TRANSAMERICA IDEX MUTUAL FUNDS

                  TA IDEX ALLIANCEBERNSTEIN INTERNATIONAL VALUE
                     TA IDEX AMERICAN CENTURY INTERNATIONAL
                  TA IDEX AMERICAN CENTURY LARGE COMPANY VALUE
                TA IDEX ASSET ALLOCATION - CONSERVATIVE PORTFOLIO
                   TA IDEX ASSET ALLOCATION - GROWTH PORTFOLIO
                  TA IDEX ASSET ALLOCATION - MODERATE PORTFOLIO
              TA IDEX ASSET ALLOCATION - MODERATE GROWTH PORTFOLIO
                  TA IDEX CLARION GLOBAL REAL ESTATE SECURITIES
                          TA IDEX EVERGREEN HEALTH CARE
                    TA IDEX EVERGREEN INTERNATIONAL SMALL CAP
                      TA IDEX FEDERATED MARKET OPPORTUNITY
                     TA IDEX GREAT COMPANIES - AMERICA(SM)
                    TA IDEX GREAT COMPANIES - TECHNOLOGY(SM)
                              TA IDEX JANUS GROWTH
                             TA IDEX JENNISON GROWTH
                       TA IDEX JPMORGAN INTERNATIONAL BOND
                        TA IDEX J.P. MORGAN MID CAP VALUE
                             TA IDEX MARSICO GROWTH
                      TA IDEX MARSICO INTERNATIONAL GROWTH
                        TA IDEX MERCURY GLOBAL ALLOCATION
                         TA IDEX MERCURY LARGE CAP VALUE
                    TA IDEX MULTI-MANAGER INTERNATIONAL FUND
                     TA IDEX NEUBERGER BERMAN INTERNATIONAL
                     TA IDEX OPPENHEIMER DEVELOPING MARKETS
                         TA IDEX PIMCO REAL RETURN TIPS
                           TA IDEX PIMCO TOTAL RETURN
                        TA IDEX PROTECTED PRINCIPAL STOCK
                             TA IDEX SALOMON ALL CAP
                         TA IDEX SALOMON INVESTORS VALUE
                         TA IDEX T. ROWE PRICE SMALL CAP
                   TA IDEX T. ROWE PRICE TAX-EFFICIENT GROWTH
                    TA IDEX TEMPLETON GREAT COMPANIES GLOBAL
                          TA IDEX TRANSAMERICA BALANCED
                   TA IDEX TRANSAMERICA CONVERTIBLE SECURITIES
                           TA IDEX TRANSAMERICA EQUITY
                      TA IDEX TRANSAMERICA FLEXIBLE INCOME
                    TA IDEX TRANSAMERICA GROWTH OPPORTUNITIES
                      TA IDEX TRANSAMERICA HIGH-YIELD BOND
                        TA IDEX TRANSAMERICA MONEY MARKET
                      TA IDEX TRANSAMERICA SHORT-TERM BOND
                    TA IDEX TRANSAMERICA SMALL/MID CAP VALUE
                       TA IDEX TRANSAMERICA VALUE BALANCED
                           TA IDEX UBS LARGE CAP VALUE
                    TA IDEX VAN KAMPEN EMERGING MARKETS DEBT
                        TA IDEX VAN KAMPEN MID-CAP GROWTH
                     TA IDEX VAN KAMPEN SMALL COMPANY GROWTH

                       STATEMENT OF ADDITIONAL INFORMATION

                 MARCH 1, 2006, AS SUPPLEMENTED JUNE 1, 2006

                         TRANSAMERICA IDEX MUTUAL FUNDS
                              570 Carillon Parkway
                          St. Petersburg, Florida 33716
                   Customer Service (888) 233-4339 (toll free)

The funds listed above are series of Transamerica IDEX Mutual Funds
("Transamerica IDEX"), an open-end management investment company that offers a
selection of investment funds. Transamerica IDEX is registered under the
Investment Company Act of 1940, as amended (the "1940 Act"). All funds, other
than TA IDEX Clarion Global Real Estate Securities (formerly, TA IDEX Clarion
Real Estate Securities), TA IDEX Evergreen Health Care (formerly, TA IDEX T.
Rowe Price Health Sciences), TA IDEX Great Companies -- America(SM), TA IDEX
Great Companies -- Technology(SM), TA IDEX JPMorgan International Bond, TA IDEX
PIMCO Real Return TIPS, TA IDEX Salomon All Cap and TA IDEX Van Kampen Emerging
Markets Debt, are diversified.

This Statement of Additional Information ("SAI") is not a prospectus, and should
be read in conjunction with the Transamerica IDEX prospectus dated March 1,
2006, as it may further be supplemented from time to time, which may be obtained
free of charge by writing or calling Transamerica IDEX at the above address or
telephone number. This SAI contains additional and more detailed information
about the Transamerica IDEX operations and activities than that set forth in the
prospectus. The Transamerica IDEX Annual Report to shareholders including the
financial statements therein, are incorporated by reference into this SAI.



                                TABLE OF CONTENTS



                                                                            Page
                                                                            ----
                                                                         
INVESTMENT OBJECTIVES....................................................      1
INVESTMENT RESTRICTIONS, POLICIES AND PRACTICES..........................      1
OTHER POLICIES AND PRACTICES OF THE FUNDS ...............................      6
OPTIONS, FUTURES AND OTHER DERIVATIVE INSTRUMENTS .......................      6
FOREIGN INVESTMENTS .....................................................     13
OTHER INVESTMENT COMPANIES ..............................................     15
WHEN-ISSUED, DELAYED SETTLEMENT AND FORWARD DELIVERY SECURITIES .........     15
ZERO COUPON, PAY-IN-KIND AND STEP COUPON SECURITIES .....................     16
INVESTMENTS IN THE REAL ESTATE INDUSTRY .................................     16
MORTGAGE-RELATED SECURITIES .............................................     17
INCOME PRODUCING SECURITIES .............................................     18
LENDING OF FUND SECURITIES ..............................................     19
JOINT TRADING ACCOUNTS ..................................................     20
ILLIQUID AND RESTRICTED/144A SECURITIES .................................     20
DISTRESSED SECURITIES ...................................................     20
MUNICIPAL OBLIGATIONS ...................................................     21
LOANS ...................................................................     21
EQUITY EQUIVALENTS ......................................................     22
EVENT-LINKED BONDS ......................................................     22
COLLATERALIZED DEBT OBLIGATIONS .........................................     22
REPURCHASE AND REVERSE REPURCHASE AGREEMENTS ............................     23
PASS-THROUGH SECURITIES .................................................     23
HIGH-YIELD/HIGH-RISK BONDS ..............................................     23
WARRANTS AND RIGHTS .....................................................     24
U.S. GOVERNMENT SECURITIES ..............................................     24
TEMPORARY DEFENSIVE POSITION ............................................     24
MONEY MARKET RESERVES ...................................................     25
OTHER SECURITIES IN WHICH THE FUNDS MAY INVEST ..........................     25
PORTFOLIO TURNOVER RATE .................................................     26
DISCLOSURE OF PORTFOLIO HOLDINGS ........................................     26
INVESTMENT ADVISORY AND OTHER SERVICES ..................................     27
SUB-ADVISERS ............................................................     35
DISTRIBUTOR .............................................................     43
ADMINISTRATIVE SERVICES .................................................     46
CUSTODIAN, TRANSFER AGENT AND OTHER AFFILIATES ..........................     48
FUND TRANSACTIONS AND BROKERAGE .........................................     49
DIRECTED BROKERAGE ......................................................     51
TRUSTEES AND OFFICERS ...................................................     54
SHAREHOLDER COMMUNICATION PROCEDURES WITH BOARD OF TRUSTEES..............     60
DEALER REALLOWANCES .....................................................     61
DISTRIBUTION PLANS ......................................................     63
DISTRIBUTION FEES .......................................................     64
NET ASSET VALUE DETERMINATION ...........................................     74
DIVIDENDS AND OTHER DISTRIBUTIONS .......................................     75
SHAREHOLDER ACCOUNTS ....................................................     76
PURCHASE OF SHARES ......................................................     76
RETIREMENT PLANS ........................................................     77
REDEMPTION OF SHARES ....................................................     77
TAXES ...................................................................     79
PRINCIPAL SHAREHOLDERS ..................................................     82
MISCELLANEOUS ...........................................................     97
PERFORMANCE INFORMATION .................................................     99
FINANCIAL STATEMENTS ....................................................    101



                                        i



                                                                         
Appendix A ..............................................................    A-1
Appendix B...............................................................    B-1




                                       ii


                              INVESTMENT OBJECTIVES

The prospectus discusses the investment objective of each fund of Transamerica
IDEX, the principal types of securities in which each fund will invest, and the
policies and practices of each fund. The following discussion of Investment
Restrictions, Policies and Practices supplements that set forth in the
prospectus.

There can be no assurance that a fund will, in fact, achieve its objective. A
fund's investment objective may be changed by the Board of Trustees without
shareholder approval. A change in the investment objective of a fund may result
in the fund having an investment objective different from that which the
shareholder deemed appropriate at the time of investment.

INVESTMENT RESTRICTIONS, POLICIES AND PRACTICES

As indicated in the prospectus, each fund is subject to certain fundamental
policies and restrictions which as such may not be changed without shareholder
approval. Shareholder approval would be the approval by the lesser of (i) more
than 50% of the outstanding voting securities of a fund, or (ii) 67% or more of
the voting securities present at a meeting if the holders of more than 50% of
the outstanding voting securities of a fund are present or represented by proxy.
Each fund has adopted the following fundamental restrictions:

1. DIVERSIFICATION

Each fund shall be a "diversified company" as that term is defined in the
Investment Company Act of 1940, as amended (the "1940 Act") (except TA IDEX
Clarion Global Real Estate Securities, TA IDEX Evergreen Health Care, TA IDEX
Great Companies - America(SM), TA IDEX Great Companies - Technology(SM), TA IDEX
JPMorgan International Bond, TA IDEX PIMCO Real Return TIPS, TA IDEX Salomon All
Cap and TA IDEX Van Kampen Emerging Markets Debt), and as interpreted or
modified by regulatory authority having jurisdiction, from time to time. TA IDEX
Clarion Global Real Estate Securities, TA IDEX Evergreen Health Care, TA IDEX
Great Companies -- America(SM), TA IDEX Great Companies - Technology(SM), TA
IDEX JPMorgan International Bond, TA IDEX PIMCO Real Return TIPS, TA IDEX
Salomon All Cap and TA IDEX Van Kampen Emerging Markets Debt shall each be a
"non-diversified company" as that term is defined in the 1940 Act.

2. BORROWING

Each fund may not borrow money, except as permitted under the 1940 Act, and as
interpreted, modified or otherwise permitted by regulatory authority having
jurisdiction, from time to time.

3. SENIOR SECURITIES

Each fund may not issue any senior security, except as permitted under the 1940
Act, and as interpreted, modified or otherwise permitted by regulatory authority
having jurisdiction, from time to time.

4. UNDERWRITING SECURITIES

Each fund may not act as an underwriter of securities within the meaning of the
Securities Act of 1933, as amended ("1933 Act"), except as permitted under the
1933 Act, and as interpreted, modified or otherwise permitted by regulatory
authority having jurisdiction, from time to time. Among other things, to the
extent that the fund may be deemed to be an underwriter within the meaning of
the 1933 Act, each fund may act as an underwriter of securities in connection
with the purchase and sale of its portfolio securities in the ordinary course of
pursuing its investment objective, investment policies and investment program.

5. REAL ESTATE

Each fund may not purchase or sell real estate or any interests therein, except
as permitted under the 1940 Act, and as interpreted, modified or otherwise
permitted by regulatory authority having jurisdiction, from time to time.
Notwithstanding this limitation, a fund may, among other things, (i) acquire or
lease office space for its own use; (ii) invest in securities of issuers that
invest in real estate or interests therein; (iii) invest in mortgage-related
securities and other securities that are secured by real estate or interests
therein; or (iv) hold and sell real estate acquired by the fund as a result of
the ownership of securities.


                                        1



6. MAKING LOANS

Each fund may not make loans, except as permitted under the 1940 Act, and as
interpreted, modified or otherwise permitted by regulatory authority having
jurisdiction, from time to time.

7. CONCENTRATION OF INVESTMENTS

Each fund may not "concentrate" its investments in a particular industry or
group of industries (except those funds listed below), except as permitted under
the 1940 Act, and as interpreted, modified or otherwise permitted by regulatory
authority having jurisdiction from time to time, provided that, without limiting
the generality of the foregoing, this limitation will not apply to securities
issued or guaranteed as to principal and/or interest by the U.S. Government, its
agencies or instrumentalities.

TA IDEX Clarion Global Real Estate Securities may concentrate in securities of
issuers in the real estate industry. TA IDEX Evergreen Health Care may
concentrate in the health sciences industry.

8. COMMODITIES

Each fund may not purchase physical commodities or contracts relating to
physical commodities, except as permitted under the 1940 Act, and as
interpreted, modified or otherwise permitted by regulatory authority having
jurisdiction, from time to time.

NON-FUNDAMENTAL RESTRICTIONS

Furthermore, certain funds have adopted the following non-fundamental
restrictions, which may be changed by the Board of Trustees of the fund without
shareholder approval.

(A) EXERCISING CONTROL OR MANAGEMENT

A fund may not invest in companies for the purposes of exercising control or
management.

(B) PURCHASING SECURITIES ON MARGIN

TA IDEX American Century International, TA IDEX American Century Large Company
Value, TA IDEX Clarion Global Real Estate Securities, TA IDEX Evergreen Health
Care, TA IDEX Evergreen International Small Cap, TA IDEX Janus Growth, TA IDEX
Jennison Growth, TA IDEX Marsico International Growth, TA IDEX PIMCO Real Return
TIPS, TA IDEX PIMCO Total Return, TA IDEX Protected Principal Stock, TA IDEX
Salomon Investors Value, TA IDEX T. Rowe Price Small Cap, TA IDEX T. Rowe Price
Tax-Efficient Growth, TA IDEX Templeton Great Companies Global, TA IDEX
Transamerica Balanced, TA IDEX Transamerica High-Yield Bond, TA IDEX
Transamerica Convertible Securities, TA IDEX Transamerica Equity, TA IDEX
Transamerica Flexible Income, TA IDEX Transamerica Growth Opportunities, TA IDEX
Transamerica Money Market, TA IDEX Transamerica Short-Term Bond, TA IDEX
Transamerica Small/Mid Cap Value, TA IDEX Transamerica Value Balanced, TA IDEX
UBS Large Cap Value, TA IDEX Van Kampen Emerging Markets Debt and TA IDEX Van
Kampen Small Company Growth may not purchase securities on margin, except to
obtain such short-term credits as are necessary for the clearance of
transactions in options, futures contracts, swaps and forward contracts and
other derivative instruments, and provided that margin payments and other
deposits made in connection with transactions in options, futures contracts,
swaps and forward contracts and other derivative instruments shall not
constitute purchasing securities on margin.

TA IDEX Mercury Large Cap Value may not purchase securities on margin, except
(i) for use of short-term credit necessary for the clearance of purchases of
portfolio securities; and (ii) it may make margin deposits in connection with
the futures contracts or other permissible investments.

(C) ILLIQUID SECURITIES

No fund may purchase any security if, as a result, more than 15% of its net
assets would be invested in illiquid securities, except that TA IDEX
Transamerica High-Yield Bond and TA IDEX Transamerica Money Market may not
invest in more than 10% of its net assets in illiquid securities.


                                        2



(D) SHORT SALES

TA IDEX American Century International, TA IDEX American Century Large Company
Value, TA IDEX Evergreen Health Care, TA IDEX Evergreen International Small Cap,
TA IDEX Marsico International Growth, TA IDEX Mercury Large Cap Value, TA IDEX
PIMCO Real Return TIPS, TA IDEX PIMCO Total Return, TA IDEX Protected Principal
Stock, TA IDEX T. Rowe Price Small Cap, TA IDEX T. Rowe Price Tax-Efficient
Growth, TA IDEX Transamerica High-Yield Bond, TA IDEX Transamerica Convertible
Securities, TA IDEX Transamerica Equity, TA IDEX Transamerica Growth
Opportunities, TA IDEX Transamerica Money Market, TA IDEX Transamerica
Short-Term Bond, TA IDEX Transamerica Small/Mid Cap Value, TA IDEX Transamerica
Value Balanced, TA IDEX UBS Large Cap Value, TA IDEX Van Kampen Emerging Markets
Debt and TA IDEX Van Kampen Small Company Growth may not sell securities short,
except short sales "against the box." A short sale against the box of a stock is
where the seller actually owns the stock, but does not want to close out the
position.

TA IDEX Clarion Global Real Estate Securities, TA IDEX Janus Growth, TA IDEX
Jennison Growth, TA IDEX Salomon Investors Value, TA IDEX Templeton Great
Companies Global, TA IDEX Transamerica Balanced and TA IDEX Transamerica
Flexible Income may not sell securities short, unless it owns or has the right
to obtain securities equivalent in kind and amount to the securities sold short
and provided that transactions in options, futures contracts, swaps, forward
contracts and other derivative instruments are not deemed to constitute selling
securities short.

(E) OIL, GAS OR MINERAL DEPOSITS

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, TA IDEX Clarion Global Real Estate
Securities, TA IDEX Janus Growth, TA IDEX Jennison Growth, TA IDEX PIMCO Real
Return TIPS, TA IDEX PIMCO Total Return, TA IDEX Transamerica Balanced, TA IDEX
Transamerica High-Yield Bond, TA IDEX Transamerica Convertible Securities, TA
IDEX Transamerica Money Market, TA IDEX Transamerica Flexible Income, TA IDEX
Transamerica Short-Term Bond, TA IDEX Transamerica Value Balanced and TA IDEX
Van Kampen Small Company Growth may not invest in interests in oil, gas or other
mineral development or exploration programs although it may invest in the
marketable securities of companies that invest in or sponsor such programs.

TA IDEX Evergreen Health Care may not invest in interests in oil, gas or other
mineral development or exploration programs, as a result thereof more than 5% of
the value of the total assets of a fund would be invested in such programs.

(F) MORTGAGE OR PLEDGE SECURITIES

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, TA IDEX Janus Growth, TA IDEX Jennison
Growth, TA IDEX Marsico International Growth, TA IDEX Salomon Investors Value,
TA IDEX Templeton Great Companies Global, TA IDEX Transamerica Balanced, TA IDEX
Transamerica Flexible Income and TA IDEX Transamerica Value Balanced may not
mortgage or pledge any securities owned or held by the fund in amounts that
exceed, in the aggregate, 15% of the fund's net assets, provided that this
limitation does not apply to reverse repurchase agreements or in the case of
assets deposited to provide margin or guarantee positions in options, futures
contracts, swaps, forward contracts or other derivative instruments or the
segregation of assets in connection with such transactions.

TA IDEX Evergreen Health Care, TA IDEX Protected Principal Stock, TA IDEX
Transamerica High-Yield Bond, TA IDEX T. Rowe Price Small Cap, TA IDEX T. Rowe
Price Tax-Efficient Growth and TA IDEX Transamerica Small/Mid Cap Value may not
mortgage, pledge, hypothecate or, in any manner, transfer any security owned by
the fund as security for indebtedness except as may be necessary in connection
with permissible borrowings or investments and then such mortgaging, pledging or
hypothecating may not exceed 33 1/3% of the fund's total assets at the time of
borrowing or investment.

TA IDEX Transamerica Convertible Securities and TA IDEX Transamerica Money
Market may not mortgage or pledge any securities owned or held by the fund in
amounts that exceed, in the aggregate, 15% of the fund's net assets, provided
that this limitation does not apply to reverse repurchase agreements or the
segregation of assets in connection with such transactions.


                                        3



(G) INVESTMENT IN OTHER INVESTMENT COMPANIES

TA IDEX Clarion Global Real Estate Securities, TA IDEX Evergreen Health Care, TA
IDEX Janus Growth, TA IDEX Jennison Growth, TA IDEX Salomon Investors Value, TA
IDEX T. Rowe Price Small Cap, TA IDEX T. Rowe Price Tax-Efficient Growth, TA
IDEX Templeton Great Companies Global, TA IDEX Transamerica Balanced, TA IDEX
Transamerica High-Yield Bond, TA IDEX Transamerica Flexible Income and TA IDEX
Transamerica Growth Opportunities may not purchase securities of other
investment companies, other than a security acquired in connection with a
merger, consolidation, acquisition, reorganization or offer of exchange and
except as permitted under the 1940 Act.

TA IDEX T. Rowe Price Small Cap and TA IDEX T. Rowe Price Tax-Efficient Growth
may purchase securities of the T. Rowe Price Reserve Investment or T. Rowe Price
Government Reserve Investment Funds. TA IDEX J.P. Morgan Mid Cap Value may not
acquire securities of other investment companies, except as permitted by the
1940 Act or any order pursuant thereto.

TA IDEX AllianceBernstein International Value, TA IDEX Neuberger Berman
International, TA IDEX Oppenheimer Developing Markets, TA IDEX JPMorgan
International Bond, TA IDEX Federated Market Opportunity, TA IDEX Mercury Global
Allocation and TA IDEX Van Kampen Mid-Cap Growth may not purchase securities
issued by registered open-end investment companies or registered unit investment
trusts in reliance upon Section 12(d)(1)(F) or Section 12(d)(1)(G) of the 1940
Act.

(H) FUTURES CONTRACTS

TA IDEX Transamerica Short-Term Bond may enter into futures contracts and write
and buy put and call options relating to futures contracts.

TA IDEX American Century International and TA IDEX Van Kampen Small Company
Growth may enter into futures contracts and write and buy put and call options
relating to futures contracts. The funds may not, however, enter into leveraged
futures transactions if it would be possible for the fund to lose more money
than it invested.

TA IDEX Clarion Global Real Estate Securities, TA IDEX Janus Growth, TA IDEX
Jennison Growth, TA IDEX Salomon Investors Value, TA IDEX Templeton Great
Companies Global, TA IDEX Transamerica Balanced and TA IDEX Transamerica
Flexible Income may not (i) enter into any futures contracts or options on
futures contracts for purposes other than bona fide hedging transactions within
the meaning of Commodity Futures Trading Commission regulations if the aggregate
initial margin deposits and premiums required to establish positions in futures
contracts and related options that do not fall within the definition of bona
fide hedging transactions would exceed 5% of the fair market value of the fund's
net assets, after taking into account unrealized profits and losses on such
contracts it has entered into; and (ii) enter into any futures contracts or
options on futures contracts if the aggregate amount of the fund's commitments
under outstanding futures contracts positions and options on futures contracts
would exceed the market value of total assets.

TA IDEX Marsico International Growth may not enter into any futures contracts if
the aggregate amount of the fund's commitments under outstanding futures
contracts positions would exceed the market value of its total assets.

TA IDEX Evergreen Health Care, TA IDEX T. Rowe Price Small Cap and TA IDEX T.
Rowe Price Tax-Efficient Growth may not purchase a futures contract or an option
thereon, if, with respect to positions in futures or options on futures that do
not represent bona fide hedging, the aggregate initial margin and premiums on
such options would exceed 5% of the fund's net asset value.

TA IDEX Transamerica High-Yield Bond may not purchase or sell interest rate
futures contracts (a) involving aggregate delivery or purchase obligations in
excess of 30% of the fund's net assets, or aggregate margin deposits made by the
fund in excess of 5% of the fund's net assets; (b) which are not for hedging
purposes only; or (c) which are executed under custodial, reserve and other
arrangements inconsistent with regulations and policies adopted or positions
taken (i) by the Securities and Exchange Commission ("SEC") for exemption from
enforcement proceedings under Section 17(f) or 18(f) of the 1940 Act; (ii) by
the Commodity Futures Trading Commission ("CFTC") for exemption of investment
companies registered under the 1940 Act from registration as "commodity pool
operators" and from certain provisions of Subpart B of Part 4 of the CFTC's
regulations; or (iii) by state securities commissioners or administrators in the
states in which the fund's shares have been qualified for public offering.


                                        4



(I) "JOINT AND SEVERAL" BASIS

TA IDEX Great Companies - America(SM) and TA IDEX Great Companies -
Technology(SM) may not participate on a "joint" or "joint and several" basis in
any trading accounts in securities.

(J) FOREIGN ISSUERS

TA IDEX Jennison Growth, TA IDEX Salomon Investors Value and TA IDEX
Transamerica High-Yield Bond may not invest more than 25% of their net assets at
the time of purchase in the securities of foreign issuers and obligors.

(K) WARRANTS

TA IDEX Evergreen Health Care may not invest in warrants if, as a result
thereof, more than 10% of the value of the net assets of the fund would be
invested in warrants.

(L) PUT, CALL, STRADDLE OR SPREAD OPTIONS

TA IDEX Transamerica High-Yield Bond may not write or purchase put, call,
straddle or spread options, or combinations thereof.

(M) REAL ESTATE LIMITED PARTNERSHIP

TA IDEX Transamerica High-Yield Bond may not invest in real estate limited
partnerships.

(N) ADDITIONAL AND TEMPORARY BORROWINGS

TA IDEX American Century International and TA IDEX American Century Large
Company Value may not purchase additional investment securities at any time
during which outstanding borrowings exceed 5% of the total assets of the fund.

TA IDEX Evergreen Health Care, TA IDEX Marsico Growth, TA IDEX T. Rowe Price
Small Cap and TA IDEX T. Rowe Price Tax-Efficient Growth may not purchase
additional securities when money borrowed exceeds 5% of its total assets. This
restriction shall not apply to temporary borrowings until the fund's assets
exceed $40,000,000.

(O) BANK TIME DEPOSITS

TA IDEX Transamerica High-Yield Bond may not invest in bank time deposits with
maturities of over 7 calendar days, or invest more than 10% of the fund's total
assets in bank time deposits with maturities of from 2 business days through 7
calendar days.

(P) OFFICERS OWNERSHIP

TA IDEX Transamerica High-Yield Bond may not purchase or retain the securities
of any issuer if, to the fund's knowledge, those officers and directors of the
manager and sub-adviser who individually own beneficially more than 0.5% of the
outstanding securities of such issuer together own beneficially more than 5% of
such outstanding securities.


                                        5



                    OTHER POLICIES AND PRACTICES OF THE FUNDS

OPTIONS, FUTURES AND OTHER DERIVATIVE INSTRUMENTS

The following investments are subject to limitations as set forth in each fund's
investment restrictions and policies.

OPTIONS ON SECURITIES AND INDICES. In an effort to increase current income and
to reduce fluctuations in net asset value, each of the funds, other than TA IDEX
Transamerica High-Yield Bond, may write covered put and call options and buy put
and call options on securities that are traded on United States and foreign
securities exchanges, and over-the-counter. A fund also may write call options
that are not covered for cross-hedging purposes. A fund may write and buy
options on the same types of securities that the fund may purchase directly.
There are no specific limitations on a fund's writing and buying of options on
securities.

A call option gives the purchaser the right to buy, and a writer has the
obligation to sell, the underlying security at the stated exercise price at any
time prior to the expiration of the option, regardless of the market price or
exchange rate of the security, as the case may be. The premium paid to the
writer is consideration for undertaking the obligations under the option
contract. A put option gives the purchaser the right to sell the underlying
security at the stated exercise price at any time prior to the expiration date
of the option, regardless of the market price or exchange rate of the security,
as the case may be. A call option is covered if a fund owns the underlying
security covered by the call or has an absolute and immediate right to acquire
that security without additional cash consideration (or for additional cash
consideration if the underlying security is held in a segregated account by its
custodian) upon conversion or exchange of other securities held in its
portfolio. A put option is covered if a fund segregates cash or other liquid
assets with a value equal to the exercise price with its custodian. Put and call
options will be valued at the last sale price or, in the absence of such a
price, at the mean between bid and asked price.

When a portfolio security or currency subject to a call option is sold, a fund
will effect a "closing purchase transaction"--the purchase of a call option on
the same security or currency with the same exercise price and expiration date
as the call option which a fund previously has written. If a fund is unable to
effect a closing purchase transaction, it will not be able to sell the
underlying security or currency until the option expires or the fund delivers
the underlying security or currency upon exercise. In addition, upon the
exercise of a call option by the holder thereof, a fund will forego the
potential benefit represented by market appreciation over the exercise price.

When a fund writes an option, an amount equal to the net premium (the premium
less the commission) received by the fund is included in the liability section
of its statement of assets and liabilities as a deferred credit. The amount of
the deferred credit will be subsequently marked-to-market to reflect the current
value of the option written. The current value of the traded option is the last
sale price or, in the absence of a sale, the average of the closing bid and
asked prices. If an option expires on the stipulated expiration date, or if the
fund enters into a closing purchase transaction, it will realize a gain (or a
loss if the cost of a closing purchase transaction exceeds the net premium
received when the option is sold) and the deferred credit related to such option
will be eliminated. If an option is exercised, a fund may deliver the underlying
security in the open market. In either event, the proceeds of the sale will be
increased by the net premium originally received and the fund will realize a
gain or loss.

The purpose of writing covered call options is to generate additional premium
income for a fund. This premium income will serve to enhance a fund's total
return and will reduce the effect of any price decline of the security involved
in the option. Covered call options will generally be written on securities
which are not expected to make any major price moves in the near future but
which, over the long term, are deemed to be attractive investments for a fund.

Once the decision to write a call option has been made, a fund's investment
adviser or a sub-adviser, in determining whether a particular call option should
be written on a particular security, will consider the reasonableness of the
anticipated premium and the likelihood that a liquid secondary market will exist
for those options. Closing transactions will be effected in order to realize a
profit on an outstanding call option, to prevent an underlying security from
being called, or to permit a sale of the underlying security. Furthermore,
effecting a closing transaction will permit a fund to write another call option
on the underlying security with either a different exercise price or expiration
date or both. If a fund desires to sell a particular security from its portfolio
on which it has written a call option, it will seek to effect a closing
transaction prior to, or concurrently with, the sale of the security. There is,
of course, no assurance that a fund will be able to effect such closing
transactions at a favorable price. If a fund cannot enter into such a
transaction, it may be required to hold a security that it might otherwise have
sold, in which case it would continue to be at market risk on the security. This
could result in higher transaction costs. The funds will pay transaction costs
in connection


                                        6



with the writing of options to close out previously written options. Such
transaction costs are normally higher than those applicable to purchases and
sales of portfolio securities.

Exercise prices of options may be below, equal to, or above the current market
values of the underlying securities at the time the options are written. From
time to time, a fund may purchase an underlying security for delivery in
accordance with an exercise notice of a call option assigned to it, rather than
delivering such security from its portfolio. In such cases, additional costs
will be incurred. A fund will realize a profit or loss from a closing purchase
transaction if the cost of the transaction is less or more than the premium
received from the writing of the option. Because increases in the market price
of a call option will generally reflect increases in the market price of the
underlying security, any loss resulting from the repurchase of a call option is
likely to be offset in whole or in part by appreciation of the underlying
security owned by a fund.

Where a fund may purchase put options, that fund is purchasing the right to sell
a specified security (or securities) within a specified period of time at a
specified exercise price. Puts may be acquired to facilitate the liquidity of
the portfolio assets. Puts may also be used to facilitate the reinvestment of
assets at a rate of return more favorable than that of the underlying security.
A fund may sell, transfer, or assign a put only in conjunction with the sale,
transfer, or assignment of the underlying security or securities. The amount
payable to a fund upon its exercise of a "put" is normally (i) the fund's
acquisition cost of the securities subject to the put (excluding any accrued
interest which the fund paid on the acquisition), less any amortized market
premium or plus any accreted market or original issue discount during the period
the fund owned the securities; plus (ii) all interest accrued on the securities
since the last interest payment date during that period. A fund generally will
acquire puts only where the puts are available without the payment of any direct
or indirect consideration. However, if necessary or advisable, a fund may pay
for puts either separately in cash or by paying higher price for portfolio
securities which are acquired subject to the puts (thus reducing the yield to
maturity otherwise available for the same securities).

Index options (or options on securities indices) are similar in many respects to
options on securities, except that an index option gives the holder the right to
receive, upon exercise, cash instead of securities, if the closing level of the
securities index upon which the option is based is greater than, in the case of
a call, or less than, in the case of a put, the exercise price of the option.

Because index options are settled in cash, a call writer cannot determine the
amount of its settlement obligations in advance and, unlike call writing on
specific securities, cannot provide in advance for, or cover, its potential
settlement obligations by acquiring and holding the underlying securities. A
fund will segregate assets or otherwise cover index options that would require
it to pay cash upon exercise.

A principal reason for writing put and call options is to attempt to realize,
through the receipt of premiums, a greater current return than would be realized
on the underlying securities alone. In return for the premium received for a
call option, a fund foregoes the opportunity for profit from a price increase in
the underlying security above the exercise price so long as the option remains
open, but retains the risk of loss should the price of the security decline. In
return for the premium received for a put option, a fund assumes the risk that
the price of the underlying security will decline below the exercise price, in
which case the put would be exercised and the fund would suffer a loss. A fund
may purchase put options in an effort to protect the value of a security it owns
against a possible decline in market value.

OPTIONS ON FOREIGN CURRENCIES. A fund may buy and write options on foreign
currencies in a manner similar to that in which futures contracts or forward
contracts on foreign currencies will be utilized. For example, a decline in the
U.S. dollar value of a foreign currency in which fund securities are denominated
will reduce the U.S. dollar value of such securities, even if their value in the
foreign currency remains constant. In order to protect against such diminutions
in the value of fund securities, a fund may buy put options on the foreign
currency. If the value of the currency declines, such fund will have the right
to sell such currency for a fixed amount in U.S. dollars and will offset, in
whole or in part, the adverse effect on its portfolio.

Conversely, when a rise in the U.S. dollar value of a currency in which
securities to be acquired are denominated is projected, thereby increasing the
cost of such securities, a fund may buy call options thereon. The purchase of
such options could offset, at least partially, the effects of the adverse
movements in exchange rates. As in the case of other types of options, however,
the benefit to a fund from purchases of foreign currency options will be reduced
by the amount of the premium and related transaction costs. In addition, if
currency exchange rates do not move in the direction or to the extent desired, a
fund could sustain losses on transactions in foreign currency options that would
require such fund to forego a portion or all of the benefits of advantageous
changes in those rates. In addition, in the case of other types of options, the
benefit to the fund from purchases of foreign currency options will be reduced
by the amount of the premium and related transaction costs.


                                        7



A fund may also write options on foreign currencies. For example, in attempting
to hedge against a potential decline in the U.S. dollar value of foreign
currency denominated securities due to adverse fluctuations in exchange rates, a
fund could, instead of purchasing a put option, write a call option on the
relevant currency. If the expected decline occurs, the option will most likely
not be exercised and the diminution in value of fund securities will be offset
by the amount of the premium received.

Similarly, instead of purchasing a call option to attempt to hedge against a
potential increase in the U.S. dollar cost of securities to be acquired, a fund
could write a put option on the relevant currency which, if rates move in the
manner projected, will expire unexercised and allow that fund to hedge the
increased cost up to the amount of premium. As in the case of other types of
options, however, the writing of a foreign currency option will constitute only
a partial hedge up to the amount of the premium. If exchange rates do not move
in the expected direction, the option may be exercised and a fund would be
required to buy or sell the underlying currency at a loss which may not be
offset by the amount of the premium. Through the writing of options on foreign
currencies, a fund also may lose all or a portion of the benefits which might
otherwise have been obtained from favorable movements in exchange rates.

A fund may write covered call options on foreign currencies. A call option
written on a foreign currency by a fund is "covered" if that fund owns the
underlying foreign currency covered by the call or has an absolute and immediate
right to acquire that foreign currency without additional cash consideration (or
for additional cash consideration that is segregated by its custodian) upon
conversion or exchange of other foreign currency held in its fund. A call option
is also covered if: (i) the fund holds a call at the same exercise price for the
same exercise period and on the same currency as the call written; or (ii) at
the time the call is written, an amount of cash, U.S. government securities or
other liquid assets equal to the fluctuating market value of the optioned
currency is segregated with the custodian.

A fund may write call options on foreign currencies for cross-hedging purposes
that would not be deemed to be covered. A call option on a foreign currency is
for cross-hedging purposes if it is not covered but is designed to provide a
hedge against a decline due to an adverse change in the exchange rate in the
U.S. dollar value of a security which the fund owns or has the right to acquire
and which is denominated in the currency underlying the option. In such
circumstances, a fund collateralizes the option by segregating cash or other
liquid assets in an amount not less than the value of the underlying foreign
currency in U.S. dollars marked-to-market daily.

FUTURES CONTRACTS AND OPTIONS THEREON. A fund may enter into futures contracts,
purchase or sell options on any such futures contracts, and engage in related
closing transactions. Futures contracts are for the purchase or sale, for future
delivery, of equity or fixed-income securities, foreign currencies or contracts
based on financial indices, including indices of U.S. government securities,
foreign government securities and equity or fixed-income securities. Certain
funds may enter into interest rate futures contracts. These contracts are for
the purchase or sale of fixed-income securities. A futures contract on a
securities index is an agreement obligating either party to pay, and entitling
the other party to receive, while the contract is outstanding, cash payments
based on the level of a specified securities index.

U.S. futures contracts are traded on exchanges which have been designated
"contract markets" by the Commodity Futures Trading Commission ("CFTC") and must
be executed through a Futures Trading Commission Merchant ("FTCM"), or brokerage
firm, which is a member of the relevant contract market. Through their clearing
corporations, the exchanges guarantee performance of the contracts as between
the clearing members of the exchange.

The funds may use future contracts to hedge against anticipated future changes
in market conditions which otherwise might adversely affect the value of
securities which these funds hold or intend to purchase. For example, when
interest rates are expected to rise or market values of portfolio securities are
expected to fall, a fund can seek through the sale of futures contracts to
offset a decline in the value of its portfolio securities. When interest rates
are expected to fall or market values are expected to rise, a fund, through the
purchase of such contracts, can attempt to secure better rates or prices than
might later be available in the market when it effects anticipated purchases.

The acquisition of put and call options on futures contracts will, respectively,
give a fund the right (but not the obligation), for a specified price, to sell
or to purchase the underlying futures contract, upon exercise of the option, at
any time during the option period.

The funds also may purchase and sell put and call options on futures contracts.
An option on a futures contract gives the purchaser the right, but not the
obligation, in return for the premium paid, to assume (in the case of a call) or
sell (in the case of a put) a position in a specified underlying futures
contract (which position may be a long or short position) a specified exercise
price at any time during the option exercise period. Sellers of options on
futures


                                        8



contracts, like buyers and sellers of futures contracts, make an initial margin
deposit and are subject to calls for variation margin.

Futures transactions involve brokerage costs and require a fund to segregate
liquid assets, such as cash, U.S. Government securities or other liquid
securities to cover its obligation under such contracts. There is a possibility
that a fund may lose the expected benefit of futures transactions if interest
rates or securities prices move in an unanticipated manner. Such unanticipated
changes may also result in poorer overall performance than if a fund had not
entered into any futures transactions. In addition, the value of futures
positions may not prove to be perfectly or even highly correlated with the value
of its portfolio securities, limiting the fund's ability to hedge effectively
against interest rates and/or market risk and giving rise to additional risks.
There is no assurance of liquidity in the secondary market for purposes of
closing out futures positions.

Futures transactions will be limited to the extent necessary to maintain the
qualification of these funds as a regulated investment companies. Pursuant to a
claim for exemption filed with the CFTC and/or the National Futures Associates
on behalf of the funds and their, the funds and the adviser are not deemed to be
a "commodity pool" or "commodity pool operator" under the Commodity Exchange Act
and are not subject to registration or regulation as such under the Commodity
Exchange Act. By virtue of changes to CFTC regulations, the substantive
limitations set forth in the funds exemption filing with respect to its use of
futures contracts are no longer applicable.

