period ------------------- to Average Turnover
Ended (g) Return (c) (000's) Net (e) Total (f) Net Assets (a) Rate (b)
---------- ---------- ----------- ------- --------- -------------- ---------
Class A 4/30/2006 11.83% $ 86,366 1.52% 1.53% (0.72)% 3%
10/31/2005 21.16 301,635 1.36 1.36 (0.27) 39
10/31/2004 8.45 176,851 1.50 1.50 (0.90) 97
10/31/2003 24.28 56,618 1.56 1.56 (0.87) 55
10/31/2002 (13.50) 25,127 1.74 2.32 (1.19) 19
10/31/2001 (37.20) 2,750 1.55 2.75 (1.15) 42
Class B 4/30/2006 11.53 54,678 2.17 2.42 (1.34) 3
10/31/2005 20.03 49,865 2.18 2.61 (0.99) 39
10/31/2004 7.68 47,928 2.20 2.72 (1.62) 97
10/31/2003 23.70 4,613 2.21 2.21 (1.52) 55
10/31/2002 (14.22) 2,732 2.39 2.98 (1.84) 19
10/31/2001 (37.78) 3,070 2.20 3.40 (1.80) 42
Class C 4/30/2006 11.40 26,775 2.16 2.16 (1.34) 3
10/31/2005 20.05 23,656 2.18 2.31 (1.00) 39
10/31/2004 7.78 21,808 2.20 2.55 (1.63) 97
10/31/2003 26.04 1,435 2.21 2.21 (1.52) 55
Class I 4/30/2006 8.50 512,862 0.81 0.81 0.02 3
42
TA IDEX Transamerica Equity
FINANCIAL HIGHLIGHTS (CONTINUED)
(UNAUDITED)
NOTES TO FINANCIAL HIGHLIGHTS
(a) Annualized.
(b) Not annualized.
(c) Total Return has been calculated for the applicable period without
deduction of a sales load, if any, on an initial purchase. Not annualized.
(d) Per share information is calculated based on average number of shares
outstanding.
(e) Ratio of Net Expenses to Average Net Assets is net of fee waivers and
reimbursements by the investment adviser, if any.
(f) Ratio of Total Expenses to Average Net Assets includes all expenses before
fee waivers and reimbursements by the investment adviser.
(g) The inception dates for the Fund's offering of share classes were as
follows:
Class C was November 11, 2002.
Class I was November 15, 2005.
(h) Amount rounds to less than $0.01.
43
INDEX OF APPENDICES
Appendix A: Form of Plan of Reorganization
Appendix B: Explanation of Strategies and Risks
Appendix C: Performance Update
Appendix D: Share Ownership
Appendix E: Form of TIM Sub-Advisory Agreement
Appendix F: Directors and Principal Executive Officer of TFAI
Appendix G: Managing Members and Principal Executive Officer[s] of TIM
Appendix H: Affiliated Brokerage
APPENDIX A: FORM OF PLAN OF REORGANIZATION
THIS PLAN OF REORGANIZATION (the "Reorganization Plan") is adopted as of this
July 19, 2006, by Transamerica IDEX Mutual Funds (the "Trust") with its
principal place of business at 570 Carillon Parkway, St. Petersburg, Florida
33716, on behalf of its series, TA IDEX Great Companies - America(SM) and TA
IDEX Transamerica Equity.
This Reorganization Plan is intended to be and is adopted as a plan of
reorganization and liquidation within the meaning of Section 368(a)(1) of the
United States Internal Revenue Code of 1986, as amended (the "Code"). The
reorganization to which this Reorganization Plan applies (the "Reorganization")
will consist of the transfer of all of the assets of Acquired Fund in the table
below to the Acquiring Fund in the table below in exchange solely for Class A,
B, C and I voting shares of the Acquiring Fund (the "Acquiring Fund Shares");
the assumption by the Acquiring Fund of all liabilities of the Acquired Fund;
and the distribution of the Acquiring Fund Shares to the shareholders of the
Acquired Fund in complete liquidation of the Acquired Fund as provided herein,
all upon the terms and conditions hereinafter set forth in this Reorganization
Plan:
ACQUIRED FUND ACQUIRING FUND
------------- --------------
TA IDEX Great Companies - America(SM) TA IDEX Transamerica Equity
WHEREAS, the Trust is an open-end, registered investment company of the
management type and the Acquired Fund owns securities which generally are assets
of the character in which the Acquiring Fund is permitted to invest;
WHEREAS, the Trustees of the Trust have determined that the exchange of all of
the assets of the Acquired Fund for the Acquiring Fund Shares and the assumption
of all liabilities of the Acquired Fund by the Acquiring Fund is in the best
interests of the Acquiring Fund and its shareholders and that the interests of
the existing shareholders of the Acquiring Fund would not be diluted as a result
of this transaction; and
WHEREAS, the Trustees of the Trust also have determined, with respect to the
Acquired Fund, that the exchange of all of the assets of the Acquired Fund for
the Acquiring Fund Shares and the assumption of all liabilities of the Acquired
Fund by the Acquiring Fund is in the best interests of the Acquired Fund and its
shareholders and that the interests of the existing shareholders of the Acquired
Fund would not be diluted as a result of this transaction;
NOW, THEREFORE, the Trust, on behalf of the Acquiring Fund and the Acquired Fund
separately, hereby approves the Reorganization Plan on the following terms and
conditions:
1. TRANSFER OF ASSETS OF THE ACQUIRED FUND TO THE ACQUIRING FUND IN EXCHANGE
FOR THE ACQUIRING FUND SHARES, THE ASSUMPTION OF ALL ACQUIRED FUND
LIABILITIES AND THE LIQUIDATION OF THE ACQUIRED FUND
1.1. Subject to the requisite approvals of the shareholders of the Acquired Fund
and the other terms and conditions herein set forth and on the basis of the
representations and warranties contained herein, the Trust will transfer
all of the Acquired Fund's assets, as set forth in paragraph 1.2, to the
Acquiring Fund, and the Acquiring Fund agrees in exchange therefor: (i) to
deliver to the Acquired Fund the number of full and fractional Class A, B,
C and I Acquiring Fund Shares determined by dividing the value of an
Acquired Fund's net assets, computed in the manner and as of the time and
date set forth in paragraph 2.1, by the net asset value of one Acquiring
Fund Share, computed in the manner and as of the time and date set forth in
paragraph 2.2; and (ii) to assume all liabilities of the Acquired Fund.
Such transactions shall take place at the closing provided for in paragraph
3.1 (the "Closing").
1.2. The assets of the Acquired Fund to be acquired by the Acquiring Fund shall
consist of all assets and property, including, without limitation, all
cash, securities, commodities and futures interests and dividends or
interests receivable that are owned by the Acquired Fund and any deferred
or prepaid expenses shown as an asset on the books of the Acquired Fund on
the closing date provided for in paragraph 3.1 (the "Closing Date").
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1.3. The Acquired Fund will endeavor to discharge all of its known liabilities
and obligations prior to the Closing Date. The Acquiring Fund shall also
assume all of the liabilities of the Acquired Fund, whether accrued or
contingent, known or unknown, existing at the Valuation Date (as defined in
paragraph 2.1). On or as soon as practicable prior to the Closing Date, the
Acquired Fund will declare and pay to its shareholders of record one or
more dividends and/or other distributions that, together with all previous
distributions, shall have the effect of distributing to its shareholders
(i) all of its investment company taxable income and all of its net
realized capital gains, if any, for the period from the close of its last
taxable year to the end of the business day on the Closing; and (ii) any
undistributed investment company taxable income and net capital gain from
any period to the extent not otherwise distributed.
1.4. Immediately after the transfer of assets provided for in paragraph 1.1, the
Acquired Fund will distribute to the Acquired Fund's shareholders of record
with respect to each class of its shares, determined as of immediately
after the close of business on the Closing Date (the "Acquired Fund
Shareholders"), on a pro rata basis within that class, the Acquiring Fund
Shares of the same class received by the Acquired Fund pursuant to
paragraph 1.1, and will completely liquidate. Such distribution and
liquidation will be accomplished, with respect to the Acquired Fund's
shares, by the transfer of the Acquiring Fund Shares then credited to the
account of the Acquired Fund on the books of the Acquiring Fund to open
accounts on the share records of the Acquiring Fund in the names of the
Acquired Fund Shareholders. The aggregate net asset value of Acquiring Fund
Shares to be so credited to Class A, B, C and I Acquired Fund Shareholders
shall be equal to the aggregate net asset value of the Acquired Fund shares
of the corresponding class owned by such shareholders on the Closing Date.
All issued and outstanding shares of the Acquired Fund will simultaneously
be canceled on the books of the Acquired Fund, although shares representing
interests in shares of the Acquired Fund will represent a number of the
same class of Acquiring Fund Shares after the Closing Date, as determined
in accordance with paragraph 2.3. The Acquiring Fund will not issue
certificates representing the Acquiring Fund Shares in connection with such
exchange.
1.5. Ownership of Acquiring Fund Shares will be shown on the books of the
Acquiring Fund's transfer agent. Shares of the Acquiring Fund will be
issued in the manner described in the Acquiring Fund's then-current
prospectus and statement of additional information.
1.6. Any reporting responsibility of the Acquired Fund including, but not
limited to, the responsibility for filing of regulatory reports, tax
returns, or other documents with the Securities and Exchange Commission
(the "Commission"), any state securities commission, and any federal, state
or local tax authorities or any other relevant regulatory authority, is and
shall remain the responsibility of the Acquired Fund.
2. VALUATION
2.1. The value of the Acquired Fund's assets to be acquired by the Acquiring
Fund hereunder shall be the value of such assets computed as of the close
of business of the New York Stock Exchange ("NYSE") and after the
declaration of any dividends on the Closing Date (such time and date being
hereinafter called the "Valuation Date"), using the valuation procedures
set forth in the Trustee's Declaration of Trust, the then-current
prospectus or statement of additional information with respect to the
Acquiring Fund, and valuation procedures established by the Trustee's Board
of Trustees.
2.2. The net asset value of an Acquiring Fund Share of any class shall be the
net asset value per share computed for that class as of the close of
business of the NYSE and after the declaration of any dividends on the
Valuation Date, using the valuation procedures set forth in the Trust's
Declaration of Trust, the then-current prospectus or statement of
additional information with respect to the Acquiring Fund, and valuation
procedures established by the Trust's Board of Trustees.
2.3. The number of A, B, C and I Acquiring Fund Shares to be issued (including
fractional shares, if any) in exchange for the Acquired Fund's assets shall
be determined by dividing the value of the net assets of the Class A, B, C
and I Acquired Fund determined using the same valuation procedures referred
to in paragraph 2.1, by the net asset value of the corresponding class of
Acquiring Fund Share, determined in accordance with paragraph 2.2.
2.4. All computations of value shall be made by the Acquiring Fund's designated
record keeping agent.
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3. CLOSING AND CLOSING DATE
3.1. The Closing Date shall be August 4, 2006, or such other date as the parties
may agree to in writing. All acts taking place at the Closing shall be
deemed to take place simultaneously as of immediately after the close of
business on the Closing Date unless otherwise agreed to by the parties. The
close of business on the Closing Date shall be as of 4:00 p.m., Eastern
Time. The Closing shall be held at the offices of the Trust or at such
other time and/or place as the Board of Trustees or officers of the Trust
may designate.
3.2. The Trust shall direct the custodian of the Acquired Fund (the
"Custodian"), to deliver, at the Closing, a certificate of an authorized
officer stating that (i) the Acquired Fund's portfolio securities, cash,
and any other assets ("Assets") shall have been delivered in proper form to
the Acquiring Fund within two business days prior to or on the Closing
Date, and (ii) all necessary taxes in connection with the delivery of the
Assets, including all applicable federal and state stock transfer stamps,
if any, have been paid or provision for payment has been made. The Acquired
Fund's portfolio securities represented by a certificate or other written
instrument shall be transferred and delivered by the Acquired Fund as of
the Closing Date for the account of the Acquiring Fund duly endorsed in
proper form for transfer in such condition as to constitute good delivery
thereof. The Acquired Fund shall direct the Custodian to deliver portfolio
securities and instruments deposited with a securities depository, as
defined in Rule 17f-4 under the Investment Company Act of 1940, (the "1940
Act"), as of the Closing Date by book entry in accordance with the
customary practices of such depositories and the custodian for Acquiring
Fund.
3.3. Transamerica Fund Services, Inc., as transfer agent for the Acquired Fund
(the "Transfer Agent"), shall deliver, on behalf of the Acquired Fund, at
the Closing a certificate of an authorized officer stating that its records
contain the names and addresses of the Acquired Fund Shareholders and the
number and percentage ownership of outstanding shares owned by each such
shareholder immediately prior to the Closing.
3.4. In the event that on the Valuation Date (a) the NYSE or another primary
trading market for portfolio securities of the Acquiring Fund or the
Acquired Fund shall be closed to trading or trading thereupon shall be
restricted, or (b) trading or the reporting of trading on the NYSE or
elsewhere shall be disrupted so that, in the judgment of the Board of
Trustees of the Trust, accurate appraisal of the value of the net assets of
the Acquiring Fund or the Acquired Fund is impracticable, the Closing Date
shall be postponed until the first business day after the day when trading
shall have been fully resumed and reporting shall have been restored.
