SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE
SECURITIES EXCHANGE ACT OF 1934
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[ ] Definitive proxy statement.
[ ] Definitive additional materials.
[ ] Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12.
[ ] Confidential, for use of the Commissioner only (as permitted by Rule
14a-6(e)(2)).
AEGON/TRANSAMERICA SERIES TRUST
(Name of Registrant as Specified in its Charter)
N/A
(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and
0-11.
(1) Title of each class of securities to which transaction
applies: N/A
(2) Aggregate number of securities to which transaction applies:
N/A
(3) Per unit price or other underlying value of transaction
computed pursuant to Rule 0-11 (Set forth the amount on
which the filing fee is calculated and state how it was
determined): N/A
(4) Proposed maximum aggregate value of transaction: N/A
(5) Total fee paid: $0
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid: N/A
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TEMPLETON GREAT COMPANIES GLOBAL
A SERIES OF
AEGON/TRANSAMERICA SERIES TRUST
570 CARILLON PARKWAY
ST. PETERSBURG, FLORIDA 33716
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NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
To be held on October 18, 2006
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To the Policyowners:
Notice is hereby given that AEGON/Transamerica Series Trust ("ATST") will hold a
special meeting of shareholders of Templeton Great Companies Global (the
"Portfolio") on October 18, 2006, at ATST's offices, 570 Carillon Parkway, St.
Petersburg, Florida 33716, at 12:00 p.m., Eastern time, as adjourned from time
to time (the "Special Meeting") for the purposes listed below:
1. To approve an investment sub-advisory agreement between Transamerica
Fund Advisors, Inc. and Transamerica Investment Management, LLC
pursuant to which Transamerica Investment Management LLC will be
appointed as an investment sub-adviser to the Portfolio.
2. To transact such other business as may properly come before the
Special Meeting.
After careful consideration, the Board of Trustees (the "Board") of ATST
unanimously approved the new sub-advisory agreement and recommends that
shareholders vote "FOR" this proposal.
Shareholders of record at the close of business on August 4, 2006 are entitled
to notice of, and to vote at, the Special Meeting. Shares of the Portfolio are
not offered directly to the public but are sold only to insurance companies and
their separate accounts as the underlying investment medium for owners (each a
"Policyowner," collectively, "Policyowners") of variable annuity contracts and
variable life policies (collectively, the "Policies"). As such, Western Reserve
Life Assurance Co. of Ohio ("WRL"), Transamerica Life Insurance Company
("Transamerica"), Diversified Investment Advisors ("DIA"), Transamerica
Financial Life Insurance Company ("TFLIC"), Peoples Benefit Life Insurance
Company ("Peoples") and Transamerica Occidental Life Insurance Company ("TOLIC")
(collectively, the "Insurance Companies") are the only shareholders of the
investment options of ATST. WRL, Transamerica, DIA, TFLIC, Peoples and TOLIC own
all of the shares of the Portfolio. ATST has agreed to solicit voting
instructions from Policyowners invested in the Portfolio in connection with the
proposal. As such and for ease of reference, throughout this Proxy Statement,
you may also be referred to as "shareholders" of the Portfolio.
You have received this Proxy Statement because you have a Policy of one of these
Insurance Companies and you are invested in the Portfolio. As such owner, you
have the right to give voting instructions on shares of the Portfolio that are
attributable to your Policy, if your voting instructions are properly submitted
and received prior to the Special Meeting.
If you do not expect to attend the Special Meeting in person, you are requested
to complete, date, and sign the enclosed voting instruction form and return it
promptly in the envelope provided for that purpose. Your voting instruction form
also provides instructions for voting via telephone or the Internet, if you wish
to take advantage of these voting options. Instructions may be revoked at any
time by executing and submitting a revised voting instruction form, by giving
written notice of revocation to ATST, or by providing instructions in person at
the Special Meeting.
By Order of the Board,
- -------------------------------------
Dennis Gallagher
General Counsel
YOUR INSTRUCTIONS ARE VERY IMPORTANT TO US REGARDLESS OF THE NUMBER OF UNITS YOU
HOLD. POLICYOWNERS WHO DO NOT EXPECT TO ATTEND THE SPECIAL MEETING ARE REQUESTED
TO COMPLETE, SIGN, DATE AND RETURN THE ACCOMPANYING VOTING INSTRUCTION FORM IN
THE ENCLOSED ENVELOPE, WHICH NEEDS NO POSTAGE IF MAILED IN THE UNITED STATES. IT
IS IMPORTANT THAT YOUR VOTING INSTRUCTION FORM BE RETURNED PROMPTLY.
FOR YOUR CONVENIENCE, YOU MAY ALSO PROVIDE INSTRUCTIONS BY TELEPHONE OR VIA THE
INTERNET BY FOLLOWING THE ENCLOSED INSTRUCTIONS. IF YOU PROVIDE INSTRUCTIONS BY
TELEPHONE OR VIA THE INTERNET, PLEASE DO NOT RETURN YOUR VOTING INSTRUCTION FORM
UNLESS YOU ELECT TO CHANGE YOUR VOTING INSTRUCTIONS.