FORWARD CONTRACTS. A forward contract is an agreement between two parties in
which one party is obligated to deliver a stated amount of a stated asset at a
specified time in the future, and the other party is obligated to pay a
specified invoice amount for the assets at the time of delivery. A fund may
enter into forward contracts to purchase and sell government securities, foreign
currencies or other financial instruments. Forward contracts generally are
traded in an interbank market conducted directly between traders (usually large
commercial banks) and their customers. Unlike futures contracts, which are
standardized contracts, forward contracts can be specifically drawn to meet the
needs of the parties that enter into them. The parties to a forward contract may
agree to offset or terminate the contract before its maturity, or may hold the
contract to maturity and complete the contemplated exchange.

 The following discussion summarizes a fund's principal uses of forward foreign
currency exchange contracts ("forward currency contracts").

A fund may enter into forward currency contracts with stated contract values of
up to the value of that fund's assets. The funds may enter into forward currency
contracts in order to hedge against adverse movements in exchange rates between
currencies. A forward currency contract is an obligation to buy or sell an
amount of a specified currency for an agreed upon price (which may be in U.S.
dollars or another currency). A fund will exchange foreign currencies for U.S.
dollars and for other foreign currencies in the normal course of business.

A fund may use currency exchange contracts in the normal course of business to
lock in an exchange rate in connection with purchases and sales of securities
denominated in foreign currencies (transaction hedge) or to lock in the U.S.
dollar value of portfolio positions (position hedge). In addition, a fund may
cross hedge currencies by entering into a transaction to purchase or sell one or
more currencies that are expected to decline in value relative to other
currencies to which a fund has or expects to have portfolio exposure. A fund may
also engage in proxy hedging which is defined as entering into positions in one
currency to hedge investments denominated in another currency, where the two
currencies are economically linked. A fund's entry into forward foreign currency
exchange contract, as well as any use of cross or proxy hedging techniques will
generally require the fund to hold liquid securities or cash equal to a fund's
obligations in a segregated account throughout the duration of the contract.

A fund may also combine forward foreign currency exchange contracts with
investments in securities denominated in other currencies in order to achieve
desired equity, credit and currency exposures. Such combinations are generally
referred to as synthetic securities. For example, in lieu of purchasing a
foreign equity or bond, a fund may purchase a U.S. dollar-denominated security
and at the same time enter into a forward foreign currency exchange contract to
exchange U.S. dollars for the contract's underlying currency at a future date.
By matching the amount of U.S. dollars to be exchanged with the anticipated
value of the U.S. dollar-denominated security, a fund may be able to lock in the
foreign currency value of the security and adopt a synthetic investment position
reflecting the equity return or credit quality of the U.S. dollar-denominated
security.

By entering into a forward currency contract in U.S. dollars for the purchase or
sale of the amount of foreign currency involved in an underlying security
transaction, the funds are able to protect themselves against a possible loss
between trade and settlement dates resulting from an adverse change in the
relationship between the U.S. dollar and


                                        9



such foreign currency. However, this tends to limit potential gains which might
result from a positive change in such currency relationships. The funds may also
hedge foreign currency exchange rate risk by engaging in a currency financial
futures and options transactions, which are described below. The forecasting of
short-term currency market movements is extremely difficult and whether such a
short-term hedging strategy will be successful is highly uncertain.

It is impossible to forecast with precision the market value of portfolio
securities at the expiration of a forward currency contract. Accordingly, it may
be necessary for a fund to purchase additional currency on the spot market if
the market value of the security is less than the amount of foreign currency
such fund is obligated to deliver when a decision is made to sell the security
and make delivery of the foreign currency in settlement of a forward contract.
Conversely, it may be necessary to sell on the spot market some of the foreign
currency received upon the sale of the portfolio security if its market value
exceeds the amount of foreign currency such fund is obligated to deliver.

If a fund retains the portfolio security and engages in an offsetting
transaction, it will incur a gain or a loss to the extent that there has been
movement in forward currency contract prices. If a fund engages in an offsetting
transaction, it may subsequently enter into a new forward currency contract to
sell the foreign currency. Although such contracts tend to minimize the risk of
loss due to a decline in the value of the hedged currency, they also tend to
limit any potential gain which might result should the value of such currency
increase. The funds will have to convert their holdings of foreign currencies
into U.S. dollars from time to time. Although foreign exchange dealers do not
charge a fee for conversion, they do realize a profit based on the difference
(the "spread") between the prices at which they are buying and selling various
currencies.

While forward currency contracts are not currently regulated by the CFTC, the
CFTC may in the future assert authority to regulate forward currency contracts.
In such event, a fund's ability to utilize forward currency contracts may be
restricted. In addition, a fund may not always be able to enter into forward
currency contracts at attractive prices and may be limited in its ability to use
these contracts to hedge its assets.

SWAPS AND SWAP-RELATED PRODUCTS. In order to attempt to protect the value of its
investments from interest rate or currency exchange rate fluctuations, a fund
may, subject to its investment restrictions, enter into interest rate and
currency exchange rate swaps, and may buy or sell interest rate and currency
exchange rate caps and floors. A fund's sub-adviser may enter into these
transactions primarily to attempt to preserve a return or spread on a particular
investment or portion of its portfolio. A fund also may enter into these
transactions to attempt to protect against any increase in the price of
securities the fund may consider buying at a later date.

The funds do not intend to use these transactions as a speculative investment.
Interest rate swaps involve the exchange by a fund with another party of their
respective commitments to pay or receive interest, e.g., an exchange of floating
rate payments for fixed rate payments. The exchange commitments can involve
payments to be made in the same currency or in different currencies. The
purchase of an interest rate cap entitles the purchaser, to the extent that a
specified index exceeds a predetermined interest rate, to receive payments of
interest on a contractually based principal amount from the party selling the
interest rate cap. The purchase of an interest rate floor entitles the
purchaser, to the extent that a specified index falls below a predetermined
interest rate, to receive payments of interest on a contractually based
principal amount from the party selling the interest rate floor.

A fund, subject to its investment restrictions, enters into interest rate swaps,
caps and floors on either an asset-based or liability-based basis, depending
upon whether it is hedging its assets or its liabilities, and will usually enter
into interest rate swaps on a net basis (i.e., the two payment streams are
netted out, with a fund receiving or paying, as the case may be, only the net
amount of the two payments). The net amount of the excess, if any, of a fund's
obligations over its entitlements with respect to each interest rate swap, will
be calculated on a daily basis. An amount of cash or other liquid assets having
an aggregate net asset at least equal to the accrued excess will be segregated
by its custodian.

If a fund enters into an interest rate swap on other than a net basis, it will
maintain a segregated account in the full amount accrued on a daily basis of its
obligations with respect to the swap. A fund will not enter into any interest
rate swap, cap or floor transaction unless the unsecured senior debt or the
claims-paying ability of the other party thereto is rated in one of the three
highest rating categories of at least one nationally recognized statistical
rating organization at the time of entering into such transaction. A fund's
sub-adviser will monitor the creditworthiness of all counterparties on an
ongoing basis. If there is a default by the other party to such a transaction,
the fund will have contractual remedies pursuant to the agreements related to
the transaction.

The swap market has grown substantially in recent years with a large number of
banks and investment banking firms acting both as principals and as agents
utilizing standardized swap documentation. The sub-advisers have


                                       10



determined that, as a result, the swap market has become relatively liquid. Caps
and floors are more recent innovations for which standardized documentation has
not yet been developed and, accordingly, they are less liquid than swaps. To the
extent a fund sells (i.e., writes) caps and floors, it will segregate cash or
other liquid assets having an aggregate net asset value at least equal to the
full amount, accrued on a daily basis, of its obligations with respect to any
caps or floors.

There is no limit on the amount of interest rate swap transactions that may be
entered into by a fund, unless so stated in its investment objectives. These
transactions may in some instances involve the delivery of securities or other
underlying assets by a fund or its counterparty to collateralize obligations
under the swap.

Under the documentation currently used in those markets, the risk of loss with
respect to interest rate swaps is limited to the net amount of the interest
payments that a fund is contractually obligated to make. If the other party to
an interest rate swap that is not collateralized defaults, a fund would risk the
loss of the net amount of the payments that it contractually is entitled to
receive. A fund may buy and sell (i.e., write) caps and floors without
limitation, subject to the segregation requirement described above.

In addition to the instruments, strategies and risks described in this SAI and
in the prospectus, there may be additional opportunities in connection with
options, futures contracts, forward currency contracts and other hedging
techniques that become available as a fund's sub-adviser develops new
techniques, as regulatory authorities broaden the range of permitted
transactions, and as new instruments are developed. The funds' sub-advisers may
use these opportunities to the extent they are consistent with each fund's
investment objective and as are permitted by a fund's investment limitations and
applicable regulatory requirements.

CREDIT DEFAULT SWAPS. A fund may enter into credit default swap contracts for
investment purposes. As the seller in a credit default swap contract, a fund
would be required to pay the par (or other agreed-upon) value of a referenced
debt obligation to the counterparty in the event of a default by a third party,
such as a U.S. or foreign corporate issuer, on the debt obligation. In return, a
fund would receive from the counterparty a periodic stream of payments over the
term of the contract provided that no event of default has occurred. If no
default occurs, a fund would keep the stream of payments and would have no
payment obligations. As the seller, a fund would be subject to investment
exposure on the notional amount of the swap.

A fund may also purchase credit default swap contracts in order to hedge against
the risk of default of debt securities held in its portfolio, in which case the
fund would function as the counterparty referenced in the preceding paragraph.
This would involve the risk that the investment may expire worthless and would
only generate income in the event of an actual default by the issuer of the
underlying obligation (as opposed to a credit downgrade or other indication of
financial instability). It would also involve credit risk--that the seller may
fail to satisfy its payment obligations to the fund in the event of a default.

TOTAL RATE OF RETURN SWAPS. A fund may enter into total rate of return swap
contracts for investment purposes. Total rate of return swaps are contracts in
which one party agrees to make payments of the total return from the underlying
asset during the specified period, in return for payments equal to a fixed or
floating rate of interest or the total return from another underlying asset.

EURO INSTRUMENTS. The funds may make investments in Euro instruments. Euro
instruments are U.S. dollar-denominated futures contracts, or options thereon,
which are linked to the London Interbank Offered Rate (the "LIBOR"), although
foreign currency-denominated instruments are available from time to time. Euro
futures contracts enable purchasers to obtain a fixed rate for the lending of
funds, and sellers to obtain a fixed rate for borrowings. A fund might use Euro
futures contracts and options thereon to hedge against changes in LIBOR, which
may be linked to many interest rate swaps and fixed-income instruments.

SPECIAL INVESTMENT CONSIDERATIONS AND RISKS. The successful use of the
investment practices described above with respect to futures contracts, options
on futures contracts, forward contracts, options on securities, options on
foreign currencies and swaps and swap-related products draws upon skills and
experience which are different from those needed to select the other instruments
in which a fund may invest. Should interest or exchange rates, or the prices of
securities or financial indices move in an unexpected manner, a fund may not
achieve the desired benefits of the foregoing instruments or may realize losses
and thus be in a worse position than if such strategies had not been used.
Unlike many exchange-traded futures contracts and options on futures contracts,
there are no daily price fluctuation limits with respect to options on
currencies, forward contracts and other negotiated or over-the-counter
instruments, and adverse market movements could therefore continue to an
unlimited extent over a period of time. In addition, the correlation between
movements in the price of the securities and currencies hedged or used for cover
will not be perfect and could produce unanticipated losses.


                                       11



A fund's ability to dispose of its positions in the foregoing instruments will
depend on the availability of liquid markets in the instruments. Markets in a
number of the instruments are relatively new and still developing, and it is
impossible to predict the amount of trading interest that may exist in those
instruments in the future.

Particular risks exist with respect to the use of each of the foregoing
instruments and could result in such adverse consequences to a fund as: the
possible loss of the entire premium paid for an option bought by a fund; the
inability of the fund, as the writer of a covered call option, to benefit from
the appreciation of the underlying securities above the exercise price of the
option; and the possible need to defer closing out positions in certain
instruments to avoid adverse tax consequences. As a result, no assurance can be
given that a fund will be able to use those instruments effectively for their
intended purposes.

In connection with certain of its hedging transactions, a fund must segregate
assets with the fund's custodian bank to ensure that such fund will be able to
meet its obligations pursuant to these instruments. Segregation of a large
percentage of a fund's assets could impede implementation of that fund's
investment policies or its ability to meet redemption requests or other current
obligations.

ADDITIONAL RISKS OF OPTIONS ON FOREIGN CURRENCIES, FORWARD CONTRACTS AND FOREIGN
INSTRUMENTS. Unlike transactions entered into by a fund in futures contracts,
options on foreign currencies and forward contracts are not traded on contract
markets regulated by the CFTC or (with the exception of certain foreign currency
options) by the Securities and Exchange Commission ("SEC"). To the contrary,
such instruments are traded through financial institutions acting as
market-makers, although foreign currency options are also traded on certain
national securities exchanges, such as the Philadelphia Stock Exchange and the
Chicago Board Options Exchange, subject to SEC regulation.

Options on currencies may be traded over-the-counter. In an over-the-counter
trading environment, many of the protections afforded to exchange participants
will not be available. For example, there are no daily price fluctuation limits,
and adverse market movements could therefore continue to an unlimited extent
over a period of time. Although the buyer of an option cannot lose more than the
amount of the premium plus related transaction costs, this entire amount could
be lost. Moreover, an option writer and a buyer or seller of futures or forward
contracts could lose amounts substantially in excess of any premium received or
initial margin or collateral posted due to the potential additional margin and
collateral requirements associated with such positions.

Options on foreign currencies traded on national securities exchanges are within
the jurisdiction of the SEC, as are other securities traded on such exchanges.
As a result, many of the protections provided to traders on organized exchanges
will be available with respect to such transactions. In particular, all foreign
currency option positions entered into on a national securities exchange are
cleared and guaranteed by the Office of the Comptroller of the Currency (the
"OCC"), thereby reducing the risk of counterparty default. Further, a liquid
secondary market in options traded on a national securities exchange may be more
readily available than in the over-the-counter market, potentially permitting a
fund to liquidate open positions at a profit prior to exercise or expiration, or
to limit losses in the event of adverse market movements.

The purchase and sale of exchange-traded foreign currency options, however, is
subject to the risks of the availability of a liquid secondary market described
above, as well as the risks regarding adverse market movements, margining of
options written, the nature of the foreign currency market, possible
intervention by governmental authorities and the effects of other political and
economic events.

In addition, exchange-traded options on foreign currencies involve certain risks
not presented by the over-the-counter market. For example, exercise and
settlement of such options must be made exclusively through the OCC, which has
established banking relationships in applicable foreign countries for this
purpose. As a result, the OCC may, if it determines that foreign government
restrictions or taxes would prevent the orderly settlement of foreign currency
option exercises, or would result in undue burdens on the OCC or its clearing
member, impose special procedures on exercise and settlement. These include such
things as technical changes in the mechanics of delivery of currency, the fixing
of dollar settlement prices or prohibitions on exercise.

In addition, options on U.S. government securities, futures contracts, options
on futures contracts, forward contracts and options on foreign currencies may be
traded on foreign exchanges and over-the-counter in foreign countries. Such
transactions are subject to the risk of governmental actions affecting trading
in or the prices of foreign currencies or securities. The value of such
positions also could be adversely affected by: (i) other complex foreign
political and economic factors; (ii) less availability than that available in
the United States of data on which to make trading decisions; (iii) delays in a
fund's ability to act upon economic events occurring in foreign markets during
non-business hours in the United States; (iv) the imposition of different
exercise and settlement terms and procedures and margin requirements than in the
United States; and (v) low trading volume.


                                       12



FOREIGN INVESTMENTS

Each fund may invest in foreign securities through the purchase of securities of
foreign issuers or of American Depositary Receipts ("ADRs"). European Depository
Receipts ("EDRs"), Global Depository Receipts ("GDRs") and Fiduciary Depository
Receipts ("FDRs") or other securities representing underlying shares of foreign
companies. Generally, ADRs, in registered form, are designed for use in U.S.
securities markets and EDRs, GDRs and FDRs, in bearer form, are designed for use
in European and global securities markets. ADRs are receipts typically issued by
a U.S. bank or trust company evidencing ownership of the underlying securities.
EDRs, EDRs and FDRs are European, global and fiduciary receipts, respectively,
evidencing a similar arrangement. Because foreign companies are not subject to
uniform accounting, auditing and financial reporting standards, practices and
requirements comparable to those applicable to U.S. companies, there may be less
publicly available information about a foreign company than about a U.S.
company. Volume and liquidity in most foreign markets are less than in the U.S.,
and securities of many foreign companies are less liquid and more volatile than
securities of comparable U.S. companies. Fixed commissions on foreign securities
exchanges are generally higher than negotiated commissions on U.S. exchanges,
although a fund will endeavor to achieve the most favorable net results on
portfolio transactions. There is generally less government supervision and
regulation of securities exchanges, brokers, dealers and listed companies than
in the U.S., thus increasing the risk of delayed settlements of portfolio
transactions or loss of certificates for portfolio securities.

Foreign markets also have different clearance and settlement procedures; and in
certain markets, there have been times when settlements have been unable to keep
pace with the volume of securities transactions, making it difficult to conduct
such transactions. Such delays in settlement could result in temporary periods
when a portion of the assets of a fund investing in foreign markets is
uninvested and no return is earned thereon. The inability of such a fund to make
intended security purchases due to settlement problems could cause the fund to
miss attractive investment opportunities. Losses to a fund due to subsequent
declines in the value of portfolio securities, or losses arising out of an
inability to fulfill a contract to sell such securities, could result in
potential liability to the fund. In addition, with respect to certain foreign
countries, there is the possibility of expropriation or confiscatory taxation,
political or social instability, or diplomatic developments which could affect
the investments in those countries. Moreover, individual foreign economies may
differ favorably or unfavorably from the U.S. economy in such respects as growth
of gross national product, rate of inflation, capital reinvestment, resource
self-sufficiency and balance of payments position.

In many instances, foreign debt securities may provide higher yields than
securities of domestic issuers which have similar maturities and quality. Under
certain market conditions these investments may be less liquid than the
securities of U.S. corporations and are certainly less liquid than securities
issued or guaranteed by the U.S. Government or its agencies or
instrumentalities. Finally, in the event of a default of any such foreign debt
obligations, it may be more difficult to obtain or to enforce a judgment against
the issuers of such securities.

If a security is denominated in foreign currency, the value of the security to a
fund will be affected by changes in currency exchange rates and in exchange
control regulations, and costs will be incurred in connection with conversions
between currencies. Currency risks generally increase in lesser developed
markets. Exchange rate movements can be large and can endure for extended
periods of time, affecting either favorably or unfavorably the value of a fund's
assets. The value of the assets of a fund as measured in U.S. dollars may be
affected favorably or unfavorably by changes in foreign currency exchange rates
and exchange control regulations.

A change in the value of any foreign currency against the U.S. dollar will
result in a corresponding change in the U.S. dollar value of securities
denominated in that currency. Such changes will also affect the income and
distributions to shareholders of a fund investing in foreign markets. In
addition, although a fund will receive income on foreign securities in such
currencies, it will be required to compute and distribute income in U.S.
dollars. Therefore, if the exchange rate for any such currency declines
materially after income has been accrued and translated into U.S. dollars, a
fund could be required to liquidate portfolio securities to make required
distributions. Similarly, if an exchange rate declines between the time a fund
incurs expenses in U.S. dollars and the time such expenses are paid, the amount
of such currency required to be converted into U.S. dollars in order to pay such
expenses in U.S. dollars will be greater.

ADRs, which are traded in the United States on exchanges or over-the-counter,
are issued by domestic banks. ADRs represent the right to receive securities of
foreign issuers deposited in a domestic bank or a correspondent bank. ADRs do
not eliminate all the risk inherent in investing in the securities of foreign
issuers' stock. However, by investing in ADRs rather than directly in foreign
issuers' stock, a fund can avoid currency risks during the settlement period for
either purchase or sales.


                                       13



In general, there is a large, liquid market in the United States for many ADRs.
The information available for ADRs is subject to the accounting, auditing and
financial reporting standards of the domestic market or exchange on which they
are traded, which standards are more uniform and more exacting than those to
which many foreign issuers may be subject. Certain ADRs, typically those
denominated as unsponsored, require the holders thereof to bear most of the
costs of such facilities, while issuers of sponsored facilities normally pay
more of the costs thereof. The depositary of an unsponsored facility frequently
is under no obligation to distribute shareholder communications received from
the issuer of the deposited securities or to pass through the voting rights to
facility holders with respect to the deposited securities, whereas the
depositary of a sponsored facility typically distributes shareholder
communications and passes through the voting rights.

SOVEREIGN DEBT SECURITIES (TA IDEX PIMCO TOTAL RETURN AND TA IDEX PIMCO REAL
RETURN TIPS). TA IDEX PIMCO Total Return and TA IDEX PIMCO Real Return TIPS may
invest in securities issued or guaranteed by any country and denominated in any
currency. The funds expect to generally invest in developed countries including
Australia, Canada, Finland, France, Germany, the Netherlands, Japan, Italy, New
Zealand, Norway, Spain, Sweden, the United Kingdom and the United States. The
obligations of governmental entities have various kinds of government support
and include obligations issued or guaranteed by governmental entities with
taxing power. These obligations may or may not be supported by the full faith
and credit of a government. Debt securities issued or guaranteed by foreign
governmental entities have credit characteristics similar to those of domestic
debt securities but are subject to the risks attendant to foreign investments,
which are discussed above.

The funds may also purchase securities issued by semi-governmental or
supranational agencies such as the Asian Developmental Bank, the International
Bank for Reconstruction and Development, the Export-Import Bank and the European
Investment Bank. The governmental members, or "stockholders," usually make
initial capital contributions to the supranational entity and in many cases are
committed to make additional capital contributions if the supranational entity
is unable to repay its borrowings. The funds will not invest more than 25% of
their assets in the securities of supranational entities.

EMERGING MARKETS. Securities traded in certain emerging market countries,
including the emerging market countries in Eastern Europe, may be subject to
risks in addition to risks typically posed by foreign investing due to the
inexperience of financial intermediaries, the lack of modern technology, and the
lack of a sufficient capital base to expand business operations. Additionally,
former Communist regimes of a number of Eastern European countries previously
expropriated a large amount of property, the claims on which have not been
entirely settled. There can be no assurance that a fund's investments in Eastern
Europe will not also be expropriated, nationalized or otherwise confiscated.

Certain funds may invest in Brady Bonds, which are securities created through
the exchange of existing commercial bank loans to sovereign entities for new
obligations in connection with debt restructurings under a debt restructuring
plan introduced by former U.S. Secretary of the Treasury, Nicholas F. Brady (the
"Brady Plan"). Brady Plan debt restructurings have been implemented in a number
of countries, including: Argentina, Bolivia, Brazil, Bulgaria, Costa Rica, the
Dominican Republic, Ecuador, Jordan, Mexico, Niger, Nigeria, Panama, Peru, the
Philippines, Poland, Uruguay, and Venezuela.

Brady Bonds may be collateralized or uncollateralized, are issued in various
currencies (primarily the U.S. dollar) and are actively traded in the
over-the-counter secondary market. Brady Bonds are not considered to be U.S.
Government securities. U.S. dollar-denominated, collateralized Brady Bonds,
which may be fixed-rate par bonds or floating-rate discount bonds, are generally
collateralized in full as to principal by U.S. Treasury zero coupon bonds having
the same maturity as the Brady Bonds. Interest payments on these Brady Bonds
generally are collateralized on a one-year or longer rolling-forward basis by
cash or securities in an amount that, in the case of fixed-rate bonds, is equal
to at least one year of interest payments or, in the case of floating rate
bonds, initially is equal to at least one year's interest payments based on the
applicable interest rate at that time and is adjusted at regular intervals
thereafter. Certain Brady Bonds are entitled to "value recovery payments" in
certain circumstances, which in effect constitute supplemental interest payments
but generally are not collateralized. Brady Bonds are often viewed as having
three or four valuation components: (i) the collateralized repayment of
principal at final maturity; (ii) the collateralized interest payments; (iii)
the uncollateralized interest payments; and (iv) any uncollateralized repayment
of principal at maturity (these uncollateralized amounts constitute the
"residual risk").

Most Mexican Brady Bonds issued to date have principal repayments at final
maturity fully collateralized by U.S. Treasury zero coupon bonds (or comparable
collateral denominated in other currencies) and interest coupon payments
collateralized on an 18-month rolling-forward basis by funds held in escrow by
an agent for the bondholders. A significant portion of the Venezuelan Brady
Bonds and the Argentine Brady Bonds issued to date have principal repayments at
final maturity collateralized by U.S. Treasury zero coupon bonds (or comparable


                                       14



collateral denominated in other currencies) and/or interest coupon payments
collateralized on a 14-month (for Venezuela) or 12-month (for Argentina)
rolling-forward basis by securities held by the Federal Reserve Bank of New York
as collateral agent.

Brady Bonds involve various risk factors including residual risk and the history
of defaults with respect to commercial bank loans by public and private entities
of countries issuing Brady Bonds. There can be no assurance that Brady Bonds in
which the fund may invest will not be subject to restructuring arrangements or
to requests for new credit, which may cause the fund to suffer a loss of
interest or principal on any of its holdings.

Risks of Investments in Russia. Certain funds may invest a portion of its assets
in securities issued by companies located in Russia. Because of the recent
formation of the Russian securities markets as well as the underdeveloped state
of Russia's banking system, settlement, clearing and registration of securities
transactions are subject to significant risks. Ownership of shares is defined
according to entries in the company's share register and normally evidenced by
extracts from the register. These extracts are not negotiable instruments and
are not effective evidence of securities ownership. The registrars are not
necessarily subject to effective state supervision nor are they licensed with
any governmental entity. Also, there is no central registration system for
shareholders and it is possible for a fund to lose its registration through
fraud, negligence or mere oversight. While a fund will endeavor to ensure that
its interest continues to be appropriately recorded either itself or through a
custodian or other agent inspecting the share register and by obtaining extracts
of share registers through regular confirmations, these extracts have no legal
enforceability and it is possible that subsequent illegal amendment or other
fraudulent act may deprive the fund of its ownership rights or improperly dilute
its interest. In addition, while applicable Russian regulations impose liability
on registrars for losses resulting from their errors, it may be difficult for a
fund to enforce any rights it may have against the registrar or issuer of the
securities in the event of loss of share registration. While the fund intends to
invest directly in Russian companies that use an independent registrar, there
can be no assurance that such investments will not result in a loss to a fund.

OTHER INVESTMENT COMPANIES

Subject to applicable investment restrictions, a fund may invest in securities
issued by other investment companies as permitted under the 1940 Act. A fund may
indirectly bear a portion of any investment advisory fees and expenses and
distribution (12b-1) fees paid by funds in which it invests, in addition to the
advisory fees and expenses paid by the fund. Merrill Lynch has received an
exemptive order from the SEC permitting TA IDEX Mercury Global Allocation and TA
IDEX Mercury Large Cap Value to invest in affiliated registered money market
funds and in an affiliated private investment company without regard to such
limitations, provided however, that in all cases these funds' aggregate
investment of cash in shares of such investment companies shall not exceed 25%
of their total assets at any time.

EXCHANGE-TRADED FUNDS ("ETFS"). Subject to limitations under the 1940 Act, a
fund may invest in shares of investment companies known as ETFs. For example, a
fund may invest in S&P Depositary Receipts, or "SPDRs." SPDRs are securities
that represent ownership in a long-term unit investment trust that holds a
portfolio of common stocks designed to track the performance of the S&P 500
Index. A fund investing in a SPDR would be entitled to the dividends that accrue
to the S&P 500 stocks in the underlying portfolio, less trust expenses.
Investing in these securities may result in duplication of certain fees and
expenses paid by these securities in addition to the advisory fees and expenses
paid by the fund. Other examples of ETFs in which the funds may invest are
DIAMONS (interests in a portfolio of securities that seeks to track the
performance of the Dow Jones Industrial Average), WEBS or World Equity Benchmark
Shares (interests in a portfolio of securities that seeks to track the
performance of a benchmark index of a particular foreign country's stocks), and
the Nasdaq-100 Trust or QQQ (interests in a portfolio of securities of the
largest and most actively traded non-financial companies listed on the NASDAQ
Stock Market).

WHEN-ISSUED, DELAYED SETTLEMENT AND FORWARD DELIVERY SECURITIES

Securities may be purchased and sold on a "when-issued," "delayed settlement" or
"forward (delayed) delivery" basis. "When-issued" or "forward delivery" refers
to securities whose terms are available, and for which a market exists, but
which are not available for immediate delivery. When-issued or forward delivery
transactions may be expected to occur a month or more before delivery is due. A
fund may engage in when-issued transactions to obtain what is considered to be
an advantageous price and yield at the time of the transaction. When a fund
engages in when-issued or forward delivery transactions, it will do so
consistent with its investment objective and policies and not for the purpose of
investment leverage.


                                       15


"Delayed settlement" is a term used to describe settlement of a securities
transaction in the secondary market which will occur sometime in the future. No
payment or delivery is made by a fund until it receives payment or delivery from
the other party for any of the above transactions. The fund will segregate with
its custodian cash, U.S. government securities or other liquid assets at least
equal to the value or purchase commitments until payment is made. The segregated
securities will either mature or, if necessary, be sold on or before the
settlement date. Typically, no income accrues on securities purchased on a
delayed delivery basis prior to the time delivery of the securities is made,
although a fund may earn income on securities it has segregated to collateralize
its delayed delivery purchases.

New issues of stocks and bonds, private placements and U.S. government
securities may be sold in this manner. At the time of settlement, the market
value of the security may be more or less than the purchase price. A fund bears
the risk of such market value fluctuations. These transactions also involve the
risk that the other party to the transaction may default on its obligation to
make payment or delivery. As a result, the fund may be delayed or prevented from
completing the transaction and may incur additional costs as a consequence of
the delay.

ZERO-COUPON, PAY-IN-KIND AND STEP-COUPON SECURITIES

Subject to its investment restrictions, a fund may invest in zero-coupon,
pay-in-kind and step-coupon securities. Zero-coupon bonds are issued and traded
at a discount from their face value. They do not entitle the holder to any
periodic payment of interest prior to maturity. Step-coupon bonds trade at a
discount from their face value and pay coupon interest. The coupon rate is low
for an initial period and then increases to a higher coupon rate thereafter. The
discount from the face amount or par value depends on the time remaining until
cash payments begin, prevailing interest rates, liquidity of the security and
the perceived credit quality of the issuer. Pay-in-kind bonds give the issuer an
option to pay cash at a coupon payment date or give the holder of the security a
similar bond with the same coupon rate and a face value equal to the amount of
the coupon payment that would have been made. Certain funds may also invest in
"strips," which are debt securities that are stripped of their interest after
the securities are issued, but otherwise are comparable to zero-coupon bonds.

Current federal income tax law requires holders of zero-coupon securities and
step-coupon securities to report the portion of the original issue discount on
such securities that accrues that year as interest income, even though the
holders receive no cash payments of interest during the year. In order to
qualify as a "regulated investment company" under the Internal Revenue Code of
1986 ("Code"), a fund must distribute its investment company taxable income,
including the original issue discount accrued on zero-coupon or step-coupon
bonds. Because it will not receive cash payments on a current basis in respect
of accrued original-issue discount on zero-coupon bonds or step-coupon bonds
during the period before interest payments begin, in some years a fund may have
to distribute cash obtained from other sources in order to satisfy the
distribution requirements under the Code. A fund might obtain such cash from
selling other portfolio holdings. These actions may reduce the assets to which
fund expenses could be allocated and may reduce the rate of return for such
fund. In some circumstances, such sales might be necessary in order to satisfy
cash distribution requirements even though investment considerations might
otherwise make it undesirable for a fund to sell the securities at the time.

Generally, the market prices of zero-coupon bonds and strip securities are more
volatile than the prices of securities that pay interest periodically in cash
and they are likely to respond to changes in interest rates to a greater degree
than other types of debt securities having similar maturities and credit
quality.

INVESTMENTS IN THE REAL ESTATE INDUSTRY AND REAL ESTATE INVESTMENT TRUSTS
("REITS")

REITs are pooled investment vehicles which invest primarily in income producing
real estate, or real estate related loans or interests. REITs are generally
classified as equity REITs, mortgage REITs, or hybrid REITs.

Equity REITs invest the majority of their assets directly in real property and
derive income primarily from the collection of rents. Equity REITs can also
realize capital gains by selling properties that have appreciated in value.
Mortgage REITs invest the majority of their assets in real estate mortgages and
derive income from the collection of interest payments. Hybrid REITs invest
their assets in both real property and mortgages. REITs are not taxed on income
distributed to policyowners provided they comply with several requirements of
the Code.

Investments in the real estate industry are subject to risks associated with
direct investment in real estate. Such risks include, but are not limited to:
declining real estate values; risks related to general and local economic
conditions; over-building; increased competition for assets in local and
regional markets; changes in zoning laws; difficulties in completing
construction; changes in real estate value and property taxes; increases in
operating expenses or interest rates; changes in neighborhood values or the
appeal of properties to tenants; insufficient


                                       16



levels of occupancy; and inadequate rents to cover operating expenses. The
performance of securities issued by companies in the real estate industry also
may be affected by prudent management of insurance risks, adequacy of financing
available in capital markets, competent management, changes in applicable laws
and governmental regulations (including taxes) and social and economic trends.

REITs also may subject a portfolio to certain risks associated with the direct
ownership of real estate. As described above, these risks include, among others:
possible declines in the value of real estate; possible lack of availability of
mortgage funds; extended vacancies of properties; risks related to general and
local economic conditions; overbuilding; increases in competition, property
taxes and operating expenses; changes in zoning laws; costs resulting from the
clean-up of, liability to third parties for or damages resulting from,
environmental problems, or casualty or condemnation losses; uninsured damages
from floods, earthquakes or other natural disasters; limitations on and
variations in rents; and changes in interest rates.

Investing in REITs involves certain unique risks, in addition to those risks
associated with investing in the real estate industry in general. Equity REITs
may be affected by changes in the value of the underlying property owned by the
REITs, while mortgage REITs may be affected by the quality of any credit
extended. REITs are dependent upon management skills, are not diversified, and
are subject to risks associated with heavy cash flow dependency, potential
default by borrowers, self-liquidation and the possibilities of failing to
qualify for the exemption from tax for distributed income under the Code. REITs
(especially mortgage REITs) are also subject to interest rate risk.

MORTGAGE-RELATED SECURITIES

The funds may invest in mortgage-related securities issued or guaranteed by the
U.S. Government, its agencies and instrumentalities, and by nongovernmental
entities, provided, however, that to the extent that a fund purchases
mortgage-related securities from such issuers which may, solely for purposes of
the 1940 Act, be deemed to be investment companies, the fund's investment in
such securities will be subject to the limitations on its investment in
investment company securities. In the case of privately-issued mortgage-related
and asset-backed securities, the funds take the position that such instruments
do not represent interests in any particular industry or group of industries.

Mortgage-related securities in which these funds may invest represent pools of
mortgage loans assembled for sale to investors by various governmental agencies
such as GNMA and government-related organizations such as FNMA and FHLMC, as
well as by nongovernmental issuers such as commercial banks, savings and loan
institutions, mortgage bankers and private mortgage insurance companies.
Although certain mortgage-related securities are guaranteed by a third party or
otherwise similarly secured, the market value of the security, which may
fluctuate, is not so secured. If a fund purchases a mortgage-related security at
a premium, that portion may be lost if there is a decline in the market value of
the security whether resulting from changes in interest rates or prepayments in
the underlying mortgage collateral. As with other interest-bearing securities,
the prices of such securities are inversely affected by changes in interest
rates. However, though the value of a mortgage-related security may decline when
interest rates rise, the converse is not necessarily true, since in periods of
declining interest rates the mortgages underlying the securities are prone to
prepayment, thereby shortening the average life of the security and shortening
the period of time over which income at the higher rate is received. When
interest rates are rising, though, the rate of prepayment tends to decrease,
thereby lengthening the period of time over which income at the lower rate is
received. For these and other reasons, a mortgage-related security's average
maturity may be shortened or lengthened as a result of interest rate
fluctuations; and, therefore, it is not possible to predict accurately the
security's return. In addition, regular payments received in respect of
mortgage-related securities include both interest and principal. No assurance
can be given as to the return the funds will receive when these amounts are
reinvested.

There are a number of important differences among the agencies and
instrumentalities of the U.S. Government that issue mortgage-related securities
and among the securities that they issue. Mortgage-related securities issued by
GNMA include GNMA Mortgage Pass-Through Certificates (also known as "Ginnie
Maes") which are guaranteed as to the timely payment of principal and interest
by GNMA and such guarantee is backed by the full faith and credit of the United
States. GNMA is a wholly owned U.S. Government corporation within the Department
of Housing and Urban Development. GNMA certificates also are supported by the
authority of GNMA to borrow funds from the U.S. Treasury to make payments under
its guarantee. Mortgage-related securities issued by FNMA include FNMA
Guaranteed Mortgage Pass-Through Certificates (also known as "Fannie Maes")
which are solely the obligations of FNMA and are not backed by or entitled to
the full faith and credit of the United States. FNMA is a government-sponsored
organization owned entirely by private stockholders. Fannie Maes are guaranteed
as to the timely payment of the principal and interest by FNMA. Mortgage-related
securities issued by FHLMC include FHLMC Mortgage Participation Certificates
(also known as "Freddie Macs" or "PCs"). FHLMC is a corporate instrumentality of


                                       17



the United States, created pursuant to an Act of Congress, which is owned
entirely by Federal Home Loan Banks. Freddie Macs are not guaranteed by the
United States or by any Federal Home Loan Banks and do not constitute a debt or
obligation of the United States or of any Federal Home Loan Bank. Freddie Macs
entitle the holder to the timely payment of interest, which is guaranteed by
FHLMC. FHLMC guarantees either ultimate collection or the timely payment of all
principal payments on the underlying mortgage loans. When FHLMC does not
guarantee timely payment of principal, FHLMC may remit the amount due on account
of its guarantee of ultimate payment of principal at any time after default on
an underlying mortgage, but in no event later than one year after it becomes
payable.

Certain funds may invest in Collateralized Mortgage Obligations ("CMOs")
residuals and stripped mortgage-backed securities ("SMBS"). CMO residuals are
mortgage securities issued by agencies or instrumentalities of the U.S.
Government or by private originators of, or investors in, mortgage loans,
including savings and loan associations, homebuilders, mortgage banks,
commercial banks, investment banks and special purpose entities of the
foregoing.

The cash flow generated by the mortgage assets underlying a series of CMOs is
applied first to make required payments of principal and interest on the CMOs
and second to pay the related administrative expenses of the issuer. The
residual in a CMO structure generally represents the interest in any excess cash
flow remaining after making the foregoing payments. Each payment of such excess
cash flow to a holder of the related CMO residual represents income and/or a
return of capital. The amount of residual cash flow resulting from a CMO will
depend on, among other things, the characteristics of the mortgage assets, the
coupon rate of each class of CMO, prevailing interest rates, the amount of
administrative expenses and the prepayment experience on the mortgage assets. In
particular, the yield to maturity on CMO residuals is extremely sensitive to
prepayments on the related underlying mortgage assets, in the same manner as an
interest-only ("IO") class of stripped mortgage-backed securities. See "Other
Mortgage-Related Securities--Stripped Mortgage-Backed Securities." In addition,
if a series of a CMO includes a class that bears interest at an adjustable rate,
the yield to maturity on the related CMO residual will also be extremely
sensitive to changes in the level of the index upon which interest rate
adjustments are based. As described below with respect to stripped
mortgage-backed securities, in certain circumstances a fund may fail to recoup
fully its initial investment in a CMO residual.