4. REPRESENTATIONS AND WARRANTIES
4.1. The Trust, on behalf of the Acquired Fund, represents and warrants to the
Acquiring Fund as follows:
(a) The Acquired Fund is duly organized as a series of the Trust, which is
a statutory trust duly organized and validly existing under the laws
of the State of Delaware, with power under the Trust's Declaration of
Trust to own all of its properties and assets and to carry on its
business as it is now being conducted;
(b) The Trust is a registered investment company classified as a
management company of the open-end type, and its registration with the
Commission as an investment company under the 1940 Act, and the
registration of its shares under the Securities Act of 1933, ("1933
Act"), are in full force and effect;
(c) No consent, approval, authorization, or order of any court or
governmental authority is required for the consummation by the
Acquired Fund of the transactions contemplated herein, except such as
have been obtained under the 1933 Act, the Securities Exchange Act of
1934, (the "1934 Act"), and the 1940 Act, and such as may be required
by state securities laws;
(d) The current prospectus and statement of additional information of the
Acquired Fund and each prospectus and statement of additional
information of the Acquired Fund used during the three years previous
to the date of this Reorganization Plan conforms or conformed at the
time of its use in all material respects to the applicable
requirements of the 1933 Act and the 1940 Act and the rules and
regulations of the Commission thereunder and does not or did not at
the time of its use include any untrue statement of a
A-3
material fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not materially misleading;
(e) On the Closing Date, the Acquired Fund will have good and marketable
title to the Acquired Fund's assets to be transferred to the Acquiring
Fund pursuant to paragraph 1.2 and full right, power, and authority to
sell, assign, transfer and deliver such assets hereunder free of any
liens or other encumbrances, and upon delivery and payment for such
assets, the Acquiring Fund will acquire good and marketable title
thereto, subject to no restrictions on the full transfer thereof,
including such restrictions as might arise under the 1933 Act, other
than as disclosed to the Acquiring Fund;
(f) The Acquired Fund is not engaged currently, and the execution,
delivery and performance of this Reorganization Plan will not result,
in (i) a material violation of the Trust's Declaration of Trust or
By-Laws or of any agreement, indenture, instrument, contract, lease or
other undertaking to which the Acquired Fund is a party or by which it
is bound, or (ii) the acceleration of any obligation, or the
imposition of any penalty, under any agreement, indenture, instrument,
contract, lease, judgment or decree to which the Acquired Fund is a
party or by which it is bound;
(g) The Acquired Fund has no material contracts or other commitments
(other than this Reorganization Plan) that will be terminated with
liability to it prior to the Closing Date;
(h) Except as otherwise disclosed in writing to and accepted by the
Acquiring Fund, no litigation or administrative proceeding or
investigation of or before any court or governmental body is presently
pending or, to its knowledge, threatened against the Acquired Fund or
any of its properties or assets that, if adversely determined, would
materially and adversely affect its financial condition or the conduct
of its business. The Acquired Fund knows of no facts which might form
the basis for the institution of such proceedings and is not a party
to or subject to the provisions of any order, decree or judgment of
any court or governmental body which materially and adversely affects
its business or its ability to consummate the transactions herein
contemplated;
(i) The financial statements of the Acquired Fund as of and for the year
ended October 31, 2005 have been audited by PricewaterhouseCoopers
LLP, Independent Registered Certified Public Accounting Firm. Such
statements are in accordance with accounting principles generally
accepted in the United States of America ("GAAP") consistently
applied, and such statements (copies of which have been furnished to
the Acquiring Fund) present fairly, in all material respects, the
financial condition of the Acquired Fund as of such date in accordance
with GAAP, and there are no known contingent liabilities of the
Acquired Fund required to be reflected on the balance sheet or in the
notes thereto;
(j) Since October 31, 2005, there has not been any material adverse change
in the Acquired Fund's financial condition, assets, liabilities or
business, other than changes occurring in the ordinary course of
business, or any incurrence by the Acquired Fund of indebtedness
maturing more than one year from the date such indebtedness was
incurred, except as otherwise disclosed to and accepted by the
Acquiring Fund. For the purposes of this subparagraph (j), a decline
in net asset value per share of the Acquired Fund due to declines in
market values of securities in the Acquired Fund's portfolio, the
discharge of Acquired Fund liabilities, or the redemption of Acquired
Fund shares by shareholders of the Acquired Fund shall not constitute
a material adverse change;
(k) On the Closing Date, all Federal and other tax returns and reports of
the Acquired Fund required by law to have been filed by such date
(including any extensions) shall have been filed and are or will be
correct in all material respects, and all Federal and other taxes
shown as due or required to be shown as due on said returns and
reports shall have been paid or provision shall have been made for the
payment thereof, and to the best of the Acquired Fund's knowledge, no
such return is currently under audit and no assessment has been
asserted with respect to such returns;
(l) For each taxable year of its operation (including the taxable year
ending on the Closing Date), the Acquired Fund has met the
requirements of Subchapter M of the Code for qualification as a
regulated
A-4
investment company and has elected to be treated as such, has been
eligible to and has computed its Federal income tax under Section 852
of the Code, and will have distributed all of its investment company
taxable income and net capital gain (as defined in the Code) that has
accrued through the Closing Date, and before the Closing Date will
have declared dividends sufficient to distribute all of its investment
company taxable income and net capital gain for the period ending on
the Closing Date;
(m) All issued and outstanding shares of the Acquired Fund are, and on the
Closing Date will be, duly and validly issued and outstanding, fully
paid and non-assessable by the Trust and have been offered and sold in
every state and the District of Columbia in compliance in all material
respects with applicable registration requirements of the 1933 Act and
state securities laws. All of the issued and outstanding shares of the
Acquired Fund will, at the time of Closing, be held by the persons and
in the amounts set forth in the records of the Transfer Agent, on
behalf of the Acquired Fund, as provided in paragraph 3.3. The
Acquired Fund does not have outstanding any options, warrants or other
rights to subscribe for or purchase any of the shares of the Acquired
Fund, nor is there outstanding any security convertible into any of
the Acquired Fund shares;
(n) The adoption and performance of this Reorganization Plan will have
been duly authorized prior to the Closing Date by all necessary
action, if any, on the part of the Trustees of the Trust, and, subject
to the approval of the shareholders of the Acquired Fund, this
Reorganization Plan will constitute a valid and binding obligation of
the Acquired Fund, enforceable in accordance with its terms, subject,
as to enforcement, to bankruptcy, insolvency, reorganization,
moratorium and other laws relating to or affecting creditors' rights
and to general equity principles;
(o) The information to be furnished by the Acquired Fund for use in
registration statements, proxy materials and other documents filed or
to be filed with any federal, state or local regulatory authority
(including the National Association of Securities Dealers, Inc.),
which may be necessary in connection with the transactions
contemplated hereby, shall be accurate and complete in all material
respects and shall comply in all material respects with Federal
securities and other laws and regulations thereunder applicable
thereto.
4.2. The Trust, on behalf of the Acquiring Fund, represents and warrants to the
Acquired Fund as follows:
(a) The Acquiring Fund is duly organized as a series of the Trust, which
is a statutory trust duly organized and validly existing under the
laws of the State of Delaware, with power under the Trust's
Declaration of Trust to own all of its properties and assets and to
carry on its business as it is now being conducted;
(b) The Trust is a registered investment company classified as a
management company of the open-end type, and its registration with the
Commission as an investment company under the 1940 Act and the
registration of its shares under the 1933 Act, including the shares of
the Acquiring Fund, are in full force and effect;
(c) No consent, approval, authorization, or order of any court or
governmental authority is required for the consummation by the
Acquiring Fund of the transactions contemplated herein, except such as
have been obtained under the 1933 Act, the 1934 Act and the 1940 Act
and such as may be required by state securities laws;
(d) The current prospectus and statement of additional information of the
Acquiring Fund and each prospectus and statement of additional
information of the Acquiring Fund used during the three years previous
to the date of this Reorganization Plan conforms or conformed at the
time of its use in all material respects to the applicable
requirements of the 1933 Act and the 1940 Act and the rules and
regulations of the Commission thereunder and does not or did not at
the time of its use include any untrue statement of a material fact or
omit to state any material fact required to be stated therein or
necessary to make the statements therein, in light of the
circumstances under which they were made, not materially misleading;
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(e) On the Closing Date, the Acquiring Fund will have good and marketable
title to the Acquiring Fund's assets, free of any liens of other
encumbrances, except those liens or encumbrances as to which the
Acquired Fund has received notice and necessary documentation at or
prior to the Closing;
(f) The Acquiring Fund is not engaged currently, and the execution,
delivery and performance of this Reorganization Plan will not result,
in (i) a material violation of the Trust's Declaration of Trust or
By-Laws or of any agreement, indenture, instrument, contract, lease or
other undertaking to which the Acquiring Fund is a party or by which
it is bound, or (ii) the acceleration of any obligation, or the
imposition of any penalty, under any agreement, indenture, instrument,
contract, lease, judgment or decree to which the Acquiring Fund is a
party or by which it is bound;
(g) Except as otherwise disclosed in writing to and accepted by the
Acquired Fund, no litigation or administrative proceeding or
investigation of or before any court or governmental body is presently
pending or, to its knowledge, threatened against the Acquiring Fund or
any of its properties or assets that, if adversely determined, would
materially and adversely affect its financial condition or the conduct
of its business. The Acquiring Fund knows of no facts which might form
the basis for the institution of such proceedings and is not a party
to or subject to the provisions of any order, decree or judgment of
any court or governmental body which materially and adversely affects
its business or its ability to consummate the transactions herein
contemplated;
(h) The financial statements of the Acquiring Fund as of and for the year
ended October 31, 2005 have been audited by PricewaterhouseCoopers
LLP, Independent Registered Certified Public Accounting Firm. Such
statements are in accordance with GAAP consistently applied, and such
statements (copies of which have been furnished to the Acquired Fund)
present fairly, in all material respects, the financial condition of
the Acquiring Fund as of such date in accordance with GAAP, and there
are no known contingent liabilities of the Acquiring Fund required to
be reflected on the balance sheet or in the notes thereto;
(i) Since October 31, 2005, there has not been any material adverse change
in the Acquiring Fund's financial condition, assets, liabilities or
business, other than changes occurring in the ordinary course of
business, or any incurrence by the Acquiring Fund of indebtedness
maturing more than one year from the date such indebtedness was
incurred, except as otherwise disclosed to and accepted by the
Acquired Fund. For purposes of this subparagraph (i), a decline in net
asset value per share of the Acquiring Fund due to declines in market
values of securities in the Acquiring Fund's portfolio, the discharge
of Acquiring Fund liabilities, or the redemption of Acquiring Fund
Shares by shareholders of the Acquiring Fund, shall not constitute a
material adverse change;
(j) On the Closing Date, all Federal and other tax returns and reports of
the Acquiring Fund required by law to have been filed by such date
(including any extensions) shall have been filed and are or will be
correct in all material respects, and all Federal and other taxes
shown as due or required to be shown as due on said returns and
reports shall have been paid or provision shall have been made for the
payment thereof, and to the best of the Acquiring Fund's knowledge no
such return is currently under audit and no assessment has been
asserted with respect to such returns;
(k) For each taxable year of its operation, the Acquiring Fund has met the
requirements of Subchapter M of the Code for qualification as a
regulated investment company and has elected to be treated as such,
has been eligible to and has computed its Federal income tax under
Section 852 of the Code, has distributed all of its investment company
taxable income and net capital gain (as defined in the Code) for
periods ending prior to the Closing Date, and will do so for the
taxable year including the Closing Date;
(l) All issued and outstanding Acquiring Fund Shares are, and on the
Closing Date will be, duly and validly issued and outstanding, fully
paid and non-assessable by the Trust and have been offered and sold in
every state and the District of Columbia in compliance in all material
respects with applicable registration requirements of the 1933 Act and
state securities laws. The Acquiring Fund does not have outstanding
any options, warrants or other rights to subscribe for or purchase any
Acquiring Fund Shares, nor is there outstanding any security
convertible into any Acquiring Fund Shares;
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(m) The adoption and performance of this Reorganization Plan will have
been fully authorized prior to the Closing Date by all necessary
action, if any, on the part of the Trustees of the Trust on behalf of
the Acquiring Fund and this Reorganization Plan will constitute a
valid and binding obligation of the Acquiring Fund, enforceable in
accordance with its terms, subject, as to enforcement, to bankruptcy,
insolvency, reorganization, moratorium and other laws relating to or
affecting creditors' rights and to general equity principles;
(n) The Acquiring Fund Shares to be issued and delivered to the Acquired
Fund, for the account of the Acquired Fund Shareholders, pursuant to
the terms of this Reorganization Plan, will on the Closing Date have
been duly authorized and, when so issued and delivered, will be duly
and validly issued Acquiring Fund Shares, and will be fully paid and
non-assessable by the Trust;
(o) The information to be furnished by the Acquiring Fund for use in the
registration statements, proxy materials and other documents that may
be necessary in connection with the transactions contemplated hereby
shall be accurate and complete in all material respects and shall
comply in all material respects with Federal securities and other laws
and regulations applicable thereto; and
(p) That insofar as it relates to Trust or the Acquiring Fund, the
Registration Statement relating to the Acquiring Fund Shares issuable
hereunder, and the proxy materials of the Acquired Fund to be included
in the Registration Statement, and any amendment or supplement to the
foregoing, will, from the effective date of the Registration Statement
through the date of the meeting of shareholders of the Acquired Fund
contemplated therein (i) not contain any untrue statement of a
material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which such statements were made, not materially
misleading provided, however, that the representations and warranties
in this subparagraph (p) shall not apply to statements in or omissions
from the Registration Statement made in reliance upon and in
conformity with information that was furnished by the Acquired Fund
for use therein, and (ii) comply in all material respects with the
provisions of the 1933 Act, the 1934 Act and the 1940 Act and the
rules and regulations thereunder.
5. COVENANTS OF THE ACQUIRING FUND AND THE ACQUIRED FUND
5.1. The Acquiring Fund and the Acquired Fund each will operate its business in
the ordinary course between the date hereof and the Closing Date, it being
understood that such ordinary course of business will include the
declaration and payment of customary dividends and distributions, and any
other distribution that may be advisable.