-3-
TEMPLETON GREAT COMPANIES GLOBAL
A SERIES OF
AEGON/TRANSAMERICA SERIES TRUST
570 CARILLON PARKWAY
ST. PETERSBURG, FLORIDA 33716
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PROXY STATEMENT
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SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON OCTOBER 18, 2006
This proxy statement and enclosed proxy notice and voting instruction form are
being furnished in connection with the solicitation of voting instructions by
the Board of Trustees (the "Board" or "Trustees") of AEGON/Transamerica Series
Trust ("ATST") for use at a special meeting of shareholders of Templeton Great
Companies Global (the "Portfolio"), on October 18, 2006, at 12:00 p.m., Eastern
time, at ATST's offices, 570 Carillon Parkway, St. Petersburg, Florida 33716, as
adjourned from time to time (the "Special Meeting"). The Board is soliciting
voting instruction forms from Policyowners of the Portfolio with respect to
shareholder approval of a proposed investment sub-advisory agreement between
Transamerica Fund Advisors, Inc. ("TFAI") and Transamerica Investment
Management, LLC ("TIM") on behalf of the Portfolio (the "TIM Sub-Advisory
Agreement") as set forth in the accompanying notice. You are entitled to provide
instructions at the Special Meeting if you were invested in the Portfolio as of
the close of business on August 4, 2006 (the "Record Date"). This proxy
statement, the notice and voting instruction form are being first mailed to
Policyowners on or about September 5, 2006.
INTRODUCTION
TFAI, as investment adviser to the Portfolio, has traditionally retained one or
more investment sub-advisers to provide portfolio management services to the
Portfolio. Prior to August 1, 2006, TFAI retained Great Companies, L.L.C.
("Great Companies") to serve as co-investment sub-adviser to the Portfolio and
manage the Portfolio's domestic equity component. Great Companies recently
entered into a transaction that resulted in affiliates of TFAI and 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 Investment Company Act of 1940 ("1940 Act")
that terminated the investment sub-advisory agreement between TFAI and Great
Companies.
Templeton Investment Counsel, LLC ("Templeton") also serves as co-investment
sub-adviser to the Portfolio. Templeton manages the Portfolio's international
equity component. The portion of the Portfolio's assets managed by Templeton
will not be affected by the proposal and will remain sub-advised by Templeton.
To avoid a potential "orphanage" of the Portfolio's domestic equity component
following the Great Companies transaction, upon TFAI's proposal at a meeting
held on July 18-19, 2006, the Board approved an interim investment sub-advisory
agreement (the "Interim Sub-Advisory Agreement") between TFAI and TIM pursuant
to which TIM was appointed as interim co-investment sub-adviser for a maximum
period of 150 days following the termination of the investment 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 Portfolio's custodian bank pending shareholder
consideration of the TIM Sub-Advisory Agreement.
If Policyowners of the Portfolio approve the TIM Sub-Advisory Agreement, TIM
will continue serving as co-investment sub-adviser to the Portfolio pursuant to
the terms of the agreement, as described below. In addition, TIM will be paid
for its services during the interim period under the Interim Sub-Advisory
Agreement in the amount held in the escrow account.
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If Policyowners reject the TIM Sub-Advisory Agreement, TIM would not be able to
continue serving as co-investment sub-adviser to the Portfolio past the end of
the 150-day interim period, and the Board would consider various options with
respect to the Portfolio, which may include liquidation and dissolution of the
Portfolio, or the appointment of another co-investment sub-adviser in accordance
with applicable law. In addition, 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).
At the Board's meeting held on July 18-19, 2006, the Trustees determined that
the best interests of Portfolio shareholders would be served by entering into
the TIM Sub-Advisory Agreement. After careful consideration, upon the
recommendation of TFAI and the management of ATST, the Trustees, including a
majority of Trustees who are not "interested persons" (as defined under the 1940
Act) of ATST (the "Independent Trustees"), unanimously approved, subject to
shareholder approval, the TIM Sub-Advisory Agreement. For your reference, a form
of the TIM Sub-Advisory Agreement is attached as Exhibit A.
THE BOARD RECOMMENDS THAT THE POLICYOWNERS OF THE PORTFOLIO PROVIDE INSTRUCTIONS
TO APPROVE THE TIM SUB-ADVISORY AGREEMENT.
PROPOSAL I
APPROVAL OF THE TIM SUB-ADVISORY AGREEMENT
INVESTMENT ADVISORY ARRANGEMENTS
TFAI, located at 570 Carillon Parkway, St. Petersburg, Florida 33716, serves as
investment adviser to the Portfolio pursuant to an investment advisory agreement
dated as of January 1, 1997, as amended (the "Advisory Agreement"). The Advisory
Agreement was approved by the Board for an initial 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 January 1, 1997. The names, addresses and principal occupations
of the principal executive officer and each director of TFAI are set forth in
Exhibit B-1, as is information regarding the ownership of TFAI.
Pursuant to the Advisory Agreement for the Portfolio, TFAI manages the
investment operations of the Portfolio and supervises the composition of the
ATST portfolios, including the purchase, retention and disposition of portfolio
securities. TFAI is authorized to enter into investment sub-advisory agreements
for investment advisory services in connection with the management of ATST and
each series thereof, including the Portfolio. TFAI has responsibility for all
investment advisory services furnished pursuant to any such investment
sub-advisory agreement. In connection with its management of the business
affairs of ATST, TFAI bears: (a) all expenses incurred by TFAI or by the
Portfolio in connection with managing the ordinary course of ATST business,
other than those assumed by the Portfolio; and (b) the fees payable to a
sub-adviser pursuant to the investment sub-advisory agreement between TFAI and a
sub-adviser. For its services, TFAI is compensated by the Portfolio at the rate
of 0.75% of the first $500 million of average daily net assets; 0.725% of
average daily net assets over $500 million up to $1.5 billion; and 0.70% of
average daily net assets over $1.5 billion. During the Portfolio's most recently
completed fiscal year ended December 31, 2005, TFAI received a total of
$4,462,577 for service as the Portfolio's investment adviser. If the TIM
Sub-Advisory Agreement is approved by shareholders, fees payable by the
Portfolio to TFAI under the Advisory Agreement will not change.