CMO residuals are generally purchased and sold by institutional investors
through several investment banking firms acting as brokers or dealers. The CMO
residual market has only very recently developed, and CMO residuals currently
may not have the liquidity of other more established securities trading in other
markets. Transactions in CMO residuals are generally completed only after
careful review of the characteristics of the securities in question. In
addition, CMO residuals may, or pursuant to an exemption therefrom, may not have
been registered under the 1933 Act. CMO residuals, whether or not registered
under the 1933 Act, may be subject to certain restrictions on transferability,
and may be deemed "illiquid" and subject to a fund's limitations on investment
in illiquid securities.

SMBS are derivative multi-class mortgage securities. SMBS may be issued by
agencies or instrumentalities of the U.S. Government, or by private originators
of, or investors in, mortgage loans, including savings and loan associations,
mortgage banks, commercial banks, investment banks and special purpose entities
of the foregoing.

SMBS are usually structured with two classes that receive different proportions
of the interest and principal distributions on a pool of mortgage assets. A
common type of SMBS will have one class receiving some of the interest and most
of the principal from the mortgage assets, while the other class will receive
most of the interest and the remainder of the principal. In the most extreme
case, one class will receive all of the interest (the "IO" class), while the
other class will receive all of the principal (the principal-only or "PO"
class). The yield to maturity on an IO class is extremely sensitive to the rate
of principal payments (including prepayments) on the related underlying mortgage
assets, and a rapid rate of principal payments may have a material adverse
effect on a fund's yield to maturity from these securities. If the underlying
mortgage assets experience greater than anticipated prepayments of principal, a
fund may fail to recoup some or all of its initial investment in these
securities even if the security is in one of the highest rating categories.

Although SMBS are purchased and sold by institutional investors through several
investment banking firms acting as brokers or dealers, these securities were
only recently developed. As a result, established trading markets have not yet
developed and, accordingly, these securities may be deemed "illiquid" and
subject to a fund's limitations on investment in illiquid securities.

INCOME-PRODUCING SECURITIES

Certain funds focus their investments in income-producing securities.


                                       18



Certain funds will purchase defaulted securities only when their respective
sub-advisers believe, based upon analysis of the financial condition, results of
operations and economic outlook of an issuer, that there is potential for
resumption of income payments and that the securities offer an unusual
opportunity for capital appreciation. Notwithstanding the sub-adviser's belief
as to the resumption of income payments, however, the purchase of any security
on which payment of interest or dividends is suspended involves a high degree of
risk. Such risk includes, among other things, the following:

     Financial and Market Risks. Investments in securities that are in default
     involve a high degree of financial and market risks that can result in
     substantial, or at times even total, losses. Issuers of defaulted
     securities may have substantial capital needs and may become involved in
     bankruptcy or reorganization proceedings. Among the problems involved in
     investments in such issuers is the fact that it may be difficult to obtain
     information about the condition of such issuers. The market prices of such
     securities also are subject to abrupt and erratic movements and above
     average price volatility, and the spread between the bid and asked prices
     of such securities may be greater than normally expected.

     Disposition of Fund Securities. The funds generally intend to purchase
     securities for which the sub-adviser expects an active market to be
     maintained. Defaulted securities may be less actively traded than other
     securities making it more difficult to dispose of substantial holdings of
     such securities at prevailing market prices. The funds will limit holdings
     of any such securities to amounts that the sub-adviser believes could be
     readily sold, and its holdings of such securities would, in any event, be
     limited so as not to limit the funds' ability to readily dispose of
     securities to meet redemptions.

     Other. Defaulted securities require active monitoring and may, at times,
     require participation in bankruptcy or receivership proceedings on behalf
     of the funds.

Other types of income-producing securities that the funds may purchase include,
but are not limited to, the following:

     Variable and Floating Rate Obligations. These types of securities are
     relatively long-term instruments that often carry demand features
     permitting the holder to demand payment of principal at any time or at
     specified intervals prior to maturity.

     Standby Commitments. These instruments, which are similar to a put, give a
     fund the option to obligate a broker, dealer or bank to repurchase a
     security held by a fund at a specified price.

     Tender Option Bonds. Tender option bonds are relatively long-term bonds
     that are coupled with the agreement of a third party (such as a broker,
     dealer or bank) to grant the holders of such securities the option to
     tender the securities to the institution at periodic intervals.

     Inverse Floaters. Inverse floaters are instruments whose interest bears an
     inverse relationship to the interest rate on another security. The funds
     will not invest more than 5% of their respective assets in inverse
     floaters.

The funds will purchase instruments with demand features, standby commitments
and tender option bonds primarily for the purpose of increasing the liquidity of
their portfolios.

These investments are subject to credit risk and market risk. Credit risk
relates to the party's ability to make payment upon demand; market risk relates
to the fact that the value of the security will be impacted by the rise and fall
of interest rates.

LENDING OF FUND SECURITIES

The funds, from time to time, may lend portfolio securities to broker-dealers,
banks or institutional borrowers of securities. In accordance with guidelines
from the SEC and its staff, the funds must receive at least 100% collateral, in
the form of cash or U.S. Government securities. This collateral must be valued
daily; and should the market value of the loaned securities increase, the
borrower must furnish additional collateral to the lender. During the time
portfolio securities are on loan, the borrower pays the lender dividends or
interest paid on such securities. Loans are subject to termination by the lender
or the borrower at any time. While the funds do not have the right to vote
securities on loan, each intends regain the right to vote if that is considered
important with respect to the investment. In the event the borrower defaults on
its obligation to a fund, it could experience delays in recovering its
securities and possible capital losses. The funds will only enter into loan
arrangements with broker-dealers, banks or other institutions determined to be
creditworthy under guidelines that may be established by the Board of Trustees.
Merrill Lynch has received an exemptive order from the SEC permitting TA IDEX
Mercury Global Allocation and TA IDEX


                                       19



Mercury Large Cap Value to lend portfolio securities to affiliates of Merrill
Lynch and to retain an affiliate of Merrill Lynch as lending agent.

JOINT TRADING ACCOUNTS

TA IDEX Janus Growth and other clients of Janus Capital Management, LLC
("Janus") and its affiliates may place assets in joint trading accounts for the
purpose of making short-term investments in money market instruments. The Board
of Trustees must approve the participation of each of these funds in these joint
trading accounts and procedures pursuant to which the joint accounts will
operate. The joint trading accounts are to be operated pursuant to an exemptive
order issued to Janus and certain of its affiliates by the SEC. All joint
account participants, including these funds, will bear the expenses of the joint
trading accounts in proportion to their investments. Financial difficulties of
other participants in the joint accounts could cause delays or other
difficulties for the funds in withdrawing their assets from joint trading
accounts.

ILLIQUID AND RESTRICTED/144A SECURITIES

Subject to its investment restrictions, a fund may invest a certain percentage
of its net assets in illiquid securities (i.e., securities that are not readily
marketable).

In recent years, a large institutional market has developed for certain
securities that are not registered under the 1933 Act. Institutional investors
generally will not seek to sell these instruments to the general public, but
instead will often depend on an efficient institutional market in which such
unregistered securities can readily be resold or on an issuer's ability to honor
a demand for repayment. Therefore, the fact that there are contractual or legal
restrictions on resale to the general public or certain institutions is not
dispositive of the liquidity of such investments.

Rule 144A under the 1933 Act established a "safe harbor" from the registration
requirements of the 1933 Act for resales of certain securities to qualified
institutional buyers. Institutional markets for restricted securities that might
develop as a result of Rule 144A could provide both readily ascertainable values
for restricted securities and the ability to liquidate an investment in order to
satisfy share redemption orders. An insufficient number of qualified
institutional buyers interested in purchasing a Rule 144A-eligible security held
by a portfolio could, however, adversely affect the marketability of such
portfolio security and the portfolio might be unable to dispose of such security
promptly or at reasonable prices.

Transamerica IDEX's Board of Trustees has authorized each fund's sub-adviser to
make liquidity determinations with respect to Rule 144A securities in accordance
with the guidelines established by the Board of Trustees. Under the guidelines
which may be amended from time to time, the fund's sub-adviser generally will
consider the following factors in determining whether a Rule 144A security is
liquid: 1) the frequency of trades and quoted prices for the security; 2) the
number of dealers willing to purchase or sell the security and the number of
other potential purchasers; 3) the willingness of dealers to undertake to make a
market in the security; and 4) the nature of the marketplace trades, including
the time needed to dispose of the security, the method of soliciting offers and
the mechanics of the transfer and/or other factors deemed appropriate. The sale
of illiquid securities often requires more time and results in higher brokerage
charges or dealer discounts and other selling expenses than does the sale of
securities eligible for trading on national securities exchanges or in the OTC
markets. The fund may be restricted in its ability to sell such securities at a
time when a fund's sub-adviser deems it advisable to do so. In addition, in
order to meet redemption requests, a fund may have to sell other assets, rather
than such illiquid securities, at a time that is not advantageous.

DISTRESSED SECURITIES

Certain funds may invest in distressed securities. Distressed securities are
speculative and involve substantial risks. Generally, a fund will invest in
distressed securities when the sub-adviser believes they offer significant
potential for higher returns or can be exchanged for other securities that offer
this potential. However, there can be no assurance that a fund will achieve
these returns or that the issuer will make an exchange offer or adopt a plan of
reorganization. A fund will generally not receive interest payments on the
distressed securities and may incur costs to protect its investment. In
addition, distressed securities involve the substantial risk that principal will
not be repaid. Distressed securities and any securities received in an exchange
for such securities may be subject to restrictions on resale.


                                       20



MUNICIPAL OBLIGATIONS

The funds may invest in the following types of municipal obligations:

MUNICIPAL BONDS. Municipal bonds generally are classified as general obligation
or revenue bonds. General obligation bonds are secured by the issuer's pledge of
its full faith, credit and unlimited taxing power for the payment of principal
and interest. Revenue bonds are payable only from the revenues generated by a
particular facility or class of facility, or in some cases from the proceeds of
a special excise tax or specific revenue source. Industrial development
obligations are a particular kind of municipal bond which are issued by or on
behalf of public authorities to obtain funds for many kinds of local, privately
operated facilities. Such obligations are, in most cases, revenue bonds that
generally are secured by a lease with a particular private corporation.

MUNICIPAL NOTES. Municipal notes are short-term debt obligations issued by
municipalities which normally have a maturity at the time of issuance of six
months to three years. Such notes include tax anticipation notes, bond
anticipation notes, revenue anticipation notes and project notes. Notes sold in
anticipation of collection of taxes, a bond sale or receipt of other revenues
are normally obligations of the issuing municipality or agency.

MUNICIPAL COMMERCIAL PAPER. Municipal commercial paper is short-term debt
obligations issued by municipalities. Although done so infrequently, municipal
commercial paper may be issued at a discount (sometimes referred to as
Short-Term Discount Notes). These obligations are issued to meet seasonal
working capital needs of a municipality or interim construction financing and
are paid from a municipality's general revenues or refinanced with long-term
debt. Although the availability of municipal commercial paper has been limited,
from time to time the amounts of such debt obligations offered have increased,
and the sub-adviser believes that this increase may continue.

VARIABLE RATE OBLIGATIONS. The interest rate payable on a variable rate
municipal obligation is adjusted either at predetermined periodic intervals or
whenever there is a change in the market rate of interest upon which the
interest rate payable is based. A variable rate obligation may include a demand
feature pursuant to which the fund would have the right to demand prepayment of
the principal amount of the obligation prior to its stated maturity. The issuer
of the variable rate obligation may retain the right to prepay the principal
amount prior to maturity.

MUNICIPAL LEASE OBLIGATIONS. Municipal lease obligations may take the form of a
lease, an installment purchase or a conditional sales contract. Municipal lease
obligations are issued by state and local governments and authorities to acquire
land, equipment and facilities such as state and municipal vehicles,
telecommunications and computer equipment, and other capital assets. Interest
payments on qualifying municipal leases are exempt from federal income taxes.
The fund may purchase these obligations directly, or they may purchase
participation interests in such obligations. Municipal leases are generally
subject to greater risks than general obligation or revenue bonds. State laws
set forth requirements that states or municipalities must meet in order to issue
municipal obligations; and such obligations may contain a covenant by the issuer
to budget for, appropriate, and make payments due under the obligation. However,
certain municipal lease obligations may contain "non-appropriation" clauses
which provide that the issuer is not obligated to make payments on the
obligation in future years unless funds have been appropriated for this purpose
each year. Accordingly, such obligations are subject to "non-appropriation"
risk. While municipal leases are secured by the underlying capital asset, it may
be difficult to dispose of such assets in the event of non-appropriation or
other default.

LOANS

A fund may invest in certain commercial loans, generally known as "syndicated
bank loans," by acquiring participations or assignments in such loans. Such
indebtedness may be secured or unsecured. Loan participations typically
represent direct participation in a loan to a corporate borrower, and generally
are offered by banks or other financial institutions or lending syndicates. The
fund may participate in such syndications, or can buy part of a loan, becoming a
part lender. The fund's investment in a loan participation typically will result
in the fund having a contractual relationship only with the lender and not with
the borrower. The fund will have the right to receive payments of principal,
interest and any fees to which it is entitled only from the lender selling the
participation and only upon receipt by the lender of the payments from the
borrower. In connection with purchasing a participation, the fund generally will
have no right to enforce compliance by the borrower with the terms of the loan
agreement relating to the loan, nor any right of set-off against the borrower,
and the fund may not directly benefit from any collateral supporting the loan in
which it has purchased the participation. As a result, the fund may be subject
to the credit risk of both the borrower and the lender that is selling the
participation. In the event of the insolvency of


                                       21



the lender selling a participation, the fund may be treated as a general
creditor of the lender and may not benefit from any set-off between the lender
and the borrower.

When a fund purchases a loan assignment from lenders, it will acquire direct
rights against the borrowers on the loan. Because assignments are arranged
through private negotiations between potential assignees and potential
assignors, however, the rights and obligations acquired by the fund as the
purchaser of an assignment may differ from, and be more limited than, those held
by the assigning lender. Because there is no liquid market for such securities,
the fund anticipates that such securities could be sold only to a limited number
of institutional investors. The lack of a liquid secondary market may have an
adverse impact on the value of such securities and a fund's ability to dispose
of particular assignments or participations when necessary to meet redemptions
of fund shares, to meet the fund's liquidity needs or when necessary in response
to a specific economic event, such as deterioration in the creditworthiness of
the borrower. The lack of a liquid secondary market for assignments and
participations also may make it more difficult for a fund to value these
securities for purposes of calculating its net asset value.

Investments in loans through a direct assignment of the financial institution's
interests with respect to the loan may involve additional risks to the fund. For
example, if a loan is foreclosed, a fund could become part owner of any
collateral, and would bear the costs and liabilities associated with owning and
disposing of the collateral. In addition, it is conceivable that under emerging
legal theories of lender liability, a fund could be held liable as co-lender. It
is unclear whether loans and other forms of direct indebtedness offer securities
law protections against fraud and misrepresentation. In the absence of
definitive regulatory guidance, a fund relies on its sub-adviser's research in
an attempt to avoid situations where fraud or misrepresentation could adversely
affect the fund.

EQUITY EQUIVALENTS

In addition to investing in common stocks, the funds may invest in other equity
securities and equity equivalents, including securities that permit a fund to
receive an equity interest in an issuer, the opportunity to acquire an equity
interest in an issuer, or the opportunity to receive a return on its investment
that permits the fund to benefit from the growth over time in the equity of an
issuer. Examples of equity securities and equity equivalents include preferred
stock, convertible preferred stock and convertible debt securities.

A fund will limit its holdings of convertible debt securities to those that, at
the time of purchase, are rated at least B- by S&P or B3 by Moody's, or, if not
rated by S&P or Moody's, are of equivalent investment quality as determined by
the sub-adviser. Except for certain funds, a fund's investments in convertible
debt securities and other high-yield, non-convertible debt securities rated
below investment-grade will comprise less than 35% of the fund's net assets.
Debt securities rated below the four highest categories are not considered
"investment-grade" obligations. These securities have speculative
characteristics and present more credit risk than investment-grade obligations.
Equity equivalents also may include securities whose value or return is derived
from the value or return of a different security. Depositary receipts are an
example of the type of derivative security in which the fund might invest.

EVENT-LINKED BONDS

Certain funds may invest a portion of their assets in "event-linked bonds,"
which are fixed-income securities for which the return of principal and payment
of interest is contingent on the non-occurrence of a specific "trigger" event,
such as a hurricane, earthquake, or other physical or weather-related
phenomenon. Some event-linked bonds are commonly referred to as "catastrophe
bonds." If a trigger event occurs, the portfolio may lose a portion, or all, of
its principal invested in the bond. Event-linked bonds often provide for an
extension of maturity to process and audit loss claims where a trigger event
has, or possibly has, occurred. An extension of maturity may increase
volatility. Event-linked bonds may also expose the fund to certain unanticipated
risks including credit risk, adverse regulatory or jurisdictional
interpretations, and adverse tax consequences. Event-linked bonds may also be
subject to liquidity risk.

COLLATERALIZED DEBT OBLIGATIONS

Certain funds may invest in collateralized debt obligations ("CDOs"), which
include collateralized bond obligations ("CBOs"), collateralized loan
obligations ("CLOs") and other similarly structured securities. CBOs and CLOs
are types of asset-backed securities. A CBO is a trust which is backed by a
diversified pool of high risk, below-investment-grade fixed-income securities. A
CLO is a trust typically collateralized by a pool of loans, which may include,
among others, domestic and foreign senior secured loans, senior unsecured loans,
and subordinate corporate loans, including loans that may be rated below
investment grade or equivalent unrated loans.


                                       22



For both CBOs and CLOs, the cashflows from the trust are split into two or more
portions, called tranches, varying in risk and yield. The riskiest portion is
the "equity" tranche which bears the bulk of defaults from the bonds or loans in
the trust and serves to protect the other, more senior tranches from default in
all but the most severe circumstances. Since it is partially protected from
defaults, a senior tranche from a CBO trust or CLO trust typically have higher
ratings and lower yields than their underlying securities, and can be rated
investment grade. Despite the protection from the equity tranche, CBO or CLO
tranches can experience substantial losses due to actual defaults, increased
sensitivity to defaults due to collateral default and disappearance of
protecting tranches, market anticipation of defaults, as well as aversion to CBO
or CLO securities as a class.

The risks of an investment in a CDO depend largely on the type of the collateral
securities and the class of the CDO in which a fund invests. Normally, CBOs,
CLOs and other CDOs are privately offered and sold, and thus, are not registered
under the securities laws. As a result, investments in CDOs may be characterized
by the funds as illiquid securities, however an active dealer market may exist
for CDOs allowing a CDO to qualify for Rule 144A transactions. In addition to
the normal risks associated with fixed-income securities discussed elsewhere in
this SAI and the funds' prospectuses (e.g., interest rate risk and default
risk), CDOs carry additional risks including, but are not limited to: (i) the
possibility that distributions from collateral securities will not be adequate
to make interest or other payments; (ii) the quality of the collateral may
decline in value or default; (iii) the funds may invest in CDOs that are
subordinate to other classes; and (iv) the complex structure of the security may
not be fully understood at the time of investment and may produce disputes with
the issuer or unexpected investment results.

REPURCHASE AND REVERSE REPURCHASE AGREEMENTS

Subject to its investment restrictions, a fund may enter into repurchase and
reverse repurchase agreements. In a repurchase agreement, a fund purchases a
security and simultaneously commits to resell that security to the seller at an
agreed-upon price on an agreed-upon date within a number of days (usually not
more than seven) from the date of purchase. The resale price reflects the
purchase price plus an agreed-upon incremental amount which is unrelated to the
coupon rate or maturity of the purchased security. A repurchase agreement
involves the obligation of the seller to pay the agreed-upon price, which
obligation is in effect secured by the value (at least equal to the amount of
the agreed-upon resale price and marked-to-market daily) of the underlying
security or collateral. A fund may engage in a repurchase agreement with respect
to any security in which it is authorized to invest. While it does not presently
appear possible to eliminate all risks from these transactions (particularly the
possibility of a decline in the market value of the underlying securities, as
well as delays and costs to a fund in connection with bankruptcy proceedings),
it is the policy of each fund to limit repurchase agreements to those parties
whose creditworthiness has been reviewed and found satisfactory by the
sub-adviser for that fund and approved by the Board of Trustees.

In a reverse repurchase agreement, a fund sells a portfolio instrument to
another party, such as a bank or broker-dealer, in return for cash and agrees to
repurchase the instrument at a particular price and time. While a reverse
repurchase agreement is outstanding, a fund will segregate with its custodian
cash and appropriate liquid assets with the funds' custodian to cover its
obligation under the agreement. The funds will enter into reverse repurchase
agreements only with parties the investment sub-adviser for each fund deems
creditworthy.

Repurchase agreements involve the risk that the seller will fail to repurchase
the security, as agreed. In that case, a fund will bear the risk of market value
fluctuations until the security can be sold and may encounter delays and incur
costs in liquidating the security. In the event of bankruptcy or insolvency of
the seller, delays and costs are incurred.

Reverse repurchase agreements may expose a fund to greater fluctuations in the
value of its assets.

PASS-THROUGH SECURITIES

Each fund may, in varying degrees, invest in various types of pass-through
securities, such as mortgage-backed securities, asset-backed securities and
participation interests, which are fully discussed in this SAI. A pass-through
security is a share or certificate of interest in a pool of debt obligations
that has been repackaged by an intermediary, such as a bank or broker-dealer.
The purchaser receives an undivided interest in the underlying pool of
securities. The issuers of the underlying securities make interest and principal
payments to the intermediary, which are passed through to purchasers, such as
the funds.

HIGH-YIELD/HIGH-RISK BONDS

High-yield/high-risk bonds, below-investment-grade securities (commonly known as
"junk bonds") involve significant credit and liquidity concerns and fluctuating
yields, and are not suitable for short-term investing. Higher


                                       23



yields are ordinarily available on fixed-income securities which are unrated or
are rated in the lower rating categories of recognized rating services such as
Moody's and Standard & Poor's.

VALUATION RISKS. Lower rated bonds also involve the risk that the issuer will
not make interest or principal payments when due. In the event of an
unanticipated default, a fund owning such bonds would experience a reduction in
its income, and could expect a decline in the market value of the securities so
affected. Such funds, furthermore, may incur additional costs in seeking the
recovery of the defaulted securities. More careful analysis of the financial
condition of each issuer of lower-rated securities is therefore necessary.
During an economic downturn or substantial period of rising interest rates,
highly leveraged issuers may experience financial stress which would adversely
affect their ability to service their principal and interest payments
obligations, to meet projected business goals and to obtain additional
financing.

The market prices of lower-grade securities are generally less sensitive to
interest rate changes than higher-rated investments, but more sensitive to
adverse economic or political changes or individual developments specific to the
issuer. Periods of economic or political uncertainty and change can be expected
to result in volatility of prices of these securities. Past experience with
high-yield securities in a prolonged economic downturn may not provide an
accurate indication of future performance during such periods.

LIQUIDITY RISKS. Lower-rated securities also may have less liquid markets than
higher-rated securities, and their liquidity as well as their value may be more
severely affected by adverse economic conditions. Adverse publicity and investor
perceptions as well as new or proposed laws may also have a greater negative
impact on the market for lower rated bonds.

Unrated securities are not necessarily of lower quality than rated securities,
but the markets for lower rated and nonrated securities are more limited than
those in which higher-rated securities are traded. In addition, an economic
downturn or increase in interest rates is likely to have a greater negative
effect on: (i) the market for lower-rated and nonrated securities; (ii) the
value of high-yield debt securities held by a fund; (iii) the new asset value of
a fund holding such securities; and (iv) the ability of the bonds' issuers to
repay principal and interest, meet projected business goals and obtain
additional financing than on higher-rated securities.

WARRANTS AND RIGHTS

Subject to its investment restrictions, a fund may invest in warrants and
rights. A warrant is a type of security that entitles the holder to buy a
proportionate amount of common stock at a specified price, usually higher than
the market price at the time of issuance, for a period of years or to
perpetuity. In contrast, rights, which also represent the right to buy common
shares, normally have a subscription price lower than the current market value
of the common stock and a life of two to four weeks.

U.S. GOVERNMENT SECURITIES

Examples of the types of U.S. government securities that a fund may hold
include, in addition to those described in the prospectus, are direct
obligations of the U.S. Treasury, the obligations of the Federal Housing
Administration, Farmers Home Administration, Small Business Administration,
General Services Administration, Central Bank for Cooperatives, Federal Farm
Credit Banks, Federal Home Loan Bank, Federal Intermediate Credit Banks, Federal
Land Banks and Maritime Administration. U.S. government securities may be
supported by the full faith and credit of the U.S. Government (such as
securities of the Small Business Administration); by the right of the issuer to
borrow from the Treasury (such as securities of the Federal Home Loan Bank); by
the discretionary authority of the U.S. Government to purchase the agency's
obligations (such as securities of the Federal National Mortgage Association);
or only by the credit of the issuing agency.

TEMPORARY DEFENSIVE POSITION

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.


                                       24



MONEY MARKET RESERVES (TA IDEX T. ROWE PRICE SMALL CAP AND TA IDEX T. ROWE PRICE
TAX-EFFICIENT GROWTH)

It is expected that these funds will invest their cash reserves primarily in a
money market fund established for the exclusive use of the T. Rowe Price family
of mutual funds and other clients of T. Rowe Price and its affiliates. The T.
Rowe Price Reserve Investment Fund ("RIF") and T. Rowe Price Government Reserve
Investment Fund ("GRIF") are series of T. Rowe Price Reserve Investment Funds,
Inc. Additional series may be created in the future. These funds were created
and operate pursuant to an Exemptive Order issued by the SEC (Investment Company
Act Release No. IC-22770, July 29, 1997).

The RIF and GRIF must comply with the requirements of Rule 2a-7 under the 1940
Act governing money market funds. To that end, the RIF invests at least 95% of
its total assets in prime money market instruments receiving the highest credit
rating from at least one Nationally Recognized Statistical Rating Organization.
The GRIF invests primarily in a portfolio of U.S. Government-backed securities,
primarily U.S. Treasuries, and repurchase agreements thereon.

The RIF and GRIF provide very efficient means of managing the cash reserves of
the funds. While these funds do not pay an advisory fee to the investment
manager, they will incur other expenses. However, the RIF and GRIF are expected
by T. Rowe Price to operate at very low expense ratios. The funds will only
invest in the RIF or GRIF to the extent it is consistent with their objectives
and programs and the terms of the Exemptive Order issued by the SEC.

The RIF and GRIF are not insured or guaranteed by the U.S. Government, and there
is no assurance they will maintain a stable net asset value of $1.00 per share.
Investing in these securities may result in duplication of certain fees and
expenses.

OTHER SECURITIES IN WHICH THE FUNDS MAY INVEST

CORPORATE DEBT SECURITIES. A fund may invest in corporate bonds, notes and
debentures of long and short maturities and of various grades, including unrated
securities. Corporate debt securities exist in great variety, differing from one
another in quality, maturity, and call or other provisions. Lower-grade bonds,
whether rated or unrated, usually offer higher interest income, but also carry
increased risk of default. Corporate bonds may be secured or unsecured, senior
to or subordinated to other debt of the issuer, and, occasionally, may be
guaranteed by another entity. In addition, they may carry other features, such
as those described under "Convertible Securities" and "Variable or Floating Rate
Securities," or have special features such as the right of the holder to shorten
or lengthen the maturity of a given debt instrument, rights to purchase
additional securities, rights to elect from among two or more currencies in
which to receive interest or principal payments, or provisions permitting the
holder to participate in earnings of the issuer or to participate in the value
of some specified commodity, financial index, or other measure of value.

COMMERCIAL PAPER. Commercial paper refers to short-term unsecured promissory
notes issued by commercial and industrial corporations to finance their current
operations. Commercial paper may be issued at a discount and redeemed at par, or
issued at par with interest added at maturity. The interest or discount rate
depends on general interest rates, the credit standing of the issuer, and the
maturity of the note, and generally moves in tandem with rates on large CDs and
Treasury bills. An established secondary market exists for commercial paper,
particularly that of stronger issuers which are rated by Moody's Investors
Service, Inc. and Standard and Poor's Ratings Group. Investments in commercial
paper are subject to the risks that general interest rates will rise, that the
credit standing and outside rating of the issuer will fall, or that the
secondary market in the issuer's notes will become too limited to permit their
liquidation at a reasonable price.

INTERNATIONAL AGENCY OBLIGATIONS. A fund may invest in bonds, notes or Eurobonds
of international agencies. Examples are securities issued by the Asian
Development Bank, the European Economic Community, and the European Investment
Bank. The funds may also purchase obligations of the International Bank for
Reconstruction and Development which, while technically not a U.S. government
agency or instrumentality, has the right to borrow from the participating
countries, including the United States.

BANK OBLIGATIONS OR SAVINGS AND LOAN OBLIGATIONS. Subject to its investment
restrictions, a fund may purchase certificates of deposit, bankers' acceptances
and other debt obligations of commercial banks and certificates of deposit and
other debt obligations of savings and loan associations ("S&Ls"). Certificates
of deposit are receipts from a bank or an S&L for funds deposited for a
specified period of time at a specified rate of return. Bankers' acceptances are
time drafts drawn on commercial banks by borrowers, usually in connection with
international commercial transactions. These instruments may be issued by
institutions of any size, may be of any maturity, and


                                       25



may be insured or uninsured. The quality of bank or savings and loan obligations
may be affected by such factors as: (a) location -- the strength of the local
economy will often affect financial institutions in the region; (b) asset mix --
institutions with substantial loans in a troubled industry may be weakened by
those loans; and (c) amount of equity capital -- under-capitalized financial
institutions are more vulnerable when loan losses are suffered. The sub-adviser
will evaluate these and other factors affecting the quality of bank and savings
and loan obligations purchased by a fund, but the fund is not restricted to
obligations or institutions that satisfy specified quality criteria.

VARIABLE- OR FLOATING-RATE SECURITIES. Subject to its investment restrictions, a
fund may purchase variable rate securities that provide for automatic
establishment of a new interest rate at fixed intervals (e.g., daily, monthly,
semi-annually, etc.). Floating rate securities generally provide for automatic
adjustment of the interest rate whenever some specified interest rate index
changes. The interest rate on variable and floating-rate securities is
ordinarily determined by reference to, or is a percentage of, a bank's prime
rate, the 90-day U.S. Treasury bill rate, the rate of return on commercial paper
or bank certificates of deposit, an index of short-term interest rates, or some
other objective measure. These securities generally are structured as loans. See
the discussion of "Loans" in this SAI.

PREFERRED STOCKS. Subject to a fund's investment restrictions, a fund may
purchase preferred stocks. Preferred stocks are securities which represent an
ownership interest in a corporation and which give the owner a prior claim over
common stock on the corporation's earnings and assets. Preferred stock generally
pays quarterly dividends. Preferred stocks may differ in many of their
provisions. Among the features that differentiate preferred stocks from one
another are the dividend rights, which may be cumulative or non-cumulative and
participating or non-participating, redemption provisions, and voting rights.
Such features will establish the income return and may affect the prospects for
capital appreciation or risks of capital loss.

CONVERTIBLE SECURITIES. Subject to its investment restrictions, a fund may
invest in debt securities convertible into or exchangeable for equity
securities, or debt securities that carry with them the right to acquire equity
securities, as evidenced by warrants attached to such securities or acquired as
part of units of the securities. Such securities normally pay less current
income than securities without conversion features, but add the potential
opportunity for appreciation from enhanced value for the equity securities into
which they are convertible, and the concomitant risk of loss from declines in
those values.

COMMON STOCKS. Subject to its investment restrictions, a fund may invest in
common stocks. TA IDEX Transamerica Flexible Income will consider investment in
income-producing common stocks if the yields of common stocks generally become
competitive with the yields of other income securities. Common stocks are junior
to the debt obligations and preferred stocks of an issuer. Hence, dividend
payments on common stocks should be regarded as less secure than income payments
on corporate debt securities.

PORTFOLIO TURNOVER RATE

Changes may be made in a fund's portfolio consistent with the investment
objective and policies of the fund whenever such changes are believed to be in
the best interests of the fund and its shareholders, and each fund will be
managed without regard to its portfolio turnover rate. The portfolio turnover
rates for all of the funds may vary greatly from year to year as well as within
a particular year, and may be affected by cash requirements for redemptions of
shares. High portfolio turnover rates will generally result in higher
transaction costs to a fund, including brokerage commissions, and may have
adverse tax consequences

The portfolio turnover rate for each of the funds is calculated by dividing the
lesser of a fund's purchases or sales of portfolio securities for the year by
the monthly average value of the securities. The SEC requires that the
calculation exclude all securities whose remaining maturities at the time of
acquisition are one year or less.

DISCLOSURE OF PORTFOLIO HOLDINGS

It is the policy of the funds to protect the confidentiality of their holdings
and prevent the selective disclosure of non-public information about the funds'
portfolio holdings. The funds' service providers are required to comply with
this policy. No non-public information concerning the portfolio holdings of the
funds may be disclosed to any unaffiliated third party, except as provided
below. The Board of Trustees has adopted formal procedures governing compliance
with the funds' policies.

The funds, or their duly authorized service providers, may publicly disclose
holdings of all funds in accordance with regulatory requirements, such as
periodic portfolio disclosure in filings with the SEC. A summary or list of a
fund's


                                       26



completed purchases and sales may only be made available after the public
disclosure of a fund's portfolio holdings.

The funds (except 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 Fund, the "Asset Allocation funds") publish all
portfolio holdings on a quarterly basis on their website at
www.transamericaidex.com 30 days after the end of each calendar quarter. Such
information generally remains online for 6 months or as otherwise consistent
with applicable regulations. The Asset Allocation funds post all portfolio
holdings on the website within two weeks after the end of each month. The
information will generally remain online for up to four months, or as otherwise
consistent with applicable regulations. The day following such publication, the
information is deemed to be publicly disclosed for the purposes of the policies
and procedures adopted by the funds. The funds may then forward the information
to investors and consultants requesting it.

There are numerous mutual fund evaluation services such as Standard & Poor's,
Morningstar or Lipper, and due diligence departments of broker-dealers and
wirehouses that regularly analyze the portfolio holdings of mutual funds in
order to monitor and report on various attributes including style,
capitalization, maturity, yield, beta, etc. These services and departments then
distribute the results of their analysis to the public, paid subscribers and/or
in-house brokers. In order to facilitate the review of the funds by these
services and departments, the funds may distribute (or authorize their service
providers to distribute) portfolio holdings to such services and departments
before their public disclosure is required or authorized provided that: (i) the
recipient does not distribute the portfolio holdings or results of the analysis
to third parties, other departments or persons who are likely to use the
information for purposes of purchasing or selling the funds before the portfolio
holdings or results of the analysis become public information; and (ii) the
recipient signs a written confidentiality agreement. Persons and entities
unwilling to execute an acceptable confidentiality agreement may only receive
portfolio holdings information that has otherwise been publicly disclosed.
Neither the funds nor their service providers receive any compensation from such
services and departments. Subject to such departures as the funds' investment
adviser's compliance department believes reasonable and consistent with
reasonably protecting the confidentiality of the portfolio information, each
confidentiality agreement should generally provide that, among other things: the
portfolio information is the confidential property of the funds (and its service
provider, if applicable) and may not be shared or used directly or indirectly
for any purpose except as expressly provided in the confidentiality agreement;
the recipient of the portfolio information agrees to limit access to the
portfolio information to its employees (and agents) who, on a need to know
basis, are: (1) authorized to have access to the portfolio information; and (2)
subject to confidentiality obligations, including duties not to trade on
non-public information, no less restrictive than the confidentiality obligations
contained in the Confidentiality Agreement; and upon written request, the
recipient agrees to promptly return or destroy, as directed, the portfolio
information.

The Board and an appropriate officer of the investment adviser's compliance
department or the funds' Chief Compliance Officer ("CCO") may, on a case-by-case
basis, impose additional restrictions on the dissemination of portfolio
information and waive certain requirements. To the extent required by law, the
CCO reports to the Board violations of the funds' policies and procedures on
disclosure of portfolio holdings.

                     INVESTMENT ADVISORY AND OTHER SERVICES

Transamerica IDEX has entered into an Investment Advisory Agreement ("Advisory
Agreement") on behalf of each fund with Transamerica Fund Advisors, Inc.
("TFAI"), located at 570 Carillon Parkway, St. Petersburg, Florida 33716. TFAI
supervises each respective fund's investments and conducts its investment
program. TFAI hires sub-advisers to furnish investment advice and
recommendations and has entered into sub-advisory agreements with each
sub-adviser.

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 the funds, is a 47.5% owned indirect subsidiary of AUSA. AUSA is
wholly owned by Transamerica Holding Company, which is wholly owned by AEGON
USA, Inc. ("AEGON USA"), a financial services holding company whose primary
emphasis is on life and health insurance, and annuity and investment products.
AEGON USA is a wholly owned, indirect subsidiary of AEGON N.V., a Netherlands
corporation and publicly traded international insurance group. Great Companies,
L.L.C., AEGON USA Investment Management, LLC, and Transamerica Investment
Management, LLC, are affiliates of TFAI and Transamerica IDEX.


                                       27


INVESTMENT ADVISER COMPENSATION

TFAI receives compensation calculated daily and paid monthly from the funds at
the annual rates indicated below (expressed as a specified percentage of the
fund's average daily net assets). The table below lists those percentages by
fund.