5.2. To the extent required by applicable law, the Trust will call a meeting of
the shareholders of the Acquired Fund to consider and act upon this
Reorganization Plan and to take all other action necessary to obtain
approval of the transactions contemplated herein.
5.3. The Acquired Fund covenants that the Acquiring Fund Shares of each class to
be issued hereunder are not being acquired for the purpose of making any
distribution thereof, other than in accordance with the terms of this
Reorganization Plan.
5.4. The Acquired Fund will assist the Acquiring Fund in obtaining such
information as the Acquiring Fund reasonably requests concerning the
beneficial ownership of the Acquired Fund shares.
5.5. Subject to the provisions of this Reorganization Plan, the Acquiring Fund
and the Acquired Fund will each take, or cause to be taken, all action, and
do or cause to be done, all things reasonably necessary, proper or
advisable to consummate and make effective the transactions contemplated by
this Reorganization Plan.
5.6. As soon as is reasonably practicable after the Closing, the Acquired Fund
will make a liquidating distribution to its shareholders consisting of the
Acquiring Fund Shares of each class received at the Closing.
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5.7. The Acquiring Fund and the Acquired Fund shall each use its reasonable best
efforts to fulfill or obtain the fulfillment of the conditions precedent to
effect the transactions contemplated by this Reorganization Plan as
promptly as practicable.
5.8. The Acquired Fund covenants that it will, from time to time, as and when
reasonably requested by the Acquiring Fund, execute and deliver or cause to
be executed and delivered all such assignments and other instruments, and
will take or cause to be taken such further action as the Acquiring Fund
may reasonably deem necessary or desirable in order to vest in and confirm
the Acquiring Fund's title to and possession of all the assets and
otherwise to carry out the intent and purpose of this Reorganization Plan.
5.9. The Acquiring Fund will use all reasonable efforts to obtain the approvals
and authorizations required by the 1933 Act, the 1940 Act and such of the
state blue sky or securities laws as may be necessary in order to continue
its operations after the Closing Date.
6. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE ACQUIRED FUND
The obligations of the Acquired Fund to consummate the transactions
provided for herein shall be subject, at the Acquired Fund's election, to
the performance by the Acquiring Fund of all the obligations to be
performed by it hereunder on or before the Closing Date, and, in addition
thereto, the following further conditions:
6.1. All representations and warranties of the Acquiring Fund and the Trust
contained in this Reorganization Plan shall be true and correct in all
material respects as of the date hereof and, except as they may be affected
by the transactions contemplated by this Reorganization Plan, as of the
Closing Date, with the same force and effect as if made on and as of the
Closing Date;
6.2. The Trust and the Acquiring Fund shall have performed all of the covenants
and complied with all of the provisions required by this Reorganization
Plan to be performed or complied with by the Trust and the Acquiring Fund
on or before the Closing Date; and
6.3. The Acquired Fund and the Acquiring Fund shall have agreed on the number of
full and fractional Acquiring Fund Shares to be issued in connection with
the Reorganization after such number has been calculated in accordance with
paragraph 1.1.
7. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE ACQUIRING FUND
The obligations of the Acquiring Fund to complete the transactions provided
for herein shall be subject, at the Acquiring Fund's election, to the
performance by the Acquired Fund of all of the obligations to be performed
by it hereunder on or before the Closing Date and, in addition thereto, the
following conditions:
7.1. All representations and warranties of the Trust and the Acquired Fund
contained in this Reorganization Plan shall be true and correct in all
material respects as of the date hereof and, except as they may be affected
by the transactions contemplated by this Reorganization Plan, as of the
Closing Date, with the same force and effect as if made on and as of the
Closing Date;
7.2. The Trust and the Acquired Fund shall have performed all of the covenants
and complied with all of the provisions required by this Reorganization
Plan to be performed or complied with by the Trust or the Acquired Fund on
or before the Closing Date;
7.3. The Acquired Fund and the Acquiring Fund shall have agreed on the number of
full and fractional Acquiring Fund Shares to be issued in connection with
the Reorganization after such number has been calculated in accordance with
paragraph 1.1;
7.4. The Acquired Fund shall have declared and paid a distribution or
distributions prior to the Closing that, together with all previous
distributions, shall have the effect of distributing to its shareholders
(i) all of its investment company taxable income and all of its net
realized capital gains, if any, for the period from the close of its last
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taxable year to 4:00 p.m. Eastern Time on the Closing; and (ii) any
undistributed investment company taxable income and net realized capital
gains from any period to the extent not otherwise already distributed.
8. FURTHER CONDITIONS PRECEDENT TO OBLIGATIONS OF THE ACQUIRING FUND AND THE
ACQUIRED FUND
If any of the conditions set forth below do not exist on or before the
Closing Date with respect to the Acquired Fund or the Acquiring Fund, the
other party to this Reorganization Plan shall, at its option, not be
required to consummate the transactions contemplated by this Reorganization
Plan:
8.1. The Reorganization Plan and the transactions contemplated herein shall have
been approved by the requisite vote, if any, of the holders of the
outstanding shares of the Acquired Fund in accordance with the provisions
of the Trust's Declaration of Trust, By-Laws, applicable Delaware law
and/or the 1940 Act, and copies of the resolutions evidencing such approval
shall have been delivered to the Acquiring Fund. Notwithstanding anything
herein to the contrary, neither the Acquiring Fund nor the Acquired Fund
may waive the conditions set forth in this paragraph 8.1;
8.2. On the Closing Date, no action, suit or other proceeding shall be pending
or, to its knowledge, threatened before any court or governmental agency in
which it is sought to restrain or prohibit, or obtain damages or other
relief in connection with, this Reorganization Plan or the transactions
contemplated herein;
8.3. All consents of other parties and all other consents, orders and permits of
Federal, state and local regulatory authorities deemed necessary by the
Acquiring Fund or the Acquired Fund to permit consummation, in all material
respects, of the transactions contemplated hereby shall have been obtained,
except where failure to obtain any such consent, order or permit would not
involve a risk of a material adverse effect on the assets or properties of
the Acquiring Fund or the Acquired Fund, provided that either party hereto
may for itself waive any of such conditions;
8.4. The Registration Statement shall have become effective under the 1933 Act
and no stop orders suspending the effectiveness thereof shall have been
issued and, to the best knowledge of the parties hereto, no investigation
or proceeding for that purpose shall have been instituted or be pending,
threatened or contemplated under the 1933 Act; and
8.5. Dechert LLP shall deliver an opinion addressed to the Trust substantially
to the effect that, based upon certain facts, assumptions, and
representations, the transaction contemplated by this Reorganization Plan
shall constitute a tax-free reorganization for Federal income tax purposes,
unless, based on the circumstances existing at the time of the Closing,
Dechert LLP determines that the transaction contemplated by this
Reorganization Plan does not qualify as such. The delivery of such opinion
is conditioned upon receipt by Dechert LLP of representations it shall
request of the Trust. Notwithstanding anything herein to the contrary, the
Trust may not waive the condition set forth in this paragraph 8.5.
9. BROKERAGE FEES AND EXPENSES
9.1. The Acquiring Fund represents and warrants to the other that there are no
brokers or finders entitled to receive any payments in connection with the
transactions provided for herein.
9.2. The investment adviser to each of the Acquired Fund and the Acquiring Fund,
Transamerica Fund Advisors, Inc., shall bear all of the expenses relating
to the proposed Reorganization. The costs of the Reorganization shall
include, but not be limited to, costs associated with obtaining any
necessary order of exemption from the 1940 Act, preparation of the
Registration Statement, printing and distributing the Acquiring Fund's
prospectus and the Acquired Fund's proxy materials, legal fees, accounting
fees, securities registration fees, and expenses of holding the
shareholders' meeting. Notwithstanding any of the foregoing, expenses will
in any event be paid by the party directly incurring such expenses if and
to the extent that the payment by the other party of such expenses would
result in the disqualification of such party as a "regulated investment
company" within the meaning of Section 851 of the Code.
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10. ENTIRE AGREEMENT; SURVIVAL OF WARRANTIES
The representations, warranties and covenants contained in this
Reorganization Plan or in any document delivered pursuant hereto or in
connection herewith shall survive the consummation of the transactions
contemplated hereunder. The covenants to be performed after the Closing
shall survive the Closing.
11. TERMINATION
This Reorganization Plan and the transactions contemplated hereby may be
terminated and abandoned by resolution of the Board of Trustees, at any
time prior to the Closing Date, if circumstances should develop that, in
the opinion of the Board, make proceeding with the Reorganization Plan
inadvisable.
12. AMENDMENTS
This Reorganization Plan may be amended, modified or supplemented in such
manner as may be set forth in writing by the authorized officers of the
Trust; provided, however, that following any meeting of the shareholders
called by the Acquired Fund pursuant to paragraph 5.2 of this
Reorganization Plan, no such amendment may have the effect of changing the
provisions for determining the number of the Acquiring Fund Shares to be
issued to the Acquired Fund Shareholders under this Reorganization Plan to
the detriment of such shareholders without their further approval.
13. HEADINGS; GOVERNING LAW; ASSIGNMENT; LIMITATION OF LIABILITY
13.1. The Article and paragraph headings contained in this Reorganization Plan
are for reference purposes only and shall not affect in any way the meaning
or interpretation of this Reorganization Plan.
13.2. This Reorganization Plan shall be governed by and construed in accordance
with the laws of the State of Delaware without regard to its principles of
conflicts of laws.
13.3. This Reorganization Plan shall bind and inure to the benefit of the
parties hereto and their respective successors and assigns, but no
assignment or transfer hereof or of any rights or obligations hereunder
shall be made by any party without the written consent of the other party.
Nothing herein expressed or implied is intended or shall be construed to
confer upon or give any person, firm or corporation, other than the parties
hereto and their respective successors and assigns, any rights or remedies
under or by reason of this Reorganization Plan.
13.4. It is expressly agreed that the obligations of the parties hereunder shall
not be binding upon any of the Trustees, shareholders, nominees, officers,
agents, or employees of the Trust personally, but shall bind only property
of such party. The execution and delivery by such officers shall not be
deemed to have been made by any of them individually or to impose any
liability on any of them personally, but shall bind only the property of
each party.
IN WITNESS WHEREOF, the Board of Trustees of the Trust has caused this
Reorganization Plan to be approved on behalf of the Acquiring Fund and the
Acquired Fund.
Transamerica IDEX Mutual Funds
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
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APPENDIX B: EXPLANATION OF STRATEGIES AND RISKS
HOW TO USE THIS SECTION
In the discussions about the Funds, you found descriptions of the principal
strategies and risks associated with the Funds. In those pages, you were
referred to this Appendix for more information about the risks of both principal
and non-principal investments.
DIVERSIFICATION
The Investment Company Act of 1940 ("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.
The Acquiring Fund qualifies as a diversified fund under the 1940 Act. The
Acquired Fund is non-diversified.
INVESTING IN COMMON STOCKS
While common stocks have historically outperformed other investments over the
long term, their prices tend to go up and down more dramatically over the
shorter term. Many factors may 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. Because the stocks a Fund may hold
fluctuate in price, the value of an investment in the Fund will go up and down.
VOLATILITY
The more an investment goes up and down in price, the more volatile it is said
to be. Volatility increases the market risk (i.e., risk of loss due to
fluctuation in value) 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.
PORTFOLIO TURNOVER
A Fund may engage in a significant number of short-term transactions, which may
lower performance. High turnover rate will not limit a manager's ability to buy
or sell securities for these Funds. 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.
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.
INVESTMENT STYLE RISK
Different investment styles tend to shift in and out of favor depending upon
market and economic conditions as well as investor sentiment. A Fund may
outperform or underperform other funds that employ a different investment style.
A Fund may also employ a combination of styles that impact its risk
characteristics. Examples of different investment styles include growth and
value investing. Growth stocks may be more volatile than other stocks because
they are more sensitive to investor perceptions of the issuing company's growth
of earnings potential. Also, since growth companies usually invest a high
portion of earnings in their business, growth stocks may lack the dividends of
value stocks that can cushion stock prices in a falling market. Growth oriented
funds will typically underperform when value investing is in favor. The value
approach carries the risk that the market will not recognize a security's
intrinsic value for a long time, or that a stock considered to be undervalued
may actually be appropriately priced.
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INVESTMENT STRATEGIES
A Fund is permitted to use other securities and investment strategies in pursuit
of its investment objective, subject to limits established by the Board. 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 Statement of Additional Information of TA IDEX, dated
March 1, 2006.
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APPENDIX C: PERFORMANCE UPDATE
MARKET ENVIRONMENT
The Standard and Poor's 500 Composite Stock Index ("S&P 500") posted a gain of
8.71% in the twelve months ended October 31, 2005, due largely to a broadly
based advance in the initial months of the period, and to gains for energy and
utilities stocks throughout the year.
Focusing on sustained growth in the economy and corporate earnings, benign
levels of inflation and still-low interest rates, the equity market largely
ignored a surge in energy prices that began in 2003 and staged a powerful rally
through early 2005. Throughout the year, investors alternated between fear of
recession and expectations of sustainable economic growth, causing stock prices
to vacillate widely. Their concerns about the state of the economy were
heightened after late-summer hurricanes shuttered many Gulf Coast oil and gas
refineries, setting off yet another spike in energy prices while interest rates
continued to climb.
The economic expansion withstood the hurricanes' impact, but recent government
data pointed to growing inflationary pressures as producers increasingly passed
along higher energy costs to consumers. Investor sentiment turned cautious as
bond yields rose and the equity market lost ground.