Under the Advisory Agreement, TFAI reviews the performance of all sub-advisers,
and makes recommendations to the Board with respect to the retention and renewal
of agreements. In connection therewith, TFAI is obligated to keep certain books
and records of ATST. TFAI also administers the business affairs of ATST and
furnishes ATST with office facilities and certain ordinary clerical and
bookkeeping services.
The terms of the Advisory Agreement and the services to be provided to the
Portfolio thereunder will remain unchanged if the TIM Sub-Advisory Agreement is
approved.
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THE PRIOR SUB-ADVISORY AGREEMENT
Until August 1, 2006, Great Companies, located at 635 Court Street, Suite 100,
Clearwater, Florida 33756, served as the Portfolio's co-investment sub-adviser
pursuant to an investment sub-advisory agreement between TFAI and Great
Companies dated May 1, 2004, which was last approved by the Board, including a
majority of Independent Trustees, at a meeting held on November 2, 2005, and was
last submitted to a vote of the Portfolio shareholders on April 27, 2004.
Pursuant to this investment sub-advisory agreement, Great Companies received
monthly compensation from TFAI at the following annual rates (expressed as a
percentage of the Portfolio's average daily net assets): 0.31% of the first $500
million; 0.275% of assets over $500 million up to $1.5 billion; and 0.28% of
assets in excess of $1.5 billion, less any amount paid by TFAI to Templeton for
Templeton's co-investment sub-advisory services to the Portfolio. Templeton
receives a portion of the sub-advisory fee based on the amount of assets of the
Portfolio that it manages: it receives 0.40% of the fee for the first $500
million of the Portfolio's average daily net assets; 0.375% of the fee for the
Portfolio's average daily net assets over $500 million up to $1.5 billion; and
0.35% of the fee for the Portfolio's average daily net assets over $1.5 billion
(for the portion of assets that Templeton manages). During the Portfolio's most
recently completed fiscal year ended December 31, 2005, Great Companies received
an aggregate total of $678,580 from TFAI for services rendered to the Portfolio.
ACQUISITION OF GREAT COMPANIES' INTERESTS
As previously noted, Great Companies recently entered into a transaction that
resulted in affiliates of TFAI and TIM acquiring all of the interests of Great
Companies and the cessation of Great Companies' operation as a business. The
acquisition was deemed to result in an "assignment" (as that term is used for
regulatory purposes) which resulted in the termination of the investment
sub-advisory agreement between TFAI and Great Companies. 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, TFS and AFSG are
affiliates as their parent companies are indirect subsidiaries of AEGON, NV, a
Netherlands corporation.
Section 15(f) of the 1940 Act provides that an investment adviser (such as Great
Companies) to a registered investment company (such as the Portfolio) 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 Portfolio. With respect to the other
condition, management will use its reasonable efforts to cause the Portfolio to
comply with the requirements of Section 15(f) and to assure that at least 75% of
the members of the Board of ATST are not "interested persons" of TFAI, TIM or
Great Companies 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 co-investment sub-adviser to the Portfolio. 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 or a bank 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 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 are substantially
similar 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 investment sub-advisory fees payable under the
Interim Sub-Advisory Agreement are identical to the fees payable under the prior
agreement with Great Companies. The Interim Sub-Advisory Agreement will expire
at the earlier of 150
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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 INVESTMENT SUB-ADVISORY ARRANGEMENTS
The Co-Investment Sub-Adviser. TIM, with its principal place of business at
11111 Santa Monica Boulevard, Suite 820, Los Angeles, California 90025, is an
investment adviser registered as such with the U.S. Securities and Exchange
Commission. As of June 30, 2006, TIM had 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 Exhibit B-2.
TIM provides investment management and related services to other mutual fund
portfolios and individual, corporate, charitable and retirement accounts.
Exhibit C sets forth certain information regarding each registered investment
company portfolio advised or sub-advised by TIM with an investment objective
similar to that employed with respect to the domestic equity component of the
Portfolio.
The TIM Sub-Advisory Agreement. The following summary of the proposed TIM
Sub-Advisory Agreement is qualified in its entirety by reference to the copy of
the TIM Sub-Advisory Agreement, a form of which is attached as Exhibit A.
The terms of the TIM Sub-Advisory Agreement are substantially similar to those
of the prior investment sub-advisory agreement between TFAI and 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
"domestic portfolio" of the Portfolio (as further explained in the discussion
entitled "Investment Objectives, Strategies and Risks" below) and for making
investment decisions and placing orders to purchase and sell securities for the
"domestic portfolio" of the Portfolio, all in accordance with the investment
objective and policies of the Portfolio 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, or 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
co-investment sub-adviser to the Portfolio.
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 Portfolio,
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
shares of the Portfolio. 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 Portfolio'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 Policyowners of the Portfolio approve the TIM Sub-Advisory Agreement, the
agreement will replace the Interim Sub-Advisory Agreement, and TIM will continue
to provide investment sub-advisory services to the Portfolio pursuant to the
terms of the agreement. If shareholders reject the TIM Sub-Advisory Agreement,
TIM would not be able to continue serving as co-investment sub-adviser to the
Portfolio past the end of the 150 day interim period, and the Board would
consider various options with respect to the Portfolio, which may include
liquidation and dissolution of the Portfolio, or the appointment of another
investment sub-adviser in accordance with applicable law.