FUND                                                   PERCENTAGE OF AVERAGE DAILY NET ASSETS
- ----                                                   --------------------------------------
                                                    
TA IDEX AllianceBernstein International Value          0.88% of the first $200 million
                                                       0.81% over $200 million up to $500 million
                                                       0.77% in excess of $500 million

TA IDEX American Century International                 0.925% of the first $250 million
                                                       0.90% over $250 million up to $500 million
                                                       0.85% over $500 million up to $1 billion
                                                       0.80% in excess of $1 billion

TA IDEX American Century Large Company Value           0.85% of the first $250 million
                                                       0.80% over $250 million up to $500 million
                                                       0.775% over $500 million up to $750 million
                                                       0.70% in excess of $750 million

TA IDEX Asset Allocation - Conservative Portfolio      0.10%
TA IDEX Asset Allocation - Growth Portfolio
TA IDEX Asset Allocation - Moderate Growth Portfolio
TA IDEX Asset Allocation - Moderate Portfolio

TA IDEX Clarion Global Real Estate Securities          0.80% of the first $250 million
                                                       0.775% over $250 million up to $500 million
                                                       0.70% over $500 million up to $1 billion
                                                       0.65% in excess of $1 billion

TA IDEX Evergreen Health Care                          0.87% of the first $100 million
                                                       0.85% over $100 million up to $250 million
                                                       0.80% in excess of $250 million

TA IDEX Evergreen International Small Cap              1.07% of the first $250 million
                                                       1.00% in excess of $250 million

TA IDEX Federated Market Opportunity                   0.85% of the first $30 million
                                                       0.80% over $30 million up to $50 million
                                                       0.70% in excess of $50 million

TA IDEX Great Companies -- America(SM)                 0.75% of the first $500 million
                                                       0.70% over $500 million up to $1 billion
                                                       0.65% in excess of $1 billion

TA IDEX Great Companies -- Technology(SM)              0.78% of the first $500 million
                                                       0.70% in excess of $500 million

TA IDEX Multi-Manager International Fund               0.10%

TA IDEX Janus Growth                                   0.80% of the first $250 million
                                                       0.77% over $250 million up to $750 million
                                                       0.75% over $750 million up to $1.5 billion
                                                       0.70% over $1.5 billion up to $3 billion
                                                       0.675% in excess of $3 billion



                                       28



                                                    
TA IDEX Jennison Growth                                0.80% of the first $250 million
                                                       0.775% over $250 million up to $500 million
                                                       0.70% over $500 million up to $1 billion
                                                       0.675% over $1 billion up to $1.5 billion
                                                       0.65% in excess of $1.5 billion

TA IDEX JPMorgan International Bond                    0.55% of the first $100 million
                                                       0.52% over $100 million up to $250 million
                                                       0.51% over $250 million up to $500 million
                                                       0.50% over $500 million up to $1 billion
                                                       0.47% in excess of $1 billion

TA IDEX J.P. Morgan Mid Cap Value                      0.85% of the first $100 million
                                                       0.80% in excess of $100 million

TA IDEX Marsico Growth                                 0.80% of the first $500 million
                                                       0.70% in excess of $500 million

TA IDEX Marsico International Growth                   1.06% of the first $300 million
                                                       1.01% from $300 million to $400 million
                                                       0.96% from $400 million to $1 billion
                                                       0.91% in excess of $1 billion

TA IDEX Mercury Global Allocation                      0.80% of the first $100 million
                                                       0.72% in excess of $100 million

TA IDEX Mercury Large Cap Value                        0.80% of the first $250 million
                                                       0.775% over $250 million up to $750 million
                                                       0.75% in excess of $750 million

TA IDEX Neuberger Berman International                 1.00% of the first $100 million
                                                       0.95% in excess of $100 million

TA IDEX Oppenheimer Developing Markets                 1.20% of the first $50 million
                                                       1.15% over $50 million up to $200 million
                                                       1.10% in excess of $200 million

TA IDEX PIMCO Real Return TIPS                         0.70% of the first $250 million
                                                       0.65% over $250 million up to $750 million
                                                       0.60% in excess of $750 million

TA IDEX PIMCO Total Return                             0.70% of the first $250 million
                                                       0.65% over $250 million up to $750 million
                                                       0.60% in excess of $750 million

TA IDEX Protected Principal Stock                      1.30% of the first $100
                                                       1.25% in excess of $100 million

TA IDEX Salomon All Cap                                0.80% of the first $500 million
                                                       0.70% in excess of $500 million




                                       29



                                                    
TA IDEX Salomon Investors Value                        0.80% of the first $500 million
                                                       0.70% in excess of $500 million

TA IDEX T. Rowe Price Small Cap                        0.75% of the first $500 million
                                                       0.70% in excess of $500 million

TA IDEX T. Rowe Price Tax-Efficient Growth             0.75% of the first $500 million
                                                       0.65% in excess of $500 million

TA IDEX Templeton Great Companies Global               0.80% of the first $500 million
                                                       0.70% in excess of $500 million

TA IDEX Transamerica Balanced                          0.80% of the first $250 million
                                                       0.75% over $250 million up to $500 million
                                                       0.70% over $500 million up to $1.5 billion
                                                       0.625% in excess of $1.5 billion

TA IDEX Transamerica High-Yield Bond                   0.59% of the first $400 million
                                                       0.575% over $400 million up to $750 million
                                                       0.55% in excess of $750 million

TA IDEX Transamerica Convertible Securities            0.75% of the first $250 million
                                                       0.70% in excess of $250 million

TA IDEX Transamerica Equity                            0.75% of the first $500 million
                                                       0.70% in excess of $500 million

TA IDEX Transamerica Flexible Income                   0.80% of the first $100 million
                                                       0.775% over $100 million up to $250 million
                                                       0.675% in excess of $250 million

TA IDEX Transamerica Growth Opportunities              0.80% of the first $250 million
                                                       0.75% over $250 million up to $500 million
                                                       0.70% in excess of $500 million

TA IDEX Transamerica Money Market                      0.40%

TA IDEX Transamerica Short-Term Bond                   0.65% of the first $250 million
                                                       0.60% from $250 million to $500 million
                                                       0.575% from $500 million to $1 billion
                                                       0.55% in excess of $1 billion

TA IDEX Transamerica Small/Mid Cap Value               0.80% of the first $500 million
                                                       0.75% in excess of $500 million

TA IDEX Transamerica Value Balanced                    0.75% of the first $500 million
                                                       0.65% over $500 million up to $1 billion
                                                       0.60% in excess of $1 billion

TA IDEX UBS Large Cap Value                            0.82% of the first $200 million
                                                       0.76% over $200 million up to $400 million
                                                       0.74% over $400 million up to $750 million
                                                       0.71% over $750 million up to $1 billion
                                                       0.67% over $1 billion up to $1.5 billion
                                                       0.62% in excess of $1.5 billion

TA IDEX Van Kampen Emerging Markets Debt               0.95% of the first $250 million
                                                       0.90% from $250 million to $500 million
                                                       0.80% in excess of $500 million




                                       30



                                                    
TA IDEX Van Kampen Mid-Cap Growth                      0.80%

TA IDEX Van Kampen Small Company Growth                0.95% of the first $500 million



ADVISORY AGREEMENT

For each fund, the duties and responsibilities of the investment adviser are
specified in the fund's Advisory Agreement. The Advisory Agreement provides that
TFAI will perform the following services or cause them to be performed by
others: (i) furnish to the fund investment advice and recommendations; (ii)
supervise the purchase and sale of securities as directed by appropriate fund
officers; and (iii) be responsible for the administration of each fund. The
Advisory Agreement is not assignable and may be terminated without penalty upon
60 days' written notice at the option of either the fund, TFAI or by a vote of
shareholders of each fund. The Advisory Agreement provides that it can be
continued from year to year so long as such continuance is specifically approved
annually (a) by the Board of Trustees or by a majority of the outstanding shares
of each fund and (b) by a majority vote of the Trustees who are not parties to
the Advisory Agreement or interested persons of any such party cast in person at
a special meeting called for such purposes.

The Advisory Agreement also provides that TFAI shall not be liable to the funds
or to any shareholder for any error of judgment or mistake of law or for any
loss suffered by a fund or by any shareholder in connection with matters to
which the Advisory Agreement relates, except for a breach of fiduciary duty or a
loss resulting from willful misfeasance, bad faith, gross negligence or reckless
disregard on the part of TFAI in the performance of its duties thereunder.

Each fund pays its allocable share of the fees and expenses of a fund's
non-interested trustees, custodian and transfer agent fees, brokerage
commissions and all other expenses in connection with the execution of its
portfolio transactions, administrative, clerical, recordkeeping, bookkeeping,
legal, auditing and accounting expenses, interest and taxes, expenses of
preparing tax returns, expenses of shareholders' meetings and preparing,
printing and mailing proxy statements (unless otherwise agreed to by the funds
or TFAI), expenses of preparing and typesetting periodic reports to shareholders
(except for those reports the funds permit to be used as sales literature), and
the costs, including filing fees, of renewing or maintaining registration of
fund shares under federal and state law.

EXPENSE LIMITATION

TFAI has entered into an expense limitation agreement with Transamerica IDEX on
behalf of certain funds, pursuant to which TFAI has agreed to reimburse a fund
or waive fees, or both, whenever, in any fiscal year, the total cost to a fund
of normal operating expenses chargeable to the fund, including the investment
advisory fee but excluding brokerage commissions, interest, taxes and 12b-1
fees, exceeds a certain percentage of the fund's average daily net assets. That
percentage is listed by fund in the following table, as specified for that fund
(expense cap). For certain funds, Transamerica IDEX, on behalf of such funds,
may at a later date reimburse TFAI for operating expenses previously paid on
behalf of such funds during the previous 36 months, but only if, after such
reimbursement, the funds' expense ratios do not exceed the expense cap. The
agreement continues automatically for one-year terms unless TFAI provides
written notice to Transamerica IDEX prior to the end of the then-current term.
In addition, the agreement will terminate upon termination of the Advisory
Agreement. The funds currently included in the agreement are listed as follows:

TA IDEX American Century International
TA IDEX American Century Large Company Value
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
TA IDEX Clarion Global Real Estate Securities
TA IDEX Evergreen Health Care(1)
TA IDEX Evergreen International Small Cap
TA IDEX Great Companies - America(SM)
TA IDEX Great Companies - Technology(SM)
TA IDEX J.P. Morgan Mid Cap Value
TA IDEX Marsico Growth
TA IDEX Marsico International Growth
TA IDEX Mercury Large Cap Value
TA IDEX PIMCO Real Return TIPS
TA IDEX PIMCO Total Return
TA IDEX Protected Principal Stock
TA IDEX Salomon Investors Value
TA IDEX Templeton Great Companies Global
TA IDEX Transamerica Balanced
TA IDEX Transamerica Convertible Securities
TA IDEX Transamerica Flexible Income
TA IDEX Transamerica Money Market
TA IDEX Transamerica Short-Term Bond
TA IDEX Transamerica Small/Mid Cap Value
TA IDEX UBS Large Cap Value
TA IDEX Van Kampen Emerging Markets Debt
TA IDEX Van Kampen Small Company Growth


                                       31


(1)  TA IDEX Evergreen Health Care was previously operated as TA IDEX T. Rowe
     Price Health Sciences. The Fund changed its name on March 1, 2006.

The applicable expense caps for each of the funds are listed in the following
table.



                                                       EXPENSE
FUND                                                     CAP
- ----                                                   -------
                                                    
TA IDEX AllianceBernstein International Value           1.13%
TA IDEX American Century International                  1.32%
TA IDEX American Century Large Company Value            1.45%
TA IDEX Asset Allocation - Conservative Portfolio       0.45%
TA IDEX Asset Allocation - Growth Portfolio             0.45%
TA IDEX Asset Allocation - Moderate Growth Portfolio    0.45%
TA IDEX Asset Allocation - Moderate Portfolio           0.45%
TA IDEX Clarion Global Real Estate Securities           1.40%
TA IDEX Evergreen Health Care(1)                        1.47%
TA IDEX Evergreen International Small Cap               1.32%
TA IDEX Federated Market Opportunity                    1.05%
TA IDEX Great Companies -- America(SM)                  1.15%
TA IDEX Great Companies -- Technology(SM)               1.18%
TA IDEX Multi-Manager International Fund                0.45%
TA IDEX Janus Growth                                    1.30%
TA IDEX Jennison Growth                                 1.40%
TA IDEX JP Morgan International Bond                    0.75%
TA IDEX J.P. Morgan Mid Cap Value                       1.05%
TA IDEX Marsico Growth                                  1.40%
TA IDEX Marsico International Growth                    1.31%
TA IDEX Mercury Global Allocation                       1.00%
TA IDEX Mercury Large Cap Value                         1.00%
TA IDEX Neuberger Berman International                  1.25%
TA IDEX Oppenheimer Developing Markets                  1.45%
TA IDEX PIMCO Real Return TIPS                          1.30%
TA IDEX PIMCO Total Return                              1.30%
TA IDEX Protected Principal Stock                       1.90%
TA IDEX Salomon All Cap                                 1.20%
TA IDEX Salomon Investors Value                         1.20%
TA IDEX T. Rowe Price Small Cap                         1.35%
TA IDEX T. Rowe Price Tax-Efficient Growth              1.35%
TA IDEX Templeton Great Companies Global                1.20%
TA IDEX Transamerica Balanced                           1.45%
TA IDEX Transamerica Convertible Securities             1.35%
TA IDEX Transamerica Equity                             1.17%
TA IDEX Transamerica Flexible Income                    1.50%
TA IDEX Transamerica Growth Opportunities               1.40%
TA IDEX Transamerica High-Yield Bond                    1.24%
TA IDEX Transamerica Money Market                       0.48%
TA IDEX Transamerica Short-Term Bond                    0.85%
TA IDEX Transamerica Small/Mid Cap Value                1.40%
TA IDEX Transamerica Value Balanced                     1.20%
TA IDEX UBS Large Cap Value                             1.02%
TA IDEX Van Kampen Emerging Markets Debt                1.15%
TA IDEX Van Kampen Mid-Cap Growth                       1.00%
TA IDEX Van Kampen Small Company Growth                 1.15%


(1)  TA IDEX Evergreen Health Care was previously operated as TA IDEX T. Rowe
     Price Health Sciences. The Fund changed its name on March 1, 2006.


                                       32



TOTAL ADVISORY FEES PAID BY THE FUNDS

The following table sets forth the total amounts the funds paid to TFAI, and
reimbursements by TFAI to the funds, if any, for the fiscal years ended October
31, 2005, 2004, and 2003.



                                                       ADVISORY FEE AFTER
                                                      EXPENSE REIMBURSEMENT                EXPENSE REIMBURSEMENTS
                                             --------------------------------------   --------------------------------
                                                           OCTOBER 31,                           OCTOBER 31,
                                             --------------------------------------   --------------------------------
                   FUND                         2005          2004          2003         2005        2004       2003
                   ----                      ----------   -----------   -----------   ----------   --------   --------
                                                                                            
TA IDEX AllianceBernstein International
   Value(1)                                         N/A           N/A           N/A          N/A        N/A        N/A
TA IDEX American Century International       $1,236,039   $ 2,036,093   $   310,246   $  115,935   $  3,005   $472,761
TA IDEX American Century Large Company
   Value                                     $3,391,055   $   682,635   $    57,108   $       --   $     --   $206,578
TA IDEX Asset Allocation - Conservative
   Portfolio                                 $  421,315   $   327,487   $   136,484   $       --   $     --   $     --
TA IDEX Asset Allocation - Growth
   Portfolio                                 $  876,694   $   522,110   $   (55,645)  $       --   $     --   $160,784
TA IDEX Asset Allocation - Moderate
   Growth Portfolio                          $1,707,666   $ 1,053,807   $   265,108   $       --   $     --   $     --
TA IDEX Asset Allocation - Moderate
   Portfolio                                 $1,181,544   $   835,347   $   280,316   $       --   $     --   $     --
TA IDEX Clarion Global Real Estate
   Securities                                $1,080,341   $   832,476   $   216,103   $       --   $     --   $  2,602
TA IDEX Evergreen Health Care(2)             $3,131,970   $ 1,190,855   $   189,603   $    9,846   $     --   $ 59,564
TA IDEX Evergreen International Small
   Cap(3)                                    $2,312,431           N/A           N/A   $       --        N/A        N/A
TA IDEX Federated Market Opportunity(1)             N/A           N/A           N/A          N/A        N/A        N/A
TA IDEX Great Companies -- America(SM)       $  779,093   $ 1,107,766   $   959,239   $   79,582   $  9,000   $147,541
TA IDEX Great Companies -- Technology(SM)    $  670,755   $   943,831   $   179,708   $   45,093   $  6,423   $138,268
TA IDEX Multi-Manager International
   Fund(4)                                          N/A           N/A           N/A          N/A        N/A        N/A
TA IDEX Janus Growth                         $8,657,669   $10,965,287   $10,670,954   $  179,171   $    389   $     --
TA IDEX Jennison Growth                      $  867,236   $   657,176   $   455,854   $       --   $     --   $103,823
TA IDEX JPMorgan International Bond(1)              N/A           N/A           N/A          N/A        N/A        N/A
TA IDEX J.P. Morgan Mid Cap Value(5)         $  837,654           N/A           N/A   $       --        N/A        N/A
TA IDEX Marsico Growth                       $  924,174   $   524,068   $   361,461   $       --   $     --   $ 26,748
TA IDEX Marsico International Growth(3)      $3,003,305           N/A           N/A   $       --        N/A        N/A
TA IDEX Mercury Global Allocation(1)                N/A           N/A           N/A          N/A        N/A        N/A
TA IDEX Mercury Large Cap Value(5)           $1,561,062           N/A           N/A   $       --        N/A        N/A
TA IDEX Neuberger Berman International(1)           N/A           N/A           N/A          N/A        N/A        N/A
TA IDEX Oppenheimer Developing Markets(1)           N/A           N/A           N/A          N/A        N/A        N/A
TA IDEX PIMCO Real Return TIPS               $3,855,610   $ 1,698,724   $    54,432   $       --   $     --   $ 63,384
TA IDEX PIMCO Total Return                   $1,098,511   $   790,940   $   742,841   $       --   $     --   $     --
TA IDEX Protected Principal Stock            $  682,207   $   809,258   $   868,445   $       --   $  8,511   $  8,511
TA IDEX Salomon All Cap                      $3,684,939   $ 5,002,344   $ 2,258,747   $       --   $     --   $295,977
TA IDEX Salomon Investors Value              $2,375,777   $ 3,077,532   $ 1,121,694   $   18,752   $  3,284   $     --



                                       33



                                                                                            
TA IDEX T. Rowe Price Small Cap              $  427,650   $ 1,129,757   $   282,683   $   24,072   $     --   $ 85,347
TA IDEX T. Rowe Price Tax-Efficient Growth   $  165,951   $   214,235   $   238,582   $   25,122   $ 21,000   $ 59,810
TA IDEX Templeton Great Companies Global     $3,684,858   $ 3,609,000   $    76,225   $  303,141   $     --   $126,966
TA IDEX Transamerica Balanced                $2,232,406   $ 2,988,883   $ 3,688,769   $       --   $     --   $     --
TA IDEX Transamerica High-Yield Bond         $2,573,944   $ 2,144,295   $ 1,081,893   $       --   $     --   $     --
TA IDEX Transamerica Convertible
   Securities                                $1,665,607   $ 1,475,024   $   607,328   $       --   $     --   $     --
TA IDEX Transamerica Equity                  $2,082,718   $   917,983   $   424,229   $  241,182   $149,198   $     --
TA IDEX Transamerica Flexible Income         $2,059,800   $ 1,325,355   $ 1,641,352   $       --   $     --   $     --
TA IDEX Transamerica Growth Opportunities    $2,474,399   $ 2,106,084   $   405,924   $  197,900   $173,444   $550,288
TA IDEX Transamerica Money Market            $  204,858   $    64,000   $    18,815   $  587,203   $693,000   $869,435
TA IDEX Transamerica Short-Term Bond(3)      $1,261,989           N/A           N/A   $       --        N/A        N/A
TA IDEX Transamerica Small/Mid Cap Value     $3,450,069   $ 2,688,009   $ 1,000,665   $       --   $     --   $     --
TA IDEX Transamerica Value Balanced          $  535,993   $   369,000   $    28,006   $32,751.41   $ 49,000   $195,436
TA IDEX UBS Large Cap Value(3)               $1,063,785           N/A   $        --          N/A        N/A        N/A
TA IDEX Van Kampen Emerging Markets
   Debt(3)                                   $1,236,852           N/A           N/A   $       --        N/A        N/A
TA IDEX Van Kampen Mid-Cap Growth(4)                N/A           N/A           N/A          N/A        N/A        N/A
TA IDEX Van Kampen Small Company Growth(3)   $  707,218           N/A           N/A   $       --        N/A        N/A



- ----------
(1)  TA IDEX AllianceBernstein International Value, TA IDEX Federated Market
     Opportunity, TA IDEX JPMorgan International Bond, TA IDEX Mercury Global
     Allocation, TA IDEX Neuberger Berman International and TA IDEX Oppenheimer
     Developing Markets commenced operations on December 6, 2005 and as such
     there is no historical fee information.

(2)  TA IDEX Evergreen Health Care previously operated as TA IDEX T. Rowe Price
     Health Sciences. The fund changed its name on March 1, 2006.

(3)  TA IDEX Evergreen International Small Cap, TA IDEX Marsico International
     Growth, TA IDEX Transamerica Short-Term Bond, TA IDEX UBS Large Cap Value,
     TA IDEX Van Kampen Emerging Markets Debt and TA IDEX Van Kampen Small
     Company Growth commenced operations on November 8, 2004, and as such there
     is no historical fee information for fiscal years ended October 31, 2004
     and October 31, 2003.

(4)  TA IDEX Multi-Manager International Fund and TA IDEX Van Kampen Mid-Cap
     Growth commenced operations on March 1, 2006 and January 3, 2006,
     respectively and as such there is no historical information.

(5)  TA IDEX J.P. Morgan Mid Cap Value and TA IDEX Mercury Large Cap Value
     commenced operations on March 1, 2005 and as such there is no historical
     fee information for fiscal years ended October 31, 2004 and October 31,
     2003.

THE INVESTMENT ADVISER'S GUARANTEE (FOR TA IDEX PROTECTED PRINCIPAL STOCK ONLY.)

As part of TFAI's guaranteed investment strategy, TFAI will provide a guarantee
to shareholders of TA IDEX Protected Principal Stock as described in that fund's
prospectus (the "Guarantee"). The Guarantee to a shareholder who invests in TA
IDEX Protected Principal Stock is that the shareholder will be entitled to
receive a guaranteed amount five years after the investment date (the
"Guaranteed Amount," and such investment date, the "Investment Date"), which
amount will be no less than the value of that shareholder's account on the
Investment Date, less extraordinary charges (such as litigation expenses and
other expenses not incurred in the ordinary course of the fund's business),
provided that shareholders have reinvested all dividends and distributions in
additional shares and have redeemed no shares.

As a swap of the guarantee risk, TFAI may enter into agreements with affiliated
and unaffiliated counterparties, subject to approval by the Board of Trustees.
Such agreements will obligate the counterparties to make payments to TFAI of any
amounts that TFAI is obligated to pay to shareholders, pursuant to the
Guarantee. TFAI has undertaken not to terminate the Investment Advisory
Agreement with the fund so long as there are shareholders with amounts subject
to the Guarantee remaining in the fund.

In the unlikely event that TA IDEX Protected Principal Stock, its Board of
Trustees, or its shareholders were to terminate TFAI's Investment Advisory
Agreement with the fund, TFAI will remain obligated to make payments


                                       34


under the Guarantee to any fund shareholder with amounts subject to the
Guarantee until the fund liquidates or retains a new investment adviser that
agrees to assume responsibility for the Guarantee. If the new investment adviser
not only agrees to assume responsibility for the Guarantee but also agrees to
compensate Peoples Benefit Life Insurance Company ("PBL") accordingly, PBL has
agreed that TFAI is permitted to assign that swap agreement to the new adviser.
In that event, PBL would then make payments to the new adviser in the same
manner that PBL is obligated to make payments to TFAI. It is not expected that a
change to a new investment adviser would result in any increase in investment
advisory fees. If, however, an increase were to be proposed, that fee increase
would, of course, be submitted to fund shareholders for prior approval.

SUB-ADVISERS

AEGON USA Investment Management, LLC ("AUIM"), located at 4333 Edgewood Rd NE,
Cedar Rapids, IA 52499, serves as sub-adviser to TA IDEX Transamerica High-Yield
Bond pursuant to a sub-advisory agreement with TFAI.

Alliance Capital Management, L.P. ("Alliance"), located at 1345 Avenue of the
Americas, New York, NY 10105, serves as sub-adviser to TA IDEX AllianceBernstein
International Value pursuant to a sub-advisory agreement with TFAI.

American Century Investment Management, Inc. ("American Century"), American
Century Tower, 4500 Main Street, Kansas City, MO 64111, serves as sub-adviser to
TA IDEX American Century Large Company Value pursuant to a sub-advisory
agreement with TFAI.

American Century Global Investment Management, Inc. ("ACGIM"), The Chrysler
Center, 666 3rd Avenue, 23rd Floor, New York, NY 10017, serves as sub-adviser to
TA IDEX American Century International pursuant to a sub-advisory agreement with
TFAI.

Columbia Management Advisors, LLC (formerly, Banc of America Capital Management,
LLC), 101 S. Tryon Street, Charlotte, NC 28255, serves as sub-adviser to TA IDEX
Marsico Growth and TA IDEX Marsico International Growth pursuant to a
sub-advisory agreement with TFAI. Columbia Management Advisors, LLC has entered
into an agreement with Marsico Capital Management, LLC ("Marsico"), 1200 17th
Street, Suite 1600, Denver, CO 80202, wherein Marsico will provide portfolio
management.

Evergreen Investment Management Company, LLC ("Evergreen"), 200 Berkeley Street,
Boston, MA 02116, serves as sub-adviser to TA IDEX Evergreen Health Care and TA
IDEX Evergreen International Small Cap pursuant to a sub-advisory agreement with
ATFA.

Federated Equity Management Company of Pennsylvania ("Federated"), located at
1001 Liberty Avenue, Pittsburgh, PA 15222-3779, serves as sub-adviser to TA IDEX
Federated Market Opportunity pursuant to a sub-advisory agreement with TFAI.

Fund Asset Management, L.P., doing business as Mercury Advisors ("Mercury
Advisors"), 800 Scudders Mill Road, Plainsboro, NJ 08536, serves as sub-adviser
to TA IDEX Mercury Global Allocation and TA IDEX Mercury Large Cap Value
pursuant to a sub-advisory agreement with TFAI

Gateway Investment Advisers, L.P. ("Gateway"), 3805 Edwards Road, Suite 600,
Cincinnati, OH 45209, serves as sub-adviser to TA IDEX Protected Principal Stock
pursuant to a sub-advisory agreement with TFAI. The sub-adviser may also serve
as a sub-adviser to certain portfolios of AEGON/Transamerica Series Trust, a
registered investment company.

Great Companies, L.L.C. ("Great Companies"), 635 Court Street, Suite 100,
Clearwater, FL 33756, serves as sub-adviser to TA IDEX Great Companies --
America(SM) and TA IDEX Great Companies -- Technology(SM), and co-sub-adviser to
TA IDEX Templeton Great Companies Global, pursuant to a sub-advisory agreement
with TFAI.

ING Clarion Real Estate Securities LP ("Clarion"), 259 N. Radnor-Chester Road,
Suite 205, Radnor, PA 19087, serves as sub-adviser to TA IDEX Clarion Global
Real Estate Securities pursuant to a sub-advisory agreement with TFAI.

Janus Capital Management LLC ("Janus"), 151 Detroit Street, Denver, CO
80206-4805, serves as sub-adviser to TA IDEX Janus Growth pursuant to a
sub-advisory agreement with TFAI.


                                       35



Jennison Associates LLC ("Jennison"), 466 Lexington Avenue, New York, NY 10017,
serves as sub-adviser to TA IDEX Jennison Growth pursuant to a sub-advisory
agreement with TFAI.

J.P. Morgan Investment Advisors Inc. ("JPMorgan"), 522 Fifth Avenue, New York,
NY 10036, serves as sub-adviser to TA IDEX JPMorgan International Bond and TA
IDEX J.P. Morgan Mid Cap Value pursuant to a sub-advisory agreement with TFAI.

Morgan Stanley Investment Management Inc., doing business as Van Kampen ("Van
Kampen"), 1221 Avenue of the Americas, New York, NY 10020, serves as sub-adviser
to TA IDEX Van Kampen Emerging Markets Debt, TA IDEX Van Kampen Mid-Cap Growth
and TA IDEX Van Kampen Small Company Growth pursuant to a sub-advisory agreement
with ATFA.

Neuberger Berman Management, Inc. ("Neuberger Berman"), located at 605 Third
Avenue, 2nd floor, New York, NY 10158-0180, serves as sub-adviser to TA IDEX
Neuberger Berman International pursuant to a sub-advisory agreement with TFAI.

OppenheimerFunds, Inc. ("Oppenheimer"), located at Two World Financial Center,
225 Liberty Street, 11th floor, New York, NY 10281-1008, serves as sub-adviser
to TA IDEX Oppenheimer Developing Markets pursuant to a subadvisory agreement
with TFAI.

Pacific Investment Management Company LLC ("PIMCO"), 840 Newport Center Drive,
Newport Beach, CA 92660, serves as sub-adviser to TA IDEX PIMCO Total Return and
TA IDEX PIMCO Real Return TIPS pursuant to sub-advisory agreements with TFAI.

Salomon Brothers Asset Management Inc. ("SaBAM")(1), 399 Park Avenue, New York,
NY 10022, serves as sub-adviser to TA IDEX Salomon All Cap and TA IDEX Salomon
Investors Value pursuant to a sub-advisory agreement with TFAI.

T. Rowe Price Associates, Inc. ("T. Rowe Price"), 100 E. Pratt Street,
Baltimore, MD 21202, serves as sub-adviser to TA IDEX T. Rowe Price Small Cap
and TA IDEX T. Rowe Price Tax-Efficient Growth pursuant to a sub-advisory
agreement with TFAI.

Templeton Investment Counsel, LLC ("Templeton"), 500 E. Broward Blvd., Suite
2100, Ft. Lauderdale, FL 33394, serves as co-sub-adviser to TA IDEX Templeton
Great Companies Global pursuant to a sub-advisory agreement with TFAI.

Transamerica Investment Management, LLC ("TIM"), 1150 South Olive Street, Suite
2700, Los Angeles, CA 90015, serves as sub-adviser to TA IDEX Transamerica
Small/Mid Cap Value, TA IDEX Transamerica Balanced, TA IDEX Transamerica
Flexible Income, TA IDEX Transamerica Growth Opportunities, TA IDEX Transamerica
Equity, TA IDEX Transamerica Value Balanced, TA IDEX Transamerica Money Market,
TA IDEX Transamerica Short-Term Bond and TA IDEX Transamerica Convertible
Securities pursuant to a sub-advisory agreement with TFAI.

UBS Global Asset Management (Americas) Inc. ("UBS"), One North Wacker Drive,
Chicago, IL 60606, serves as sub-adviser to TA IDEX UBS Large Cap Value pursuant
to a sub-advisory agreement with ATFA.

     (1)  Note: On December 1, 2005, Citigroup Inc. ("Citigroup") completed the
          sale of substantially all of its asset management business, Citigroup
          Asset Management, to Legg Mason, Inc. As a result, Salomon Brothers
          Asset Management Inc became a wholly owned subsidiary of Legg Mason,
          Inc. Legg Mason, whose principal executive offices are at 100 Light
          Street, Baltimore, Maryland, 21202, is a financial services holding
          company.

          Under a licensing agreement between Citigroup and Legg Mason, the name
          Salomon Brothers Asset Management Inc, as well as all logos,
          trademarks, and service mars related to Citigroup or any of its
          affiliates ("Citi Marks") are licensed for use by Legg Mason. All Citi
          Marks are owned by Citigroup and are used under license. Legg Mason
          and its affiliates, as well as Salomon Brothers Asset Management Inc,
          are not affiliated with Citigroup.

The sub-advisers also serve as sub-advisers to certain portfolios of
AEGON/Transamerica Series Trust ("ATST"), a registered investment company. They
may be referred to herein collectively as the "sub-advisers" and individually as
a "sub-adviser." Each sub-adviser receives monthly compensation from TFA at the
annual rate of a specified percentage, indicated below, of a fund's average
daily net assets:


                                       36





                                    Sub-Adviser                                     Sub-Advisory Fee
                                 ----------------   --------------------------------------------------------------------------------
                                              
TA IDEX AllianceBernstein            Alliance       0.45% of assets up to $200 million of average daily net assets; 0.36% of next
International Value                                 $300 million of average daily net assets; 0.32% of average daily net assets in
                                                    excess of $500 million.

TA IDEX American Century               ACGIM        0.50% of assets up to $250 million of average daily net assets; 0.475% of next
International*                                      $250 million of average daily net assets; 0.45% of next $500 million of average
                                                    daily net assets; and 0.40% of average daily net assets in excess of $1 billion.

TA IDEX American Century             American       0.45% of assets up to $250 million of average daily net assets; 0.40% of next
Large Company Value**                 Century       $250 million of average daily net assets; 0.35% of next $250 million of average
                                                    daily net assets; and 0.30% of average daily net assets in excess of $750
                                                    million.

TA IDEX Asset Allocation -          Morningstar     0.10% of the fund's average daily net assets.
Conservative Portfolio

TA IDEX Asset Allocation -          Morningstar     0.10% of the fund's average daily net assets.
Growth Portfolio

TA IDEX Asset Allocation -          Morningstar     0.10% of the fund's average daily net assets.
Moderate Growth Portfolio

TA IDEX Asset Allocation -          Morningstar     0.10% of the fund's average daily net assets.
Moderate Portfolio

TA IDEX Clarion Global Real           Clarion       0.40% of the first $250 million of average daily net assets; 0.375% of average
Estate Securities                                   daily net assets over $250 million up to $500 million; 0.35% of average daily
                                                    net assets over $500 million up to $1 billion; and 0.30% of average daily net
                                                    assets in excess of $1 billion, less 50% of any amount reimbursed pursuant to
                                                    the fund's expense limitation.

TA IDEX Evergreen Health Care        Evergreen      0.42% of the first $100 million of average daily net assets; 0.40% of average
                                                    daily net assets over $100 million up to $ 250 million; and 0.35% in excess of
                                                    $250 million.

TA IDEX Evergreen                    Evergreen      0.52% of the first $250 million of average daily net assets;
International Small Cap                             0.50% of average daily net assets in excess of $250 million.

TA IDEX Federated Market             Federated      0.50% of assets up to $30 million of average daily net assets; 0.35% of next $20
Opportunity                                         million of average daily net assets; 0.25% of average daily net assets in excess
                                                    of $50 million.

TA IDEX Great Companies --        Great Companies   0.30% of the first $500 million of average daily net assets; 0.25% of average
America(SM)                                         daily net assets in excess of $500 million.

TA IDEX Great Companies --        Great Companies   0.35% of the first $250 million of average daily net assets; 0.30% of next $250
Technology(SM)                                      million up to $500 million of average daily net assets; and 0.25% of average
                                                    daily net assets in excess of $500 million.



                                       37



                                              
TA IDEX Multi-Manager               Morningstar     0.10% of the average daily net assets.
International Fund

TA IDEX Janus Growth                   Janus        0.40% of the first $250 million of average daily net assets; 0.35% of next $500
                                                    million of average daily net assets; 0.30% of next $750 million of average daily
                                                    net assets; 0.25% of next $1.5 billion of average daily net assets; and 0.225%
                                                    of average daily net assets in excess of $3 billion, less 50% of any amount
                                                    reimbursed pursuant to the fund's expense limitation agreement. In addition, the
                                                    sub-adviser waives its monthly compensation by the following percentages based
                                                    on the average daily net assets of the fund: Assets between $1.5 and $3.0
                                                    billion, 5% Fee Reduction on Assets over $1.5 billion; Assets between $3.0 and
                                                    $5.0 billion, 7.5% Fee Reduction on Assets over $3.0 billion; Assets above $5
                                                    billion, 10.0% Fee Reduction on Assets over $5 billion.

TA IDEX Jennison Growth              Jennison       0.40% of the first $250 million of average daily net assets; 0.35% over $250
                                                    million up to $500 million; 0.30% over $500 million up to $1 billion; 0.25% over
                                                    $1 billion up to $1.5 billion and 0.20% in excess of $1.5 billion.

TA IDEX JPMorgan                     JPMorgan       0.20% of assets up to $100 million of average daily net assets; 0.17% of next
International Bond                                  $150 million of average daily net assets; 0.16% of next $250 million of average
                                                    daily net assets; 0.15% of next $500 million of average daily net assets; 0.12%
                                                    of average daily net assets in excess of $1 billion.

TA IDEX J.P. Morgan Mid Cap         J.P. Morgan     0.40% of the average daily net assets.
Value

TA IDEX Marsico Growth               Columbia       0.40% of the first $250 million of average daily net assets; 0.375% of the next
                                    Management      $250 million of average daily net assets; 0.35% of the next $500 million of
                                                    average daily net assets; and 0.30% of average daily net assets in excess of $1
                                                    billion.

TA IDEX Marsico International        Columbia       0.50% of the first $300 million of average daily net assets; 0.45% of the next
Growth                              Management      $100 million of average daily net assets; 0.40% of the next $600 million of
                                                    average daily net assets; and 0.35% of average daily net assets in excess of $1
                                                    billion.

TA IDEX Mercury Global                Merrill       0.44% of assets up to $100 million of average daily net assets; 0.32% of average
Allocation                             Lynch        daily net assets in excess of $100 million.

TA IDEX Mercury Large Cap             Merrill       0.35% of the first $250 million of average daily net assets;0.325% of the next
Value                                  Lynch        $500 million of average daily net assets; and 0.30% of average daily net assets
                                                    in excess of $750 million

TA IDEX Neuberger Berman             Neuberger      0.50% of assets up to $100 million of average daily net assets; 0.45% of average
International                         Berman        daily net assets in excess of $100 million.




                                       38



                                              
TA IDEX Oppenheimer Developing      Oppenheimer     0.70% of assets up to $50 million of average daily net assets; 0.65% of next
Markets                                             $150 million of average daily net assets; 0.60% of average daily net assets in
                                                    excess of $200 million.

TA IDEX PIMCO Real Return TIPS         PIMCO        0.25% of average daily net assets.

TA IDEX PIMCO Total Return             PIMCO        0.25% of average daily net assets.

TA IDEX Protected Principal           Gateway       0.40% of the first $100 million of average daily net assets; 0.375% of average
Stock                                               daily net assets in excess of $100 million, less 50% of excess expenses

TA IDEX Salomon All Cap***             SaBAM        0.30% of the first $20 million of average daily net assets; 0.50% of the next
                                                    $80 million of average daily net assets; and 0.40% of average daily net assets
                                                    over $100 million.

TA IDEX Salomon Investors              SaBAM        0.35% of average daily net assets, less 50% of any amount reimbursed pursuant to
Value                                               the fund's expense limitation.

TA IDEX T. Rowe Price Small        T. Rowe Price    0.35% of average daily net assets (T. Rowe Price has agreed to a voluntary fee
Cap                                                 waiver based on the combined average daily net assets of TA IDEX T. Rowe Price
                                                    Small Cap, TA IDEX T. Rowe Price Tax-Efficient Growth, ATST T. Rowe Price Equity
                                                    Income, ATST T. Rowe Price Growth Stock and ATST T. Rowe Price Small Cap as
                                                    follows: assets between $750 million and $1.5 billion: 5% fee reduction; assets
                                                    between $1.5 billion and $3 billion: 7.5% fee reduction; assets above $3
                                                    billion: 10.0% fee reduction. The reduction in fees is split evenly between
                                                    shareholders and TFAI.)

TA IDEX T. Rowe Price              T. Rowe Price    0.45% of the first $100 million of the fund's average daily net assets; 0.40% of
Tax-Efficient Growth                                the next $100 million up to $250 million; and 0.35% of average daily net assets
                                                    in excess of $250 million (T. Rowe Price has agreed to a voluntary fee waiver
                                                    based on the combined average daily net assets of TA IDEX T. Rowe Price Small
                                                    Cap, TA IDEX T. Rowe Price Tax-Efficient Growth, ATST T. Rowe Price Equity
                                                    Income, ATST T. Rowe Price Growth Stock and ATST T. Rowe Price Small Cap as
                                                    follows: assets between $750 million and $1.5 billion: 5% fee reduction; assets
                                                    between $1.5 billion and $3 billion: 7.5% fee reduction; assets above $3
                                                    billion: 10.0% fee reduction. The reduction in fees is split evenly between
                                                    shareholders and TFAI.)

TA IDEX Templeton Great          Great Companies/   0.35% of the first $500 million of average daily net assets; 0.30% of average
Companies Global                     Templeton      daily next assets in excess of $500 million of average daily net assets.
                                                    Templeton receives a portion of the sub-advisory fee based on the amount of
                                                    assets that it manages; it receives 0.40% of the fee for the first $500 million
                                                    of the fund's average daily net assets; 0.375% of the fee for assets over $500
                                                    million up to $1.5 billion; and 0.35% of the fee for assets over $1.5 billion
                                                    (for the portion of assets that it manages). Great Companies receives the
                                                    sub-advisory fee stated in this paragraph, less any amount paid to Templeton for
                                                    its sub-advisory services.




                                       39



                                              
TA IDEX Transamerica Balanced           TIM         0.35% of the first $250 million of average daily net assets; 0.325% of the next
                                                    $250 million up to $500 million of average daily net assets; 0.30% over $500
                                                    million up to $1.5 billion; 0.25% of average daily net assets in excess of $1.5
                                                    billion, less 50% of any amount reimbursed pursuant to the fund's expense
                                                    limitation.

TA IDEX Transamerica                   AUIM         0.28% of the first $400 million of average daily net assets; 0.25% in excess of
High-Yield Bond                                     $400 million up to $750 million; and 0.20% in excess of $750 million.

TA IDEX Transamerica                    TIM         0.35% of average daily net assets, less 50% of any amount reimbursed pursuant to
Convertible Securities                              the fund's expense limitation.

                                                    0.35% of the first $500 million of average daily net assets; 0.30% of the fund's
TA IDEX Transamerica Equity             TIM         average daily net assets in excess of $500 million, less 50% of any amount
                                                    reimbursed pursuant to the fund's expense limitation.