PERFORMANCE
For the year ended October 31, 2005, TA IDEX Transamerica Equity, Class A
returned 21.16%. By comparison its primary and former benchmarks, the Russell
1000 Growth Index and the S&P 500, returned 8.81% and 8.71%, respectively.
STRATEGY REVIEW
The primary drivers of the portfolio's superior results were individual
healthcare, financial and technology holdings which more than offset an
underweighting in energy, the market's strongest sector. The portfolio comprised
investments in companies that, in our view, benefited from strongly positive
secular trends and have strong management teams, stable balance sheets and
highly competitive positions. Because we found more industrial, consumer
discretionary, health care and technology stocks that met these parameters, the
portfolio was overweighted in those sectors. The portfolio was underweighted in
utilities, telecommunications, energy and financial stocks, which were areas
where we identified fewer stocks with the right combination of attributes. The
largest contributors to total return were SanDisk Corporation ("SanDisk"),
Genentech, Inc. ("Genentech"), and Chicago Mercantile Exchange Holdings Inc.
("CME"). Each is a prime example of a company well positioned to benefit from an
enduring, non-cyclical trend.
SanDisk is a leading competitor among portable memory manufacturers, whose
shares rose dramatically as it became increasingly clear that applications and
demand for ultra-compact memory devices (e.g., picture cell phones) were
expanding at a rapid rate. CME's shares rose sharply as investors became
increasingly aware that this electronic exchange is at the forefront of a
structural shift in how futures, options, foreign exchange and credit
derivatives are traded. Genentech, a biopharmaceutical company that develops new
therapies for widespread forms of cancer (i.e., breast, lung and colon), saw its
stock advance on positive news about the efficacy of Avastin, a ground-breaking
cancer treatment.
The gains for these and other stocks were partially diluted by losses for
Lexmark International, Inc. ("Lexmark") (computer printers) and Zimmer Holdings,
Inc. ("Zimmer") (replacement joint supplier).We exited Lexmark soon after
learning that its major customer relationship was in jeopardy but have
maintained the portfolio's exposure to Zimmer. Investors exited Zimmer's stock
after the company announced that, under pressure from Europe and Japan, it would
not raise product prices. In our view, the company's prospects are still
encouraging, since sales volumes continue to rise.
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APPENDIX D: SHARE OWNERSHIP
As of the Record Date, the name, address, and share ownership of persons who
owned of record or beneficially 5% or more of the outstanding shares of either
party to the Reorganization are set forth below:
TA IDEX Great Companies - America(SM)
Shares
Beneficial or Record Owner of Securities and Address Owned % Owned
- ---------------------------------------------------- ------ -------
TA IDEX Transamerica Equity
Shares
Beneficial or Record Owner of Securities and Address Owned % Owned
- ---------------------------------------------------- ------ -------
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APPENDIX E: FORM OF TIM SUB-ADVISORY AGREEMENT
FORM OF
SUB-ADVISORY AGREEMENT BETWEEN
TRANSAMERICA FUND ADVISORS, INC. AND
TRANSAMERICA INVESTMENT MANAGEMENT, LLC
SUB-ADVISORY AGREEMENT, made as of the 1ST day of November 2006, between
Transamerica Fund Advisors, Inc. (the "Investment Adviser"), a corporation
organized and existing under the laws of the State of Florida and Transamerica
Investment Management, LLC (the "Sub-Adviser"), a limited liability company
organized and existing under the laws of the State of Delaware.
WHEREAS, the Investment Adviser has entered into an Investment Advisory
Agreement dated as of June 15, 2000 ("Advisory Agreement") with Transamerica
IDEX Mutual Funds ("Transamerica IDEX"), a Delaware statutory trust which is
registered as an open-end management investment company under the Investment
Company Act of 1940 ("1940 Act"), to provide or procure investment advisory
services with respect to _______________________ (the "Fund"), a separate series
of Transamerica IDEX; and
WHEREAS, the Sub-Adviser is engaged principally in the business of
rendering investment advisory services and is registered as an investment
adviser under the Investment Advisers Act of 1940 ("Advisers Act"); and
WHEREAS, the Investment Adviser desires to retain the Sub-Adviser as
sub-adviser to assist the Investment Adviser in furnishing certain investment
advisory services with respect to the Fund, and the Sub-Adviser is willing to
furnish such services upon the terms and conditions and for the compensation set
forth below.
NOW, THEREFORE, in consideration of the premises and mutual promises herein
set forth, the parties hereto agree as follows:
1. APPOINTMENT.
The Investment Adviser hereby appoints the Sub-Adviser as its investment
sub-adviser with respect to the Fund for the period and on the terms set forth
in this Agreement. The Sub-Adviser accepts such appointment and agrees to render
the services herein set forth, for the compensation herein provided. The
Sub-Adviser shall for all purposes herein be deemed to be independent contractor
and shall, except as otherwise provided herein, have no authority to act for or
represent the Investment Adviser, Transamerica IDEX, or the Fund in any way or
otherwise be deemed the agent of any of them.
2. DUTIES AND SERVICES OF THE SUB-ADVISER.
A. Investment Sub-Advisory Services. Subject to the supervision of the
Transamerica IDEX Board of Trustees ("Board") and the Investment Adviser, the
Sub-Adviser shall act as the investment sub-adviser to, and shall manage the
day-to-day investment program of, the Fund in accordance with the Fund's
investment objective, policies, and restrictions as provided in the Transamerica
IDEX Prospectus and Statement of Additional Information, as currently in effect
and as amended or supplemented from time to time (hereinafter referred to as the
"Prospectus"), and such other limitations as directed by the appropriate
officers of the Investment Adviser or Transamerica IDEX by notice in writing to
the Sub-Adviser. In furtherance of this duty, the Sub-Adviser, on behalf of the
Fund, is authorized, in its discretion and without prior consultation with the
Board or the Investment Adviser, to (without limitation):
E-1
(1) provide investment research and analysis concerning the Fund's
investments and conduct a continuous investment program to the Fund;
(2) place orders and negotiate the commissions (if any) for all purchases
and sales of the investments made by the Fund with or through such brokers,
dealers, underwriters or issuers as the Sub-Adviser may select;
(3) maintain the books and records required in connection with its duties
hereunder; and
(4) keep the Investment Adviser informed of developments materially
affecting the Fund and its investments.
B. Additional Duties of the Sub-Adviser. In addition to the above, the
Sub-Adviser shall:
(1) use the same skills and care in providing its services to the Fund as
it uses in providing investment services to other fiduciary accounts;
(2) cause its officers to attend meetings, either in person or via
teleconference, of Transamerica IDEX and furnish oral or written reports,
as Transamerica IDEX of the Investment Adviser may reasonably require, in
order to keep Transamerica IDEX and its officers and Board fully informed
as to the condition of the investments of the Fund, the investment
recommendations of the Sub-Adviser, and the investment considerations which
provide the basis for those recommendations; and
(3) furnish such information and reports as may reasonably be required by
Transamerica IDEX or the Investment Adviser from time to time.
C. Further Duties of the Sub-Adviser. (1) In all matters relating to
the performance of this Agreement, the Sub-Adviser shall act in conformity with
the Transamerica IDEX Declaration of Trust and By-Laws, as each may be amended
or supplemented, and currently effective Registration Statement (as defined
below) and with the written instructions and directions of Transamerica IDEX and
the Investment Adviser, and shall comply in all material respects with the
requirements of the 1940 Act, the Advisers Act, the rules thereunder, and all
other applicable laws and regulations.
(2) The Sub-Adviser acknowledges that the Fund may engage in certain
transactions in reliance on exemptions under Rule 10f-3, Rule 12d3-1, Rule
17a-10 and Rule 17e-1 under the 1940 Act. Accordingly, the Sub-Adviser hereby
agrees that it will not consult with any other sub-adviser of the Fund, or an
affiliated person of such other sub-adviser, concerning transactions for the
Fund in securities or other fund assets. The Sub-Adviser shall be limited to
providing investment advice with respect to only the discrete portion of the
Fund's portfolio as may be determined from time-to-time by the Investment
Adviser, and shall not consult with any other sub-adviser as to any other
portion of the Fund's portfolio concerning transactions for the Fund in
securities or other assets.
D. Custody. The Sub-Adviser shall have no responsibility with respect
to maintaining custody of the Fund's assets. The Sub-Adviser shall affirm
security transactions with central depositories and advise the custodian of the
Fund (the "Custodian") or such depositories or agents as may be designated by
the Custodian and the Investment Adviser promptly of each purchase and sale of a
security on behalf of the Fund, specifying the name of the issuer, the
description and amount or number of shares of the security purchased, the market
price, the commission and gross or net price, the trade date and settlement date
and the identity of the effecting broker or dealer. The Sub-Adviser shall from
time to time provide the Custodian and the Investment Adviser with evidence of
authority of its personnel who are authorized to give instructions to the
Custodian. The Fund shall instruct the Custodian to provide the Sub-Adviser with
such information as the Sub-Adviser may reasonably request relating to daily
cash levels held by the Fund.
E. Proxy Voting and Other Actions as a Fiduciary. Unless the
Investment Adviser advises the Sub-Adviser in writing that the right to vote
proxies has been expressly reserved to the Investment Adviser or Transamerica
IDEX or otherwise delegated to another party, the Sub-Adviser shall exercise
voting rights incident to any securities held
by the Fund in accordance with its own proxy voting policies and procedures
without consultation with the Investment Adviser or the Fund. The Sub-Adviser
agrees to furnish a copy of its proxy voting policies and procedures, and any
amendments thereto, to the Investment Adviser.
The Sub-Adviser shall further respond to all corporate action matters
incident to such securities held in the Fund including, without limitation,
proofs of claim in bankruptcy and class action cases and shelf registrations.
The Sub-Adviser agrees to keep the Fund informed about any such litigation and
the actions that it intends to take. In the case of class action suits involving
issuers held by the Fund, the Sub-Adviser may include information about the Fund
for purposes of participating in any settlements upon written agreement by the
Fund.
F. Use of Name. The Sub-Adviser shall give the Fund, for the term of
this Agreement, a royalty free, nonexclusive, nontransferable right to use the
name "_________" (hereinafter referred to as the "Mark") in the United States as
part of the name of the Fund, provided such name is approved by the Sub-Adviser
in writing. Such right does not include the right to allow third parties to use
the Mark except as specifically provided in this Agreement. Neither the Fund nor
the Investment Adviser shall retain any right to use of the Mark after the
termination of this Agreement. Upon termination of this Agreement, the Fund will
immediately terminate all use of the Mark and destroy any remaining unused sales
documentation, promotional, marketing, advertising or other written printed or
electronic material or performance information that contains the Mark. The Fund
agrees to use its best efforts to ensure that the nature and quality of the
services rendered in connection with the Mark shall conform to the terms of this
Agreement and any amendments thereto.
3. COMPENSATION.
For the services provided by the Sub-Adviser pursuant to this Agreement,
the Sub-Adviser shall receive monthly an investment sub-advisory fee at the
annual rate (as a percentage of average daily net assets) as specified in
Schedule A of this Agreement. If this Agreement is not in effect for an entire
month, the amount of sub-advisory fee payable hereunder shall be pro-rated
accordingly.
4. EXPENSES.
During the term of this Agreement, the Sub-Adviser will bear all expenses
incurred by it in the performance of its duties and its provision of services
hereunder, other than the cost of investments (including brokerage fees)
purchased and sold for the Fund. Notwithstanding the foregoing, the Sub-Adviser
shall not bear expenses related to the operation of the Fund, including but not
limited to, taxes, interests, brokerage fees and commissions, proxy voting
expenses and extraordinary Fund expenses.
5. DUTIES OF THE INVESTMENT ADVISER.
A. The Investment Adviser shall continue to have responsibility for all
services to be provided to the Fund pursuant to the Advisory Agreement and shall
oversee and review the Sub-Adviser's performance of its duties and services
under this Agreement.
B. The Investment Adviser has furnished the Sub-Adviser with copies of each
of the following documents and will furnish to the Sub-Adviser at its principal
office all future amendments and supplements to such documents, if any, as soon
as practicable after such documents become available:
(1) The Transamerica IDEX Declaration of Trust and By-Laws, as each is
in effect on the date hereof and as amended from time to time;
(2) Certified resolutions of the Board authorizing the appointment of
the Investment Adviser and the Sub-Adviser and approving this
Agreement;
(3) The Transamerica IDEX Registration Statement under the 1940 Act
and the Securities Act of 1933, on Form N-1A, as filed with the
Securities and Exchange Commission ("SEC") relating to the Fund and
its shares and all amendments thereto ("Registration Statement"); and
(4) A certified copy of any publicly available financial statement or
report prepared for Transamerica IDEX by certified or independent
public accountants, and copies of any financial statements or reports
made by the Fund to its shareholders or to any governmental body or
securities exchange.
The Investment Adviser shall furnish the Sub-Adviser with any further
documents, materials or information that the Sub-Adviser may reasonably request
to enable it to perform its duties pursuant to this Agreement.
C. During the term of this Agreement, the Investment Adviser shall furnish
to the Sub-Adviser at its principal office all prospectuses, proxy statements,
reports to shareholders, sales documentation, promotional, marketing,
advertising and other written, printed or electronic material or performance
information or data prepared for distribution to shareholders of the Fund or the
public, which include the Mark or refer to the Fund, the Sub-Adviser or
investment companies or other advisory accounts advised or sponsored by the
Sub-Adviser in any way, prior to a use thereof which has not been previously
approved by the Sub-Adviser. The Investment Adviser shall not use any such
materials without the Sub-Adviser's prior written approval, which approval shall
not be unreasonably withheld; and the Investment Adviser shall not use any such
materials which do not include the Mark if the Sub-Adviser reasonably objects in
writing within ten (10) business days (or such other time as may be mutually
agreed upon) after the Sub-Adviser's receipt thereof.