Comparison of Fees. Compensation payable by TFAI to TIM under the TIM
Sub-Advisory Agreement is the same as the compensation payable under TFAI's
prior investment sub-advisory agreement with Great Companies and the Interim
Sub-Advisory Agreement. Under the TIM Sub-Advisory Agreement, TIM will receive
monthly compensation from TFAI at the following annual rates (expressed as a
percentage of the Portfolio's average daily net assets): 0.31% of the first $500
million of the Portfolio's average daily net assets; 0.275% of assets over $500
million up to $1.5 billion; and 0.28% of assets over $1.5 billion; less any
amount paid by TFAI to Templeton for Templeton's co-investment sub-advisory
services to the
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Portfolio. Please see discussion of "The Prior Sub-Advisory Agreement" above for
information on the percentage of fees payable to Templeton.
Investment Objectives, Strategies and Risks. As further disclosed in the
Portfolio's prospectus, the Portfolio's assets currently are allocated between
two co-investment sub-advisers. TIM currently manages a portion of the
Portfolio's assets composed of domestic securities (called the "domestic
portfolio"), and Templeton manages a portion of the Portfolio's assets composed
of non-U.S. securities (called the "international portfolio"). During the
duration of the Interim Sub-Advisory Agreement, the Portfolio's investment
objective, strategies and risks remain substantially the same, as TIM continues
to manage the domestic portfolio of the Portfolio in accordance with the
investment program currently disclosed in the Portfolio's prospectus. Upon
approval of the TIM Sub-Advisory Agreement (or shortly thereafter), the
Portfolio's investment program will be changed to, among other things, permit
the Portfolio to invest, under normal circumstances, at least 80% of the
Portfolio assets in the domestic portfolio in a diversified portfolio of
domestic common stocks that are believed by TIM to have the defining feature of
premier growth companies that are undervalued in the stock market.
The name of the Portfolio also will be changed to "Templeton Transamerica
Global" to reflect the changes to the Portfolio's investment program.
Affiliations and Affiliated Brokerage. During the fiscal year ended December 31,
2005, the Portfolio paid no commissions on portfolio brokerage transactions to
brokers who may be deemed to be affiliated persons of the Portfolio, TFAI, Great
Companies, TIM, Templeton, or affiliated persons of such persons ("Affiliated
Brokers").
EVALUATION BY THE BOARD
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 considered whether the Interim Sub-Advisory Agreement and
the TIM Sub-Advisory Agreement 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 and consideration, the Trustees determined that the
agreements would enable shareholders of the Portfolio 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, unanimously
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 and
the necessity to promptly appoint a co-investment sub-adviser to avoid the
potential orphanage of the domestic portfolio of the Portfolio, as well as
information that they had received throughout the year as part of their regular
oversight of the Portfolio (including information from TFAI, Templeton, and
Great Companies), as well as information about TIM, which serves as investment
sub-adviser to other series of ATST. The Trustees also obtained and reviewed
certain comparative information regarding performance of the Portfolio relative
to performance 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 ATST 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:
The nature, extent and quality of the advisory services to be provided. The
Board considered the nature and quality of the sub-advisory services anticipated
to be provided by TIM to the domestic portfolio of the Portfolio (including the
ability to pursue the investment program of the domestic portfolio of the
Portfolio unchanged during the duration of the Interim Sub-Advisory Agreement),
and the services that TIM currently provides to other series of ATST. The Board
concluded that TIM is capable of providing high quality services to the
Portfolio, 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 domestic investment
portfolios. The Trustees also concluded that TIM proposed to provide services
that are appropriate in scope and extent in light of the Portfolio's operations,
and the competitive landscape of the investment company business and investor
needs.
The investment performance of the Portfolio. The Board reviewed comparative
information prepared by Strategic Insight Simfund from data compiled by Lipper
Analytics, and noted that the Portfolio's performance has trailed behind its
6
category median over the past one-year, three-year and five-year periods as of
April 30, 2006. The Board also noted the strong performance of another ATST
series that TIM currently manages and that TIM is expected to manage the
domestic portfolio of the Portfolio in a substantially similar style (assuming
shareholder approval of the TIM Sub-Advisory Agreement). The Board concluded,
based in particular on the Trustees' assessment of the nature, extent and
quality of investment sub-advisory services expected to be provided by TIM, that
TIM is capable of generating a level of investment performance for the domestic
portfolio that is appropriate in light of the Portfolio's investment objective,
policies and strategies and competitive with other investment companies, as
demonstrated by TIM with respect to other series of ATST for which it serves as
sub-adviser. The Board also concluded, in light of the past performance of the
domestic portfolio of the Portfolio, that TIM offered a reasonable prospect for
improved overall Portfolio performance during the interim period, and thereafter
if TIM continues to serve as the sub-adviser to the domestic portfolio of the
Portfolio.
The cost of investment 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 (which remains unchanged in
comparison to the sub-advisory agreement between TFAI and Great Companies) in
connection with providing sub-advisory services to the Portfolio, the estimated
expense ratio of the Portfolio (which also is expected to remain unchanged), the
competitiveness of the Portfolio'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
Portfolio, 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 Portfolio grows. The Board concluded that the
existence of asset-based breakpoints in the Portfolio'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 Portfolio's
management fees appropriately reflect the Portfolio'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 Portfolio
has achieved economies of scale and the appropriateness of sub-advisory fees
payable by TFAI (as well as the management fees that the Portfolio pays to TFAI)
in the future.
Benefits (such as soft dollars) to TIM and its affiliates from their
relationship with the Portfolio. The Board concluded that other benefits derived
by TIM and its affiliates (including TFAI) from their relationship with the
Portfolio are reasonable and fair, and are consistent with industry practice and
the best interests of the Portfolio and its shareholders. In this regard, the
Board noted that TIM will participate (as did Great Companies) in a program
pursuant to which a portion of brokerage commissions paid by the Portfolio is
recaptured for the benefit of the Portfolio and its shareholders, thus limiting
the amount of "soft-dollar" arrangements TIM may engage in with respect to the
Portfolio's brokerage transactions. In addition, the Trustees previously had
determined that the management, administration, fund accounting and other fees
paid by the Portfolio 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
Portfolio's overall operating expenses, and the necessity of the services for
the Portfolio's operations.