TA IDEX Transamerica Flexible           TIM         0.30% of the first $250 million of average daily net assets; 0.25% of the fund's
Income                                              average daily net assets in excess of $250 million, less 50% of any amount
                                                    reimbursed pursuant to the fund's expense limitation.

TA IDEX Transamerica Growth             TIM         0.40% of average daily net assets up to $100 million; and 0.35% of average daily
Opportunities                                       net assets in excess of $100 million, less 50% of any amount reimbursed pursuant
                                                    to the fund's expense limitation.

TA IDEX Transamerica Money              TIM         0.15% of average daily net assets.
Market

TA IDEX Transamerica                    TIM         0.25% of the first $250 million of average daily net assets; 0.20% of the next
Short-Term Bond                                     $250 million of average daily net assets; 0.175% of the next $500 million of
                                                    average daily net assets; and 0.15% of average daily net assets in excess of $1
                                                    billion.

TA IDEX Transamerica Small/Mid          TIM         0.375% of the first $500 million of average daily net assets and 0.325% of
Cap Value                                           average daily net assets in excess of $500 million, less 50% of any amount
                                                    reimbursed pursuant to the fund's expense limitation.

TA IDEX Transamerica Value              TIM         0.35% of average daily net assets up to $500 million; 0.325% of assets in excess
Balanced                                            of $500 million up to $1 billion; and 0.30% of assets in excess of $1 billion,
                                                    less 50% of any amount reimbursed pursuant to the fund's expense limitation.

TA IDEX UBS Large Cap Value             UBS         0.35% of the first $200 million of average daily net assets; 0.32% of the next
                                                    $200 million of average daily net assets; 0.30% of the next $350 million of
                                                    average daily net assets; 0.27% of the next $250 million of average daily net
                                                    assets; 0.25% of average daily net assets in excess of $1 billion up to $1.5
                                                    billion; and 0.20% in excess of $1.5 billion.

TA IDEX Van Kampen Emerging         Van Kampen      0.45% of the first $250 million of average daily net assets; 0.40% of the next
Markets Debt                                        $250 million of average daily net assets; and 0.35% of average daily net assets
                                                    over $500 million.

TA IDEX Van Kampen                  Van Kampen      0.40% of the average daily net assets.
Mid-Cap Growth

TA IDEX Van Kampen Small            Van Kampen      0.45% of the first $500 million of average daily net assets; and 0.40% of
Company Growth                                      average daily net assets over $500 million.




                                       40


*    Based on the combined average daily net assets for TA IDEX American Century
     International and ATST American Century International.

**   Based on the combined average daily net assets for TA IDEX American Century
     Large Company Value and ATST American Century Large Company Value.

***  Based on the combined average daily net assets for TA IDEX Salomon All Cap
     and ATST Salomon All Cap.

                             SUB-ADVISORY FEES PAID
                            (NET OF FEES REIMBURSED)

The following table sets forth the total amounts of sub-advisory fee paid by
TFAI to each sub-adviser for the fiscal years ended October 31, 2005, 2004 and
2003:



                                                                OCTOBER 31
                                                   ------------------------------------
FUND                                                  2005         2004         2003
- ----                                               ----------   ----------   ----------
                                                                    
TA IDEX AllianceBernstein International Value(1)          N/A          N/A          N/A
TA IDEX American Century International             $  738,207   $1,197,799   $  244,128
TA IDEX American Century Large Company Value       $1,666,843   $  570,802   $   70,665
TA IDEX Clarion Global Real Estate Securities      $  543,122   $  463,070   $  108,002
TA IDEX Evergreen Health Care(2)                   $1,861,524   $  902,494   $  123,114
TA IDEX Evergreen International Small Cap(3)       $1,127,670   $      N/A   $      N/A
TA IDEX Federated Market Opportunity(1)                   N/A          N/A          N/A
TA IDEX Great Companies -- America(SM)             $  398,628   $  561,548   $  553,390
TA IDEX Great Companies -- Technology(SM)          $  360,793   $  472,258   $  156,417
TA IDEX Multi-Manager International Fund(4)               N/A          N/A          N/A
TA IDEX Janus Growth                               $4,087,418   $5,503,113   $5,232,669
TA IDEX Jennison Growth                            $  435,940   $  357,802   $  279,838
TA IDEX JPMorgan International Bond(1)                    N/A          N/A          N/A
TA IDEX J.P. Morgan Mid Cap Value(5)               $  402,976          N/A          N/A
TA IDEX Marsico Growth                             $  463,541   $  279,454   $  180,621
TA IDEX Marsico International Growth(3)            $1,406,490          N/A          N/A
TA IDEX Mercury Global Allocation(1)                      N/A          N/A          N/A
TA IDEX Mercury Large Cap Value(5)                 $  677,282          N/A          N/A
TA IDEX Neuberger Berman International(1)                 N/A          N/A          N/A
TA IDEX Oppenheimer Developing Markets(1)                 N/A          N/A          N/A
TA IDEX PIMCO Real Return TIPS                     $1,431,219   $  789,191   $   37,598
TA IDEX PIMCO Total Return                         $  394,337   $  299,015   $  250,346
TA IDEX Protected Principal Stock                  $  211,169   $  242,883   $  265,380
TA IDEX Salomon All Cap                            $1,888,062   $2,589,029   $1,304,258
TA IDEX Salomon Investors Value                    $1,055,890   $1,446,080   $  487,218
TA IDEX T. Rowe Price Small Cap                    $  207,078   $  481,110   $  134,783
TA IDEX T. Rowe Price Tax-Efficient Growth         $  113,831   $  141,195   $  179,035
TA IDEX Templeton Great Companies Global           $1,750,807   $1,911,464   $  104,166
TA IDEX Transamerica Balanced                      $  970,590   $1,489,763   $1,829,006
TA IDEX Transamerica High-Yield Bond               $1,281,666   $1,065,834   $  539,081
TA IDEX Transamerica Convertible Securities        $  781,111   $  684,516   $  283,457
TA IDEX Transamerica Equity                        $1,083,797   $  620,718   $  211,792
TA IDEX Transamerica Flexible Income               $  787,019   $  567,577   $  828,099
TA IDEX Transamerica Growth Opportunities          $1,283,486   $1,295,668   $  258,320
TA IDEX Transamerica Money Market                  $  299,056   $  190,509   $ (76,127)
TA IDEX Transamerica Short-Term Bond(3)            $  483,234          N/A          N/A



                                       41





                                                                OCTOBER 31
                                                   ------------------------------------
FUND                                                  2005         2004         2003
- ----                                               ----------   ----------   ----------
                                                                    
TA IDEX Transamerica Small/Mid Cap Value           $1,625,336   $1,335,128    $555,925
TA IDEX Transamerica Value Balanced                $  266,973   $  288,334    $  6,702
TA IDEX UBS Large Cap Value(3)                     $  475,574          N/A         N/A
TA IDEX Van Kampen Emerging Markets Debt(3)        $  585,847          N/A         N/A
TA IDEX Van Kampen Mid-Cap Growth(4)                      N/A          N/A         N/A
TA IDEX Van Kampen Small Company Growth(3)         $  334,998          N/A         N/A


(1)  TA IDEX AllianceBernstein International Value, TA IDEX Federated Market
     Opportunity, TA IDEX JP Morgan International Bond, TA IDEX Mercury Global
     Allocation, TA IDEX Neuberger Berman International and TA IDEX Oppenheimer
     Developing Markets commenced operations on December 6, 2005, and as such
     there is no historical fee information.

(2)  TA IDEX Evergreen Health Care previously operated as TA IDEX T. Rowe Price
     Health Sciences. The fund changed its name on March 1, 2006.

(3)  TA IDEX Evergreen International Small Cap, TA IDEX Marsico International
     Growth, TA IDEX Transamerica Short-Term Bond, TA IDEX UBS Large Cap Value,
     TA IDEX Van Kampen Emerging Markets Debt and TA IDEX Van Kampen Small
     Company Growth commenced operations on November 8, 2004, and as such there
     is no historical fee information.

(4)  TA IDEX Multi-Manager International Fund and TA IDEX Van Kampen Mid-Cap
     Growth commenced operations on March 1, 2006 and January 3, 2006
     respectively, and as such there is no historical fee information for fiscal
     years ended October 31, 2004 and October 31, 2003.

(5)  TA IDEX J.P. Morgan Mid Cap Value and TA IDEX Mercury Large Cap Value
     commenced operations on March 1, 2005 and as such there is no historical
     fee information for the fiscal years ended October 31, 2004 and October 31,
     2003.

Each of the sub-advisers also serves as investment adviser or sub-adviser to
other funds and/or private accounts that may have investment objectives
identical or similar to that of the funds. Securities frequently meet the
investment objectives of one or all of these funds, the other funds and the
private accounts. In such cases, a sub-adviser's decision to recommend a
purchase to one fund or account rather than another is based on a number of
factors. The determining factors in most cases are the amounts available for
investment by each fund or account, the amount of securities of the issuer then
outstanding, the value of those securities and the market for them. Another
factor considered in the investment recommendations is other investments which
each fund or account presently has in a particular industry.

It is possible that at times identical securities will be held by more than one
fund or account. However, positions in the same issue may vary and the length of
time that any fund or account may choose to hold its investment in the same
issue may likewise vary. To the extent that more than one of the funds or
private accounts served by a sub-adviser seeks to acquire or sell the same
security at about the same time, either the price obtained by the funds or the
amount of securities that may be purchased or sold by a fund at one time may be
adversely affected. On the other hand, if the same securities are bought or sold
at the same time by more than one fund or account, the resulting participation
in volume transactions could produce better executions for the funds. In the
event more than one fund or account purchases or sells the same security on a
given date, the purchase and sale transactions are allocated among the fund(s),
the other funds and the private accounts in a manner believed by the
sub-advisers to be equitable to each.

INFORMATION ABOUT EACH FUND'S PORTFOLIO MANAGERS

Information regarding other accounts for which any portfolio manager is
primarily responsible for the day-to-day management, a description of any
material conflict of interest that may arise in connection with the portfolio
manager's management of the fund's investments, the structure of, and method
used to determine, the compensation of each portfolio manager and the dollar
range of equity securities in the fund beneficially owned by each portfolio
manager are provided in Appendix B of this SAI.

PORTFOLIO CONSTRUCTION MANAGER

Morningstar Associates, LLC ("Morningstar Associates") located at 225 West
Wacker Dr., Chicago, IL 60606, serves as a portfolio construction manager and,
as such, makes asset allocation and fund selection decisions for the TA IDEX
Asset Allocation - Conservative Portfolio, TA IDEX Asset Allocation - Growth
Portfolio, TA IDEX Asset Allocation - Moderate Portfolio, TA IDEX Asset
Allocation - Moderate Growth Portfolio and TA IDEX Multi-Manager International
Fund while consulting with the TFAI Investment Committee. For the fiscal years
ended October 31, 2005, 2004 and 2003, TFAI paid Morningstar Associates the
following amounts: $5,007,743, $1,416,197 and $365,269, respectively (no
information is provided for TA IDEX Multi-Manager International Fund, which
commenced operations after October 31, 2005). TFAI compensates Morningstar
Associates 0.10% of the average daily net assets of each portfolio.


                                       42


                                   DISTRIBUTOR

Effective March 1, 2001, Transamerica IDEX entered into an Underwriting
Agreement with AFSG Securities Corporation ("AFSG"), located at 4333 Edgewood
Rd. NE, Cedar Rapids, Iowa 52494, to act as the principal underwriter of the
shares of the funds. (Prior to this date, InterSecurities, Inc. ("ISI"), located
at 570 Carillon Parkway, St. Petersburg, FL 33716, served as the principal
underwriter.) The Underwriting Agreement will continue from year to year so long
as its continuance is approved at least annually in the same manner as the
investment advisory agreements discussed above. A discussion of AFSG's
responsibilities and charges as principal underwriter of fund shares is set
forth in each fund's prospectus.

                             UNDERWRITING COMMISSION



                                         COMMISSIONS RECEIVED                  COMMISSIONS RETAINED
                                         FOR THE PERIOD ENDED                  FOR THE PERIOD ENDED
                                              OCTOBER 31                            OCTOBER 31
                                -------------------------------------   ----------------------------------
FUND                               2005          2004         2003         2005         2004        2003
- ----                            ----------   -----------   ----------   ----------   ----------   --------
                                                                                
TA IDEX AllianceBernstein
   International Value(1)              N/A           N/A          N/A          N/A          N/A        N/A
TA IDEX American Century
   International                $   33,320   $   244,787   $   47,000   $    5,195   $    9,469   $  1,405
TA IDEX American Century
   Large Company Value          $   33,545   $   211,113   $   42,777   $    5,396   $    8,225   $  2,581
TA IDEX Asset Allocation -
   Conservative  Portfolio      $1,924,341   $ 9,208,131   $1,175,635   $  323,137   $  459,260   $155,402
TA IDEX Asset Allocation -
   Moderate Growth Portfolio    $9,046,506   $23,921,190   $3,078,179   $1,448,031   $  868,465   $432,717
TA IDEX Asset Allocation -
   Moderate Portfolio           $4,876,484   $26,583,844   $2,729,843   $  801,897   $1,083,796   $360,920
TA IDEX Asset Allocation -
   Growth Portfolio             $4,208,026   $44,889,907   $1,263,680   $  652,775   $1,945,740   $165,440
TA IDEX Clarion Global Real
   Estate Securities            $   95,667   $   220,787   $   27,770   $   15,591   $    9,203   $  4,058
TA IDEX Evergreen Health
   Care(2)                      $   24,026   $   222,672   $   24,272   $    3,583   $    7,485   $  3,510
TA IDEX Evergreen
   International Small Cap(3)          N/A           N/A          N/A          N/A          N/A        N/A
TA IDEX Federated Market
   Opportunity(1)                      N/A           N/A          N/A          N/A          N/A        N/A
TA IDEX Great Companies --
   America (SM)                 $   47,766   $   778,023   $  270,384   $    7,261   $   35,478   $ 34,970
TA IDEX Great Companies --
   Technology (SM)              $   21,533   $   137,159   $   39,665   $    3,286   $    6,027   $  5,278
TA IDEX Multi-Manager
   International Fund(4)               N/A           N/A          N/A          N/A          N/A        N/A
TA IDEX Janus Growth            $  576,971   $ 1,518,782   $1,125,486   $   85,937   $  114,409   $125,912
TA IDEX Jennison Growth         $   31,171   $   198,730   $   70,022   $    4,536   $    6,957   $  5,324
TA IDEX JPMorgan
   International Bond(1)               N/A           N/A          N/A          N/A          N/A        N/A
TA IDEX J.P. Morgan Mid Cap
   Value(5)                            N/A           N/A          N/A          N/A          N/A        N/A
TA IDEX Marsico Growth          $   64,813   $   364,146   $   64,311   $   10,524   $   10,765   $  8,441
TA IDEX Marsico International
   Growth(3)                           N/A           N/A          N/A          N/A          N/A        N/A
TA IDEX Mercury Global
   Allocation(1)                       N/A           N/A          N/A          N/A          N/A        N/A
TA IDEX Mercury Large Cap
   Value(5)                            N/A           N/A          N/A          N/A          N/A        N/A



                                       43





                                         COMMISSIONS RECEIVED                  COMMISSIONS RETAINED
                                         FOR THE PERIOD ENDED                  FOR THE PERIOD ENDED
                                              OCTOBER 31                            OCTOBER 31
                                -------------------------------------   ----------------------------------
FUND                               2005          2004         2003         2005         2004        2003
- ----                            ----------   -----------   ----------   ----------   ----------   --------
                                                                                
TA IDEX Neuberger Berman
   International(1)                    N/A           N/A          N/A          N/A          N/A        N/A
TA IDEX Oppenheimer
   Developing Markets(1)               N/A           N/A          N/A          N/A          N/A        N/A
TA IDEX PIMCO Real Return
   TIPS                         $   70,509   $   404,692   $   12,182   $   13,682   $   19,410   $  2,060
TA IDEX PIMCO Total Return      $   27,675   $   248,014   $  247,636   $    5,131   $   13,171   $ 26,821
TA IDEX Protected Principal
   Stock                        $       --   $        --   $       --   $       --   $       --   $     --
TA IDEX Salomon All Cap         $  120,289   $ 1,431,014   $  259,938   $   18,204   $   48,341   $ 25,176
TA IDEX Salomon Investors
   Value                        $   22,895   $   181,432   $   55,240   $    3,622   $    7,742   $  2,718
TA IDEX T. Rowe Price Small
   Cap                          $   38,293   $   204,615   $   54,701   $    5,929   $    7,145   $  3,148
TA IDEX T. Rowe Price
   Tax-Efficient Growth         $   16,974   $   162,041   $   41,961   $    2,569   $    6,756   $  4,806
TA IDEX Templeton Great
   Companies Global             $  108,650   $   442,256   $   22,327   $   16,111   $   22,374   $  3,273
TA IDEX Transamerica Balanced   $  125,227   $   618,806   $  348,953   $   19,119   $   23,915   $ 37,187
TA IDEX Transamerica
   High-Yield Bond              $   81,594   $   626,505   $  286,578   $   15,360   $   15,769   $  8,824
TA IDEX Transamerica
   Convertible Securities       $   11,381   $   191,582   $   34,730   $    2,053   $    4,817   $  5,126
TA IDEX Transamerica Equity     $  136,859   $   386,988   $   27,797   $   20,381   $   13,428   $  4,103
TA IDEX Transamerica Flexible
   Income                       $   38,002   $   338,553   $  305,116   $    6,639   $   10,622   $ 30,950
TA IDEX Transamerica Growth
   Opportunities                $  119,321   $   551,401   $   76,803   $   17,549   $   27,436   $  8,609
TA IDEX Transamerica Money
   Market                       $       --   $   484,309   $   22,095   $       --   $       --   $ (2,505)
TA IDEX Transamerica
   Short-Term Bond(3)                  N/A           N/A          N/A          N/A          N/A        N/A
TA IDEX Transamerica
   Small/Mid Cap Value          $  151,775   $   717,768   $  125,363   $   23,076   $   30,690   $ 10,542
TA IDEX Transamerica Value
   Balanced                     $   56,147   $   210,615   $   55,214   $    9,144   $   10,752   $  5,380
TA IDEX UBS Large Cap
   Value(3)                            N/A           N/A          N/A          N/A          N/A        N/A
TA IDEX Van Kampen Emerging
   Markets Debt(3)                     N/A           N/A          N/A          N/A          N/A        N/A
TA IDEX Van Kampen Mid-Cap
   Growth(4)                           N/A           N/A          N/A          N/A          N/A        N/A
TA IDEX Van Kampen Small
   Company Growth(3)                   N/A           N/A          N/A          N/A          N/A        N/A


(1)  TA IDEX AllianceBernstein International Value, TA IDEX Federated Market
     Opportunity, TA IDEX JPMorgan International Bond, TA IDEX Mercury Global
     Allocation, TA IDEX Neuberger Berman International and TA IDEX Oppenheimer
     Developing Markets commenced operations on December 6, 2005, and as such
     there is no historical fee information.

(2)  TA IDEX Evergreen Health Care previously operated as TA IDEX T. Rowe Price
     Health Sciences. The fund changed its name on March 1, 2006.

(3)  TA IDEX Evergreen International Small Cap, TA IDEX Marsico International
     Growth, TA IDEX Transamerica Short-Term Bond, TA IDEX UBS Large Cap Value,
     TA IDEX Van Kampen Emerging Markets Debt and TA IDEX Van Kampen Small
     Company Growth commenced operations on November 8, 2004, and as such there
     is no historical fee information.

(4)  TA IDEX Multi-Manager International Fund and TA IDEX Van Kampen Mid-Cap
     Growth commenced operations on March 1, 2006 and January 3, 2006
     respectively, and as such there is no historical fee information.


                                       44


(5)  TA IDEX J.P. Morgan Mid Cap Value and TA IDEX Mercury Large Cap Value
     commenced operations on March 1, 2005, and as such there is no historical
     fee information for fiscal years ended October 31, 2004 and October 31,
     2003.

For the Period Ended October 31, 2005:



                                           NET UNDERWRITING   COMPENSATION ON
                                             DISCOUNTS AND     REDEMPTIONS &     BROKERAGE        OTHER
                                              COMMISSIONS       REPURCHASES     COMMISSIONS   COMPENSATION
                                           ----------------   ---------------   -----------   ------------
                                                                                  
TA IDEX AllianceBernstein
   International Value(1)                            N/A                N/A          N/A              N/A
TA IDEX American Century International        $    5,195         $   45,951         $  0      $   432,767
TA IDEX American Century Large Company
   Value                                      $    5,396         $   50,624         $  0      $ 1,287,684
TA IDEX Asset Allocation-Conservative
   Portfolio                                  $  323,137         $  619,725         $  0      $  (915,783)
TA IDEX Asset Allocation-Growth
   Portfolio                                  $  652,775         $  838,714         $  0      $(2,631,057)
TA IDEX Asset Allocation-Moderate
   Growth Portfolio                           $1,448,031         $1,573,647         $  0      $(5,465,998)
TA IDEX Asset Allocation-Moderate
   Portfolio                                  $  801,897         $1,171,657         $  0      $(2,830,325)
TA IDEX Clarion Global Real Estate
   Securities                                 $   15,591         $   22,802         $  0      $   390,922
TA IDEX Evergreen Health Care(2)              $    3,583         $   17,867          N/A      $   554,041
TA IDEX Evergreen International Small
   Cap(3)                                            N/A                N/A          N/A      $   214,995
TA IDEX Federated Market Opportunity(1)              N/A                N/A          N/A              N/A
TA IDEX Great Companies - America(SM)         $    7,261         $  259,035         $  0      $   401,069
TA IDEX Great Companies - Technology(SM)      $    3,286         $   17,102         $  0      $   264,295
TA IDEX Multi-Manager International
   Fund(4)                                           N/A                N/A          N/A              N/A
TA IDEX Janus Growth                          $   85,937         $  393,891         $  0      $ 2,263,638
TA IDEX Jennison Growth                       $    4,536         $   86,645         $  0      $   396,105
TA IDEX JPMorgan International Bond(1)               N/A                N/A          N/A              N/A
TA IDEX J.P. Morgan Mid Cap Value(5)                 N/A                N/A          N/A      $   311,978
TA IDEX Marsico Growth                        $   10,524         $   57,114         $N/A      $   360,430
TA IDEX Marsico International Growth(3)              N/A                N/A          N/A      $   198,174
TA IDEX Mercury Global Allocation(1)                 N/A                N/A          N/A      $   614,633
TA IDEX Mercury Large Cap Value(5)                   N/A                N/A          N/A              N/A
TA IDEX Neuberger Berman
   International(1)                                  N/A                N/A          N/A              N/A
TA IDEX Oppenheimer Developing
   Markets(1)                                        N/A                N/A          N/A              N/A
TA IDEX PIMCO Real Return TIPS                $   13,682         $   37,092         $  0      $   955,910
TA IDEX PIMCO Total Return                    $    5,131         $   90,666         $  0      $   544,054
TA IDEX Protected Principal Stock                    N/A         $  220,014          N/A      $   267,730
TA IDEX Salomon All Cap                       $   18,204         $  428,291         $  0      $ 1,655,796
TA IDEX Salomon Investors Value               $    3,622         $   36,757         $  0      $   948,910



                                       45





                                           NET UNDERWRITING   COMPENSATION ON
                                             DISCOUNTS AND     REDEMPTIONS &     BROKERAGE        OTHER
                                              COMMISSIONS       REPURCHASES     COMMISSIONS   COMPENSATION
                                           ----------------   ---------------   -----------   ------------
                                                                                  
TA IDEX T. Rowe Price Small Cap               $    5,929         $   30,766         $  0      $   186,863
TA IDEX T. Rowe Price Tax-Efficient
   Growth                                     $    2,569         $   28,750         $  0      $    99,420
TA IDEX Templeton Great Companies
   Global                                     $   16,111         $  193,342         $  0      $ 1,658,651
TA IDEX Transamerica Balanced                 $   19,120         $  356,481         $  0      $ 1,227,469
TA IDEX Transamerica High-Yield Bond          $   15,360         $  224,157         $  0      $ 1,304,196
TA IDEX Transamerica Convertible
   Securities                                 $    2,053         $   26,887         $  0      $   676,661
TA IDEX Transamerica Equity                   $   20,381         $   92,418         $  0      $   901,385
TA IDEX Transamerica Flexible Income          $    6,639         $  139,505         $  0      $   638,593
TA IDEX Transamerica Growth
   Opportunities                              $   17,549         $  166,746         $  0      $ 1,091,933
TA IDEX Transamerica Money Market             $       --         $  159,430         $  0      $   489,656
TA IDEX Transamerica Short-Term Bond(3)              N/A                N/A          N/A      $   188,413
TA IDEX Transamerica Small/Mid Cap
   Value                                      $   23,076         $  121,669         $  0      $ 1,327,381
TA IDEX Transamerica Value Balanced           $    9,144         $   62,318         $  0      $   248,904
TA IDEX UBS Large Cap Value(3)                       N/A                N/A          N/A      $   132,629
TA IDEX Van Kampen Emerging Markets
   Debt(3)                                           N/A                N/A          N/A      $   174,164
TA IDEX Van Kampen Mid-Cap Growth(4)                 N/A                N/A          N/A              N/A
TA IDEX Van Kampen Small Company
   Growth(3)                                         N/A                N/A          N/A      $    97,073


- ----------
(1)  TA IDEX AllianceBernstein International Value, TA IDEX Federated Market
     Opportunity, TA IDEX JP Morgan International Bond, TA IDEX Mercury Global
     Allocation, TA IDEX Neuberger Berman International and TA IDEX Oppenheimer
     Developing Markets commenced operations on December 6, 2005, and as such
     there is no historical fee information.

(2)  TA IDEX Evergreen Health Care previously operated as TA IDEX T. Rowe Price
     Health Sciences. The fund changed its name on March 1, 2006.

(3)  TA IDEX Evergreen International Small Cap, TA IDEX Marsico International
     Growth, TA IDEX Transamerica Short-Term Bond, TA IDEX UBS Large Cap Value,
     TA IDEX Van Kampen Emerging Markets Debt and TA IDEX Van Kampen Small
     Company Growth commenced operations on November 8, 2004, and as such there
     is no historical fee information.

(4)  TA IDEX Multi-Manager International Fund and TA IDEX Van Kampen Mid-Cap
     Growth commenced operations on March 2, 2006 and January 3, 2006
     respectively, and as such there is no historical fee information.

(5)  TA IDEX J.P. Morgan Mid Cap Value and TA IDEX Mercury Large Cap Value
     commenced operations on March 1, 2005, and as such there is no historical
     fee information for fiscal years ended October 31, 2004 and October 31,
     2003.

                             ADMINISTRATIVE SERVICES

TFAI is responsible for the supervision of all of the administrative functions,
providing office space, and paying its allocable portion of the salaries, fees
and expenses of all fund officers and of those trustees who are affiliated with
TFAI. The costs and expenses, including legal and accounting fees, filing fees
and printing costs in connection with the formation of a fund and the
preparation and filing of a fund's initial registration statements under the
1933 Act and 1940 Act are also paid by the adviser. Transamerica IDEX has
entered into an Administrative Services Agreement ("Administrative Agreement")
with Transamerica Fund Services, Inc. ("TFS") on behalf of each fund. Under the
Administrative Agreement, TFS carries out and supervises all of the
administrative functions of the funds and incurs expenses payable by
Transamerica IDEX related to such functions. On January 1, 2005, certain funds
entered into an agreement wherein the funds would pay 0.02% of their daily net
assets to TFS for such administrative services; effective January 1, 2006, this
fee was reduced to 0.0125% for the asset allocation funds. From July 1, 2002 to
December 31, 2004, the administrator received 0.015% of a fund's daily net
assets subject to a minimum fee calculated at $35,000 multiplied by the weighted
average number of funds.


                                       46


The administrative duties of TFS with respect to each fund include: providing
the fund with office space, telephones, office equipment and supplies; paying
the compensation of the fund's officers for services rendered as such;
supervising and assisting in preparation of annual and semi-annual reports to
shareholders, notices of dividends, capital gain distributions and tax
information; supervising compliance by the fund with the recordkeeping
requirements under the 1940 Act and regulations thereunder and with the state
regulatory requirements; maintaining books and records of the fund (other than
those maintained by the fund's custodian and transfer agent); preparing and
filing tax returns and reports; monitoring and supervising relationships with
the fund's custodian and transfer agent; monitoring the qualifications of tax
deferred retirement plans providing for investment in shares of each fund;
authorizing expenditures and approving bills for payment on behalf of each fund;
and providing executive, clerical and secretarial help needed to carry out its
duties.

The funds paid the following administrative expenses for the fiscal years ended
October 31, 2005, 2004, and 2003.

                               ADMINISTRATIVE FEES



FUND                                                     2005       2004       2003
- ----                                                   --------   --------   -------
                                                                    
TA IDEX AllianceBernstein International Value(1)            N/A        N/A       N/A
TA IDEX American Century International                 $ 27,572   $ 35,436   $35,430
TA IDEX American Century Large Company Value           $ 79,050   $ 16,988   $31,300
TA IDEX Asset Allocation - Conservative Portfolio      $ 80,935   $ 50,244   $37,115
TA IDEX Asset Allocation - Growth Portfolio            $169,051   $ 77,938   $37,415
TA IDEX Asset Allocation - Moderate Growth Portfolio   $329,180   $148,272   $37,475
TA IDEX Asset Allocation - Moderate Portfolio          $227,343   $117,483   $38,095
TA IDEX Clarion Global Real Estate Securities          $ 25,924   $ 20,100   $22,300
TA IDEX Evergreen Health Care(2)                       $ 61,338   $ 22,412   $31,300
TA IDEX Evergreen International Small Cap(3)                N/A        N/A       N/A
TA IDEX Federated Market Opportunity(1)                     N/A        N/A       N/A
TA IDEX Great Companies -- America(SM)                 $ 20,974   $ 23,884   $30,850
TA IDEX Great Companies -- Technology(SM)              $ 16,755   $ 21,693   $28,450
TA IDEX Multi-Manager International Fund(4)                 N/A        N/A       N/A
TA IDEX Janus Growth                                   $214,649   $160,197   $32,500
TA IDEX Jennison Growth                                $ 20,707   $ 16,818   $30,600
TA IDEX JPMorgan International Bond(1)                      N/A        N/A       N/A
TA IDEX J.P. Morgan Mid Cap Value(5)                   $ 20,149        N/A       N/A
TA IDEX Marsico Growth                                 $ 22,368   $ 14,590   $32,500
TA IDEX Marsico International Growth(3)                $ 56,112        N/A       N/A
TA IDEX Mercury Global Allocation(1)                        N/A        N/A       N/A
TA IDEX Mercury Large Cap Value(5)                     $ 39,280        N/A       N/A
TA IDEX Neuberger Berman International(1)                   N/A        N/A       N/A
TA IDEX Oppenheimer Developing Markets(1)                   N/A        N/A       N/A
TA IDEX PIMCO Real Return TIPS                         $109,861   $ 42,159   $28,115
TA IDEX PIMCO Total Return                             $ 30,117   $ 21,719   $36,055
TA IDEX Protected Principal Stock                      $ 10,022   $ 15,273   $37,575
TA IDEX Salomon All Cap                                $ 87,685   $ 89,314   $31,300
TA IDEX Salomon Investors Value                        $ 56,088   $ 56,971   $31,800
TA IDEX T. Rowe Price Small Cap                        $ 11,400   $ 24,489   $32,080
TA IDEX T. Rowe Price Tax-Efficient Growth             $  4,960   $ 11,553   $36,250
TA IDEX Templeton Great Companies Global               $ 96,903   $ 57,283   $33,648
TA IDEX Transamerica Balanced                          $ 52,978   $ 47,495   $39,850
TA IDEX Transamerica High-Yield Bond                   $ 83,065   $ 53,757   $31,800
TA IDEX Transamerica Convertible Securities            $ 42,627   $ 31,106   $32,375
TA IDEX Transamerica Equity                            $ 59,338   $ 25,137   $36,365
TA IDEX Transamerica Flexible Income                   $ 51,607   $ 26,301   $30,300
TA IDEX Transamerica Growth Opportunities              $ 64,975   $ 43,641   $35,705
TA IDEX Transamerica Money Market                      $ 37,803   $ 31,245   $31,275
TA IDEX Transamerica Short-Term Bond(3)                $ 38,292        N/A       N/A
TA IDEX Transamerica Small/Mid Cap Value               $ 82,728   $ 49,592   $33,300
TA IDEX Transamerica Value Balanced                    $ 14,481   $ 15,212   $38,185
TA IDEX UBS Large Cap Value(3)                         $ 24,584        N/A       N/A
TA IDEX Van Kampen Emerging Markets Debt(3)            $ 25,836        N/A       N/A
TA IDEX Van Kampen Mid-Cap Growth(4)                        N/A        N/A       N/A
TA IDEX Van Kampen Small Company Growth(3)             $ 14,692        N/A       N/A



                                       47



(1)  TA IDEX AllianceBernstein International Value, TA IDEX Federated Market
     Opportunity, TA IDEX JPMorgan International Bond, TA IDEX Mercury Global
     Allocation, TA IDEX Neuberger Berman International and TA IDEX Oppenheimer
     Developing Markets commenced operations on December 6, 2005, and as such
     there is no historical fee information.

(2)  TA IDEX Evergreen Health Care previously operated as TA IDEX T. Rowe Price
     Health Sciences. The fund changed its name on March 1, 2006.

(3)  TA IDEX Evergreen International Small Cap, TA IDEX Marsico International
     Growth, TA IDEX Transamerica Short-Term Bond, TA IDEX UBS Large Cap Value,
     TA IDEX Van Kampen Emerging Markets Debt and TA IDEX Van Kampen Small
     Company Growth commenced operations on November 8, 2004, and as such there
     is no historical fee information for fiscal years ended October 31, 2004
     and October 31, 2003.

(4)  TA IDEX Multi-Manager International Fund and TA IDEX Van Kampen Mid-Cap
     Growth commenced operations on March 1, 2006 and January 3, 2006,
     RESPECTIVELY, and as such there is no historical fee information.

(5)  TA IDEX J.P. Morgan Mid Cap Value and TA IDEX Mercury Large Cap Value
     commenced operations on March 1, 2005, and as such there is no historical
     fee information for fiscal years ended October 31, 2004 and October 31,
     2003.

                 CUSTODIAN, TRANSFER AGENT AND OTHER AFFILIATES

Investors Bank & Trust Company ("IBT"), 200 Clarendon Street, 16th Floor,
Boston, MA 02116, is custodian for Transamerica IDEX. The custodian is not
responsible for any of the investment policies or decisions of a fund, but holds
its assets in safekeeping, and collects and remits the income thereon subject to
the instructions of the funds.

Transamerica Fund Services, Inc. ("TFS"), 570 Carillon Parkway, St. Petersburg,
Florida 33716, is the transfer agent, withholding agent and dividend disbursing
agent for each fund. TFS is directly owned by Western Reserve (44%) and AUSA
(56%), both of which are indirect wholly owned subsidiaries of AEGON N.V. and
thus TFS is an affiliate of TFAI. Each fund pays the transfer agent an annual
per-account charge of $19.60 for each Open Account and $1.50 for each Closed
Account. There is no new account charge.

Transaction requests should be mailed to Transamerica IDEX Mutual Funds, P.O.
Box 219945, Kansas City, MO 64121-9945 or Transamerica IDEX Mutual Funds, 330 W.
9th Street, Kansas City, MO 64105 (for overnight mail).

IBT is a provider of data processing and recordkeeping services for TFS. Each
fund may use another affiliate of IBT as introducing broker for certain
portfolio transactions as a means to reduce expenses through a credit against
transfer agency fees with regard to commissions earned by such affiliate. (See
"Fund Transactions and Brokerage.") There were no brokerage credits received for
the periods ended October 31, 2005, 2004 and 2003.

                              TRANSFER AGENCY FEES



                                                        FEES AND EXPENSES NET OF BROKERAGE
                                                           CREDITS FOR THE PERIOD ENDED
                                                       ------------------------------------
                                                                    OCTOBER 31
FUND                                                      2005         2004         2003
- ----                                                   ----------   ----------   ----------
                                                                        
TA IDEX AllianceBernstein International Value(1)              N/A          N/A          N/A
TA IDEX American Century International                 $  246,072   $  207,738   $  281,663
TA IDEX American Century Large Company Value           $  120,876   $  118,857   $  176,820
TA IDEX Asset Allocation - Conservative Portfolio      $  433,272   $  261,305   $  191,895
TA IDEX Asset Allocation - Growth Portfolio            $1,324,719   $  772,677   $  278,025
TA IDEX Asset Allocation - Moderate Growth Portfolio   $2,074,643   $1,310,961   $  590,435
TA IDEX Asset Allocation - Moderate Portfolio          $1,169,092   $  839,210   $  452,160
TA IDEX Clarion Global Real Estate Securities          $   51,851   $   19,755   $   33,500
TA IDEX Evergreen Health Care(2)                       $   50,892   $   28,101   $   30,640
TA IDEX Evergreen International Small Cap(3)           $    2,043          N/A          N/A
TA IDEX Federated Market Opportunity(1)                       N/A          N/A          N/A
TA IDEX Great Companies -- America(SM)                 $  369,107   $  385,899   $  466,206
TA IDEX Great Companies -- Technology(SM)              $  111,687   $  109,286   $  143,316
TA IDEX Multi-Manager International Fund(4)                   N/A          N/A          N/A
TA IDEX Janus Growth                                   $2,979,491   $4,054,492   $4,628,337
TA IDEX Jennison Growth                                $  229,108   $  238,433   $  315,824
TA IDEX JPMorgan International Bond(1)                        N/A          N/A          N/A
TA IDEX J.P. Morgan Mid Cap Value(5)                   $      860          N/A          N/A
TA IDEX Marsico Growth                                 $  156,652   $  125,758   $  146,115



                                       48





                                                        FEES AND EXPENSES NET OF BROKERAGE
                                                           CREDITS FOR THE PERIOD ENDED
                                                       ------------------------------------
                                                                    OCTOBER 31
FUND                                                      2005         2004         2003
- ----                                                   ----------   ----------   ----------
                                                                        
TA IDEX Marsico International Growth(3)                $    2,033          N/A          N/A
TA IDEX Mercury Global Allocation(1)                          N/A          N/A          N/A
TA IDEX Mercury Large Cap Value(5)                     $      860          N/A          N/A
TA IDEX Neuberger Berman International(1)                     N/A          N/A          N/A
TA IDEX Oppenheimer Developing Markets(1)                     N/A          N/A          N/A
TA IDEX PIMCO Real Return TIPS                         $   35,375   $   13,469   $   33,930
TA IDEX PIMCO Total Return                             $   94,923   $  108,381   $  172,960
TA IDEX Protected Principal Stock                      $   38,628   $   38,464   $  113,575
TA IDEX Salomon All Cap                                $  847,237   $  864,861   $1,159,079
TA IDEX Salomon Investors Value                        $  154,283   $  133,664   $  181,175
TA IDEX T. Rowe Price Small Cap                        $  144,179   $  135,077   $  167,395
TA IDEX T. Rowe Price Tax-Efficient Growth             $   90,552   $   94,638   $  127,160
TA IDEX Templeton Great Companies Global               $1,234,817   $1,471,960   $2,216,789
TA IDEX Transamerica Balanced                          $  672,426   $  783,812   $1,130,216
TA IDEX Transamerica High-Yield Bond                   $  203,032   $  188,665   $  250,467
TA IDEX Transamerica Convertible Securities            $   27,953   $   21,419   $   31,230
TA IDEX Transamerica Equity                            $  814,357   $  455,369   $   60,715
TA IDEX Transamerica Flexible Income                   $  174,695   $  224,543   $  355,847
TA IDEX Transamerica Growth Opportunities              $1,093,486   $1,047,061   $  905,240
TA IDEX Transamerica Money Market                      $  441,546   $  605,240   $  708,310
TA IDEX Transamerica Short-Term Bond(3)                $    2,050          N/A          N/A
TA IDEX Transamerica Small/Mid Cap Value               $  297,644   $  254,598   $  312,415
TA IDEX Transamerica Value Balanced                    $  222,235   $  195,426   $  151,830
TA IDEX UBS Large Cap Value(3)                         $    2,050          N/A          N/A
TA IDEX Van Kampen Emerging Markets Debt(3)            $    2,033          N/A          N/A
TA IDEX Van Kampen Mid-Cap Growth(4)                          N/A          N/A          N/A
TA IDEX Van Kampen Small Company Growth(3)             $    2,070          N/A          N/A


- ----------
(1)  TA IDEX AllianceBernstein International Value, TA IDEX Federated Market
     Opportunity, TA IDEX JPMorgan International Bond, TA IDEX Mercury Global
     Allocation, TA IDEX Neuberger Berman International and TA IDEX Oppenheimer
     Developing Markets commenced operations on December 6, 2005, and as such
     there is no historical fee information.