6. BROKERAGE.
A. The Sub-Adviser agrees that, in placing orders with broker-dealers for
the purchase or sale of Fund securities, it will attempt to obtain the best
execution of its orders. Consistent with these obligations and the terms of
Section 28(e) of the Securities Exchange Act of 1934, the Sub-Adviser may,
subject to any procedures that the Board may adopt, agree to pay a broker-dealer
that furnishes brokerage or research services a higher commission than that
which might have been charged by another broker-dealer for effecting the same
transactions, if the Sub-Adviser determines in good faith that such commission
is reasonable in relation to the brokerage and research services provided by the
broker-dealer, viewed in terms of either that particular transaction or the
overall responsibilities of the Sub-Adviser with respect to the Fund and its
other clients and that the total commissions paid by the Fund will be reasonable
in relation to the benefits provided to the Fund. In no instance will Fund
securities be purchased from or sold to the Sub-Adviser, or any affiliated
person thereof, except to the extent permitted by exemptive order of the SEC or
in accordance with applicable laws and regulations.
B. On occasions when the Sub-Adviser deems the purchase or sale of a
security to be in the best interest of the Fund, as well as other clients of the
Sub-Adviser, the Sub-Adviser, to the extent permitted by applicable laws and
regulations, may, but shall be under no obligation to, aggregate the securities
to be purchased or sold to attempt to obtain a more favorable price or lower
brokerage commissions and efficient execution. In such event, allocation of the
securities so purchased or sold, as well as the expenses incurred in the
transaction, will be made by the Sub-Adviser in the manner the Sub-Adviser
considers to be the most equitable and consistent with its fiduciary obligations
to the Fund and to its other clients.
7. OWNERSHIP OF RECORDS.
The Sub-Adviser shall maintain all books and records required to be
maintained by the Sub-Adviser pursuant to the 1940 Act and the rules and
regulations promulgated thereunder with respect to transactions on behalf of the
Fund. In compliance with the requirements of Rule 31a-3 under the 1940 Act, the
Sub-Adviser hereby agrees (i) to preserve for the periods prescribed by Rule
31a-3 under the 1940 Act any records that it maintains for the Fund that are
required to be maintained by Rule 31a-1 under the 1940 Act, and (ii) to provide
the Fund with access to or copies of any records that it maintains for the Fund
upon reasonable request by the Fund.
8. REPORTS.
The Sub-Adviser shall furnish to the Board or the Investment Adviser, or
both, as appropriate, such information, reports, evaluations, analyses and
opinions as the Sub-Adviser and the Board or the Investment Adviser, as
appropriate, may mutually agree upon from time to time.
9. SERVICES TO OTHER CLIENTS.
To the extent consistent with the Sub-Adviser's duties and services under
this Agreement, nothing contained in this Agreement shall limit or restrict (i)
the freedom of the Sub-Adviser, or any affiliated person thereof, to render
investment management and corporate administrative services to other investment
companies, to act as investment manager or investment counselor to other
persons, firms, or corporations, or to engage in any other business activities,
or (ii) the right of any director, officer, or employee of the Sub-Adviser, to
engage in any other business or to devote his or her time and attention in part
to the management or other aspects of any other business, whether of a similar
nature or a dissimilar nature.
10. THE SUB-ADVISER'S USE OF THE SERVICES OF OTHERS.
The Sub-Adviser may (at its cost except as contemplated by Section 6 of
this Agreement) employ, retain, or otherwise avail itself of the services or
facilities of other persons or organizations for the purpose of obtaining such
statistical and other factual information, such advice regarding economic
factors and trends, such advice as to occasional transactions in specific
securities, or such other information, advice, or assistance as the Sub-Adviser
may deem necessary, appropriate, or convenient for the discharge of its
obligations hereunder or otherwise helpful to the Sub-Adviser, as appropriate,
or in the discharge of the Sub-Adviser's overall responsibilities with respect
to the other accounts that it serves as investment manager or counselor,
provided that the Sub-Adviser shall at all times retain responsibility for
making investment recommendations with respect to the Fund.
11. LIABILITY AND INDEMNIFICATION OF THE SUB-ADVISER.
The Sub-Adviser may rely on information reasonably believed by it to be
accurate and reliable. Except as may otherwise be provided by the 1940 Act,
neither the Sub-Adviser nor its officers, directors, employees or agents shall
be subject to any liability to the Investment Adviser, the Fund or any
shareholder of the Fund for any error of judgment, mistake of law or any loss
arising out of any investment or other act or omission in the course of,
connected with or arising out of any service to be rendered hereunder, except by
reason of willful misfeasance, bad faith or gross negligence in its performance
of its obligations and duties or by reason of its reckless disregard of its
obligations and duties under this Agreement.
The Sub-Adviser shall indemnify and hold harmless the Investment Adviser,
the Fund and their respective directors, trustees, officers, employees or agents
from any and all claims, losses, expenses, obligation and liabilities (including
reasonable attorneys fees) arising or resulting from the Sub-Adviser's willful
misfeasance, bad faith or gross negligence in its performance of its obligations
and duties or by reason of its reckless disregard of its obligations and duties
under this Agreement.
12. REPRESENTATIONS OF THE SUB-ADVISER.
The Sub-Adviser represents, warrants, and agrees as follows:
A. The Sub-Adviser: (i) is registered as an investment adviser under the
Advisers Act and will continue to be so registered for so long as this Agreement
remains in effect; (ii) is not prohibited by the 1940 Act or the Advisers Act
from performing the services contemplated by this Agreement; (iii) has met, and
will continue to meet for so long as this Agreement remains in effect, any
applicable federal or state requirements, or the applicable requirements of any
regulatory or industry self-regulatory agency, necessary to be met in order to
perform the services contemplated by this Agreement; (iv) has the authority to
enter into and perform the services contemplated by this Agreement; and (v) will
immediately notify the Investment Adviser of the occurrence of any event that
would disqualify the Sub-Adviser from serving as an investment adviser of an
investment company pursuant to Section 9 (a) of the 1940 Act or otherwise.
B. The Sub-Adviser has adopted a written code of ethics complying with the
requirements of Rule 17j-1 under the 1940 Act and 204A-1 under the Advisers Act
and will provide the Investment Adviser and Transamerica IDEX with a copy of
such code of ethics and any amendments thereto, together with evidence of
adoption for review and approval by
the Board. The Sub-Adviser understands that the Board is required to approve the
Sub-Adviser's code of ethics and acknowledges that the Agreement is conditioned
upon such Board approval.
C. The Sub-Adviser has adopted proxy voting policies and procedures
reasonably designed to ensure that the proxies are voted in the best interests
of the Fund and its shareholders and complying with Rule 206(4)-6 under the
Advisers Act and will provide the Investment Adviser and Transamerica IDEX with
a copy of such policies and procedures and any amendments thereto, together with
evidence of adoption for review and approval by the Board. The Sub-Adviser
understands that the Board is required to approve the Sub-Adviser's proxy voting
policies and procedures and acknowledges that the Agreement is conditioned upon
such Board approval.
D. The Sub-Adviser has provided the Investment Adviser and Transamerica
IDEX with a copy of its Form ADV as most recently filed with the SEC and will,
promptly after filing any material amendment to its Form ADV with the SEC,
furnish a copy of such amendment to the Investment Adviser.
E. The Sub-Adviser has adopted compliance policies and procedures
reasonably designed to prevent violations of the Advisers Act and the rules
thereunder, has provided Transamerica IDEX and the Investment Adviser with a
copy of such compliance policies and procedures (and will provide them with any
amendments thereto), and agrees to assist the Fund in complying with the Fund's
compliance program adopted pursuant to Rule 38a-1 under the 1940 Act, to the
extent applicable. The Sub-Adviser understands that the Board is required to
approve the Sub-Adviser's compliance policies and procedures and acknowledges
that the Agreement is conditioned upon such Board approval.
F. The Sub-Adviser will manage the Fund so that the Fund will qualify as a
regulated investment company under Subchapter M of the Internal Revenue Code,
and will immediately notify the Investment Adviser and the Fund upon having a
reasonable basis for believing that the Fund has ceased to so qualify or may not
so qualify in the future.
G. The Sub-Adviser shall notify the Investment Adviser and the Fund
immediately of any material fact known to the Sub-Adviser relating to the
Sub-Adviser that is not contained in the Registration Statement, or any
amendment or supplement thereto, or of any statement contained therein that
becomes untrue in any material respect.
H. The Sub-Adviser shall not divert the Fund's portfolio securities
transactions to a broker or dealer in consideration of such broker or dealer's
promotion or sales of shares of the Fund, any other series of Transamerica IDEX,
or any other registered investment company.
13. TERM OF AGREEMENT.
This Agreement shall become effective as of the date set forth above.
Unless sooner terminated as provided herein, it shall continue in effect for two
years from its effective date. Thereafter, if not terminated, it shall continue
for successive 12-month periods, provided that such continuance is specifically
approved at least annually (a) by the vote of a majority of the Fund's
outstanding voting securities (as defined in the 1940 Act) or by the Board and
(b) by the vote, cast in person at a meeting called for the purpose, of a
majority of the Trustees who are not interested persons (for regulatory
purposes) of Transamerica IDEX or the Investment Adviser. This Agreement may be
terminated at any time, without payment of any penalty, on 60 days' written
notice to the Investment Adviser or the Sub-Adviser, as appropriate, by (i) the
Board, (ii) a vote of a majority of the outstanding voting securities of the
Fund, (iii) the Investment Adviser, or (iv) the Sub-Adviser. This Agreement
shall terminate automatically in the event of its assignment (as defined or
interpreted for regulatory purposes) or the termination of the Advisory
Agreement.
14. NOTICES.
Any notice shall be sufficiently given when sent by certified U.S. mail,
national expenses deliver service, or facsimile to the parties at the address
below:
If to Transamerica IDEX:
Transamerica IDEX Mutual Funds
570 Carillon Parkway
St. Petersburg, FL 33716
Attn: Dennis P. Gallagher
Telephone: (727) 299-1821
Fax: (727) 299-1832
If to the Investment Adviser:
Transamerica Fund Advisors, Inc.
570 Carillon Parkway
St. Petersburg, FL 33716
Attn: Dennis P. Gallagher
Telephone: (727) 299-1821
Fax: (727) 299-1832
If to the Sub-Adviser:
Transamerica Investment Management, LLC
11111 Santa Monica Boulevard, Suite 820
Los Angeles, CA 90025
Telephone: ______________
Fax: ____________________
15. AMENDMENT OF AGREEMENT.
No provision of this Agreement may be changed, waived, discharged, or
terminated orally, but only by an instrument in writing signed by the party
against which enforcement of the change, waiver, discharge, or termination is
sought, and no amendment of this Agreement shall be effective until approved by
the Board and, solely to the extent required by the 1940 Act, regulations
thereunder and/or interpretations thereof, the shareholders of the Fund..
16. MISCELLANEOUS.
A. Governing Law. This Agreement shall be construed in accordance with the
laws of the State of Delaware without giving effect to the conflicts of laws
principles thereof, and the 1940 Act. To the extent that the applicable laws of
the State of Delaware conflict with the applicable provisions of the 1940 Act,
the latter shall control.
B. Captions. The captions contained in this Agreement are included for
convenience of reference only and in no way define or delimit any of the
provisions hereof or otherwise affect their construction or effect.
C. Entire Agreement. This Agreement represents the entire agreement and
understanding of the parties hereto and shall supersede any prior agreements
between the parties relating to the subject matter hereof, and all such prior
agreements shall be deemed terminated upon the effectiveness of this Agreement.
D. Severability. If any provision of this Agreement shall be held or made
invalid by a court decision, statute, rule or otherwise, the remainder of this
Agreement shall not be affected, and to this extent, the provisions of this
Agreement shall be deemed to be severable.
E. Definitions. Any question of interpretation of any term or provision of
this Agreement having a counterpart in or otherwise derived from a term or
provision of the 1940 Act shall be resolved by reference to such term or
provision of the 1940 Act and to authoritative interpretations thereof.
F. Confidentiality. The Sub-Adviser will maintain the strictest confidence
regarding the business affairs of Transamerica IDEX and the Fund. Written
reports furnished by the Sub-Adviser to Transamerica IDEX and the Investment
Adviser will be treated as confidential, and for the exclusive use and benefit
of Transamerica IDEX and the Investment Adviser, except as disclosure may be
required by applicable law.
G. Counterparts. This Agreement may be executed in counterparts, each of
which shall be deemed an original of the same agreement.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
executed by their duly authorized signatories as of the date and year first
above written.
TRANSAMERICA FUND ADVISORS, INC.
By:
-------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
TRANSAMERICA INVESTMENT MANAGEMENT, LLC
By:
-------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
SUB-ADVISORY AGREEMENT
SCHEDULE A
FUND SUB-ADVISER COMPENSATION*
---- -----------------------------
[FUND NAME] 0.30% of the first $500
million of average daily net
assets; and 0.25% of average
daily net assets in excess of
$500 million
* As a percentage of average daily net assets on an annual basis.
APPENDIX F: DIRECTORS AND PRINCIPAL EXECUTIVE OFFICER OF TFAI
The business address of each director and principal executive officer is 570
Carillon Parkway, St. Petersburg, Florida 33716.