Other considerations. In evaluating how to respond to the potential orphaning of
the domestic portfolio of the Portfolio that would be occasioned by Great
Companies' impending cessation of operations, the Board discussed at length with
ATST management the process by which management proposed the retention of TIM as
co-investment sub-adviser to the Portfolio. 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 domestic portfolio of the Portfolio in the best
interests of shareholders, and without regard to affiliations with TFAI. In
approving 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 ATST,
and determined that TIM has made a substantial commitment to the recruitment and
retention of high quality personnel, and has the financial and operational
resources reasonably necessary to manage the domestic equity component of the
Portfolio. 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
underlying transaction was consistent with (and not adverse to) shareholders'
interests. The Board also noted that Templeton would remain as co-investment
7
sub-adviser to manage the international equity component of the Portfolio. 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.
THE BOARD, INCLUDING THE INDEPENDENT TRUSTEES, UNANIMOUSLY RECOMMENDS THAT
POLICYOWNERS PROVIDE INSTRUCTIONS TO VOTE "FOR" APPROVAL OF THE TIM SUB-ADVISORY
AGREEMENT AS PROVIDED UNDER THIS PROPOSAL. UNMARKED VOTING INSTRUCTION FORMS
WILL BE SO VOTED.
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. 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.
ADDITIONAL INFORMATION
ADMINISTRATOR, PRINCIPAL UNDERWRITER, AND TRANSFER AGENT
Transamerica Fund Services, Inc. ("TFS") is the Portfolio's administrator and
transfer agent, and AFSG Securities Corporation ("AFSG") is the Portfolio's
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 52499-0002. During the fiscal year ended December 31, 2005, the
Portfolio paid TFS $119,657 for administrative and transfer agent services and
the Portfolio paid AFSG $14,045.36 for distribution services. If the proposed
TIM Sub-Advisory Agreement is approved, TFS and AFSG will continue to render the
same services to the Portfolio as they currently render. TFS and AFSG (as well
as TFAI, TIM and Great Companies) are affiliates of AEGON, NV, a Netherlands
corporation.
SHAREHOLDER REPORTS
Insurance contract owners can find important information about the Portfolio in
the ATST annual report dated December 31, 2005, including financial reports for
the fiscal year ended December 31, 2005, and in the ATST semi-annual report
dated June 30, 2006, both of which have been provided by the respective
insurance company from which you have purchased a variable insurance contract.
You may obtain copies of these reports without charge by writing to the
Portfolio, or by calling the telephone number shown on the front page of this
proxy statement.
VOTING INFORMATION
Voting Instructions/Solicitation. The principal solicitation of voting
instructions will be by the mailing of this Proxy Statement on or about
September 5, 2006, but instructions may also be solicited by telephone and/or in
person by representatives of ATST, regular employees of TFS, their affiliate(s),
or Computershare Fund Services ("Computershare"), a private proxy services firm.
The estimated costs of retaining Computershare is approximately $254,322, which
will be paid by TFAI and/or its affiliates. If we have not received your
instructions as the date of the Special Meeting approaches, you may receive a
call from these parties to ask for your instructions.
The costs of the Meeting, including the preparation and mailing of the notice,
proxy statement, proxy and voting instruction form, and the solicitation of
instructions, including reimbursement to broker-dealers 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 Portfolio who own shares of
beneficial interest at the close of business on the Record Date will be entitled
to notice of, and 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 28,568,760.47 shares of the
Portfolio, representing the same number of votes. As noted above, shares of the
Portfolio are
8
offered only to the Insurance Companies so they are the only shareholders of the
Portfolio. Insurance Companies who are known to have owned beneficially 5% or
more of the Portfolio's outstanding shares as of the Record Date are listed on
Exhibit D. As of the Record Date, the Trustees and officers, as a group, owned
less than 1.00% of the outstanding shares of the Portfolio. As of the Record
Date, there were no persons who were known to control the Portfolio.
Insurance Companies that use shares of the Portfolio as funding media for their
variable annuity contracts and variable life policies will vote shares of the
Portfolio held by their separate accounts in accordance with the instructions
received from owners of the variable insurance contracts. An insurance company
also will vote shares of the Portfolio held in such separate account for which
it has not received timely instructions in the same proportion as it votes
shares held by that separate account for which it has received instructions. An
insurance company whose separate account invests in the Portfolio will vote
shares by its general account and its subsidiaries in the same proportion as
other votes cast by its separate account in the aggregate. As a result, a small
number of owners of variable annuity contracts and variable life policies could
determine the outcome of the vote if other owners fail to vote.
Thirty-three and one-third percent (33-1/3%) of the Portfolio'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. Shares attributable to amounts retained by
each Insurance Company will be voted in the same proportion as voting
instructions received from Policyowners. Accordingly, there are not expected to
be "broker non-votes."
In the event that a quorum is not present at the Special Meeting, or a quorum is
present but sufficient votes to approve the proposals 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 Portfolio 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 Proposal 1 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.
In order that your units may be represented at the Special Meeting, you are
requested to provide instructions by mail, the Internet or by telephone by
following the enclosed instructions. IF YOU PROVIDE INSTRUCTIONS BY TELEPHONE OR
INTERNET, PLEASE DO NOT RETURN YOUR VOTING INSTRUCTION FORM, UNLESS YOU LATER
ELECT TO CHANGE YOUR INSTRUCTIONS. You may revoke your instructions: (a) at any
time prior to its exercise by written notice of its revocation to the secretary
of ATST prior to the Special Meeting; (b) by the subsequent execution and return
of another voting instruction form prior to the Special Meeting; or (c) by being
present and providing instructions 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 voting instructions.