(2)  TA IDEX Evergreen Health Care previously operated as TA IDEX T. Rowe Price
     Health Sciences. The fund changed its name on March 1, 2006.

(3)  TA IDEX Evergreen International Small Cap, TA IDEX Marsico International
     Growth, TA IDEX Transamerica Short-Term Bond, TA IDEX UBS Large Cap Value,
     TA IDEX Van Kampen Emerging Markets Debt and TA IDEX Van Kampen Small
     Company Growth commenced operations on November 8, 2004, and as such there
     is no historical fee information for fiscal years ended October 31, 2004
     and October 31, 2003.

(4)  TA IDEX Multi-Manager International Fund and TA IDEX Van Kampen Mid-Cap
     Growth commenced operations on March 1, 2006 and January 3, 2006,
     RESPECTIVELY, and as such there is no historical fee information.

(5)  TA IDEX J.P. Morgan Mid Cap Value and TA IDEX Mercury Large Cap Value
     commenced operations on March 1, 2005, and as such there is no historical
     fee information for fiscal years ended October 31, 2004 and October 31,
     2003.

                         FUND TRANSACTIONS AND BROKERAGE

Decisions as to the assignment of fund business for each of the funds and
negotiation of commission rates are made by a fund's sub-adviser, whose policy
is to obtain the "best execution" of all fund transactions. The Investment
Advisory Agreement and Investment Counsel Agreement/Sub-Advisory Agreement for
each fund specifically provide that in placing portfolio transactions for a
fund, the fund's sub-adviser may agree to pay brokerage commissions for
effecting a securities transaction in an amount higher than another broker or
dealer would have charged for effecting that transaction as authorized, under
certain circumstances, by the Securities Exchange Act of 1934, as amended (the
"1934 Act").

In selecting brokers and dealers and in negotiating commissions, a fund's
sub-adviser may consider a number of factors, including but not limited to:

     The sub-adviser's knowledge of currently available negotiated commission
     rates or prices of securities and other current transaction costs;

     The nature of the security being traded;

     The size and type of the transaction;


                                       49


     The nature and character of the markets for the security to be purchased or
     sold;

     The desired timing of the trade;

     The activity existing and expected in the market for the particular
     security;

     The quality of the execution, clearance and settlement services;

     Financial stability;

     The existence of actual or apparent operational problems of any broker or
     dealer; and

     Research products and services provided.

In recognition of the value of the foregoing factors, the sub-adviser may place
portfolio transactions with a broker with whom it has negotiated a commission
that is in excess of the commission another broker would have charged for
effecting that transaction. This is done if the sub-adviser determines in good
faith that such amount of commission was reasonable in relation to the value of
the brokerage and research provided by such broker viewed in terms of either
that particular transaction or of the overall responsibilities of the
sub-adviser. Research provided may include:

     Furnishing advice, either directly or through publications or writings, as
     to the value of securities, the advisability of purchasing or selling
     specific securities and the availability of securities or purchasers or
     sellers of securities;

     Furnishing seminars, information, analyses and reports concerning issuers,
     industries, securities, trading markets and methods, legislative
     developments, changes in accounting practices, economic factors and trends
     and portfolio strategy;

     Access to research analysts, corporate management personnel, industry
     experts, economists and government officials; and

     Comparative performance evaluation and technical measurement services and
     quotation services, and other services (such as third party publications,
     reports and analyses, and computer and electronic access, equipment,
     software, information and accessories that deliver process or otherwise
     utilize information, including the research described above) that assist
     the sub-adviser in carrying out its responsibilities.

Most of the brokers and dealers used by the funds' sub-advisers provide research
and other services described above.

A sub-adviser may use research products and services in servicing other accounts
in addition to the funds. If a sub-adviser determines that any research product
or service has a mixed use, such that it also serves functions that do not
assist in the investment decision-making process, a sub-adviser may allocate the
costs of such service or product accordingly. The portion of the product or
service that a sub-adviser determines will assist it in the investment
decision-making process may be paid for in brokerage commission dollars. Such
allocation may be a conflict of interest for a sub-adviser.

When a fund purchases or sells a security in the over-the-counter market, the
transaction takes place directly with a principal market-maker without the use
of a broker, except in those circumstances where better prices and executions
will be achieved through the use of a broker.

A sub-adviser may place transactions for the purchase or sale of portfolio
securities with affiliates of TFAI, AFSG or the sub-adviser, including
InterSecurities, Inc., AEGON USA Securities, Inc. or DST Securities, Inc. A
sub-adviser may place transactions if it reasonably believes that the quality of
the transaction and the associated commission are fair and reasonable, and if
overall the associated transaction costs, net of any credits described above
under "Custodian, Transfer Agent and Other Affiliates," are lower than those
that would otherwise be incurred. Under rules adopted by the SEC, Transamerica
IDEX's Board of Trustees will conduct periodic compliance reviews of such
brokerage allocations and review certain procedures adopted by the Board of
Trustees to ensure compliance with these rules and to determine their continued
appropriateness.

Merrill Lynch has received an exemptive order from the SEC permitting TA IDEX
Mercury Global Allocation and TA IDEX Mercury Large Cap Value to lend portfolio
securities to Merrill Lynch or its affiliates. Pursuant to that order, these
funds have retained an affiliated entity of the sub-adviser as the securities
lending agent for a fee, including a fee based on a share of the returns on
investment of cash collateral. In connection with securities lending activities,
the lending agent may, on behalf of these funds invest cash collateral received
by these funds for such


                                       50



loans, among other things, in a private investment company managed by the
lending agent or in registered money market funds advised by the sub-adviser or
its affiliates, or in private investment company managed by the lending agent.
If these funds acquire shares in either the private investment company or an
affiliated money market fund, shareholders would bear both their proportionate
share of the funds expenses, and indirectly, the expense of such other entities.
However, in accordance with the exemptive order, the sub-adviser to the private
investment company will not charge any advisory fees with respect to shares
purchased by these funds. Such shares also will not be subject to a sales load,
redemption fee, distribution fee or service fee, or in the case of the shares of
an affiliated money market fund, the payment of any such sales load, redemption
fee, distribution fee or service fee will be offset the sub-adviser's waiver of
a portion of its sub-advisory fee.

DIRECTED BROKERAGE

A sub-adviser to a fund, to the extent consistent with the best execution and
with TFAI's usual commission rate policies and practices, may place portfolio
transactions of the fund with broker/dealers with which the fund has established
a Directed Brokerage Program. A Directed Brokerage Program is any arrangement
under which a broker/dealer applies a portion of the commissions received by
such broker/dealer on the fund's portfolio transactions to the payment of
operating expenses that would otherwise be borne by the fund. These commissions
are not used for promoting or selling fund shares or otherwise related to the
distribution of fund shares.

                              BROKERAGE COMMISSIONS



                                                                               TA IDEX       TA IDEX        TA IDEX
                                TA IDEX          TA IDEX        TA IDEX         ASSET         ASSET          ASSET
BROKERAGE COMMISSIONS      ALLIANCEBERNSTEIN     AMERICAN       AMERICAN    ALLOCATION -  ALLOCATION -    ALLOCATION -
PAID (INCLUDING              INTERNATIONAL       CENTURY     CENTURY LARGE  CONSERVATIVE     GROWTH     MODERATE GROWTH
AFFILIATED BROKERAGE)           VALUE(1)      INTERNATIONAL  COMPANY VALUE   PORTFOLIO      PORTFOLIO      PORTFOLIO
- -------------------------  -----------------  -------------  -------------  ------------  ------------  ---------------
                                                                                      
October 31, 2005                  N/A           $  490,857      $159,698         N/A           N/A            N/A
October 31, 2004                  N/A           $1,020,329      $ 97,047         N/A           N/A            N/A
October 31, 2003                  N/A           $  537,878      $ 94,692         N/A           N/A            N/A
AFFILIATED BROKERAGE PAID
October 31, 2005                  N/A           $   14,858      $    129         N/A           N/A            N/A
October 31, 2004                  N/A           $        0      $      0         N/A           N/A            N/A
October 31, 2003                  N/A           $   17,311      $      2         N/A           N/A            N/A




                           TA IDEX ASSET  TA IDEX CLARION   TA IDEX      TA IDEX         TA IDEX       TA IDEX
BROKERAGE COMMISSIONS       ALLOCATION -    GLOBAL REAL    EVERGREEN    EVERGREEN       FEDERATED       GREAT
PAID (INCLUDING               MODERATE         ESTATE        HEALTH   INTERNATIONAL      MARKET      COMPANIES -
AFFILIATED BROKERAGE)        PORTFOLIO       SECURITIES     CARE(2)    SMALL CAP(3)  OPPORTUNITY(1)  AMERICA(SM)
- -------------------------  -------------  ---------------  ---------  -------------  --------------  -----------
                                                                                   
October 31, 2005                N/A           $234,222      $748,821     $738,428          N/A         $206,334
October 31, 2004                N/A           $263,317      $307,128          N/A          N/A         $ 65,027
October 31, 2003                N/A           $194,883      $ 95,604          N/A          N/A         $165,530
AFFILIATED BROKERAGE PAID
October 31, 2005                N/A           $      0      $      0     $      0          N/A         $      0
October 31, 2004                N/A           $      0      $      0          N/A          N/A         $      0
October 31, 2003                N/A           $      0      $      0          N/A          N/A         $      0




                               TA IDEX        TA IDEX                                       TA IDEX       TA IDEX
BROKERAGE COMMISSIONS          GREAT       MULTI-MANAGER                                    JPMORGAN    J.P. MORGAN
PAID (INCLUDING              COMPANIES -   INTERNATIONAL     TA IDEX        TA IDEX      INTERNATIONAL    MID CAP
AFFILIATED BROKERAGE)      TECHNOLOGY(SM)     FUND(4)     JANUS GROWTH  JENNISON GROWTH     BOND(1)       VALUE(5)
- -------------------------  --------------  -------------  ------------  ---------------  -------------  -----------
                                                                                      
October 31, 2005              $208,636          N/A        $1,163,357       $186,909          N/A         $162,962
October 31, 2004              $131,753          N/A        $1,387,343       $215,796          N/A              N/A
October 31, 2003              $104,653          N/A        $1,648,358       $378,404          N/A              N/A
AFFILIATED BROKERAGE PAID
October 31, 2005              $      0          N/A        $        0       $    646          N/A         $      0
October 31, 2004              $      0          N/A        $        0       $      0          N/A              N/A
October 31, 2003              $      0          N/A        $        0       $    235          N/A              N/A



                                       51





                                              TA IDEX                                                             TA IDEX
BROKERAGE COMMISSIONS                         MARSICO         TA IDEX          TA IDEX       TA IDEX NEUBERGER  OPPENHEIMER
PAID (INCLUDING               TA IDEX      INTERNATIONAL  MERCURY GLOBAL  MERCURY LARGE CAP        BERMAN        DEVELOPING
AFFILIATED BROKERAGE)      MARSICO GROWTH    GROWTH(3)     ALLOCATION(1)       VALUE(5)       INTERNATIONAL(1)   MARKETS(1)
- -------------------------  --------------  -------------  --------------  -----------------  -----------------  -----------
                                                                                              
October 31, 2005              $167,295       $1,602,401         N/A            $121,522             N/A             N/A
October 31, 2004              $137,057              N/A         N/A                 N/A             N/A             N/A
October 31, 2003              $173,100              N/A         N/A                 N/A             N/A             N/A
AFFILIATED BROKERAGE PAID
October 31, 2005              $      0       $        0         N/A            $      0             N/A             N/A
October 31, 2004              $      0              N/A         N/A                 N/A             N/A             N/A
October 31, 2003              $    247              N/A         N/A                 N/A             N/A             N/A




BROKERAGE COMMISSIONS        TA IDEX      TA IDEX        TA IDEX                           TA IDEX         TA IDEX
PAID (INCLUDING             PIMCO REAL  PIMCO TOTAL     PROTECTED         TA IDEX          SALOMON      T. ROWE PRICE
AFFILIATED BROKERAGE)      RETURN TIPS     RETURN    PRINCIPAL STOCK  SALOMON ALL CAP  INVESTORS VALUE    SMALL CAP
- -------------------------  -----------  -----------  ---------------  ---------------  ---------------  -------------
                                                                                      
October 31, 2005             $11,794       $3,358        $35,493         $1,044,185        $486,804        $115,095
October 31, 2004             $ 1,286       $  118        $50,203         $1,060,995        $655,297        $146,535
October 31, 2003             $    64       $  525        $     0         $  661,448        $368,613        $ 97,569
AFFILIATED BROKERAGE PAID
October 31, 2005             $     0       $    0        $     0         $   18,798        $ 23,331        $      0
October 31, 2004             $     0       $    0        $70,856         $        0        $      0        $      0
October 31, 2003             $     0       $    0        $     0         $   10,100        $ 20,550        $      0




                              TA IDEX                                                        TA IDEX
BROKERAGE COMMISSIONS      T. ROWE PRICE       TA IDEX         TA IDEX        TA IDEX      TRANSAMERICA     TA IDEX
PAID (INCLUDING            TAX-EFFICIENT   TEMPLETON GREAT  TRANSAMERICA   TRANSAMERICA    CONVERTIBLE   TRANSAMERICA
AFFILIATED BROKERAGE)          GROWTH     COMPANIES GLOBAL    BALANCED    HIGH-YIELD BOND   SECURITIES      EQUITY
- -------------------------  -------------  ----------------  ------------  ---------------  ------------  ------------
                                                                                       
October 31, 2005              $ 3,693        $  719,882       $ 82,941            0           $60,003      $225,112
October 31, 2004              $ 2,434        $1,067,791       $318,998            0           $54,792      $222,593
October 31, 2003              $26,905        $   64,702       $326,630          410           $60,148      $126,623
AFFILIATED BROKERAGE PAID
October 31, 2005              $     0        $        0       $      0            0           $     0      $      0
October 31, 2004              $     0        $        0       $      0            0           $     0      $      0
October 31, 2003              $     0        $        0       $      0            0           $     0      $      0




                                               TA IDEX                      TA IDEX       TA IDEX        TA IDEX
BROKERAGE COMMISSIONS          TA IDEX       TRANSAMERICA     TA IDEX    TRANSAMERICA   TRANSAMERICA  TRANSAMERICA
PAID (INCLUDING              TRANSAMERICA       GROWTH     TRANSAMERICA   SHORT-TERM   SMALL/MID CAP      VALUE
AFFILIATED BROKERAGE)      FLEXIBLE INCOME  OPPORTUNITIES  MONEY MARKET     BOND(3)        VALUE        BALANCED
- -------------------------  ---------------  -------------  ------------  ------------  -------------  ------------
                                                                                    
October 31, 2005                $    0         $583,922         N/A           N/A        $  640,805      $57,518
October 31, 2004                $  480         $479,466         N/A           N/A        $1,302,881      $62,524
October 31, 2003                $1,153         $393,042         N/A           N/A        $  822,570      $20,519
AFFILIATED BROKERAGE PAID
October 31, 2005                $    0         $      0         N/A           N/A        $        0      $     0
October 31, 2004                $    0         $      0         N/A           N/A        $        0      $     0
October 31, 2003                $    0         $      0         N/A           N/A        $        0      $     0




BROKERAGE COMMISSIONS         TA IDEX            TA IDEX             TA IDEX            TA IDEX
PAID (INCLUDING            UBS LARGE CAP  VAN KAMPEN EMERGING  VAN KAMPEN MID-CAP  VAN KAMPEN SMALL
AFFILIATED BROKERAGE)         VALUE(3)      MARKETS DEBT(3)         GROWTH(4)      COMPANY GROWTH(3)
- -------------------------  -------------  -------------------  ------------------  -----------------
                                                                       
October 31, 2005              $198,075            N/A                  N/A              $230,370
October 31, 2004                   N/A            N/A                  N/A                   N/A
October 31, 2003                   N/A            N/A                  N/A                   N/A
AFFILIATED BROKERAGE PAID
October 31, 2005              $ 10,410            N/A                  N/A              $ 10,091
October 31, 2004                   N/A            N/A                  N/A                   N/A
October 31, 2003                   N/A            N/A                  N/A                   N/A



                                       52


(1)  TA IDEX AllianceBernstein International Value, TA IDEX Federated Market
     Opportunity, TA IDEX JPMorgan International Bond, TA IDEX Mercury Global
     Allocation, TA IDEX Neuberger Berman International and TA IDEX Oppenheimer
     Developing Markets commenced operations on December 6, 2005, and as such
     there is no historical fee information.

(2)  TA IDEX Evergreen Health Care previously operated as TA IDEX T. Rowe Price
     Health Sciences. The fund changed its name on March 1, 2006.

(3)  TA IDEX Evergreen International Small Cap, TA IDEX Marsico International
     Growth, TA IDEX Transamerica Short-Term Bond, TA IDEX UBS Large Cap Value,
     TA IDEX Van Kampen Emerging Markets Debt and TA IDEX Van Kampen Small
     Company Growth commenced operations on November 8, 2004, and as such there
     is no historical fee information for fiscal years ended October 31,2004 and
     October 31,2003.

(4)  TA IDEX Multi-Manager International Fund commenced operations on March 1,
     2006 and TA IDEX Van Kampen Mid-Cap Growth commenced operations on January
     3, 2006, and as such there is no historical fee information.

(5)  TA IDEX J.P. Morgan Mid Cap Value and TA IDEX Mercury Large Cap Value
     commenced operations on March 1, 2005, and as such there is no historical
     fee information for fiscal years ended October 31, 2004 and October 31,
     2003.

The following table provides brokerage commissions that were directed to brokers
for brokerage and research services provided during the fiscal year ended
October 31, 2005.



 TA IDEX ALLIANCEBERNSTEIN    TA IDEX AMERICAN CENTURY    TA IDEX AMERICAN CENTURY    TA IDEX ASSET ALLOCATION
  INTERNATIONAL VALUE(1)            INTERNATIONAL            LARGE COMPANY VALUE      - CONSERVATIVE PORTFOLIO
- --------------------------   --------------------------   ------------------------   -------------------------
                                                                            
            N/A                        $28,675                      $6,997                      N/A




                              TA IDEX ASSET ALLOCATION
TA IDEX ASSET ALLOCATION -        - MODERATE GROWTH       TA IDEX ASSET ALLOCATION     TA IDEX CLARION GLOBAL
     GROWTH PORTFOLIO                 PORTFOLIO             - MODERATE PORTFOLIO       REAL ESTATE SECURITIES
- --------------------------   --------------------------   ------------------------   -------------------------
                                                                            
            N/A                          N/A                         N/A                      $97,691




 TA IDEX EVERGREEN HEALTH         TA IDEX EVERGREEN       TA IDEX FEDERATED MARKET   TA IDEX GREAT COMPANIES -
          CARE(2)            INTERNATIONAL SMALL CAP(3)        OPPORTUNITY(1)               AMERICA(SM)
- --------------------------   --------------------------   ------------------------   -------------------------
                                                                            
         $122,838                     $208,861                       N/A                      $67,188




 TA IDEX GREAT COMPANIES -      TA IDEX MULTI-MANAGER
      TECHNOLOGY(SM)            INTERNATIONAL FUND(4)       TA IDEX JANUS GROWTH      TA IDEX JENNISON GROWTH
- --------------------------   --------------------------   ------------------------   -------------------------
                                                                            
          $60,413                        N/A                       $18,063                    $20,492




     TA IDEX JPMORGAN          TA IDEX J.P. MORGAN MID                                    TA IDEX MARSICO
   INTERNATIONAL BOND(1)            CAP VALUE(5)           TA IDEX MARSICO GROWTH     INTERNATIONAL GROWTH(3)
- --------------------------   --------------------------   ------------------------   -------------------------
                                                                            
            N/A                          $0                        $12,290                     $6,772




  TA IDEX MERCURY GLOBAL      TA IDEX MERCURY LARGE CAP   TA IDEX NEUBERGER BERMAN      TA IDEX OPPENHEIMER
       ALLOCATION(1)                  VALUE(5)                INTERNATIONAL(1)         DEVELOPING MARKETS(1)
- --------------------------   --------------------------   ------------------------   -------------------------
                                                                            
            N/A                          $0                          N/A                        N/A




 TA IDEX PIMCO REAL RETURN                                    TA IDEX PROTECTED
           TIPS              TA IDEX PIMCO TOTAL RETURN        PRINCIPAL STOCK        TA IDEX SALOMON ALL CAP
- --------------------------   --------------------------   ------------------------   -------------------------
                                                                            
            $0                           $0                          $0                       $118,706




 TA IDEX SALOMON INVESTORS      TA IDEX T. ROWE PRICE       TA IDEX T. ROWE PRICE     TA IDEX TEMPLETON GREAT
           VALUE                      SMALL CAP             TAX-EFFICIENT GROWTH          COMPANIES GLOBAL
- --------------------------   --------------------------   ------------------------   -------------------------
                                                                            
          $9,465                       $4,340                        $44                      $227,577




   TA IDEX TRANSAMERICA         TA IDEX TRANSAMERICA        TA IDEX TRANSAMERICA        TA IDEX TRANSAMERICA
         BALANCED                  HIGH-YIELD BOND         CONVERTIBLE SECURITIES              EQUITY
- --------------------------   --------------------------   ------------------------   -------------------------
                                                                            
          $31,677                        N/A                       $45,993                    $112,567




   TA IDEX TRANSAMERICA         TA IDEX TRANSAMERICA        TA IDEX TRANSAMERICA        TA IDEX TRANSAMERICA
      FLEXIBLE INCOME           GROWTH OPPORTUNITIES            MONEY MARKET             SHORT-TERM BOND(3)
- --------------------------   --------------------------   ------------------------   -------------------------
                                                                            
            N/A                        $94,650                       N/A                        N/A




   TA IDEX TRANSAMERICA         TA IDEX TRANSAMERICA               TA IDEX              VAN KAMPEN EMERGING
    SMALL/MID CAP VALUE            VALUE BALANCED          UBS LARGE CAP VALUE(3)         MARKETS DEBT(3)
- --------------------------   --------------------------   ------------------------   -------------------------
                                                                            
          $78,327                      $3,030                      $20,857                      N/A



                                       53


                                                                            
          TA IDEX                      TA IDEX
    VAN KAMPEN MID-CAP        VAN KAMPEN SMALL COMPANY
         GROWTH(4)                    GROWTH(3)
- --------------------------   --------------------------
          N/A                         $100,798



(1)  TA IDEX AllianceBernstein International Value, TA IDEX Federated Market
     Opportunity, TA IDEX JPMorgan International Bond, TA IDEX Mercury Global
     Allocation, TA IDEX Neuberger Berman International and TA IDEX Oppenheimer
     Developing Markets commenced operations on December 6, 2005, and as such
     there is no historical fee information.

(2)  TA IDEX Evergreen Health Care previously operated as TA IDEX T. Rowe Price
     Health Sciences. The fund changed its name on March 1, 2006.

(3)  TA IDEX Evergreen International Small Cap, TA IDEX Marsico International
     Growth, TA IDEX Transamerica Short-Term Bond, TA IDEX UBS Large Cap Value,
     TA IDEX Van Kampen Emerging Markets Debt and TA IDEX Van Kampen Small
     Company Growth commenced operations on November 8, 2004, and as such there
     is no historical fee information for fiscal years ended October 31, 2004
     and October 31, 2003.

(4)  TA IDEX Multi-Manager International Fund commenced operations on March 1,
     2006 and TA IDEX Van Kampen Mid-Cap Growth commenced operations on January
     3, 2006, and as such there is no historical fee information.

(5)  TA IDEX J.P. Morgan Mid Cap Value and TA IDEX Mercury Large Cap Value
     commenced operations on March 1, 2005, and as such there is no historical
     fee information for fiscal years ended October 31, 2004 and October 31,
     2003.

                              TRUSTEES AND OFFICERS

The Trustees and executive officers of Transamerica IDEX are listed below. The
Board of Trustees governs each fund and is responsible for protecting the
interests of the shareholders. The Trustees are experienced executives who meet
periodically throughout the year to oversee the business affairs of each fund
and the operation of Transamerica IDEX by its officers. The Board also reviews
the management of each fund's assets by the investment adviser and its
respective sub-adviser. Transamerica IDEX is part of a Fund Complex which
consists of Transamerica IDEX, AEGON/Transamerica Series Trust ("ATST"), and
Transamerica Income Shares, Inc. ("TIS"), and consists of 89 funds/portfolios as
of the date of this SAI.

Each Trustee holds office for an indefinite term until the earlier of (1) the
next meeting of shareholders at which Trustees are elected and until his or her
successor is elected and qualified; or (2) a Trustee resigns, is replaced or his
or her term as a Trustee is terminated in accordance with Transamerica IDEX's
Declaration of Trust. The executive officers are elected and appointed by the
Trustees and hold office until they resign, are removed, or are otherwise
disqualified to serve.



                                         TERM OF
                                          OFFICE
                                           AND                                                            NUMBER OF
                                          LENGTH                                                           FUNDS IN
                                         OF TIME                                                           COMPLEX         OTHER
NAME, ADDRESS AND AGE        POSITION    SERVED*        PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS        OVERSEEN   DIRECTORSHIPS
- ---------------------        --------    -------        -------------------------------------------       ---------   -------------
                                                                                                       
INTERESTED TRUSTEES**

Brian C. Scott               Trustee,    2002 -    Trustee, President & CEO (2002-present), ATST;             89           N/A
4333 Edgewood Rd. NE         President   present   Manager, Transamerica Investment Management, LLC
Cedar Rapids, IA 52499       & CEO                 (TIM) (2002-2005); President & Director,
(DOB 9/29/43)                                      Transamerica Index Funds, Inc. (TIF)
                                                   (2002-2004); Director, President & CEO  Transamerica
                                                   Fund Advisors, Inc. (TFAI) (2001-present); Director
                                                   & CEO Transamerica Fund Services, Inc. (TFS)
                                                   (2002-present); CEO, Transamerica Investors, Inc.
                                                   (TII) (2003-present); Director, President & CEO
                                                   Endeavor Management Co. (2001-2002)

INDEPENDENT TRUSTEES

Peter R. Brown               Chairman,   1986 -    Chairman & Trustee, ATST (1986-present);  Director,        89           N/A
8323 40th Place North        Trustee     present   TIS (2002-present); Director, TIF 2002-2004)
St. Petersburg, FL 33709                           Chairman of the Board, Peter Brown
(DOB 5/10/28)                                      Construction Company (1963- 2000); Rear
                                                   Admiral (Ret.) U.S. Navy Reserve, Civil Engineer
                                                   Corps



                                       54



                                                                                                       
Charles C. Harris            Trustee     1994 -    Trustee, ATST (1986-present); Director, TIS                89           N/A
2 Seaside Lane, #304                     present   (2002-present)
Belleair Bluffs, FL  33770
(DOB 1/15/30)

Russell A. Kimball, Jr.      Trustee     2002 -    Trustee, ATST (1986-present); Director, TIS                89           N/A
1160 Gulf Boulevard                      present   (2002-present); General Manager, Sheraton Sand Key
Clearwater Beach, FL 34630                         Resort (1975 - present)
(DOB 8/17/44)

William W. Short, Jr.        Trustee     1986 -    Trustee, ATST (2000-present); Director, TIS                89           N/A
7882 Lantana Creek Road                  present   (2002-present); Retired CEO and Chairman of the
Largo, FL 33777                                    Board, Shorts, Inc.
(DOB 2/25/36)

Daniel Calabria              Trustee     1996 -    Trustee, ATST (2001-present); Director, TIS                89           N/A
7068 S. Shore Drive S.                   present   (2002-present); Trustee, Florida Tax Free Funds
South Pasadena, FL 33707                           (1993-2004)
(DOB 3/05/36)

Robert L. Anderson, Ph.D.    Trustee     2005 -    Dean, Professor, College of Business, University of        46           N/A
3301 Bayshore Blvd., #1408               present   South Florida (1995 - present)
Tampa, FL 33629
(DOB 10/30/40)

Janice B. Case               Trustee     2002 -    Trustee, ATST (2001-present); Director, TIS                89      Central
205 Palm Island NW                       present   (2002-present); Senior Vice President, Florida Power               Vermont
Clearwater, FL 33767                               Corporation, 1996-2000, Director, Central Vermont                  Public
(DOB 9/27/52)                                      Public Service Corp 2001-present, Director, Western                Service Co.
                                                   Electricity Coordinating Council, 2002-present, Director,
                                                   Candence Network, Inc. 1997-2004, Trustee, Morton Plant
                                                   Mease Healthcare 1999-2005, Director Arts
                                                   Center & Theatre 2001-present

Norm R. Nielsen              Trustee     2006 -    Trustee, ATST (2006-present); Director, TIS                89      Iowa Student
9687 Cypress Hammock, #201               present   (2006-present); President, Kirkwood Community                      Loan
Bonita Springs, FL 34135                           College (1985-2005); Director, Iowa Health Systems                 Liquidity
(DOB 5/11/39)                                      (1994-2003); Director, Iowa City Area Development                  Corporation
                                                                                                                      (1998 -
                                                                                                                      present);
                                                                                                                      Buena Vista
                                                                                                                      University
                                                                                                                      Board
                                                                                                                      of Trustees
                                                                                                                      (2004-present)

Jack E. Zimmerman            Trustee     1986 -    Retired Director, Regional Marketing of Marietta           46           N/A
6778 Rosezita Lane                       present   Corporation & Director of Strategic Planning, Martin
Dayton, OH 45459                                   Marietta Baltimore Aerospace
(DOB 2/3/28)

Leo J. Hill                  Trustee     2002 -    Trustee, ATST (2001-present); Director, TIS                89           N/A
7922 Bayou Club Boulevard                present   (2002-present); Owner & President, Prestige
Largo, FL 33777                                    Automotive Group (2001 - 2005)
(DOB 3/27/56)

John W. Waechter             Trustee     2005 -    Trustee, ATST (2004-present); Director, TIS                89           N/A
5913 Bayview Circle                      present   (2004-present); Executive Vice President, Chief
Gulfport, FL 33707                                 Financial Officer, Chief Compliance Officer, William
(DOB 2/25/52)                                      R. Hough & Co. (1979-2004); Treasurer, The Hough
                                                   Group of Funds (1993-2004)




                                       55


OFFICERS



                                                   TERM OF OFFICE
                                                         AND
 NAME, ADDRESS***                                  LENGTH OF TIME                      PRINCIPAL OCCUPATION(S) OR
      AND AGE                  POSITION              SERVED****                      EMPLOYMENT DURING PAST 5 YEARS
- ------------------   ---------------------------   --------------   ----------------------------------------------------------------
                                                           
John K. Carter       Senior Vice                   1999 - present   Sr. Vice President, General Counsel, Secretary & Chief
(DOB 4/24/61)        President, General Counsel,                    Compliance Officer, ATST (1999-present) & TIS (2002-present);
                     Secretary & Chief                              Sr. Vice President, General Counsel & Secretary, TIF (2002);
                     Compliance Officer                             Director, Sr. Vice President, General Counsel, & Secretary, TFAI
                                                                    (2000-present) & TFS (2001-present); Chief Compliance Officer,
                                                                    TFAI Officer (2004-present); Vice President, AFSG Securities
                                                                    Corporation (AFSG) (2001-present); Sr. Vice President, General
                                                                    Counsel, Secretary & Chief Compliance Officer, TII
                                                                    (2003-present); Vice President, Transamerica Investment
                                                                    Services, Inc. (TISI) (2003-2005) & TIM (2001-2005)

Glenn E. Brightman   Vice President, Treasurer &   2005 - present   Vice President and Principal Financial Officer, ATST, TII; Vice
(DOB 12/01/72)       Principal Financial Officer                    President, TFS, TFAI (2005-present); Manager - Mutual Fund
                                                                    Accounting, The Vanguard Group, Inc. (1996-2005)


*    Each Trustee serves an indefinite term until he or she is removed, reaches
     mandatory retirement age, resigns or becomes incapacitated.

**   May be deemed an "interested person" (as that term is defined in the 1940
     Act) of TA IDEX because of his employment with TFAI or an affiliate of
     TFAI.

***  The business address of each officer is 570 Carillon Parkway, St.
     Petersburg, FL 33716. No officer of Transamerica IDEX, except for the Chief
     Compliance Officer, receives any compensation from Transamerica IDEX.

**** Elected and serves at the pleasure of the Board of Trustees of Transamerica
     IDEX.

COMMITTEES OF THE BOARD

The Trustees are responsible for major decisions relating to each fund's
objective, policies and techniques. They review investment decisions, although
they do not actively participate on a regular basis in making such decisions.
The Board of Trustees has seven standing committees that each perform
specialized functions: an Audit, Nominating, Valuation Oversight, Governance,
Contract Review, Compensation, Marketing Oversight and Proxy Voting Committees.
Each committee is composed of members who are Independent Trustees.



                                                                                                                  NUMBER OF MEETINGS
                                                                                                                   HELD DURING LAST
                                                                                                                      FISCAL YEAR
   COMMITTEE                               FUNCTIONS                                        MEMBERS                   10/31/2005
   ---------                               ---------                                        -------               -----------------
                                                                                                         
AUDIT             The Audit Committee reviews the financial reporting             John Waechter, Chairman;                 5
                  process, the system of internal control, the audit              Janice Case; Charles Harris;
                  process, and the Transamerica IDEX process for monitoring       Daniel Calabria; Leo Hill;
                  compliance with investment restrictions and applicable          Peter Brown; William Short,
                  laws and the Transamerica IDEX Code of Ethics.                  Jr. and Russell Kimball, Jr.

NOMINATING        The Nominating Committee operates under a written charter.      Peter Brown, Chairman; Daniel            1
                  The Nominating Committee nominates and evaluates                Calabria; Charles Harris;
                  Independent Trustee candidates. The Nominating Committee        William Short, Jr. and
                  meets periodically, as necessary, and met twice Nuring          Russell Kimball, Jr.
                  Transamerica IDEX's most recently completed fiscal year.
                  While the nominating Committee is solely responsible for
                  the selection and Nomination of potential candidates to
                  serve on the Board, the Nominating Committee may consider
                  nominations from shareholders of the funds. Shareholders
                  may submit for the Nominating Committee's consideration,
                  recommendations regarding potential nominees for service
                  on the Board. Each eligible shareholder or shareholder
                  group may



                                       56





                                                                                                                  NUMBER OF MEETINGS
                                                                                                                   HELD DURING LAST
                                                                                                                      FISCAL YEAR
   COMMITTEE                               FUNCTIONS                                        MEMBERS                   10/31/2005
   ---------                               ---------                                        -------               -----------------
                                                                                                         
                  submit no more than one nominee each calendar year.

                  In order for the Nominating Committee to consider
                  shareholder submissions, the following requirements, among
                  others, must be satisfied regarding the nominee: the
                  nominee must satisfy all qualifications provided in
                  Transamerica IDEX's organizational documents, including
                  qualification as a possible Independent Director/Trustee
                  if the nominee is to serve in that capacity; the nominee
                  may not be the nominating shareholder, a member of the
                  nominating shareholder group or a member of the immediate
                  family of the nominating shareholder or any member of the
                  nominating shareholder group; neither the nominee nor any
                  member of the nominee's immediate family may be currently
                  employed or employed within the year prior to the
                  nomination by any nominating shareholder entity or entity
                  in a nominating shareholder group; neither the nominee nor
                  any immediate family member of the nominee is permitted to
                  have accepted directly or indirectly, during the year of
                  the election for which the nominee's name was submitted,
                  during the immediately preceding calendar year, or during
                  the year when the nominee's name was submitted, any
                  consulting, advisory, or other compensatory fee from the
                  nominating shareholder or any member of a nominating
                  shareholder group; the nominee may not be an executive
                  officer, director/trustee or person fulfilling similar
                  functions of the nominating shareholder or any member of
                  the nominating shareholder group, or of an affiliate of
                  the nominating shareholder or any such member of the
                  nominating shareholder group; the nominee may not control
                  the nominating shareholder or any member of the nominating
                  shareholder group (or, in the case of a holder or member
                  that is a fund, an interested person of such holder or
                  member as defined by Section 2(a)(19) of the 1940 Act);
                  and a shareholder or shareholder group may not submit for
                  consideration a nominee which has previously been
                  considered by the Nominating Committee.

                  In addition, in order for the Nominating Committee to
                  consider shareholder submissions, the following
                  requirements must be satisfied regarding the shareholder
                  or shareholder group submitting the proposed nominee: any
                  shareholder or shareholder group submitting a proposed
                  nominee must beneficially own, either individually or in
                  the aggregate, more than 5% of a fund's (or a series
                  thereof) securities that are eligible to vote both at the
                  time of submission of the nominee and at the



                                       57





                                                                                                                  NUMBER OF MEETINGS
                                                                                                                   HELD DURING LAST
                                                                                                                      FISCAL YEAR
   COMMITTEE                               FUNCTIONS                                        MEMBERS                   10/31/2005
   ---------                               ---------                                        -------               -----------------
                                                                                                         
                  time of the Board member election (each of the securities
                  used for purposes of calculating this ownership must have
                  been held continuously for at least two years as of the date
                  of the nomination); in addition, such securities must
                  continue to be held through the date of the meeting and the
                  nominating shareholder or shareholder group must also bear
                  the economic risk of the investment; and the nominating
                  shareholder or shareholder group must also submit a
                  certification which provides the number of shares which the
                  person or group has (a) sole power to vote or direct the
                  vote, (b) shared power to vote or direct the vote, (c) sole
                  power to dispose or direct the disposition of such shares,
                  and (d) shared power to dispose or direct the disposition of
                  such shares (in addition the certification shall provide that
                  the shares have been held continuously for at least two
                  years).

                  In assessing the qualifications of a potential candidate
                  for membership on the Board, the Nominating Committee may
                  consider the candidate's potential contribution to the
                  operation of the Board and its committees, and such other
                  factors as it may deem relevant.

COMPENSATION      Reviews compensation arrangements for each Trustee.             Janice Case and Charles                  1
                                                                                  Harris, Co-Chairs; Peter
                                                                                  Brown; Daniel Calabria;
                                                                                  Russell Kimball, Jr.; Leo
                                                                                  Hill; William Short, Jr.;
                                                                                  Jack Zimmerman; Robert
                                                                                  Anderson; Norm Nielsen
                                                                                  and John Waechter

VALUATION         Oversees the process by which the funds calculate their net     Leo Hill, Chairman; Charles              4
OVERSIGHT         asset value to verify consistency with the funds' valuation     Harris; Robert Anderson and
                  policies and procedures, industry guidance, interpretative      William Short, Jr.
                  positions issued by the SEC and its staff, and industry best
                  practices.

PROXY VOTING      Provides the fund's consent to vote in matters where the        Russell Kimball, Jr.,                    1
                  Adviser or Sub-Adviser seeks such consent because of a          Chairman; William Short, Jr.
                  conflict of interest that arises in connection with a           and Leo Hill
                  particular vote, or for other reasons. The Proxy Voting
                  Committee also may review the Adviser's and each
                  Sub-Adviser's proxy voting policies and procedures in lieu of
                  submission of the policies and procedures to the entire Board
                  for approval.