NAME AND POSITION WITH THE
INVESTMENT ADVISER PRINCIPAL OCCUPATION/POSITION
-------------------------- -----------------------------
Brian C. Scott Trustee/Director, TA IDEX Mutual Funds
Director ("TA IDEX"), AEGON/Transamerica Series
Trust ("ATST"), and Transamerica Income
Shares, Inc. ("TIS"); and Transamerica
Fund Services, Inc. ("TFS")
John K. Carter President and Chief Executive Officer,
Director, President and Chief General Counsel, Chief Compliance
Executive Officer, General Counsel, Officer and Secretary, TA IDEX, ATST
Chief Compliance Officer and and TIS; Vice President, AFSG
Secretary Securities Corp.; Chief Executive
Officer, Secretary and Chief Compliance
Officer, TII.
Christopher A. Staples Senior Vice President - Investment
Director and Senior Vice President Management, TA IDEX, ATST, TIS ; and
- - Investment Management Director, TFS; Vice President -
Investment Administration, TII.
Mr. Scott serves as a Trustee of TA IDEX; Messrs. Carter and Staples serve as
Officers of TA IDEX.
TFAI is a Florida corporation with its principal offices located at 570 Carillon
Parkway, St. Petersburg, Florida 33716. TFAI is directly owned by Western
Reserve Life Assurance Co. of Ohio (77%) (Western Reserve) and AUSA Holding
Company (23%) (AUSA), both of which are indirect, wholly owned subsidiaries of
AEGON N.V. Western Reserve Life Assurance Co. of Ohio is wholly-owned by First
AUSA Life Insurance Company, a stock life insurance company, which is wholly
owned by Transamerica Holding Company, which is wholly owned by AEGON USA, Inc.
("AEGON USA"), a financial services holding company whose primary emphasis is
generally the sale and servicing of life and health insurance, and annuity and
investment products. AEGON USA is a wholly-owned indirect subsidiary of AEGON,
N.V., a Netherlands corporation, which is a publicly traded international
insurance group.
APPENDIX G: MANAGING MEMBERS AND PRINCIPAL EXECUTIVE OFFICER[S] OF TIM
The business address of each of the following persons is 11111 Santa Monica
Blvd., Suite 820, Los Angeles, California 90025.
NAME POSITIONS/OFFICES HELD WITH SUB-ADVISER
---- ---------------------------------------
John C. Riazzi Chairman of the Board and Chief Executive Officer
Geoffrey I. Edelstein Counsel and Secretary
Gary U. Rolle Chief Investment Officer
Emme Devonish Chief Compliance Officer
Travis Weimer Controller
No Officer or Trustee of TA IDEX is an officer, employee, managing member or
shareholder of TIM. No Officer or Trustee of TA IDEX owns securities or has any
other material indirect interest in TIM.
G-1
APPENDIX H: AFFILIATED BROKERAGE
Aggregate Amount of Fund Brokerage Percentage of Fund's Aggregate Brokerage
Name of Affiliated Broker Commissions Paid to Broker Commissions Paid to Broker
------------------------- ---------------------------------- ----------------------------------------
AFSG Securities Corporation $0 0%
Diversified Investors Securities Corp. $0 0%
InterSecurities, Inc. $0 0%
Transamerica Capital, Inc. $0 0%
Transamerica Financial Advisors, Inc. $0 0%
Transamerica Securities Sales Corporation $0 0%
World Group Securities, Inc. $0 0%
---
Total: $0
===
H-1
PART B
TRANSAMERICA IDEX MUTUAL FUNDS
570 Carillon Parkway
St. Petersburg, Florida 33716
----------
Statement of Additional Information
__________, 2006
----------
Acquisition of the Assets and By and in Exchange for Shares of:
Liabilities of:
TA IDEX Great Companies - America(SM) TA IDEX Transamerica Equity
This Statement of Additional Information is available to the shareholders of TA
IDEX Great Companies - America(SM) in connection with a proposed transaction
whereby all of the assets and liabilities of TA IDEX Great Companies -
America(SM) will be transferred to TA IDEX Transamerica Equity in exchange for
shares of TA IDEX Transamerica Equity.
This Statement of Additional Information of TA IDEX Transamerica Equity consists
of this cover page, the accompanying pro forma financial statements and related
notes, and the following documents, each of which was filed electronically with
the Securities and Exchange Commission and is incorporated by reference herein:
1. The Statement of Additional Information for Transamerica IDEX Mutual Funds
dated March 1, 2006; and
2. The Financial Statements of TA IDEX Great Companies - America(SM) and TA
IDEX Transamerica Equity as included in Transamerica IDEX Mutual Funds'
Annual Report filed for the year ended October 31, 2005 and the Semi-Annual
Report filed for the period ended on April 30, 2006.
This Statement of Additional Information is not a prospectus. A Proxy
Statement/Prospectus dated [_________, 2006] relating to the transaction may be
obtained, without charge, by writing to Transamerica IDEX Mutual Funds, 570
Carillon Parkway, St. Petersburg, Florida 33716 or calling 1-888-233-4339. This
Statement of Additional Information should be read in conjunction with the Proxy
Statement/Prospectus.
Part B-1
REORGANIZATION BETWEEN TA IDEX TRANSAMERICA EQUITY AND TA IDEX
GREAT COMPANIES - AMERICA(SM)
PRO FORMA SCHEDULE OF INVESTMENTS
AT APRIL 30, 2006
(ALL AMOUNTS EXCEPT SHARE AMOUNTS IN THOUSANDS)
(UNAUDITED)
TA IDEX
TA IDEX GREAT COMPANIES
TRANSAMERICA EQUITY - AMERICA(SM) PRO FORMA FUND
------------------- ------------------ -------------------
SHARES VALUE SHARES VALUE SHARES VALUE
--------- -------- --------- ------- --------- --------
COMMON STOCKS
Aerospace
United Technologies Corp. -- $ -- 50,000 $3,141 50,000 $ 3,141
Amusement & Recreation Services
Disney (Walt) Co. (The) -- -- 64,660 1,808 64,660 1,808
Beverages
PepsiCo, Inc. -- -- 52,350 3,049 52,350 3,049
Business Services
eBay, Inc. ** 440,000 15,140 -- -- 440,000 15,140
Moody's Corp. 220,000 13,642 -- -- 220,000 13,642
Chemicals & Allied Products
Clorox Co. -- -- 29,000 1,861 29,000 1,861
Praxair, Inc. 350,000 19,646 -- -- 350,000 19,646
Procter & Gamble Co. 320,000 18,627 33,970 1,977 353,970 20,604
Commercial Banks
JP Morgan Chase & Co. -- -- 44,000 1,997 44,000 1,997
Communication
XM Satellite Radio Holdings, Inc.-Class A ** + 480,000 9,706 -- -- 480,000 9,706
Communications Equipment
Corning, Inc. ** -- -- 81,000 2,238 81,000 2,238
QUALCOMM, Inc. 700,000 35,938 42,000 2,156 742,000 38,094
Computer & Data Processing Services
F5 Networks, Inc. ** + -- -- 16,000 937 16,000 937
Intuit, Inc. ** 370,000 20,043 -- -- 370,000 20,043
Microsoft Corp. 900,000 21,735 -- -- 900,000 21,735
Sun Microsystems, Inc. ** -- -- 275,000 1,375 275,000 1,375
Yahoo!, Inc. ** -- -- 56,000 1,836 56,000 1,836
Computer & Office Equipment
Apple Computer, Inc. ** 270,000 19,005 25,700 1,809 295,700 20,814
Sandisk Corp. ** + 335,000 21,383 -- -- 335,000 21,383
Drug Stores & Proprietary Stores
Walgreen Co. 430,000 18,030 -- -- 430,000 18,030
Electronic & Other Electric Equipment
Emerson Electric Co. -- -- 21,000 1,784 21,000 1,784
General Electric Co. 475,000 16,430 -- -- 475,000 16,430
Electronic Components & Accessories
Intel Corp. -- -- 100,000 1,998 100,000 1,998
Trident Microsystems, Inc. ** -- -- 35,000 931 35,000 931
Engineering & Management Services
Jacobs Engineering Group, Inc. ** 270,000 22,329 -- -- 270,000 22,329
Furniture & Fixtures
THE NOTES TO THE PRO FORMA FINANCIAL STATEMENTS ARE AN INTEGRAL PART OF THESE
PRO FORMA FINANCIAL STATEMENTS.
REORGANIZATION BETWEEN TA IDEX TRANSAMERICA EQUITY AND TA IDEX
GREAT COMPANIES - AMERICA(SM)
PRO FORMA SCHEDULE OF INVESTMENTS
AT APRIL 30, 2006
(ALL AMOUNTS EXCEPT SHARE AMOUNTS IN THOUSANDS)
(UNAUDITED)
TA IDEX
TA IDEX GREAT COMPANIES
TRANSAMERICA EQUITY - AMERICA(SM) PRO FORMA FUND
------------------- ------------------ -------------------
SHARES VALUE SHARES VALUE SHARES VALUE
--------- -------- --------- ------- --------- --------
Johnson Controls, Inc. -- -- 24,000 1,957 24,000 1,957
Hotels & Other Lodging Places
Marriott International, Inc.-Class A 300,000 21,921 -- -- 300,000 21,921
MGM Mirage, Inc. ** 450,000 20,205 -- -- 450,000 20,205
Industrial Machinery & Equipment
Caterpillar, Inc. 350,000 26,509 -- -- 350,000 26,509
National Oilwell Varco, Inc. ** -- -- 14,000 966 14,000 966
Instruments & Related Products
Danaher Corp. -- -- 30,000 1,923 30,000 1,923
Insurance
AFLAC, Inc. -- -- 39,000 1,854 39,000 1,854
UnitedHealth Group, Inc. -- -- 32,440 1,614 32,440 1,614
WellPoint, Inc. ** 275,000 19,525 -- -- 275,000 19,525
Leather & Leather Products
Coach, Inc. ** -- -- 75,000 2,477 75,000 2,477
Life Insurance
Prudential Financial, Inc. -- -- 34,600 2,703 34,600 2,703
Management Services
Paychex, Inc. 400,000 16,156 -- -- 400,000 16,156
Medical Instruments & Supplies
Bard, (C.R.) Inc. -- -- 15,000 1,117 15,000 1,117
Medtronic, Inc. -- -- 33,400 1,674 33,400 1,674
St. Jude Medical, Inc. ** -- -- 24,190 955 24,190 955
Zimmer Holdings, Inc. ** 250,000 15,725 -- -- 250,000 15,725
Mining
Vulcan Materials Co. -- -- 17,000 1,444 17,000 1,444
Motor Vehicles, Parts & Supplies
BorgWarner, Inc. -- -- 18,000 1,093 18,000 1,093
Oil & Gas Extraction
Anadarko Petroleum Corp. 150,000 15,723 -- -- 150,000 15,723
BJ Services Co. -- -- 65,760 2,502 65,760 2,502
Chesapeake Energy Corp. + -- -- 28,000 887 28,000 887
Hugoton Royalty Trust -- -- 2,050 57 2,050 57
Nabors Industries, Ltd. ** -- -- 36,000 1,344 36,000 1,344
Schlumberger, Ltd. 400,000 27,656 -- -- 400,000 27,656
Weatherford International, Ltd. ** -- -- 44,000 2,329 44,000 2,329
XTO Energy, Inc. + -- -- 34,410 1,457 34,410 1,457
Paper & Allied Products
3M Co. -- -- 24,000 2,050 24,000 2,050
Petroleum Refining
Marathon Oil Corp. -- -- 13,000 1,032 13,000 1,032
THE NOTES TO THE PRO FORMA FINANCIAL STATEMENTS ARE AN INTEGRAL PART OF THESE
PRO FORMA FINANCIAL STATEMENTS.
REORGANIZATION BETWEEN TA IDEX TRANSAMERICA EQUITY AND TA IDEX
GREAT COMPANIES - AMERICA(SM)
PRO FORMA SCHEDULE OF INVESTMENTS
AT APRIL 30, 2006
(ALL AMOUNTS EXCEPT SHARE AMOUNTS IN THOUSANDS)
(UNAUDITED)
TA IDEX
TA IDEX GREAT COMPANIES
TRANSAMERICA EQUITY - AMERICA(SM) PRO FORMA FUND
------------------- ------------------ -------------------
SHARES VALUE SHARES VALUE SHARES VALUE
--------- -------- --------- ------- --------- --------
Suncor Energy, Inc. 250,000 21,435 -- -- 250,000 21,435
Valero Energy Corp. -- -- 15,000 971 15,000 971
Pharmaceuticals
Alkermes, Inc. ** + -- -- 33,460 718 33,460 718
Allergan, Inc. + 200,000 20,544 -- -- 200,000 20,544
Biogen Idec, Inc. ** -- -- 20,420 916 20,420 916
Genentech, Inc. ** 280,000 22,319 -- -- 280,000 22,319
Genzyme Corp. ** -- -- 25,810 1,579 25,810 1,579
Gilead Sciences, Inc. ** -- -- 17,000 978 17,000 978
Wyeth -- -- 42,620 2,074 42,620 2,074
Printing & Publishing
McGraw-Hill Cos., Inc. (The) 420,000 23,377 -- -- 420,000 23,377
Radio & Television Broadcasting
Viacom, Inc.-Class B ** -- -- 29,000 1,155 29,000 1,155
Retail Trade
Staples, Inc. 820,000 21,656 -- -- 820,000 21,656
Rubber & Misc. Plastic Products
Newell Rubbermaid, Inc. -- -- 25,790 707 25,790 707
Security & Commodity Brokers
American Express Co. 400,000 21,524 51,000 2,744 451,000 24,268
Ameriprise Financial, Inc. 350,000 17,164 -- -- 350,000 17,164
Chicago Mercantile Exchange + 65,000 29,770 -- -- 65,000 29,770
E*TRADE Financial Corp. ** -- -- 72,000 1,791 72,000 1,791
Goldman Sachs Group, Inc. (The) -- -- 11,200 1,795 11,200 1,795
Morgan Stanley -- -- 41,000 2,636 41,000 2,636
T. Rowe Price Group, Inc. -- -- 32,000 2,694 32,000 2,694
Telecommunications
Sprint Nextel Corp. 440,000 10,912 67,000 1,662 507,000 12,574
Verizon Communications, Inc. -- -- 53,000 1,751 53,000 1,751
Transportation & Public Utilities
Expeditors International of Washington, Inc. 280,000 23,971 -- -- 280,000 23,971
Trucking & Warehousing
United Parcel Service, Inc.-Class B + 340,000 27,564 -- -- 340,000 27,564
------- ------ -------
TOTAL COMMON STOCKS (COST: $607,639) 655,310 84,503 739,813
------- ------ -------
PRINCIPAL VALUE PRINCIPAL VALUE PRINCIPAL VALUE
--------- ----- --------- ----- --------- -----
SECURITY LENDING COLLATERAL
DEBT
Bank Notes
Bank of America
4.81%, due 06/07/2006 * $ 1,670 $ 1,670 $ 130 $ 130 $ 1,800 $1,800
THE NOTES TO THE PRO FORMA FINANCIAL STATEMENTS ARE AN INTEGRAL PART OF THESE
PRO FORMA FINANCIAL STATEMENTS.