Required Vote. Approval of Proposal 1, the TIM Sub-Advisory Agreement, requires
the vote of a "majority of the outstanding voting securities" of the Portfolio,
which means 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 the vote of more than 50% of the Portfolio's
outstanding shares, whichever is less. Accordingly, assuming the presence of a
quorum, abstentions have the effect of a negative vote on Proposal 1.
Contract Owners Sharing the Same Address. As permitted by law, only one copy of
this proxy statement is being delivered to insurance contract owners residing at
the same address, unless such contract owners have notified ATST of their desire
to receive multiple copies of the shareholder reports and proxy statements ATST
sends. If you would like to receive an additional copy, please contact ATST by
writing to ATST's address, or by calling the telephone number shown on the front
page of this proxy statement. ATST will then promptly deliver, upon request, a
separate copy of the proxy statement to any contract owner residing at an
address to which only one copy was mailed. Contract owners wishing to receive
separate copies of ATST's shareholder reports and proxy statements in the
future, and shareholders sharing an address that wish to receive a single copy
if they are receiving multiple copies, should also send a request as indicated.
9
CONTRACT OWNER PROPOSALS
As a general matter, ATST does not hold annual meetings of shareholders.
Insurance contract owners wishing to submit proposals for inclusion in a proxy
statement for a subsequent shareholders' meeting should send their written
proposal to the secretary of ATST, 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.
TO ENSURE THE PRESENCE OF A QUORUM AT THE SPECIAL MEETING, PROMPT EXECUTION AND
RETURN OF THE ENCLOSED VOTING INSTRUCTION FORM IS REQUESTED. A SELF-ADDRESSED,
POSTAGE-PAID ENVELOPE IS ENCLOSED FOR YOUR CONVENIENCE.
By Order of the Board of Trustees,
/s/ John K. Carter
----------------------------------------
John K. Carter
President and Chief Executive Officer
10
LIST OF EXHIBITS
Exhibit A - Form of TIM Sub-Advisory Agreement between TFAI and TIM
Exhibit B-1 - Directors and Principal Executive Officer of TFAI
Exhibit B-2 - Managing Members and Principal Executive Officer(s) of TIM
Exhibit C - Similar Funds
Exhibit D - Beneficial Owners of 5% or More of the Outstanding Shares of the
Portfolio
11
EXHIBIT A
FORM OF
SUB-ADVISORY AGREEMENT BETWEEN
TRANSAMERICA FUND ADVISORS, INC. AND
TRANSAMERICA INVESTMENT MANAGEMENT, LLC
SUB-ADVISORY AGREEMENT, made as of the 27th day of October 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 January 1, 1997, as amended ("Advisory Agreement") with
AEGON/Transamerica Series Trust ("ATST"), 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 Templeton Transamerica Global (the "Portfolio"), a
separate series of ATST; 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 Portfolio, 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 Portfolio 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, ATST, or the Portfolio 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
ATST's 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 Portfolio in accordance with the Portfolio's
investment objective, policies, and restrictions as provided in the ATST
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 ATST by notice in writing to the
Sub-Adviser. In furtherance of this duty, the Sub-Adviser, on behalf of the
Portfolio, is authorized, in its discretion and without prior consultation with
the Board or the Investment Adviser, to (without limitation):
(1) provide investment research and analysis concerning the
Portfolio's investments and conduct a continuous investment program to
the Portfolio;
(2) place orders and negotiate the commissions (if any) for all
purchases and sales of the investments made by the Portfolio with or
through such brokers, dealers, underwriters or issuers as the
Sub-Adviser may select;
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(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 Portfolio 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
Portfolio 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 ATST and furnish oral or written reports, as ATST
of the Investment Adviser may reasonably require, in order to keep
ATST and its officers and Board fully informed as to the condition of
the investments of the Portfolio, 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 ATST 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 ATST 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 ATST 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 Portfolio 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
Portfolio, or an affiliated person of such other sub-adviser, concerning
transactions for the Portfolio in securities or other Portfolio assets. The
Sub-Adviser shall be limited to providing investment advice with respect to only
the discrete portion of the Portfolio's assets 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 Portfolio's assets concerning
transactions for the Portfolio in securities or other assets.
D. Custody. The Sub-Adviser shall have no responsibility with respect
to maintaining custody of the Portfolio's assets. The Sub-Adviser shall affirm
security transactions with central depositories and advise the custodian of the
Portfolio (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 Portfolio, 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 Portfolio 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 Portfolio.
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 ATST or
otherwise delegated to another party, the Sub-Adviser shall exercise voting
rights incident to any securities held by the Portfolio in accordance with its
own proxy voting policies and procedures without consultation with the
Investment Adviser or the Portfolio. 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 Portfolio including, without limitation,
proofs of claim in bankruptcy and class action cases and shelf registrations.
The Sub-Adviser agrees to keep the Portfolio informed about any such litigation
and the actions that it intends to take. In the
A-2
case of class action suits involving issuers held by the Portfolio, the
Sub-Adviser may include information about the Portfolio for purposes of
participating in any settlements upon written agreement by the Portfolio.