GOVERNANCE        Provides oversight responsibilities and monitors certain        Daniel Calabria, Chairman;               1
                  issues, in consultation with the CCO and independent            William Short, Jr.; Russell
                  trustees' counsel, that affect the duties of independent        Kimball, Jr. and Leo Hill
                  members of the Board.



                                       58


                                                                                                         
CONTRACT REVIEW   Reviews contracts between or among the funds and their     Russell Kimball, Jr., Chairman;               1
                  service providers. Oversight responsibilities for the      Daniel Calabria; Jack Zimmerman
                  process of evaluating new contracts, reviewing existing    and Janice Case
                  contracts on a periodic basis and making recommendations
                  to the Board with respect to any contracts affecting the
                  funds.

MARKETING         Oversees the marketing efforts on behalf of the funds.     Robert Anderson, Chairman and                 0
OVERSIGHT                                                                    Janice Case



TRUSTEE OWNERSHIP OF EQUITY SECURITIES

The table below gives the dollar range of shares of Transamerica IDEX, as well
as the aggregate dollar range of shares of all funds advised and sponsored by
TFAI (collectively, the "Fund Complex"), owned by each Trustee as of December
31, 2005:



                                                      AGGREGATE DOLLAR RANGE OF EQUITY SECURITIES
                                                         IN ALL REGISTERED INVESTMENT COMPANIES
                             DOLLAR RANGE OF EQUITY        OVERSEEN BY TRUSTEES IN FAMILY OF
NAME OF TRUSTEE              SECURITIES IN THE FUND               INVESTMENT COMPANIES
- ---------------              ----------------------   -------------------------------------------
                                                
Robert L. Anderson(1)                  -0-                                -0-
Peter R. Brown(2)                 Over $100,000                      Over $100,000
Daniel Calabria(2)                Over $100,000                      Over $100,000
Janice B. Case                         -0-                                -0-
Charles C. Harris(2)              Over $100,000                      Over $100,000
Leo J. Hill(2)                    Over $100,000                      Over $100,000
Russell A. Kimball, Jr.(2)        Over $100,000                      Over $100,000
Brian C. Scott*                   Under 100,000                      Under 100,000
William W. Short, Jr.             Over $100,000                      Over $100,000
Jack E. Zimmerman                 Over $100,000                      Over $100,000
John W. Waechter                  Over $100,000                      Over $100,000
Norm R. Nielsen(3)                     -0-                                -0-


*    Interested Trustees as defined in the 1940 Act due to employment with a
     TFAI affiliate.

(1)  Mr. Anderson did not become a Trustee until September 2005.

(2)  A portion of the dollar range of equity securities in the fund for this
     Trustee consists of allocations made under the fund's deferred compensation
     plan. The deferred compensation amounts are based on the value of Class A
     shares of the fund elected by such Trustee (without the imposition of the
     sales charge).

(3)  Mr. Nielsen did not become a Trustee until May 2006.

CONFLICTS OF INTEREST

The following table sets forth information as of December 31, 2005 about
securities owned beneficially or of record by each Independent Trustee or
members of his or her immediate family, representing interests in the Investment
Adviser, sub-advisers or Distributor of the fund, or any person controlling,
controlled by or under common control with such persons. For this purpose,
"immediate family member" includes the Trustee's spouse, children residing in
the Trustee's household and dependents of the Trustee.



                                NAME OF OWNERS AND                  TITLE OF      VALUE OF
NAME OF TRUSTEE              RELATIONSHIPS TO TRUSTEE     COMPANY     CLASS      SECURITIES    PERCENT OF CLASS
- ---------------           -----------------------------   -------   --------   -------------   ----------------
                                                                                
Peter R. Brown            N/A                             TA IDEX      N/A          N/A               N/A
Charles C. Harris         Mary A. Harris, Spouse          TA IDEX       T        $1-$10,000      Less than 1%
Russell A. Kimball, Jr.   Martha A. Kimball, Spouse       N/A          N/A          N/A               N/A
William W. Short, Jr.     Joyce J. Short, Spouse          TA IDEX       A        $1-$10,000      Less than 1%
Robert L. Anderson        N/A                             N/A          N/A          N/A               N/A
Daniel Calabria           N/A                             N/A          N/A          N/A               N/A
Janice B. Case            N/A                             N/A          N/A          N/A               N/A
Leo J. Hill               N/A                             N/A          N/A          N/A               N/A
Jack E. Zimmerman         Patricia A. Zimmerman, Spouse   TA IDEX       A      Over $100,000     Less than 1%
John W. Waechter          N/A                             N/A          N/A          N/A               N/A
Norm R. Nielsen           N/A                             N/A          N/A          N/A               N/A

(1)  Mr. Nielsen did not become a Trustee until May 2006.



                                       59



Disinterested Trustees receive a total annual retainer fee of $64,000 from the
TA IDEX funds, of which the funds pay a pro rata share allocable to each TA IDEX
fund based on the relative assets of the fund. The Chairman of the Board also
receives an additional retainer of $40,000 per year. Each Audit Committee member
receives an additional retainer of $6,000, except the audit committee financial
expert, whose additional retainer amounts to $10,000. Any fees and expenses paid
to Trustees who are affiliates of TFAI or AFSG are paid by TFAI and/or AFSG and
not by the funds.

Commencing on January 1, 1996, a non-qualified deferred compensation plan (the
"Plan") became available to Trustees who are not interested persons of the fund.
Under the Plan, compensation may be deferred that would otherwise be payable by
Transamerica IDEX and/or ATST to a Disinterested Trustee or Director on a
current basis for services rendered as Trustee or Director. Deferred
compensation amounts will accumulate based on the value of Class A shares of a
fund (without imposition of sales charge), as elected by the Trustee. It is not
anticipated that the Plan will have any material impact on the funds.

The following table provides compensation amounts paid to Disinterested Trustees
of the funds for the fiscal year ended October 31, 2005.

                               COMPENSATION TABLE



                                 AGGREGATE COMPENSATION   PENSION OR RETIREMENT                              TOTAL COMPENSATION PAID
                                 FROM TRANSAMERICA IDEX    BENEFITS ACCRUED AS    ESTIMATED ANNUAL BENEFIT    TO TRUSTEES FROM FUND
NAME OF PERSON, POSITION            MAUTUAL FUNDS(1)      PART OF FUND EXPENSES        UPON RETIREMENT              COMPLEX(2)
- ------------------------         ----------------------   ---------------------   ------------------------   -----------------------
                                                                                                 
Robert L. Anderson, Trustee(3)         $  9,000.00             $        --                   N/A                   $  9,000.00
Peter R. Brown, Trustee                $ 74,500.00             $        --                   N/A                   $193,750.00
Daniel Calabria, Trustee               $ 58,000.00             $ 41,200.00                   N/A                   $152,250.00
Janice Case, Trustee                   $ 60,500.00             $        --                   N/A                   $158,250.00
Charles C. Harris, Trustee             $ 60,500.00             $ 12,100.00                   N/A                   $158,250.00
Leo Hill, Trustee                      $ 60,500.00             $  3,600.00                   N/A                   $158,250.00
Russell Kimball, Trustee               $ 43,500.00             $ 43,500.00                   N/A                   $137,750.00
William W. Short, Jr., Trustee         $ 60,500.00             $        --                   N/A                   $158,250.00
Jack E. Zimmerman, Trustee             $ 34,500.00             $        --                   N/A                   $128,750.00
John W. Waechter(4)                    $ 46,000.00             $        --                   N/A                   $  46,00.00
Norm R. Nielsen(5)                         N/A                     N/A                       N/A                       N/A
                                       -----------             -----------                                         -----------
Total:                                 $507,500.00             $100,400.00                                         $300,500.00
                                       ===========             ===========                                         ===========


(1)  Of this aggregate compensation, the total amounts deferred (including
     earnings) and accrued for the benefit of the participating Trustees for the
     year ended October 31, 2005 were as follows: Peter R. Brown, $1,159; Daniel
     Calabria, $41,465; William W. Short, Jr., $82; Charles C. Harris, $12,100;
     Russell A. Kimball, Jr., $58,836; Janice B. Case, $0; Leo J. Hill, $8,480;
     Jack E. Zimmerman, $0, Robert L. Anderson, $0, and John W. Waechter, $0.

(2)  The Fund Complex currently consists of Transamerica IDEX, ATST and TIS.

(3)  Mr. Anderson did not become a Trustee until September 2005.

(4)  Mr. Waechter did not become a Trustee until February 2005.

(5)  Mr. Nielsen did not become a Trustee until May 2006.

A Trustee who is an Independent Trustee may elect to serve as Trustee Emeritus
of the Trust upon his or her voluntary resignation as Trustee, provided such
person has served at least five years as Trustee of the Trust. While serving as
such, a Trustee shall be entitled to receive a fee per annum equal to 50% of the
retainer as paid to the Independent Trustees of the Trust. In addition, a
Trustee Emeritus will receive reimbursement of actual and reasonable expenses
incurred for attendance at Board meetings. A Trustee Emeritus who served as
Chairman of the Board will also receive 50% of the additional retainer that is
designed for the position of Chairman.

During the fiscal year ended October 31, 2005, the TA IDEX funds paid $626,415
in Trustees' fees and expenses. As of December 31, 2005, the trustees and
officers held in the aggregate less than 1% of the outstanding shares of each of
the TA IDEX funds.

           SHAREHOLDER COMMUNICATION PROCEDURES WITH BOARD OF TRUSTEES

The Board of Trustees of the funds has adopted these procedures by which
shareholders of the funds may send written communications to the Board.
Shareholders may mail written communications to the Board, addressed to the care
of the Secretary of the funds ("Secretary"), as follows:


                              60


                                        Board of Trustees
                                        Transamerica IDEX Mutual Funds
                                        c/o Secretary
                                        570 Carillon Parkway
                                        St. Petersburg, Florida 33716

Each shareholder communication must: (i) be in writing and be signed by the
shareholder; (ii) identify the fund to which it relates; and (iii) identify the
class (if applicable) held by the shareholder. The Secretary is responsible for
collecting, reviewing and organizing all properly submitted shareholder
communications. With respect to each properly submitted shareholder
communication, the Secretary shall either (i) provide a copy of the
communication to the Board at the next regularly scheduled Board meeting; or
(ii) if the Secretary determines that the communication requires more immediate
attention, forward the communication to the Board promptly after receipt. The
Secretary may, in good faith, determine that a shareholder communication should
not be provided to the Board because the communication (i) does not reasonably
relate to a fund or its operation, management, activities, policies, service
providers, Board, officers, shareholders or other matters relating to an
investment in a fund; or (ii) is ministerial in nature (such as a request for
fund literature, share data or financial information).

                               DEALER REALLOWANCES

CLASS A, CLASS B, CLASS C AND CLASS M SHARES ONLY (NOT APPLICABLE TO CLASS I OR
CLASS R SHARES).

Transamerica IDEX sells shares of its funds both directly and through authorized
dealers. When you buy shares, your fund receives the entire NAV of the shares
you purchase. AFSG keeps the sales charge, then "reallows" a portion to the
dealers through which shares were purchased. This is how dealers are
compensated. From time to time, and particularly in connection with sales that
are not subject to a sales charge, AFSG may enter into agreements with a broker
or dealer whereby the dealer reallowance is less than the amounts indicated in
the following tables.

Promotions may also involve non-cash incentives such as prizes or merchandise.
Non-cash compensation may also be in the form of attendance at seminars
conducted by AFSG, including lodging and travel expenses, in accordance with the
rules of the NASD.

Reallowances may also be given to financial institutions to compensate them for
their services in connection with Class A share sales and servicing of
shareholder accounts.

                        CLASS A SHARE DEALER REALLOWANCES
  (all funds except TA IDEX Transamerica Flexible Income, TA IDEX Transamerica
    High-Yield Bond, TA IDEX Transamerica Convertible Securities and TA IDEX
                           Transamerica Money Market)



                                            REALLOWANCE TO
                                          DEALERS AS A % OF
AMOUNT OF PURCHASE                          OFFERING PRICE
- ------------------                        -----------------
                                       
Under $50 Thousand                                 4.75%
   $50 Thousand to under $100 Thousand             4.00%
   $100 Thousand to under $250 Thousand            2.75%
   $250 Thousand to under $500 Thousand            2.25%
   $500 Thousand to under $1 Million               1.75%
For purchases of $1 Million and above:
   $1 Million to under $5 Million                 1.00%*
   $5 Million to under $50 Million           Plus 0.50%*
   $50 Million and above                     Plus 0.25%*



                                       61



                        CLASS A SHARE DEALER REALLOWANCES
(TA IDEX Transamerica Flexible Income, TA IDEX Transamerica High-Yield Bond and
                  TA IDEX Transamerica Convertible Securities)



                                            REALLOWANCE TO
                                          DEALERS AS A % OF
AMOUNT OF PURCHASE                          OFFERING PRICE
- ------------------                        ----------------
                                       
Under $50 Thousand                                4.00%
   $50 Thousand to under $100 Thousand            3.25%
   $100 Thousand to under $250 Thousand           2.75%
   $250 Thousand to under $500 Thousand           1.75%
   $500 Thousand to under $1 Million              1.00%
For purchases of $1 Million and above:
   $1 Million to under $5 Million                 0.50%*
   $5 Million and above                      Plus 0.25%*


*    No Dealer Reallowance is paid on purchases made on behalf of wrap accounts
     for the benefit of certain broker-dealers, financial institutions, or
     financial planners who have entered into arrangements with TA IDEX or AFSG
     Securities Corporation, and for purchases made by a retirement plan
     described in Section 401(a), 401(k), 401(m), or 457 of the Internal
     Revenue Code.

                        CLASS B SHARE DEALER REALLOWANCES



                       REALLOWANCE TO
                     DEALERS AS A % OF
AMOUNT OF PURCHASE     OFFERING PRICE
- ------------------   -----------------
                  
All purchases              4.00%*


                        CLASS C SHARE DEALER REALLOWANCES



                       REALLOWANCE TO
                     DEALERS AS A % OF
AMOUNT OF PURCHASE     OFFERING PRICE
- ------------------   -----------------
                  
All purchases            1.00%**(a)


                        CLASS M SHARE DEALER REALLOWANCES
                       (TA IDEX Protected Principal Stock)



                       REALLOWANCE TO
                     DEALERS AS A % OF
AMOUNT OF PURCHASE     OFFERING PRICE
- ------------------   -----------------
                  
All purchases             0.00%**


                        CLASS T SHARE DEALER REALLOWANCES
                             (TA IDEX Janus Growth)



                                 REALLOWANCE TO
                               DEALERS AS A % OF
AMOUNT OF PURCHASE               OFFERING PRICE
- ------------------             -----------------
                            
Under $10,000                        7.00%
$10,000 to under $25,000             6.25%
$25,000 to under $50,000             5.50%
$50,000 to under $75,000             5.00%
$75,000 to under $100,000            4.25%
$100,000 to under $250,000           3.75%
$250,000 to under $500,000           2.50%
$500,000 to under $1,000,000         1.00%
$1,000,000 and over                  1.00%



                                       62


*    From time to time, AFSG may reallow to a dealer an amount less than 4% on
     sales of Class B shares. In such circumstances, AFSG will benefit directly
     to the extent the reallowance percentage is reduced below 4% on any
     purchase of Class B shares.

**   From time to time, AFSG may enter into agreements with brokers and dealers
     whereby the dealer allowance may be less than the amount indicated. Such
     agreements would also provide that the applicable shares could be subject
     to a contingent deferred sales charge for a period less than the otherwise
     applicable period

(a)  All shares designated as Class C2 shares on March 1, 2004 were converted to
     Class C shares on June 15, 2004. On September 24, 2004, Class M shares
     (except Class M shares of TA IDEX Protected Principal Stock) were converted
     into Class C shares.

Please note that Class A, B and C shares of the following funds are no longer
offered for sale: TA IDEX American Century International; TA IDEX American
Century Large Company Value; TA IDEX Clarion Global Real Estate Securities; TA
IDEX Jennison Growth; TA IDEX Marsico Growth; TA IDEX PIMCO Real Return TIPS; TA
IDEX PIMCO Total Return; TA IDEX Salomon Investors Value; TA IDEX Evergreen
Health Care; TA IDEX T. Rowe Price Small Cap; and TA IDEX T. Rowe Price
Tax-Efficient Growth.

                               DISTRIBUTION PLANS

CLASS A, CLASS B, CLASS C, CLASS M AND CLASS R SHARES ONLY (NOT APPLICABLE TO
CLASS I SHARES).

As stated in the prospectus under "Investment Advisory and Other Services," each
fund has adopted a separate Distribution Plan pursuant to Rule 12b-1 under the
1940 Act (individually, a "Plan" and collectively, the "Plans"), applicable to
Class A, Class B, Class C, Class M and Class R shares of the fund. This Plan is
structured as a Compensation Plan. CLASS T SHARES OF TA IDEX JANUS GROWTH ARE
NOT SUBJECT TO DISTRIBUTION AND SERVICE FEES.

In determining whether to approve the Distribution Plan and the Distribution
Agreements, the Trustees considered the possible advantages afforded
shareholders from adopting the Distribution Plans and Distribution Agreements.
The Trustees were informed by representatives of AFSG that reimbursements of
distribution-related expenses by the funds under the Distribution Plans would
provide incentives to AFSG to establish and maintain an enhanced distribution
system whereby new investors will be attracted to the funds. The Trustees
believe that improvements in distribution services should result in increased
sales of shares in the funds. In turn, increased sales are expected to lead to
an increase in a fund's net asset levels, which would enable the funds to
achieve economies of scale and lower their per-share operating expenses. In
addition, higher net asset levels could enhance the investment management of the
funds, for net inflows of cash from new sales may enable a fund's investment
adviser and sub-adviser to take advantage of attractive investment
opportunities. Finally, reduced redemptions could eliminate the potential need
to liquidate attractive securities positions in order to raise the capital
necessary to meet redemption requests.

Under the Plans for Class A shares (the "Class A Plans"), a fund may pay AFSG an
annual distribution fee of up to 0.35% and an annual service fee of up to 0.25%
of the average daily net assets of a fund's Class A shares; however, to the
extent that a fund pays service fees, the amount which a fund may pay as a
distribution fee is reduced accordingly so that the total fees payable under the
Class A Plan may not exceed on an annualized basis 0.35% of the average daily
net assets of a fund's Class A shares. Under the Plans for Class B shares (the
"Class B Plans"), a fund may pay AFSG an annual distribution fee of up to 0.75%
and an annual service fee of up to 0.25% of the average daily net assets of the
fund's Class B shares. Under the Plans for Class C shares (the "Class C Plans"),
a fund may pay AFSG an annual distribution fee of up to 0.75% and an annual
service fee of up to 0.25% of the average daily net assets of the fund's Class C
shares. Effective on or about the close of business on February 28, 2006, the
following funds ceased accepting new investments (other than reinvestment of
dividends and distributions) and ceased the payment by each class of shares of
the funds of Rule 12b-1 fees at least until March 1, 2007: TA IDEX American
Century International; TA IDEX American Century Large Company Value; TA IDEX
Clarion Global Real Estate Securities; TA IDEX Evergreen Health Care; TA IDEX
Jennison Growth; TA IDEX Marsico Growth; TA IDEX PIMCO Real Return TIPS; TA IDEX
PIMCO Total Return; TA IDEX Salomon Investors Value; TA IDEX T. Rowe Price Small
Cap; and TA IDEX T. Rowe Price Tax-Efficient Growth.

Under the Plans for Class R shares (the "Class R Plans"), a fund may pay AFSG an
annual distribution and service fee of up to 0.50% of the average daily net
assets of the fund's Class R shares.


                                       63



Under the Plans for Class M shares (TA IDEX Protected Principal Stock only) (the
"Class M Plan"), a fund may pay AFSG an annual distribution fee of up to 0.75%
and an annual service fee of up to 0.25% of the average daily net assets of the
fund's Class M shares; however, the total fee payable pursuant to the Class M
Plan may not, on an annualized basis, exceed 0.90% of the average daily net
assets of the fund's Class M shares.

AFSG may use the fees payable under the Class A, Class B, Class C, Class M and
Class R Plans as it deems appropriate to pay for activities or expenses
primarily intended to result in the sale of the Class A, Class B, Class C, Class
R or Class M shares, respectively, or in personal service to and/or maintenance
of these shareholder accounts. In the case of funds or classes of shares that
are closed to new investors or investments, AFSG also may use the fees payable
under these Plans to make payments to brokers and other financial intermediaries
for past sales and distribution efforts. For each class, these activities and
expenses may include, but are not limited to:

     Compensation to employees of AFSG;

     Compensation to and expenses of AFSG and other selected dealers who engage
     in or otherwise support the distribution of shares or who service
     shareholder accounts;

     In the case of a fund or a class of shares that is closed to new investors
     or investments, payment for services to and for maintenance of existing
     shareholder accounts and compensation of broker-dealers or other
     intermediaries for past sales and distribution efforts;

     The costs of printing and distributing prospectuses, statements of
     additional information and reports for other than existing shareholders;
     and

     The cost of preparing, printing and distributing sales literature and
     advertising materials.

Under the Plans, as required by Rule 12b-1, the Board of Trustees will review,
at least quarterly, a written report provided by AFSG of the amounts expended by
AFSG in distributing and servicing Class A, Class B, Class C, Class M or Class R
shares of the funds and the purpose for which such expenditures were made. For
so long as the Plans are in effect, selection and nomination of the Trustees who
are not interested persons of the fund shall be committed to the discretion of
the Trustees who are not interested persons of the fund.

A Plan may be terminated as to a class of shares of a fund at any time by vote
of a majority of the Disinterested Trustees, or by vote of a majority of the
outstanding voting securities of the applicable class. A Plan may be amended by
vote of the Trustees, including a majority of the Disinterested Trustees of the
fund that have no direct or indirect financial interest in the operation of the
Plan or any agreement relating thereto, cast in person at a meeting called for
that purpose. Any amendment of a Plan that would materially increase the costs
to a particular class of shares of a fund requires approval by the shareholders
of that class. A Plan will remain in effect for successive one year periods, so
long as such continuance is approved annually by vote of the fund's Trustees,
including a majority of the Disinterested Trustees, cast in person at a meeting
called for the purpose of voting on such continuance.

                                DISTRIBUTION FEES

CLASS A, CLASS B, CLASS C, CLASS M AND CLASS R SHARES ONLY (NOT APPLICABLE TO
CLASS I SHARES, WHICH DO NOT INCUR DISTRIBUTION FEES).

Total distribution expenses incurred by AFSG for the costs of promotion and
distribution with respect to Class A, B, C and M shares for the funds for the
fiscal year ended October 31, 2005 were as follows (please note that as the
Class R Plans were not offered until after October 31, 2005, there is no expense
information provided for those shares):


                                       64





                                    TA IDEX AMERICAN CENTURY
                                       LARGE COMPANY VALUE
                                  ----------------------------
                                   CLASS A   CLASS B   CLASS C
                                  --------   -------   -------
                                              
Compensation to dealers           $227,365   $13,780   $16,024
Compensation to sales personnel    122,470    14,943    10,015
Printing and Postage                13,132     1,581     1,086
Promotional Expenses                18,821     2,210     1,586
Travel                              17,911     2,180     1,467
Office and other expenses           65,795     8,050     5,368
                                  --------   -------   -------
TOTAL                             $465,495   $42,743   $35,546
                                  ========   =======   =======




                                    TA IDEX AMERICAN CENTURY
                                          INTERNATIONAL
                                  ----------------------------
                                   CLASS A   CLASS B   CLASS C
                                  --------   -------   -------
                                              
Compensation to dealers           $274,115   $15,350   $20,534
Compensation to sales personnel     69,763    17,424    12,944
Printing and Postage                 6,945     1,840     1,365
Promotional Expenses                 8,574     2,562     1,895
Travel                              10,074     2,541     1,887
Office and other expenses           38,028     9,390     6,978
                                  --------   -------   -------
TOTAL                             $407,499   $49,108   $45,602
                                  ========   =======   =======




                                      TA IDEX ASSET ALLOCATION -
                                        CONSERVATIVE PORTFOLIO
                                  ----------------------------------
                                    CLASS A     CLASS B     CLASS C
                                  ----------   --------   ----------
                                                 
Compensation to dealers           $2,425,204   $151,754   $  330,062
Compensation to sales personnel      331,754    149,975      522,016
Printing and Postage                  36,052     15,906       57,282
Promotional Expenses                  52,902     22,344       85,466
Travel                                48,633     21,891       76,658
Office and other expenses            177,741     80,752      279,107
                                  ----------   --------   ----------
TOTAL                             $3,072,285   $442,622   $1,350,592
                                  ==========   ========   ==========




                                       TA IDEX ASSET ALLOCATION -
                                            GROWTH PORTFOLIO
                                  ------------------------------------
                                    CLASS A      CLASS B     CLASS C
                                  ----------   ----------   ----------
                                                   
Compensation to dealers           $5,741,381   $  347,119   $  722,165
Compensation to sales personnel      718,076      438,110    1,338,121
Printing and Postage                  77,761       47,103      145,273
Promotional Expenses                 113,412       67,831      212,814
Travel                               105,200       64,102      196,127
Office and other expenses            384,996      235,241      717,056
                                  ----------   ----------   ----------
TOTAL                             $7,140,826   $1,199,507   $3,331,556
                                  ==========   ==========   ==========



                                       65




                                   TA IDEX ASSET ALLOCATION - MODERATE
                                                PORTFOLIO
                                  ------------------------------------
                                    CLASS A      CLASS B      CLASS C
                                  ----------   ----------   ----------
                                                   
Compensation to dealers           $7,206,982   $  437,648   $1,016,191
Compensation to sales personnel      788,050      466,518    1,610,072
Printing and Postage                  85,027       49,812      175,561
Promotional Expenses                 123,216       70,842      259,129
Travel                               115,376       68,176      236,170
Office and other expenses            422,831      250,849      862,004
                                  ----------   ----------   ----------
TOTAL                             $8,741,484   $1,343,844   $4,159,126
                                  ==========   ==========   ==========




                                   TA IDEX ASSET ALLOCATION - MODERATE
                                             GROWTH PORTFOLIO
                                  -------------------------------------
                                    CLASS A       CLASS B      CLASS C
                                  -----------   ----------   ----------
                                                    
Compensation to dealers           $11,432,059   $  684,258   $1,416,774
Compensation to sales personnel     1,395,682      923,719    2,490,854
Printing and Postage                  152,136       99,726      270,003
Promotional Expenses                  224,431      144,672      394,474
Travel                                204,711      135,254      364,981
Office and other expenses             747,273      495,563    1,335,197
                                  -----------   ----------   ----------
TOTAL                             $14,156,291   $2,483,192   $6,272,282
                                  ===========   ==========   ==========




                                   TA IDEX CLARION GLOBAL REAL
                                        ESTATE SECURITIES
                                  ----------------------------
                                   CLASS A   CLASS B   CLASS C
                                  --------   -------   -------
                                              
Compensation to dealers           $137,290   $ 5,668   $12,043
Compensation to sales personnel     51,600     9,033    12,147
Printing and Postage                 5,707       971     1,400
Promotional Expenses                 8,628     1,397     2,256
Travel                               7,588     1,322     1,800
Office and other expenses           27,543     4,851     6,427
                                  --------   -------   -------
TOTAL                             $238,356   $23,241   $36,072
                                  ========   =======   =======




                                  TA IDEX TRANSAMERICA SMALL/MID
                                             CAP VALUE
                                  ------------------------------
                                   CLASS A    CLASS B    CLASS C
                                  --------   --------   --------
                                               
Compensation to dealers           $533,568   $ 39,726   $ 42,962
Compensation to sales personnel    145,584     41,677     49,303
Printing and Postage                15,833      4,428      5,838
Promotional Expenses                23,263      6,242      9,787
Travel                              21,345      6,085      7,343
Office and other expenses           77,986     22,432     25,923
                                  --------   --------   --------
TOTAL                             $817,579   $120,591   $141,155
                                  ========   ========   ========



                                       66




                                   TA IDEX TRANSAMERICA BALANCED
                                  ------------------------------
                                   CLASS A    CLASS B    CLASS C
                                  --------   --------   --------
                                               
Compensation to dealers           $887,488   $114,985   $118,012
Compensation to sales personnel     42,014     92,150     52,750
Printing and Postage                 4,481      9,785      5,638
Promotional Expenses                 6,360     13,775      8,032
Travel                               6,139     13,453      7,710
Office and other expenses           22,596     49,605     28,358
                                  --------   --------   --------
TOTAL                             $969,079   $293,754   $220,500
                                  ========   ========   ========




                                      TA IDEX TRANSAMERICA
                                         FLEXIBLE INCOME
                                  ----------------------------
                                   CLASS A   CLASS B   CLASS C
                                  --------   -------   -------
                                              
Compensation to dealers           $279,522   $26,596   $36,774
Compensation to sales personnel     49,255    22,338    20,214
Printing and Postage                 5,355     2,383     2,158
Promotional Expenses                 7,865     3,383     3,068
Travel                               7,221     3,264     2,954
Office and other expenses           26,386    12,014    10,869
                                  --------   -------   -------
TOTAL                             $375,604   $69,977   $76,038
                                  ========   =======   =======




                                        TA IDEX JANUS GROWTH*
                                  --------------------------------
                                    CLASS A     CLASS B    CLASS C
                                  ----------   --------   --------
                                                 
Compensation to dealers           $2,222,920   $156,344   $155,747
Compensation to sales personnel      253,578    132,450     83,556
Printing and Postage                  27,127     14,110      8,913
Promotional Expenses                  38,715     19,986     12,656
Travel                                37,070     19,348     12,209
Office and other expenses            136,297     71,251     44,937
                                  ----------   --------   --------
TOTAL                             $2,715,707   $413,490   $318,072
                                  ==========   ========   ========




                                       TA IDEX SALOMON ALL CAP
                                  --------------------------------
                                    CLASS A     CLASS B    CLASS C
                                  ----------   --------   --------
                                                 
Compensation to dealers           $1,093,724   $111,527   $139,524
Compensation to sales personnel       91,583     91,487     61,746
Printing and Postage                   9,564      9,722      6,580
Promotional Expenses                  13,047     13,706      9,323
Travel                                13,332     13,359      9,020
Office and other expenses             49,464     49,241     33,215
                                  ----------   --------   --------
TOTAL                             $1,270,714   $289,043   $259,408
                                  ==========   ========   ========



                                       67





                                    TA IDEX PIMCO REAL RETURN
                                              TIPS
                                  ----------------------------
                                   CLASS A   CLASS B   CLASS C
                                  --------   -------   -------
                                              
Compensation to dealers           $254,865   $ 9,072   $10,967
Compensation to sales personnel    115,042     7,743    29,308
Printing and Postage                12,172       838     3,053
Promotional Expenses                17,025     1,222     4,143
Travel                              16,785     1,134     4,265
Office and other expenses           61,972     4,152    15,838
                                  --------   -------   -------
TOTAL                             $477,862   $24,160   $67,573
                                  ========   =======   =======




                                     TA IDEX JENNISON GROWTH
                                  ----------------------------
                                   CLASS A   CLASS B   CLASS C
                                  --------   -------   -------
                                              
Compensation to dealers           $227,505   $24,599   $30,370
Compensation to sales personnel     71,466    21,059    17,535
Printing and Postage                 7,118     2,268     1,973
Promotional Expenses                 8,795     3,276     3,068
Travel                              10,320     3,082     2,587
Office and other expenses           38,953    11,303     9,325
                                  --------   -------   -------
TOTAL                             $364,158   $65,591   $64,857
                                  ========   =======   =======




                                     TA IDEX MARSICO GROWTH
                                  ----------------------------
                                   CLASS A   CLASS B   CLASS C
                                  --------   -------   -------
                                              
Compensation to dealers           $201,173   $15,973   $22,500
Compensation to sales personnel     34,478    15,547    32,051
Printing and Postage                 3,719     1,667     3,618
Promotional Expenses                 5,388     2,389     5,651
Travel                               5,048     2,274     4,731
Office and other expenses           18,500     8,353    17,034
                                  --------   -------   -------
TOTAL                             $268,307   $46,203   $85,585
                                  ========   =======   =======




                                   TA IDEX PIMCO TOTAL RETURN
                                  ----------------------------
                                   CLASS A   CLASS B   CLASS C
                                  --------   -------   -------
                                              
Compensation to dealers           $199,302   $17,108   $21,806
Compensation to sales personnel     41,458    15,207    13,837
Printing and Postage                 4,422     1,602     1,487
Promotional Expenses                 6,276     2,224     2,142
Travel                               6,057     2,217     2,025
Office and other expenses           22,297     8,199     7,430
                                  --------   -------   -------
TOTAL                             $279,813   $46,557   $48,728
                                  ========   =======   =======



                                       68




                                  TA IDEX SALOMON INVESTORS VALUE
                                  -------------------------------
                                     CLASS A   CLASS B   CLASS C
                                    --------   -------   -------
                                                
Compensation to dealers             $288,908   $13,793   $11,688
Compensation to sales personnel       78,595    14,142     6,592
Printing and Postage                   8,172     1,496       704
Promotional Expenses                  11,053     2,091     1,000
Travel                                11,433     2,063       963
Office and other expenses             42,487     7,618     3,545
                                    --------   -------   -------
TOTAL                               $440,647   $41,203   $24,492
                                    ========   =======   =======




                                     TA IDEX PROTECTED PRINCIPAL STOCK
                                  --------------------------------------
                                   CLASS A   CLASS B   CLASS C   CLASS M
                                  --------   -------   -------   -------
                                                      
Compensation to dealers           $151,334   $24,133   $18,401    $3,516
Compensation to sales personnel      2,127    15,961     4,848       512
Printing and Postage                   226      1700       518        56
Promotional Expenses                   320     2,407       738        83
Travel                                 311     2,332       709        75
Office and other expenses            1,145     8,587     2,606       274
                                  --------   -------   -------    ------
TOTAL                             $155,463   $55,120   $27,820    $4,516
                                  ========   =======   =======    ======




                                  TA IDEX T. ROWE PRICE SMALL CAP
                                  -------------------------------
                                     CLASS A   CLASS B   CLASS C
                                    --------   -------   -------
                                                
Compensation to dealers             $133,734   $11,076   $12,871
Compensation to sales personnel       18,963    10,111     6,287
Printing and Postage                   2,062     1,087       675
Promotional Expenses                   3,030     1,565       968
Travel                                 2,780     1,479       920
Office and other expenses             10,158     5,429     3,377
                                    --------   -------   -------
TOTAL                               $170,727   $30,747   $25,098
                                    ========   =======   =======




                                  TA IDEX T. ROWE PRICE TAX-EFFICIENT GROWTH
                                  ------------------------------------------
                                          CLASS A   CLASS B   CLASS C
                                         --------   -------   -------
                                                     
Compensation to dealers                  $74,432     $ 9,352  $ 9,035
Compensation to sales personnel            5,752       7,969    3,977
Printing and Postage                         604         845      424
Promotional Expenses                         833       1,186      603
Travel                                       838       1,163      581
Office and other expenses                  3,103       4,291    2,138
                                         -------     -------  -------
TOTAL                                    $85,563     $24,806  $16,758
                                         =======     =======  =======



                                       69





                                  TA IDEX TRANSAMERICA HIGH-YIELD BOND
                                  ------------------------------------
                                       CLASS A   CLASS B   CLASS C
                                      --------   -------   -------
                                                  
Compensation to dealers               $439,226   $30,770   $36,600
Compensation to sales personnel        149,792    24,877    28,156
Printing and Postage                    15,602     2,607     3,070
Promotional Expenses                    21,176     3,582     4,532
Travel                                  21,796     3,624     4,130
Office and other expenses               80,945    13,426    15,074
                                      --------   -------   -------
TOTAL                                 $728,537   $78,887   $91,561
                                      ========   =======   =======




                                  TA IDEX TRANSAMERICA CONVERTIBLE SECURITIES
                                  -------------------------------------------
                                           CLASS A   CLASS B   CLASS C
                                          --------   -------   -------
                                                      
Compensation to dealers                   $159,171   $ 4,021   $ 9,666
Compensation to sales personnel            102,728     6,552     6,118
Printing and Postage                        10,514       667       639
Promotional Expenses                        13,777       864       876
Travel                                      14,903       950       891
Office and other expenses                   55,703     3,557     3,305
                                          --------   -------   -------
TOTAL                                     $356,796   $16,611   $21,490
                                          ========   =======   =======




                                    TA IDEX TRANSAMERICA EQUITY
                                  ------------------------------
                                   CLASS A    CLASS B    CLASS C
                                  --------   --------   --------
                                               
Compensation to dealers           $536,443   $ 42,122   $ 46,025
Compensation to sales personnel     97,253     42,075     39,519
Printing and Postage                10,588      4,589      4,229
Promotional Expenses                15,586      6,775      6,040
Travel                              14,261      6,172      5,777
Office and other expenses           52,084     22,525     21,240
                                  --------   --------   --------
TOTAL                             $726,216   $124,258   $122,826
                                  ========   ========   ========




                                  TA IDEX TRANSAMERICA GROWTH OPPORTUNITIES
                                  -----------------------------------------
                                         CLASS A    CLASS B    CLASS C
                                        --------   --------   --------
                                                     
Compensation to dealers                 $633,603   $ 64,869   $ 65,852
Compensation to sales personnel           90,823     56,247     31,652
Printing and Postage                       9,819      5,997      3,406
Promotional Expenses                      14,278      8,507      4,914
Travel                                    13,302      8,218      4,632
Office and other expenses                 48,712     30,253     16,992
                                        --------   --------   --------
TOTAL                                   $810,536   $174,091   $127,448
                                        ========   ========   ========



                                       70





                                  TA IDEX TRANSAMERICA MONEY MARKET
                                  ---------------------------------
                                     CLASS A    CLASS B    CLASS C
                                   ----------   -------   --------
                                                 
Compensation to dealers            $  462,193   $30,162     37,712
Compensation to sales personnel       362,041    35,314     51,727
Printing and Postage                   38,914     3,763      5,340
Promotional Expenses                   56,009     5,330      7,123
Travel                                 52,970     5,159      7,515
Office and other expenses             194,407    18,999     28,001
                                   ----------   -------   --------
TOTAL                              $1,166,534   $98,730   $137,418
                                   ==========   =======   ========




                                  TA IDEX TRANSAMERICA VALUE BALANCED
                                  -----------------------------------
                                       CLASS A   CLASS B   CLASS C
                                      --------   -------   -------
                                                  
Compensation to dealers               $236,888   $19,438   $26,609
Compensation to sales personnel         21,446    18,603    14,600
Printing and Postage                     2,260     1,955     1,567
Promotional Expenses                     3,136     2,699     2,249
Travel                                   3,127     2,711     2,136
Office and other expenses               11,562    10,035     7,842
                                      --------   -------   -------
TOTAL                                 $278,418   $55,440   $55,004
                                      ========   =======   =======




                                  TA IDEX EVERGREEN INTERNATIONAL SMALL CAP
                                  -----------------------------------------
                                          CLASS A   CLASS B   CLASS C
                                          -------   -------   -------
                                                     
Compensation to dealers                   $    --     $--       $--
Compensation to sales personnel            21,606      --        --
Printing and Postage                        2,471      --        --
Promotional Expenses                        3,939      --        --
Travel                                      3,197      --        --
Office and other expenses                  11,450      --        --
                                          -------     ---       ---
TOTAL                                     $42,662     $--       $--
                                          =======     ===       ===




                                  TA IDEX GREAT COMPANIES - AMERICA(SM)
                                  -------------------------------------
                                       CLASS A   CLASS B    CLASS C
                                      --------   -------   --------
                                                  