REORGANIZATION BETWEEN TA IDEX TRANSAMERICA EQUITY AND TA IDEX
GREAT COMPANIES - AMERICA(SM)
PRO FORMA SCHEDULE OF INVESTMENTS
AT APRIL 30, 2006
(ALL AMOUNTS EXCEPT SHARE AMOUNTS IN THOUSANDS)
(UNAUDITED)
TA IDEX
TA IDEX GREAT COMPANIES
TRANSAMERICA EQUITY - AMERICA(SM) PRO FORMA FUND
------------------- ------------------ -------------------
PRINCIPAL VALUE PRINCIPAL VALUE PRINCIPAL VALUE
--------- -------- --------- ------- --------- --------
4.81%, due 08/10/2006 * 1,612 1,612 126 126 1,738 1,738
Bear Stearns & Co.
5.01%, due 06/06/2006 * 645 645 50 50 695 695
5.01%, due 09/07/2006 * 1,934 1,934 151 151 2,085 2,085
Certificates Of Deposit
Halifax Bank of Scotland
4.78%, due 06/06/2006 * 1,612 1,612 126 126 1,738 1,738
Rabobank Nederland
4.87%, due 05/31/2006 * 1,612 1,612 126 126 1,738 1,738
Commercial Paper
Banco Santander Central Hispano SA
4.77%, due 05/02/2006 967 967 75 75 1,042 1,042
Sheffield Receivables Corp.-144A
4.81%, due 05/03/2006 1,609 1,609 125 125 1,734 1,734
Euro Dollar Overnight
Bank of Montreal
4.77%, due 05/02/2006 1,289 1,289 100 100 1,389 1,389
Dexia Group
4.78%, due 05/04/2006 1,612 1,612 126 126 1,738 1,738
Fortis Bank
4.77%, due 05/01/2006 645 645 50 50 695 695
Royal Bank of Canada
4.77%, due 05/01/2006 2,256 2,256 176 176 2,432 2,432
Royal Bank of Scotland
4.75%, due 05/03/2006 1,612 1,612 126 126 1,738 1,738
Svenska Handlesbanken
4.82%, due 05/01/2006 1,231 1,231 96 96 1,327 1,327
Euro Dollar Terms
BancoBilbao Vizcaya Argentaria SA
4.95%, due 06/20/2006 1,289 1,289 100 100 1,389 1,389
Bank of the West
4.94%, due 06/16/2006 1,289 1,289 100 100 1,389 1,389
Barclays
4.79%, due 05/10/2006 1,934 1,934 151 151 2,085 2,085
4.77%, due 05/16/2006 645 645 50 50 695 695
Canadian Imperial Bank of Commerce
4.97%, due 06/23/2006 967 967 75 75 1,042 1,042
Credit Suisse First Boston Corp.
4.73%, due 05/08/2006 967 967 75 75 1,042 1,042
THE NOTES TO THE PRO FORMA FINANCIAL STATEMENTS ARE AN INTEGRAL PART OF THESE
PRO FORMA FINANCIAL STATEMENTS.
REORGANIZATION BETWEEN TA IDEX TRANSAMERICA EQUITY AND TA IDEX
GREAT COMPANIES - AMERICA(SM)
PRO FORMA SCHEDULE OF INVESTMENTS
AT APRIL 30, 2006
(ALL AMOUNTS EXCEPT SHARE AMOUNTS IN THOUSANDS)
(UNAUDITED)
TA IDEX
TA IDEX GREAT COMPANIES
TRANSAMERICA EQUITY - AMERICA(SM) PRO FORMA FUND
------------------- ------------------ -------------------
PRINCIPAL VALUE PRINCIPAL VALUE PRINCIPAL VALUE
--------- -------- --------- ------- --------- --------
Fortis Bank
4.83%, due 05/08/2006 645 645 50 50 695 695
Lloyds TSB Bank
4.81%, due 05/11/2006 967 967 75 75 1,042 1,042
Royal Bank of Scotland
4.87%, due 05/12/2006 1,289 1,289 100 100 1,389 1,389
Societe Generale
4.79%, due 05/10/2006 1,612 1,612 126 126 1,738 1,738
UBS AG
4.95%, due 06/20/2006 1,612 1,612 126 126 1,738 1,738
Repurchase Agreements ++
Credit Suisse First Boston Corp. 4.92%,
dated 04/28/2006 to be repurchased
at $2,361 on 05/01/2006 2,188 2,188 170 170 2,358 2,358
Goldman Sachs Group, Inc. (The) 4.92%, dated
04/28/2006 to be repurchased at $5,106
on 05/01/2006 4,735 4,735 369 369 5,104 5,104
Lehman Brothers, Inc. 4.92%, dated
04/28/2006 to be repurchased at $86
on 05/01/2006 80 80 6 6 86 86
Merrill Lynch & Co. 4.87%, dated 04/28/2006
to be repurchased at $5,214 on 05/01/2006 4,835 4,835 377 377 5,212 5,212
Morgan Stanley Dean Witter & Co. 4.93%,
dated 04/28/2006 to be repurchased at
$2,433 on 05/01/2006 2,256 2,256 176 176 2,432 2,432
SHARES VALUE SHARES VALUE SHARES VALUE
--------- ----- --------- ----- --------- -------
INVESTMENT COMPANIES
Barclays Global Investors Institutional
Money Market Fund 1-day yield of 4.78% 2,578,693 $ 2,579 200,852 $ 201 2,779,545 $ 2,780
Merrimac Cash Fund, Premium Class
1-day yield of 4.61% @ 686,102 686 53,440 53 739,542 739
-------- ------- --------
TOTAL SECURITY LENDING COLLATERAL (COST: $54,844) 50,881 3,963 54,844
-------- ------- --------
TOTAL INVESTMENT SECURITIES (COST: $662,483) # $706,191 $88,466 $794,657
======== ======= ========
NOTES TO SCHEDULE OF INVESTMENTS:
** Non-income producing.
+ At April 30, 2006, all or a portion of this security is on loan. The value
at April 30, 2006, of all securities on loan is $53,252.
* Floating or variable rate note. Rate is listed as of April 30, 2006.
++ Cash collateral for the Repurchase Agreements, valued at $15,640, that
serve as collateral for securities lending are invested in corporate bonds
with interest rates and maturity dates ranging from 0.00% - 9.05% and
05/02/2006 - 12/31/2049, respectively.
@ Regulated investment company advised by Investors Bank and Trust Co.
("IBT"). IBT is also the accounting, custody and lending agent for the
Fund.
# Aggregate cost for Federal income tax purposes is $662,853. Aggregate gross
unrealized appreciation for all securities in which there is an excess of
value over tax cost and aggregate gross unrealized depreciation for all
securities in which there is an excess of tax cost over value were $145,264
and $13,460, respectively. Net unrealized appreciation for tax purposes
is $131,804.
DEFINITIONS:
144A 144A Securities are registered pursuant to Rule 144A of the Securities Act
of 1933. These securities are deemed to be liquid for purposes of
compliance limitations on holdings of illiquid securities and may be resold
as transactions exempt from registration, normally to qualified
institutional buyers. At April 30, 2006, these securities aggregated
$1,734.
THE NOTES TO THE PRO FORMA FINANCIAL STATEMENTS ARE AN INTEGRAL PART OF THESE
PRO FORMA FINANCIAL STATEMENTS.
REORGANIZATION BETWEEN TA IDEX TRANSAMERICA EQUITY AND TA IDEX GREAT COMPANIES -
AMERICA(SM)
PRO FORMA STATEMENT OF ASSETS AND LIABILITIES
AT APRIL 30, 2006
(ALL AMOUNTS EXCEPT PER SHARE AMOUNTS IN THOUSANDS)
(UNAUDITED)
TA IDEX TA IDEX GREAT
TRANSAMERICA COMPANIES PRO FORMA
EQUITY AMERICA(SM) ADJUSTMENTS FUND
------------ ------------- ----------- ---------
ASSETS:
Investment securities, at cost $ 580,424 $82,059 $ 662,483
========= ======= =========
Investment securities, at value
(including securities loaned of $49,385, $3,867 and $53,252,
respectively) $ 706,191 $88,466 $ 794,657
Cash 24,475 117 24,592
Receivables:
Investment securities sold -- 2,917 2,917
Shares of beneficial interest sold 1,515 7 1,522
Interest 45 6 51
Dividends 330 96 426
Other 28 8 36
--------- ------- ---------
732,584 91,617 824,201
--------- ------- ---------
LIABILITIES:
Investment securities purchased -- 711 711
Accounts payable and accrued liabilities:
Shares of beneficial interest redeemed 331 278 609
Management and advisory fees 404 51 455
Distribution and service fees 93 51 144
Transfer agent fees 101 43 144
Administration fees 11 1 12
Payable for collateral for securities on loan 50,881 3,963 54,844
Other 82 27 109
--------- ------- ---------
51,903 5,125 57,028
--------- ------- ---------
NET ASSETS $ 680,681 $86,492 $ 767,173
========= ======= =========
NET ASSETS CONSIST OF:
Shares of beneficial interest unlimited shares authorized,
no par value 669,138 88,455 757,593
Distributable net investment income (loss) (826) (290) (1,116)
Accumulated net realized gain (loss) from investment
securities (113,397) (8,079) (121,476)
Net unrealized appreciation (depreciation) on investment
securities 125,766 6,406 132,172
--------- ------- ---------
NET ASSETS $ 680,681 $86,492 $ 767,173
========= ======= =========
NET ASSETS BY CLASS:
Class A $ 86,366 $26,937 $ 113,303
Class B 54,678 35,571 90,249
Class C 26,775 15,559 42,334
Class I 512,862 8,425 521,287
SHARES OUTSTANDING:
Class A 8,780 2,692 46(a) 11,518
Class B 5,826 3,697 91(a) 9,614
Class C 2,850 1,617 40(a) 4,507
Class I 51,972 840 14(a) 52,826
NET ASSET VALUE PER SHARE:
Class A $ 9.84 $ 10.01 $ 9.84
Class B 9.39 9.62 9.39
Class C 9.39 9.62 9.39
Class I 9.87 10.03 9.87
MAXIMUM OFFERING PRICE PER SHARE (1):
Class A $ 10.41 $ 10.59 $ 10.41
(1) Includes the maximum selling commission (represented as a percentage of
offering price) which is reduced on certain levels of sales as set forth in
the Prospectus. Net asset value per share for Classes B, C and I shares
represents offering price. The redemption price for Classes B and C shares
equals net asset value less any applicable contingent deferred sales
charge.
(a) See Note 2 of the Pro Forma Notes to the Financial Statements.
THE NOTES TO THE PRO FORMA FINANCIAL STATEMENTS ARE AN INTEGRAL PART OF THESE
PRO FORMA FINANCIAL STATEMENTS.
REORGANIZATION BETWEEN TA IDEX TRANSAMERICA EQUITY AND TA IDEX GREAT COMPANIES -
AMERICA(SM)
PRO FORMA STATEMENT OF OPERATIONS
FOR THE PERIOD MAY 1, 2005 THROUGH APRIL 30, 2006
(ALL AMOUNTS IN THOUSANDS)
(UNAUDITED)
TA IDEX TA IDEX GREAT
TRANSAMERICA COMPANIES PRO FORMA
EQUITY AMERICA(SM) ADJUSTMENTS FUND
------------ ------------- ----------- ---------
Investment Income:
Dividends (net of withholding taxes on foreign dividends of
$4, $-- and $4, respectively) $ 3,156 $ 1,144 $ 4,300
Interest 373 76 449
Income from loaned securities-net 41 4 45
-------- -------- --------
3,570 1,224 4,794
-------- -------- --------
EXPENSES:
Management and advisory fees 3,405 749 (38)(b) 4,116
Distribution and service fees:
Class A 621 119 740
Class B 512 413 925
Class C 247 194 441
Transfer agent fees:
Class A 368 130 498
Class B 374 176 550
Class C 96 67 163
Class I -- -- --
Printing and shareholder reports 97 33 130
Custody fees 38 12 (2)(c) 48
Administration fees 91 19 110
Legal fees 25 7 32
Audit fees 29 21 (21)(d) 29
Trustees fees 19 4 23
Registration fees 49 28 77
Other 8 4 12
-------- ------- ------- --------
Total expenses 5,979 1,976 (61) 7,894
Less:
Reimbursement of class expenses:
Class A (8) (38) 46(e) --
Class B (204) (62) 35(e) (231)
Class C (3) (14) 6(e) (11)
-------- ------- ------- --------
Total reimbursed expenses (215) (114) 87 (242)
-------- ------- ------- --------
NET EXPENSES 5,764 1,862 26 7,652
-------- ------- ------- --------
NET INVESTMENT INCOME (LOSS) (2,194) (638) (26) (2,858)
-------- ------- ------- --------
NET REALIZED AND UNREALIZED GAIN (LOSS)
Realized gain (loss) from investment securities 13,239 9,522 22,761
Increase (decrease) in unrealized appreciation (depreciation) on
investment securities 99,320 (1,058) 98,262
-------- ------- --------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENT SECURITIES 112,559 8,464 121,023
-------- ------- --------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $110,365 $ 7,826 (26) $118,165
======== ======= ======= ========
(b) - (e) See Note 2 of the Pro Forma Notes to the Financial Statements.