F. Use of Name. The Sub-Adviser shall give the Portfolio, for the term
of this Agreement, a royalty free, nonexclusive, nontransferable right to use
the name "Transamerica" (hereinafter referred to as the "Mark") in the United
States as part of the name of the Portfolio, 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 Portfolio 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 Portfolio 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 Portfolio 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 Portfolio. Notwithstanding the foregoing, the
Sub-Adviser shall not bear expenses related to the operation of the Portfolio,
including but not limited to, taxes, interests, brokerage fees and commissions,
proxy voting expenses and extraordinary Portfolio expenses.
5. DUTIES OF THE INVESTMENT ADVISER.
A. The Investment Adviser shall continue to have responsibility for all
services to be provided to the Portfolio 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 ATST 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 ATST 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 Portfolio and its shares
and all amendments thereto ("Registration Statement"); and
(4) A certified copy of any publicly available financial statement or
report prepared for ATST by certified or independent public
accountants, and copies of any financial statements or reports made by
the Portfolio to its shareholders or to any governmental body or
securities exchange.
A-3
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 Portfolio
or the public, which include the Mark or refer to the Portfolio, 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 Portfolio 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 Portfolio and
its other clients and that the total commissions paid by the Portfolio will be
reasonable in relation to the benefits provided to the Portfolio. In no instance
will Portfolio 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 Portfolio, 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 Portfolio 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
Portfolio. 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 Portfolio that
are required to be maintained by Rule 31a-1 under the 1940 Act, and (ii) to
provide the Portfolio with access to or copies of any records that it maintains
for the Portfolio upon reasonable request by the Portfolio.
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
A-4
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 Portfolio.
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 Portfolio or any
shareholder of the Portfolio 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 Portfolio 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 ATST 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 Portfolio and its shareholders and complying with Rule 206(4)-6 under the
Advisers Act and will provide the Investment Adviser and ATST 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
A-5
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 ATST 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 ATST 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 Portfolio in complying with the Portfolio'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 acknowledges that the Portfolio offers its shares so
that it may serve as an investment vehicle for variable annuity contracts and
variable life insurance policies issued by insurance companies. Consequently,
the Sub-Adviser will manage the Portfolio so that the Portfolio will qualify as
a regulated investment company under Subchapter M of the Internal Revenue Code
and will comply with the diversification requirements of Section 817(h) of the
Internal Revenue Code and the regulations issued thereunder, and any other rules
and regulations applicable to investment vehicles underlying variable annuity
contracts or variable life insurance policies (together, the "Tax Rules"), and
it will immediately notify the Investment Adviser and the Portfolio upon having
a reasonable basis for believing that the Portfolio has ceased to (i) comply
with such Tax Rules or may not be in compliance in the future; or (ii) qualify
as a regulated investment company or may not so qualify in the future.
G. The Sub-Adviser shall notify the Investment Adviser and the Portfolio
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 Portfolio's portfolio securities
transactions to a broker or dealer in consideration of such broker or dealer's
promotion or sales of shares of the Portfolio, any other series of ATST, or any
other registered investment company.
A-6
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 Portfolio'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 ATST 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 Portfolio, (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 ATST:
AEGON/Transamerica Series Trust
570 Carillon Parkway
St. Petersburg, FL 33716
Attn: Dennis 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 Gallagher
Telephone: (727) 299-1821
Fax: (727) 299-1832
If to the Sub-Adviser:
Transamerica Investment Management, LLC
11111 Santa Monica Blvd., Suite 820
Los Angeles, CA 90025
Attn: Geoffrey Edelstein
Telephone: 310-996-3234
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 Portfolio..
A-7
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 ATST and the Portfolio. Written reports
furnished by the Sub-Adviser to ATST and the Investment Adviser will be treated
as confidential, and for the exclusive use and benefit of ATST 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:
-----------------------------
A-8
SUB-ADVISORY AGREEMENT
SCHEDULE A
FUND SUB-ADVISORY FEE SCHEDULE*
---- --------------------------
Templeton Transamerica Global 0.31% of the first $500 million of the fund's
average daily net assets; 0.275% of assets over
$500 million up to $1.5 billion; and 0.28% of
assets over $1.5 billion.
* Templeton receives 0.40% of the first $500 million of the portion of assets
that it manages up to $500 million; 0.375% of the average daily net assets
of the fund for the portion it manages over $500 million up to $1.5
billion; and 0.35% of the average daily net assets of the fund for the
portion it manages over $1.5 billion. Transamerica receives the
sub-advisory fees listed in the schedule, less the fees paid to Templeton.
* As a percentage of average daily net assets on an annual basis.
A-9
EXHIBIT B-1
DIRECTORS AND PRINCIPAL EXECUTIVE OFFICER OF TRANSAMERICA FUND ADVISORS, INC.
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, Transamerica IDEX Mutual Funds ("TA IDEX") and
Director AEGON/Transamerica Series Trust ("ATST"); Director, Transamerica
Income Shares, Inc. ("TIS") and Transamerica Fund Services, Inc.
("TFS").
John K. Carter President and Chief Executive Officer, TA IDEX, ATST, and TIS; Vice
Director, President and Chief Executive Officer President, AFSG Securities Corporation; Director, President and
Chief Executive Officer, TFS; Chief Executive Officer, Transamerica
Investors, Inc. ("TII").
Christopher A. Staples Senior Vice President - Investment Management, TA IDEX, ATST and TIS;
Director and Senior Vice President - Investment Director, TFS; Vice President - Investment Administration, TII.
Management
Mr. Scott serves as a Trustee of ATST; Messrs. Carter and Staples serve as
Officers of ATST.
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.
B-1
EXHIBIT B-2
MANAGING MEMBERS AND PRINCIPAL EXECUTIVE OFFICER[S] OF TRANSAMERICA INVESTMENT
MANAGEMENT, LLC
The business address of each of the following persons is 11111 Santa Monica
Boulevard, 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 ATST is an officer, employee, managing member or
shareholder of TIM. No Officer or Trustee of ATST owns securities or has any
other material indirect interest in TIM.
B-2
EXHIBIT C
SIMILAR FUNDS
The following table sets forth certain information regarding registered
investment companies with similar investment objectives to those contemplated
for the "domestic portfolio" of the Portfolio that are advised or sub-advised by
TIM.
NET ASSETS AS OF
NAME OF FUND WITH SIMILAR INVESTMENT OBJECTIVE JUNE 30, 2006 ANNUAL MANAGEMENT FEE RATE
- ---------------------------------------------- ----------------- --------------------------
Large Growth Institutional Separately Managed $4,945 million 0.075% up to $25 million; 0.65% over $25
Accounts million up to $50 million; 0.55% over $50
(19 accounts) million up to $100 million; 0.50% over $100
million up to $250 million; 0.45% in excess
of $250 million (Minimum Fee: $75,000)
Large Growth SMA/Commission Separately $525 million 0.075% up to $25 million; 0.65% over $25
Managed Accounts million up to $50 million; 0.55% over $50
(1,336 accounts) million up to $100 million; 0.50% over $100
million up to $250 million; 0.45% in excess
of $250 million (Minimum Fee: $75,000)
TA IDEX Transamerica Equity $689.7 million 0.75% of the first $500 million of the Fund's
average daily net assets; and 0.70% of the
Fund's average daily net assets over $500
million.
Transamerica Equity (ATST) $1,717.8 million 0.75% of the first $500 million of average
daily net assets; and 0.70% of average daily
net assets over $500 million
Transamerica Equity II (ATST) $19 million 0.30% of the average daily net assets
Transamerica Premier Institutional Equity $49 million 0.73% of the Fund's average daily net assets
Transamerica Premier Equity $412.9 million 0.85% for the first $1 billion of assets in
the Fund; 0.82% of the next $1 billion; and
0.80 of assets in excess of $2 billion.
C-1
EXHIBIT D
As of the Record Date, the following persons are known to have owned
beneficially 5% or more of the outstanding shares of the Portfolio:
BENEFICIAL OWNER OF SECURITIES AND ADDRESS SHARES OWNED % OWNED
- ------------------------------------------ ------------- -------
Transamerica Life Insurance Company 2,152,109.342 7.5331%
4333 Edgewood Road, NE
Cedar Rapids, IA 52499
Western Reserve Life Assurance Co. of Ohio 26,031,806.76 91.1198%
570 Carillon Parkway
St. Petersburg, FL 33716
D-1
FORM OF
EVERY POLICYOWNER'S INSTRUCTIONS ARE IMPORTANT!
PLEASE SIGN, DATE AND RETURN YOUR
VOTING INSTRUCTION FORM TODAY
YOUR INSTRUCTIONS ARE IMPORTANT!
AND NOW YOU CAN PROVIDE INSTRUCTIONS ON
THE PHONE, OR THE INTERNET.
IT SAVES MONEY! TELEPHONE AND INTERNET
INSTRUCTIONS SAVES POSTAGE COSTS.
SAVINGS WHICH CAN HELP MINIMIZE EXPENSES.
IT SAVES TIME! TELEPHONE AND INTERNET
INSTRUCTIONS ARE INSTANTANEOUS -- 24 HOURS
A DAY.
IT'S EASY! JUST FOLLOW THESE SIMPLE STEPS:
1. READ YOUR PROXY STATEMENT AND HAVE IT
AT HAND.
2. CALL TOLL-FREE 1-866-235-4258, OR GO TO
WEBSITE: https://vote.proxy-direct.com
3. FOLLOW THE RECORDED OR ON-SCREEN
DIRECTIONS.
4. DO NOT MAIL YOUR VOTING INSTRUCTION
FORM WHEN YOU PROVIDE INSTRUCTIONS BY
PHONE, OR INTERNET.
Please detach at perforation before mailing.
VOTING INSTRUCTION FORM AEGON/TRANSAMERICA SERIES TRUST VOTING INSTRUCTION FORM
TEMPLETON GREAT COMPANIES GLOBAL
VOTING INSTRUCTIONS FOR THE SPECIAL MEETING OF SHAREHOLDERS
OCTOBER 18, 2006
[Insurance Company Name Drop In]
The undersigned hereby instructs the above referenced insurance company with
full power of substitution, to vote as directed on the reverse side of this form
all shares of Templeton Great Companies Global which the undersigned is entitled
to provide instructions for at the Special Meeting of Shareholders of
AEGON/Transamerica Series Trust to be held at the office of AEGON/Transamerica
Series Trust, 570 Carillon Parkway, St. Petersburg, Florida 33716, on October
18, 2006 at 12:00 p.m. (Eastern time) and at any adjournment(s) or postponements
thereof.
THIS PROXY IS SOLICITED ON BEHALF OF THE ABOVE REFERENCED INSURANCE COMPANY.
This voting instruction form will be voted as instructed. If no specification is
made, the voting instruction form will be voted "FOR" Proposal 1 and Proposal 2.
PROVIDE INSTRUCTIONS VIA
THE INTERNET:
https://vote.proxy-direct.com
PROVIDE INSTRUCTIONS VIA THE TELEPHONE:
1-866-235-4258
------------------- -----------------
999 9999 9999 999
------------------- -----------------
NOTE: Signature(s) should be exactly
as name or names appearing on this
proxy. If shares are held jointly, each
holder should sign. If signing is by
attorney, executor, administrator,
trustee or guardian, please give full
title.
---------------------------------------
Signature(s)
---------------------------------------
Signature(s)
---------------------------------------
Date GRT_16729