THE NOTES TO THE PRO FORMA FINANCIAL STATEMENTS ARE AN INTEGRAL PART OF THESE
PRO FORMA FINANCIAL STATEMENTS.
REORGANIZATION BETWEEN TA IDEX TRANSAMERICA EQUITY AND TA IDEX GREAT COMPANIES -
AMERICA(SM)
PRO FORMA NOTES TO THE FINANCIAL STATEMENTS
At April 30, 2006
(ALL AMOUNTS IN THOUSANDS)
(UNAUDITED)
NOTE 1 - GENERAL
The accompanying unaudited pro forma financial statements are presented to show
the effect of the proposed transfer of substantially all of the assets of TA
IDEX Great Companies - America(SM) (the "Fund") to TA IDEX Transamerica Equity
(the "Acquiring Fund") in exchange for Class A, B, C and I shares of the
Acquiring Fund and the assumption by the Acquiring Fund of substantially all of
the liabilities of the Fund as described elsewhere in this proxy
statement/prospectus.
The "Pro Forma Fund" as identified in these financial statements represents the
combined fund after the merger, with the Acquiring Fund treated as the
accounting survivor for financial reporting purposes. Management believes the
Acquiring Fund to be the accounting survivor because this fund's investment
objective/style, fee and expense structure would remain in tact with the
combined fund. In addition, the Acquiring Fund has substantially more assets
than the Fund.
Under the terms of the Agreement and Plan of Reorganization, the exchange of
assets of the Fund for the Class A, B, C and I shares of the Acquiring Fund will
be treated and accounted for as a tax-free reorganization. The acquisition would
be accomplished by an acquisition of the net assets of the Fund in exchange for
the Class A, B, C and I shares of the Acquiring Fund at net asset value. The
unaudited pro forma Schedule of Investments and the unaudited Pro Forma
Statement of Assets and Liabilities have been prepared as though the acquisition
had been effective on April 30, 2006. The unaudited pro forma Statement of
Operations has been prepared as though the acquisition had been effective May 1,
2005 to report operations for the twelve months ended April 30, 2006.
The accompanying pro forma financial statements should be read in conjunction
with the financial statements of the Fund and the Acquiring Fund, which are
included in their respective semi-annual reports dated April 30, 2006.
NOTE 2 - PRO FORMA ADJUSTMENTS
The Pro Forma adjustments below reflect the impact of the merger.
(a) To adjust shares outstanding of the Pro Forma Fund based on combining the
Fund at the Acquiring Fund's net asset value.
(b) To restate advisory fees using the Acquiring Fund advisory fee rates for
the Pro Forma Fund at the combined average daily net assets of the Fund and
Acquiring Fund.
(c) To remove duplicate Custody fees.
(d) To remove duplicate Auditing fees.
(e) To adjust the Reimbursements by the investment advisor as a result of the
stated annual expense limit of the Acquiring Fund at the combined average
daily net assets of the Fund and the Acquiring Fund.
No adjustments have been made to investments owned on the Schedules of
Investments as the investments of the Pro Forma Fund are not unsuitable nor
violate the investment objectives of the Acquiring Fund.
PRO FORMA NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
At April 30, 2006
(ALL AMOUNTS IN THOUSANDS)
(UNAUDITED)
NOTE 3 - INVESTMENT ADVISORY AND OTHER TRANSACTIONS
Transamerica Fund Advisors, Inc. ("TFAI") is the Acquiring Fund's investment
adviser. Transamerica Fund Services, Inc. ("TFS") is the Acquiring Fund's
administrator and transfer agent. AFSG Securities Corp. ("AFSG") is the
Acquiring Fund's distributor/principal underwriter. TFAI, TFS, and AFSG are
affiliates of AEGON, NV, a Netherlands corporation.
Transamerica Investment Management, LLC is both an affiliate of the Acquiring
Fund and a sub-adviser to the Pro Forma Fund.
Certain officers and trustees of the Acquiring Fund are also officers and/or
directors of TFAI, TFS and AFSG.
The following schedule represents the percentage of Pro Forma Fund assets owned
by affiliated investment companies at April 30, 2006:
Net % of
Assets Net Assets
-------- ----------
TA IDEX Asset Allocation- Conservative Portfolio $ 27,460 3.58%
TA IDEX Asset Allocation- Growth Portfolio 176,820 23.05%
TA IDEX Asset Allocation- Moderate Portfolio 104,156 13.58%
TA IDEX Asset Allocation- Moderate Growth Portfolio 204,531 26.66%
-------- -----
Total $512,967 66.87%
======== =====
INVESTMENT ADVISORY FEES
The Acquiring Fund pays management fees to TFAI based on average daily net
assets ("ANA") at the following breakpoints:
0.75% of the first $500 million of ANA
0.70% of ANA over $500 million
If the reorganization is approved, the Acquiring Fund will pay management fees
to TFAI based on ANA at the following breakpoints:
0.75% of the first $500 million of ANA
0.70% of the next $2.0 billion of ANA
0.65% of ANA over $2.5 billion
TFAI has contractually agreed to waive its advisory fee and will reimburse the
Acquiring Fund to the extent that operating expenses, excluding 12b-1 fees,
exceed the following stated annual limit:
1.17% Expense Limit
If the reorginization is approved, the Fund will not be required to reimburse
the adviser for previously waived advisory fees and reimbursed class expenses
Total waived advisory fees are $148 and total Reimbursed class Expenses are $88.
PART C
OTHER INFORMATION
[NOTE: PLEASE CONFIRM, UPDATE AND COMPLETE.]
Item 15 Indemnification
Provisions relating to indemnification of the Registrant's Trustees and
employees are included in Registrant's Restatement of Declaration of Trust and
Bylaws which are incorporated herein by reference.
Insofar as indemnification for liability arising under the Securities Act
of 1933 may be permitted to Trustees, officers and controlling persons, or
otherwise, Registrant has been advised that in the opinion of the Commission
such indemnification may be against public policy as expressed in the Act and
may be, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by Registrant of expenses
incurred or paid by a Trustee, officer or controlling person of Registrant in
the successful defense of any action, suit or proceeding) is asserted by such
Trustee, officer or controlling person in connection with the securities being
registered, Registrant will, unless in the opinion of its counsel the matter has
been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
Item 16 Exhibits
(1) Declaration of Trust(m)
(2) Bylaws(m)
(3) Not Applicable
(4) Form of Plan of Reorganization(n)
(5) See Exhibits 1 and 2.
(6) (a) Investment Advisory Contract - TA IDEX Transamerica Equity(e)
(b) Sub-Advisory Agreement - TA IDEX Transamerica Equity(e)
(7) (a) Underwriting Agreement(j)
(b) Dealer's Sales Agreement(i)
(c) Service Agreement(d)
(d) Wholesaler's Agreement(c)
(e) Amended and Restated Plan for Multiple Classes of Shares(g)
(8) Trustees Deferred Compensation Plan(b)
(9) Custody Agreement(h)
(10) (a) Plan of Distribution under Rule 12b-1 - Class A/B Shares(k)
(b) Plan of Distribution under Rule 12b-1 - Class C Shares(k)
(i) TA IDEX Transamerica Equity(e)
(ii) Amendment to Plan of Distribution under Rule 12b-1(f)
(11) Opinion and Consent of Counsel to be filed herewith.
(12) Opinion and Consent of Dechert LLP to be filed by post-effective amendment.
(13) (a) (i) Transfer Agency Agreement(a)
(ii) Amendment to Transfer Agency Agreement(l)
(b) (i) Administrative Services Agreement(h)
(ii) Amendment to Administrative Services Agreement(l)
(c) Expense Limitation Agreement(j)
(d) Consulting Agreement(k)
(14) Consent of Independent Registered Certified Public Accounting Firm is filed
herewith.
Part C-1
(15) Not Applicable
(16) Powers of Attorney are filed herewith.
(17) Form of proxy card is filed herewith.
- ----------
All exhibits filed previously are herein incorporated by reference.
(a) Filed previously with Post-Effective Amendment No. 20 to Registration
Statement filed on November 16, 1995 (File No. 33-2659).
(b) Filed previously with Post-Effective Amendment No. 24 to Registration
Statement filed on November 16, 1996 (File No. 33-2659).
(c) Filed previously with Post-Effective Amendment No. 25 to Registration
Statement filed on January 31, 1997 (File No. 33-2659).
(d) Filed previously with Post-Effective Amendment No. 31 to Registration
Statement filed on September 2, 1999 (File No. 33-2659).
(e) Filed previously with Post-Effective Amendment No. 33 to Registration
Statement filed on December 17, 1999 (File No. 33-2659).
(f) Filed previously with Post-Effective Amendment No. 42 to Registration
Statement filed on March 1, 2001 (File No. 33-2659).
(g) Filed previously with Post-Effective Amendment No. 43 to Registration
Statement filed on December 17, 2001 (File No. 33-2659).
(h) Filed previously with Post-Effective Amendment No. 49 to Registration
Statement filed on September 12, 2002 (File No. 33-2659).
(i) Filed previously with Post-Effective Amendment No. 50 to Registration
Statement filed on November 12, 2002 (File No. 33-2659).
(j) Filed previously with Post-Effective Amendment No. 51 to Registration
Statement filed on December 13, 2002 (File No. 33-2659).
(k) Filed previously with Post-Effective Amendment No. 56 to Registration
Statement filed on March 1, 2004 (File No. 33-2659).
(l) Filed previously with Post-Effective Amendment No. 67 to Registration
Statement filed on February 25, 2005 (File No. 33-2659).
(m) Filed previously with Post-Effective Amendment No. 69 to Registration
Statement filed on May 27, 2005 (File No. 33-2659). Where is this in the
list of exhibits?
(n) See Appendix A to the Proxy Statement/Prospectus.
Item 17. Undertakings
1. The undersigned registrant agrees that prior to any public reoffering of
the securities registered through the use of a prospectus which is a part
of this registration statement by any person or party who is deemed to be
an underwriter within the meaning of Rule 145(c) of the Securities Act of
1933 (17 CFR 230.145(c)), the reoffering prospectus will contain the
information called for by the applicable registration form for reofferings
by persons who may be deemed underwriters, in addition to the information
called for by the other items of the applicable form.
2. The undersigned registrant agrees that every prospectus that is filed under
paragraph (1) above will be filed as a part of an amendment to the
registration statement and will not be used until the amendment is
effective, and that, in determining any liability under the 1933 Act, each
post-effective amendment shall be deemed to be a new registration statement
for the securities offered therein, and the offering of the securities at
that time shall be deemed to be the initial bona fide offering of them.
3. The undersigned registrant undertakes to file a post-effective amendment to
this registration statement upon the closing of the Reorganizations
described in this registration statement that contains an opinion of
counsel supporting the tax matters discussed in this registration
statement.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant has
duly caused this Registration Statement on Form N-14 to be signed on its behalf
by the undersigned, thereunto duly authorized, in the City of St. Petersburg and
State of Florida on the 4th day of August, 2006.
TRANSAMERICA IDEX MUTUAL FUNDS
By: /s/ John K. Carter
------------------------------------
John K. Carter
President and Chief Executive
Officer
Pursuant to the requirements of the Securities Act of 1933, as amended, this
Registration Statement has been signed below by the following persons in the
capacities and on the 4th day of August, 2006.
TRANSAMERICA IDEX MUTUAL FUNDS
/s/ Peter R. Brown By: /s/ John K. Carter
- ------------------------------------- -------------------------------------
Peter R. Brown John K. Carter, as President and
Chairman of the Board and Trustee Chief Executive Officer, and as
Attorney-In-Fact for the Trustees
whose names appear opposite
/s/ Robert L. Anderson /s/ Glenn E. Brightman
- ------------------------------------- ----------------------------------------
Robert L. Anderson, Ph.D. Glenn E. Brightman, Senior Vice
Trustee President and Principal Financial
Officer
/s/ Daniel Calabria
- -------------------------------------
Daniel Calabria
Trustee
/s/ Charles C. Harris
- -------------------------------------
Charles C. Harris
Trustee
/s/ Jack E. Zimmerman
- -------------------------------------
Jack E. Zimmerman
Trustee
/s/ Janice B. Case
- -------------------------------------
Janice B. Case
Trustee
/s/ Norm R. Nielsen
- ------------------------------------
Norm R. Nielsen
Trustee
/s/ Russel A. Kimball, Jr. /s/ John W. Waechter
- ------------------------------------- ----------------------------------------
Russell A Kimball, Jr. John W. Waechter
Trustee Trustee
/s/ Leo J. Hill /s/ William W. Short, Jr.
- ------------------------------------- ----------------------------------------
Leo J. Hill William W. Short, Jr.
Trustee Trustee
EXHIBIT INDEX
11 Opinion and Consent of Counsel filed herewith.
14 Consent of Independent Registered Certified Public Accounting Firm is filed
herewith.
16 Powers of Attorney are filed herewith
17 Form of proxy card is filed herewith.