Compensation to dealers               $372,767   $34,632   $ 50,081
Compensation to sales personnel         26,053    30,506     36,136
Printing and Postage                     2,706     3,225      3,690
Promotional Expenses                     3,652     4,503      4,811
Travel                                   3,789     4,450      5,240
Office and other expenses               14,086    16,436     19,603
                                      --------   -------   --------
TOTAL                                 $423,053   $93,751   $119,561
                                      ========   =======   ========



                                       71





                                  TA IDEX GREAT COMPANIES - TECHNOLOGY(SM)
                                  ----------------------------------------
                                         CLASS A   CLASS B   CLASS C
                                        --------   -------   -------
                                                    
Compensation to dealers                 $109,434   $ 6,739     7,987
Compensation to sales personnel           24,415     4,471     3,731
Printing and Postage                       2,592       470       396
Promotional Expenses                       3,649       651       555
Travel                                     3,564       652       544
Office and other expenses                 13,143     2,411     2,008
                                        --------   -------   -------
TOTAL                                   $156,797   $15,394   $15,223
                                        ========   =======   =======




                                  TA IDEX J.P. MORGAN MID CAP VALUE
                                  ---------------------------------
                                     CLASS A   CLASS B   CLASS C
                                     -------   -------   -------
                                                
Compensation to dealers              $    --      $--      $--
Compensation to sales personnel       31,233       --       --
Printing and Postage                   5,580       --       --
Promotional Expenses                   5,726       --       --
Travel                                 4,623       --       --
Office and other expenses             16,543       --       --
                                     -------      ---      ---
TOTAL                                $61,705      $--      $--
                                     =======      ===      ===




                                  TA IDEX MARSICO INTERNATIONAL GROWTH
                                  ------------------------------------
                                       CLASS A   CLASS B   CLASS C
                                       -------   -------   -------
                                                  
Compensation to dealers                $    --      $--      $--
Compensation to sales personnel         19,972       --       --
Printing and Postage                     2,279       --       --
Promotional Expenses                     3,619       --       --
Travel                                   2,954       --       --
Office and other expenses               10,589       --       --
                                       -------      ---      ---
TOTAL                                  $39,413      $--      $--
                                       =======      ===      ===




                                  TA IDEX MERCURY LARGE CAP VALUE
                                  -------------------------------
                                     CLASS A   CLASS B   CLASS C
                                    --------   -------   -------
                                                
Compensation to dealers             $     --     $--       $--
Compensation to sales personnel       62,011      --        --
Printing and Postage                   7,073      --        --
Promotional Expenses                  11,230      --        --
Travel                                 9,171      --        --
Office and other expenses             32,880      --        --
                                    --------     ---       ---
TOTAL                               $122,365     $--       $--
                                    ========     ===       ===



                                       72





                                  TA IDEX EVERGREEN HEALTH CARE
                                  -----------------------------
                                    CLASS A   CLASS B   CLASS C
                                   --------   -------   -------
                                                 
Compensation to dealers            $117,239   $ 4,336     4,069
Compensation to sales personnel      56,051     6,978     4,640
Printing and Postage                  6,048       737       515
Promotional Expenses                  8,766     1,026       783
Travel                                8,206     1,018       683
Office and other expenses            30,074     3,760     2,475
                                   --------   -------   -------
TOTAL                              $226,384   $17,855   $13,166
                                   ========   =======   =======




                                  TA IDEX TEMPLETON GREAT COMPANIES GLOBAL
                                  ----------------------------------------
                                        CLASS A     CLASS B    CLASS C
                                      ----------   --------   --------
                                                     
Compensation to dealers               $  882,739   $ 78,541   $ 89,264
Compensation to sales personnel          127,077     61,116     40,104
Printing and Postage                      13,669      6,491      4,281
Promotional Expenses                      19,700      9,143      6,087
Travel                                    18,595      8,923      5,861
Office and other expenses                 68,227     32,898     21,565
                                      ----------   --------   --------
TOTAL                                 $1,130,007   $197,112   $167,162
                                      ===========  ========   ========




                                  TA IDEX TRANSAMERICA SHORT-TERM BOND
                                  ------------------------------------
                                       CLASS A   CLASS B   CLASS C
                                       -------   -------   -------
                                                  
Compensation to dealers                $    --     $--       $--
Compensation to sales personnel         19,025      --        --
Printing and Postage                     2,162      --        --
Promotional Expenses                     3,413      --        --
Travel                                   2,812      --        --
Office and other expenses               10,096      --        --
                                       -------     ---       ---
TOTAL                                  $37,508     $--       $--
                                       =======     ===       ===




                                  TA IDEX UBS LARGE CAP VALUE
                                  ---------------------------
                                  CLASS A   CLASS B   CLASS C
                                  -------   -------   -------
                                             
Compensation to dealers           $    --     $--       $--
Compensation to sales personnel    13,468      --        --
Printing and Postage                1,525      --        --
Promotional Expenses                2,396      --        --
Travel                              1,989      --        --
Office and other expenses           7,152      --        --
                                  -------     ---       ---
TOTAL                             $26,531     $--       $--
                                  =======     ===       ===



                                       73





                                  TA IDEX VAN KAMPEN EMERGING MARKETS DEBT
                                  ----------------------------------------
                                          CLASS A   CLASS B   CLASS C
                                          -------   -------   -------
                                                     
Compensation to dealers                   $    --     $--        --
Compensation to sales personnel            17,281      --        --
Printing and Postage                        1,989      --        --
Promotional Expenses                        3,201      --        --
Travel                                      2,560      --        --
Office and other expenses                   9,145      --        --
                                          -------     ---       ---
TOTAL                                     $34,176     $--       $--
                                          =======     ===       ===




                                  TA IDEX VAN KAMPEN SMALL COMPANY GROWTH
                                  ---------------------------------------
                                         CLASS A   CLASS B   CLASS C
                                         -------   -------   -------
                                                    
Compensation to dealers                  $    --     $--       $--
Compensation to sales personnel            9,535      --        --
Printing and Postage                       1,112      --        --
Promotional Expenses                       1,823      --        --
Travel                                     1,416      --        --
Office and other expenses                  5,031      --        --
                                         -------     ---       ---
TOTAL                                    $18,917     $--       $--
                                         =======     ===       ===


*    Class T shares of TA IDEX Janus Growth are not subject to annual
     distribution and service fees. Note: Fees are not shown for Class R shares
     as they commenced operations on June 15, 2006.

                          NET ASSET VALUE DETERMINATION

The price at which shares are purchased or redeemed is the net asset value per
share ("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 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 as determined at 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
determined as of the close of the NYSE the next day the NYSE is open. Purchase
and redemption requests by telephone are deemed received when the telephone call
is received

Orders for shares of 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 (the "TA IDEX Asset Allocation funds") and
corresponding orders for the TA IDEX underlying funds in which they invest are
priced on the same day when orders for shares on the TA IDEX Asset Allocation
funds are received. Thus, receipt in good order and acceptance of a purchase
request or receipt in good order of a redemption request for shares of the TA
IDEX Asset Allocation funds by regular closing time of


                                       74


the NYSE is deemed to constitute receipt of a proportional order for the
corresponding shares of the TA IDEX underlying funds on the same day, so that
both orders generally will receive a day's NAV.

How NAV is Determined

The NAV of each fund (or class thereof) is calculated by taking the value of its
assets, less liabilities, and dividing by the number or 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
net asset value 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.

                        DIVIDENDS AND OTHER DISTRIBUTIONS

CLASS A, CLASS B, CLASS C, CLASS I, CLASS M AND CLASS R SHARES.

An investor may choose among several options with respect to dividends and
capital gains distributions payable to the investor. Dividends or other
distributions will be paid in full and fractional shares at the net asset value
determined as of the ex-dividend date unless the shareholder has elected another
distribution option as described in the prospectus. The quarterly ex-dividend
date for TA IDEX Asset Allocation - Conservative Portfolio will be 3 business
days following the ex-dividend date of the underlying TA IDEX funds in which it
invests. The December annual ex-dividend date for all other TA IDEX Asset
Allocation funds will be 3 business days following the ex-dividend date of the
underlying TA IDEX funds in which they invest. Transaction confirmations and
checks for payments designated to be made in cash generally will be mailed on
the payable date. The per share income dividends on Class B and Class C shares
(also Class M and Class R shares) of a fund are anticipated to be lower than the
per share income dividends on Class A shares of that fund (and Class T shares of
TA IDEX Janus Growth and Class I), as a result of higher distribution and
service fees applicable to the Class B, Class C, Class M and Class R shares.


                                       75



                              SHAREHOLDER ACCOUNTS

CLASS A, CLASS B, CLASS C, CLASS M AND CLASS R SHARES ONLY (NOT APPLICABLE TO
CLASS I SHARES).

Detailed information about general procedures for Shareholder Accounts and
specific types of accounts is set forth in each fund's prospectus.

                               PURCHASE OF SHARES

THE FOLLOWING FUNDS ARE CLOSED TO NEW INVESTMENTS:

TA IDEX American Century International, TA IDEX American Century Large Company
Value, TA IDEX Clarion Global Real Estate Securities, TA IDEX Evergreen Health
Care, TA IDEX Jennison Growth, TA IDEX Marsico Growth, TA IDEX PIMCO Real Return
TIPS, TA IDEX PIMCO Total Return, TA IDEX Salomon Investors Value, TA IDEX T.
Rowe Price Small Cap, and TA IDEX T. Rowe Price Tax-Efficient Growth.

CLASS A, CLASS B, CLASS C, CLASS I, CLASS T AND CLASS M SHARES.

As stated in the prospectus, the funds currently offer investors a choice of
four classes of shares: Class A, Class B, Class C and Class I shares. As stated
in the prospectus, Class I shares of the TA IDEX funds in this SAI are currently
offered for investment only to the TA IDEX Asset Allocation funds; and ATST
Asset Allocation -- Conservative Portfolio, ATST Asset Allocation -- Growth
Portfolio, ATST Asset Allocation -- Moderate Growth Portfolio, and ATST Asset
Allocation -- Moderate Portfolio, each a series of ATST. Class I shares may be
offered to other persons at any time in the future.

TA IDEX Janus Growth also includes Class T shares and TA IDEX Protected
Principal Stock also includes Class M shares, which are not available for new
investors. (All shares previously designated as Class C2 shares on March 1, 2004
were converted to Class C shares on June 15, 2004. On September 24, 2004,
previously existing Class M shares were converted into Class C shares, except
for TA IDEX Protected Principal Stock.

Class A, Class B or Class C shares of a fund can be purchased through AFSG or
through broker-dealers or other financial institutions that have sales
agreements with AFSG. Shares of each fund are sold at the net asset value per
share as determined at the close of the regular session of business on the NYSE
next occurring after a purchase order is received and accepted by the fund. (The
applicable sales charge is added in the case of Class A, Class M and Class T
shares.) The prospectus contains detailed information about the purchase of fund
shares.

Shareholders whose investments are transferred from one class of shares of a
Transamerica IDEX fund to another class of shares of the same Transamerica IDEX
fund for administrative or eligibility reasons also may qualify for a waiver or
reduction of sales charges and/or redemption charges in connection with the
exchange.

Information on sales charge reductions and/or waivers can also be found on the
Transamerica IDEX website at www.transamericaidex.com.

CLASS R SHARES.

As stated in the prospectus, Class R shares of the TA IDEX funds in this SAI are
currently offered for investment only by the following funds: TA IDEX Asset
Allocation - Conservative Portfolio, TA IDEX Asset Allocation - Growth
Portfolio, TA IDEX Asset Allocation - Moderate Growth Portfolio and TA IDEX
Asset Allocation - Moderate Portfolio,, each a series of TA IDEX.


                                       76



                                RETIREMENT PLANS

CLASS A, CLASS B, CLASS C, CLASS R AND CLASS M SHARES ONLY (NOT APPLICABLE TO
CLASS I SHARES).

Transamerica IDEX offers several types of retirement plans that an investor may
establish to invest in shares of a fund with tax deductible dollars. Prototype
retirement plan documents for Individual Retirement Accounts, Code Section
403(b)(7) plans and SEP-IRA and SIMPLE IRA plans are available by calling or
writing TFS Customer Service. These plans require the completion of separate
applications, which are also available from TFS Customer Service. State Street
Bank & Trust, Kansas City, Missouri ("State Street"), acts as the custodian or
trustee under these plans for which it charges an annual fee of $15.00 on each
such account with a maximum of $30.00 per tax identification number. However, if
your combined retirement plan and ESA account(s)' balance per taxpayer
identification number is more than $50,000, there is no fee. To receive
additional information or forms on these plans, please call your Financial
Advisor or Transamerica IDEX Customer Service at 1-888-233-4339 or write to
Transamerica Fund Services at P.O. Box 219945, Kansas City, Missouri 64121-9945.
No contribution to a retirement plan can be made until the appropriate forms to
establish the plan have been completed. It is advisable for an investor
considering the funding of any retirement plan to consult with an attorney,
retirement plan consultant or financial or tax adviser with respect to the
requirements of such plans and the tax aspects thereof.

                              REDEMPTION OF SHARES

Shareholders may redeem their shares at any time at a price equal to the net
asset value per share next determined following receipt of a valid redemption
order by the transfer agent, in proper form. Payment will ordinarily be made
within three business days of the receipt of a valid redemption order. The value
of shares on redemption may be more or less than the shareholder's cost,
depending upon the market value of the fund's net assets at the time of
redemption. Class B shares, Class C shares and Class M shares and certain Class
A and Class T share purchases are also subject to a contingent deferred sales
charge upon certain redemptions. Class I Shares are not subject to the
contingent deferred sales charge. Except for Class I and Class R Shares, and as
further explained in the prospectus, a short-term trading redemption fee of 2%
of the amount redeemed may be assessed on any fund shares in a fund account that
are sold (by redemption, whether voluntary or involuntary) within five (5) NYSE
trading days following their purchase date. The prospectus describes the
requirements and procedures for the redemption of shares.

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 the remaining shareholders by the delivery of securities selected
from its assets at its discretion. TA IDEX has, however, elected to be governed
by Rule 18f-1 under the 1940 Act pursuant to which a fund is obligated to redeem
shares solely in cash up to the lesser of $250,000 or 1% of the net asset value
of a fund during any 90-day period for any one shareholder. Should redemptions
by any shareholder exceed such limitation, the fund will have the option of
redeeming the excess in cash or in kind. If shares are redeemed in kind, the
redeeming shareholder might incur brokerage costs in converting the assets to
cash. The method of valuing securities used to make redemptions in kind will be
the same as the method of valuing portfolio securities described under "Net
Asset Value Determination," and such valuation will be made as of the same time
the redemption price is determined. Upon any distributions in kind, shareholders
may appeal the valuation of such securities by writing to TFS.

Redemption of shares may be suspended, or the date of payment may be postponed,
whenever: (1) trading on the NYSE is restricted, as determined by the SEC, or
the NYSE is closed (except for holidays and weekends); (2) the SEC permits such
suspension and so orders; or (3) an emergency exists as determined by the SEC so
that disposal of securities and determination of net asset value is not
reasonably practicable.

The Contingent Deferred Sales Charge ("CDSC") is waived on redemptions of Class
B, Class C and Class M shares (and Class A, C and T, when applicable) in the
circumstances described below. (Please note that, effective November 1, 2005,
CDSCs were not charged on redemptions of Class A, Class B or Class C shares of
the following funds, which are now closed to new investors and investments: TA
IDEX American Century International; TA IDEX American Century Large Company
Value; TA IDEX Clarion Global Real Estate Securities; TA IDEX Evergreen Health
Care; TA IDEX Jennison Growth; TA IDEX Marsico Growth; TA IDEX PIMCO Real Return
TIPS; TA IDEX PIMCO Total Return; TA IDEX Salomon Investors Value; TA IDEX T.
Rowe Price Small Cap; TA IDEX T. Rowe Price Tax-Efficient Growth.)


                                       77



(a) Redemption upon Total Disability or Death

A fund will waive the CDSC on redemptions following the death or total
disability (as evidenced by a determination of the federal Social Security
Administration) of a shareholder, but in the case of total disability only as to
shares owned at the time of the initial determination of disability. The
transfer agent or distributor will require satisfactory proof of death or
disability before it determines to waive the CDSC.

(b) Redemption Pursuant to a Fund's Systematic Withdrawal Plan

A shareholder may elect to participate in a systematic withdrawal plan ("SWP")
with respect to the shareholder's investment in a fund. Under the SWP, a dollar
amount of a participating shareholder's investment in the fund will be redeemed
systematically by the fund on a periodic basis, and the proceeds paid in
accordance with the shareholder's instructions. The amount to be redeemed and
frequency of the systematic withdrawals will be specified by the shareholder
upon his or her election to participate in the SWP. The CDSC will be waived on
redemptions made under the SWP subject to the limitations described below.

The amount of a shareholder's investment in a fund at the time election to
participate in the SWP is made, with respect to the fund, is hereinafter
referred to as the "Initial Account Balance." The amount to be systematically
withdrawn from a fund without the imposition of a CDSC may not exceed a maximum
of 12% annually of the shareholder's Initial Account Balance. The funds reserve
the right to change the terms and conditions of the SWP and the ability to offer
the SWP.

Please Note: The amount redeemed under this waiver does not need to be under a
systematic withdrawal plan. If it is not under a systematic withdrawal plan, it
is limited to one redemption per calendar year up to 12% of your account balance
at the time of redemption.

(c) Reinvestment Privilege

The CDSC is also waived on redemption of shares as it relates to the
reinvestment of redemption proceeds in the same class of shares of another fund
within 90 days after redemption.

(d) Certain Retirement Plan Withdrawals

CDSC is also waived for accounts opened prior to April 1, 2000, on withdrawals
from IRS qualified and nonqualified retirement plans, individual retirement
accounts, tax-sheltered accounts, and deferred compensation plans, where such
withdrawals are permitted under the terms of the plan or account. (This waiver
does not include transfer of asset redemptions, broker directed accounts or
omnibus accounts.)

(e) Investors Who Previously Held Class C2 Shares

As described in the prospectus, upon the close of business on June 15, 2004,
Class C2 shares were converted into Class C shares. With regard to the Class C2
shares that converted into Class C shares (or on future investments in Class C
shares made through such accounts), accountholders will not pay any CDSC
otherwise payable on Class C shares. Upon the close of business on September 24,
2004, Class M shares were converted into Class C shares; for accountholders who
also own Class C shares which converted from Class C2 shares, their Class C
shares that convert from Class M shares will not be subject to a CDSC and will
be subject to the same 12b-1 commission structure applicable to their former
Class C2 shares.

(f) Purchases through Merrill Lynch, Pierce, Fenner & Smith Incorporated

Investors who purchase Class C shares of the funds through Merrill Lynch,
Pierce, Fenner & Smith Incorporated on or after June 21, 2004 will not be
subject to any CDSC otherwise payable with respect to redemptions of such Class
C shares of the funds. In connection with such purchases, AFSG will pay Merrill
Lynch, Pierce, Fenner & Smith Incorporated compensation equal to 1.00% of the
aggregate offering price for the Class C shares of the funds so purchased. The
CDSC waiver may be terminated at any time, in which case only investors who
formerly held Class C2 shares of the funds as of the conversion of Class C2
shares into Class C will be authorized to make additional investments in Class C
shares of the funds without being subject to any CDSC otherwise payable with
respect to redemptions of Class C shares through their existing accounts with
Merrill Lynch, Pierce, Fenner & Smith Incorporated.


                                       78



                                      TAXES

In order to qualify as a regulated investment company ("RIC") each fund must
meet certain requirements regarding the source of its income, the
diversification if its assets and the distribution of its income.

Each fund has qualified, and expects to continue to qualify, for treatment as a
RIC under the Internal Revenue Code of 1986, as amended (the "Code"). In order
to qualify for that treatment, a fund must distribute to its shareholders for
each taxable year at least 90% of its investment company taxable income
("Distribution Requirement") and must meet several additional requirements. With
respect to each fund, these requirements include the following: (1) the fund
must derive at least 90% of its gross income each taxable year from dividends,
interest, payments with respect to securities loans, and gains from the sale or
other disposition of securities or foreign currencies, net income derived from
an interest in a qualified publicly traded partnership or other income
(including gains from options, futures or forward contracts) derived with
respect to its business of investing in securities or those currencies ("Income
Requirement"); (2) at the close of each quarter of a fund's taxable year, at
least 50% of the value of its total assets must be represented by cash and cash
items, U.S. government securities, securities of other RICs and other securities
that, with respect to any one issuer, do not exceed 5% of the value of the
fund's total assets and that do not represent more than 10% of the outstanding
voting securities of the issuer; and (3) at the close of each quarter of a
fund's taxable year, not more than 25% of the value of its total assets may be
invested in securities (other than U.S. government securities or the securities
of other RICs) of any one issuer, in two or more issuers that the fund controls
and which are engaged in the same or similar trade or business or of one or more
qualified publicly traded partnerships. If each fund qualifies as a regulated
investment company and distributes to its shareholders substantially all of its
net income and net capital gains, then each fund should have little or no income
taxable to it under the Code. Shareholders of a regulated investment company
generally are required to include these distributions as ordinary income, to the
extent the distributions are attributable as the RIC's investment income (except
for qualifying dividends as discussed below), net short-term capital gain, and
certain net realized foreign exchange gains, or as capital gains, to the extent
of the RICs net capital gain (i.e., net long-term capital gains over net
short-term capital losses). If a fund fails to qualify as a regulated investment
company, the fund will be subject to federal, and possibly state, corporate
taxes on its taxable income and gains, and distributions to its shareholders
will constitute ordinary dividend income to the extent of the fund's available
earnings and profits.

A fund will be subject to a nondeductible 4% excise tax to the extent it fails
to distribute by the end of any calendar year substantially all of its ordinary
income for that year and capital gains net income for the one-year period ending
on October 31 of that year, plus certain other amounts. Each fund intends to
distribute annually a sufficient amount of any taxable income and capital gains
so as to avoid liability for this excise tax.

Tax laws generally provide for a maximum tax rate for individual taxpayers of
15% on long-term capital gains from sales 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 brackets).

     -    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.

Asset Allocation funds - A fund that is an Asset Allocation fund will not be
able to offset gains distributed by one underlying fund in which it invests
against losses in another underlying fund in which it invests. Redemptions of
shares in an underlying fund, including those resulting from changes in the
allocation among underlying funds, could also cause additional distributable
gains to shareholders of an Asset Allocation fund. A portion of any such gains
may be short-term capital gains that would be distributable as ordinary income
to shareholders of an Asset Allocation fund. Further, a portion of losses on
redemptions of shares in the underlying funds may be deferred under the wash
sale rules. As a result of these factors, the use of the fund-of-funds structure
by the Asset Allocation funds could therefore affect the amount, timing and
character of distributions to shareholders. The Asset


                                       79



Allocation funds will also not be able to pass through from the underlying funds
any potential benefit from the foreign tax credit or income from certain federal
obligations (that may be exempt from state tax).

Upon the sale or other disposition of fund shares, or upon receipt of a
distribution in complete liquidation of a fund, a shareholder usually will
realize a capital gain or loss. This loss may be long-term or short-term,
generally depending upon the shareholder's holding period for the shares. For
tax purposes, a loss will be disallowed on the sale or exchange of shares if the
disposed of shares are replaced (including shares acquired pursuant to a
dividend reinvestment plan) within a period of 61 days. The 61-day time window
begins 30 days before and ends 30 days after the date of the sale or exchange of
such shares. Should a disposition fall within this 61-day window, the basis of
the acquired shares will be adjusted to reflect the disallowed loss. Any loss
realized by the shareholder on its disposition of fund shares held by the
shareholder for six months or less, will be treated as a long-term capital loss,
to the extent of any distributions of net capital gains deemed received by the
shareholder, with respect to such shares.

Dividends and interest received by a fund may be subject to income, withholding
or other taxes imposed by foreign countries and U.S. possessions that would
reduce the yield on its securities. However, tax conventions between certain
countries and the United States may reduce or eliminate these foreign taxes. In
addition, many foreign countries do not impose taxes on capital gains in respect
of investments by foreign investors and most U.S. Tax conventions preclude the
imposition of such taxes.

Passive Foreign Investment Companies - Each fund may invest in the stock of
passive foreign investment companies"("PFICs"). A PFIC is a foreign corporation
that, in general, meets either of the following tests: (1) at least 75% of its
gross income is passive; or (2) an average of at least 50% of its assets
produce, or are held for the production of, passive income. Under certain
circumstances, a fund will be subject to federal income tax on a portion of any
"excess distribution" received on the stock of a PFIC or of any gain on
disposition of that stock (collectively, "PFIC income"), plus interest thereon,
even if the fund distributes the PFIC income as a taxable dividend to its
shareholders. If such a tax is imposed on a fund, the balance of the PFIC income
will be included in the fund's investment company taxable income and,
accordingly, will not be taxable to the fund to the extent that the income is
distributed to its shareholders. If a fund invests in a PFIC and elects to treat
the PFIC as a "qualified electing fund," then in lieu of the foregoing tax and
interest obligation, the fund will be required to include in income each year
its pro rata share of the qualified electing fund's annual ordinary earnings and
net capital gain (the excess of net long-term capital gains over net short-term
capital losses). This income inclusion is required even if the PFIC does not
distribute such income and gains to the fund, and the amounts so included would
be subject to the Distribution Requirement described above. In many instances it
will be very difficult, if not impossible, to make this election because of
certain requirements thereof. Distributions from a PFIC are not eligible for the
reduced rate of tax on "qualifying dividends."

In addition, another election may be available that would involve marking to
market a fund's PFIC stock at the end of each taxable year (and on certain other
dates prescribed in the Code), with the result that unrealized gains are treated
as though they were realized as of such date although any such gains will be
ordinary income rather than capital gain. If this election were made, tax at the
fund level under the excess distribution rules would be eliminated, but a fund
could incur nondeductible interest charges. A fund's intention to qualify
annually as a regulated investment company may limit a fund's ability to make an
election with respect to PFIC stock.

Options, Futures and Forward Contracts and Swap Agreements -- Certain options,
futures contracts, and forward contracts in which a fund may invest may be
"Section 1256 contracts." Gains or losses on Section 1256 contracts generally
are considered 60% long-term and 40% short-term capital gains or losses;
however, foreign currency gains or losses arising from certain Section 1256
contracts may be treated as ordinary income or loss. Also, Section 1256
contracts held by a fund at the end of each taxable year (and at certain other
times as prescribed pursuant to the Code) are "marked to market" with the result
that unrealized gains or losses are treated as though they were realized.

Generally, the hedging transactions undertaken by a fund may result in
"straddles" for U.S. federal income tax purposes. The straddle rules may affect
the character of gains (or losses) realized by a fund. In addition, losses
realized by a fund on positions that are part of a straddle may be deferred
under the straddle rules, rather than being taken into account in calculating
the taxable income for the taxable year in which such losses are realized.
Because only a few regulations implementing the straddle rules have been
promulgated, the tax consequences of transactions in options, futures, forward
contracts, swap agreements and other financial contracts to a fund are not
entirely clear. The transactions may increase the amount of short-term capital
gain realized by a fund which is taxed as ordinary income when distributed to
shareholders.


                                       80



A fund may make one or more of the elections available under the Code which are
applicable to straddles. If a fund makes any of the elections, the amount,
character and timing of the recognition of gains or losses from the affected
straddle positions will be determined under rules that vary according to the
election(s) made. The rules applicable under certain of the elections may
operate to accelerate the recognition of gains or losses from the affected
straddle positions.

Because application of the straddle rules may affect the character of gains or
losses, defer losses and/or accelerate the recognition of gains or losses from
the affected straddle positions, the amount which must be distributed to
shareholders, and which will be taxed to shareholders as ordinary income or
long-term capital gain, may be increased or decreased as compared to a fund that
did not engage in such hedging transactions.

Because only a few regulations regarding the treatment of swap agreements, and
related caps, floors and collars, have been implemented, the tax consequences of
such transactions are not entirely clear. The funds intend to account for such
transactions in a manner deemed by them to be appropriate, but the Internal
Revenue Service might not necessarily accept such treatment. If it did not, the
status of a fund as a regulated investment company might be affected.

The requirements applicable to a fund's qualification as a regulated investment
company may limit the extent to which a fund will be able to engage in
transactions in options, futures contracts, forward contracts, swap agreements
and other financial contracts.

Under the recently enacted tax law, certain hedging activities may cause a
dividend that would otherwise be subject to the lower tax rate applicable to a
"qualifying dividend," to instead be taxed as the rate of tax applicable to
ordinary income.

Market Discount -- If a fund purchases a debt security at a price lower than the
stated redemption price of such debt security, the excess of the stated
redemption price over the purchase amount is "market discount." If the amount of
market discount is more than a de minimis amount, a portion of such market
discount must be included as ordinary income (not capital gain) by the fund in
each taxable year in which the fund owns an interest in such debt security and
receives a principal payment on it. In particular, the fund will be required to
allocate that principal payment first to a portion of the market discount on the
debt security that has accrued but has not previously been includable in income.
In general, the amount of market discount that must be included for each period
is equal to the lesser of (i) the amount of market discount accruing during such
period (plus any accrued market discount for prior periods not previously taken
into account) or (ii) the amount of the principal payment with respect to such
period. Generally, market discount accrues on a daily basis for each day the
debt security is held by a fund at a constant rate over the time remaining to
the debt security's maturity or, at the election of the fund, at a constant
yield to maturity which takes into account the semi-annual compounding of
interest. Gain realized on the disposition of a market discount obligation must
be recognized as ordinary interest income (not capital gain) to the extent of
the "accrued market discount."

Original Issue Discount -- Certain debt securities acquired by the funds may be
treated as debt securities that were originally issued at a discount. Very
generally, original issue discount is defined as the difference between the
price at which a security was issued and its stated redemption price at
maturity. Although no cash income on account of such discount is actually
received by a fund, original issue discount that accrues on a debt security in a
given year generally is treated for federal income tax purposes as interest and,
therefore, such income would be subject to the distribution requirements
applicable to regulated investment companies.

Some debt securities may be purchased by the funds at a discount that exceeds
the original issue discount on such debt securities, if any. This additional
discount represents market discount for federal income tax purposes (see above).

Constructive Sales -- These rules may affect timing and character of gain if a
fund engages in transactions that reduce or eliminate its risk of loss with
respect to appreciated financial positions. If the fund enters into certain
transactions in property while holding substantially identical property, the
fund would be treated as if it had sold and immediately repurchased the property
and would be taxed on any gain (but not loss) from the constructive sale. The
character of gain from a constructive sale would depend upon the fund's holding
period in the property. Loss from a constructive sale would be recognized when
the property was subsequently disposed of, and its character would depend on the
fund's holding period and the application of various loss deferral provisions of
the Code.

Foreign Taxation -- Income received by a fund from sources within a foreign
country may be subject to withholding and other taxes imposed by that country.
Tax conventions between certain countries and the U.S. may reduce or eliminate
such taxes.


                                       81



The payment of such taxes will reduce the amount of dividends and distributions
paid to the fund's shareholders. So long as a fund qualifies as a regulated
investment company, certain distribution requirements are satisfied, and more
than 50% of such fund's assets at the close of the taxable year consists of
securities of foreign corporations, the fund may elect, subject to limitation,
to pass through its foreign tax credits to its shareholders.

Furthermore, the amount of the foreign tax credit that is available may be
limited to the extent that dividends from a foreign corporation qualify for the
lower tax rate on "qualifying dividends."

Foreign Currency Transactions -- Under the Code, gains or losses attributable to
fluctuations in exchange rates which occur between the time a fund accrues
income or other receivables or accrues expenses or other liabilities denominated
in a foreign currency and the time that a fund actually collects such
receivables or pays such liabilities, generally are treated as ordinary income
or ordinary loss. Similarly, on disposition of debt securities denominated in a
foreign currency and on disposition of certain futures contracts, forward
contracts and options, gains or losses attributable to fluctuations in the value
of foreign currency between the date of acquisition of the security or contract
and the date of disposition also are treated as ordinary gain or loss. Some of
the TA IDEX funds elect to treat this foreign currency income as capital gain or
capital loss. These gains or losses, referred to under the Code as "Section 988"
gains or losses, may increase or decrease the amount of a fund's investment
company taxable income to be distributed to its shareholders as ordinary income.

Backup withholding - A fund may be required to withhold U.S. federal income tax
at the rate of 28% of all amounts deemed to be distributed The 28% rate applies
to shareholders receiving payments who:

a.   fail to provide the fund with their correct taxpayer identification number,

b.   fail to make required certifications or,

c.   have been notified by the Internal Revenue Service that they are subject to
     backup withholding.

Backup withholding is not an additional tax. Any amounts withheld will be
credited against a shareholder's U.S. federal income tax liability. Corporate
shareholders and certain other shareholders are exempt from such backup
withholding

TAXATION OF NON-U.S. SHAREHOLDERS. Dividends from investment company taxable
income attributable to a fund's taxable year beginning before January 1, 2005 or
after December 31, 2007 and paid to a shareholder who, as to the United States,
is a nonresident alien individual, nonresident alien fiduciary of a trust or
estate, foreign corporation or foreign partnership ("foreign shareholder") may
be subject to a 30% withholding tax unless the applicable tax rate is reduced by
a treaty between the United States and the shareholder's country of residence.
Dividends from investment company taxable income attributable to a fund's
taxable year beginning after December 31, 2004 or before January 1, 2008 that
are attributable to short-term capital gains or "qualified interest income" may
not be subject to withholding tax, provided that such fund elects to follow
certain procedures. A fund may choose to not follow such procedures and there
can be no assurance as to the amount, if any, of dividends that would not be
subject to withholding. Withholding does not apply to a dividend paid to a
foreign shareholder that is "effectively connected with the shareholder's
conduct of a trade or business within the United States," in which case the
withholding requirements applicable to domestic taxpayers apply.

The treatment of income dividends and capital gains distributions by a fund to
shareholders under the various state income tax laws may not parallel that under
the federal laws. Qualification as a RIC does not involve supervision of a
fund's management or of its investment policies and practices by any
governmental authority.

Shareholders are urged to consult their own tax advisors with specific reference
to their own tax situations, including their state and local tax liabilities.
Note that the 15% rate of tax applicable to certain dividends (discussed above)
does not apply to dividends paid to foreign shareholders.

                             PRINCIPAL SHAREHOLDERS

As of February 1, 2006, the Trustees and officers as a group owned less than 1%
of any class of each fund's outstanding shares. To the knowledge of the
management, as of that date, no shareholders owned beneficially or 5% or more of
the outstanding shares of a class of a fund, except as follows:


                                       82




                                                                                                                      % OF SHARES OF
                                                                                                                        BENEFICIAL
                    NAME/ADDRESS                                               FUND                           CLASS      INTEREST
                    ------------                                               ----                           -----   --------------
                                                                                                             
Sac & Co                                               TA IDEX Templeton Great Companies Global                 A          9.04%
New York, NY

Citigroup Global Markets Inc                           TA IDEX Transamerica Flexible Income                     B          5.25%
House Account
New York, NY

Citigroup Global Markets Inc                           TA IDEX Transamerica High Yield Bond                     B         18.10%
House Account
New York, NY

Investors Bank & Trust Co                              TA IDEX Jennison Growth                                  A          5.72%
Retirement Plans
Purchase, NY

Investors Bank & Trust Co                              TA IDEX American Century International                   A          9.18%
Retirement Plans
Purchase, NY

Investors Bank & Trust Co                              TA IDEX Salomon Investors Value                          A         10.87%
Retirement Plans
Purchase, NY

Investors Bank & Trust Co                              TA IDEX T. Rowe Price Small Cap                          A         13.81%
Retirement Plans
Purchase, NY

EMJAYCO                                                TA IDEX T. Rowe Price Small Cap                          A          5.29%
Fbo University Federal Credit Union
Milwaukee, WI

Transamerica Fund Advisors, Inc                        TA IDEX Clarion Global Real Estate Securities            C          6.30%
Seed money account
St. Petersburg, FL

Transamerica Fund Advisors, Inc                        TA IDEX Clarion Global Real Estate Securities            C          6.28%
Seed money account
St. Petersburg, FL

Transamerica Fund Advisors, Inc                        TA IDEX Clarion Global Real Estate Securities            C          6.28%
Seed money account
St. Petersburg, FL

Investors Bank & Trust Co                              TA IDEX American Century Large Company Value             A         11.68%
Retirement Plans
Purchase, NY

Merrill Lynch Pierce Fenner & Smith Inc.               TA IDEX Great Companies - America(SM)                    A          8.91%
Customer Accounts
Jacksonville, FL

Citigroup Global Markets Inc                           TA IDEX Great Companies - America(SM)                    B          8.49%
House Account
New York, NY

Merrill Lynch Pierce Fenner & Smith Inc.               TA IDEX Great Companies - America(SM)                    B          7.39%
Customer Accounts
Jacksonville, FL

Gary U and Della Rolle Trust                           TA IDEX Transamerica Convertible Securities              A          8.97%
Los Angeles, CA

Citigroup Global Markets Inc                           TA IDEX Transamerica Convertible                         B         17.21%
House Account                                          Securities
New York, NY

Citigroup Global Markets Inc                           TA IDEX PIMCO Total Return                               B          5.76%
House Account
New York, NY



                                       83



                                                                                                             
Merrill Lynch Pierce Fenner & Smith Inc.               TA IDEX PIMCO Total Return                               B          5.26%
Customer Accounts
Jacksonville, FL

Merrill Lynch Pierce Fenner & Smith Inc.               TA IDEX Asset Allocation - Conservative Portfolio        A          8.94%
Customer Accounts
Jacksonville, FL

Merrill Lynch Pierce Fenner & Smith Inc.               TA IDEX Asset Allocation - Conservative Portfolio        B          8.71%
Customer Accounts
Jacksonville, FL

Citigroup Global Markets Inc                           TA IDEX Asset Allocation - Conservative Portfolio        B          5.89%
House Account
New York, NY

Merrill Lynch Pierce Fenner & Smith Inc.               TA IDEX Asset Allocation - Moderate Portfolio            A          7.67%
Customer Accounts
Jacksonville, FL

Merrill Lynch Pierce Fenner & Smith Inc.               TA IDEX Asset Allocation - Moderate Portfolio            B         11.20%
Customer Accounts
Jacksonville, FL

Merrill Lynch Pierce Fenner & Smith Inc.               TA IDEX Asset Allocation - Moderate Portfolio            B          6.77%
Customer Accounts
Jacksonville, FL

Citigroup Global Markets Inc                           TA IDEX Asset Allocation - Moderate Growth Portfolio     A          7.24%
House Accounts
New York, NY

Citigroup Global Markets Inc                           TA IDEX Asset Allocation - Moderate Growth Portfolio     A          5.72%
House Account
New York, NY

Merrill Lynch Pierce Fenner & Smith Inc.               TA IDEX Asset Allocation - Moderate Growth Portfolio     B          9.91%
Customer Accounts
Jacksonville, FL

Citigroup Global Markets Inc                           TA IDEX Asset Allocation - Moderate Growth Portfolio     B          8.33%
House Account
New York, NY

Merrill Lynch Pierce Fenner & Smith Inc.               TA IDEX Asset Allocation - Growth Portfolio              A         10.44%
Customer Accounts
Jacksonville, FL

Citigroup Global Markets Inc                           TA IDEX Asset Allocation - Growth Portfolio              A          6.92%
House Account
New York, NY

Citigroup Global Markets Inc                           TA IDEX Asset Allocation - Growth Portfolio              B         10.78%
House Account
New York, NY

Merrill Lynch Pierce Fenner & Smith Inc.               TA IDEX Asset Allocation - Growth Portfolio              B         10.40%
Customer Accounts
Jacksonville, FL




                                       84



                                                                                                             
Merrill Lynch Pierce Fenner & Smith Inc.               TA IDEX American Century Large Company Value             C         13.73%
Customer Accounts
Jacksonville, FL

LPL Financial Services                                 TA IDEX American Century International                   C          5.51%
San Diego, CA

Citigroup Global Markets Inc                           TA IDEX Great Companies - America(SM)                    C          9.56%
House Account
New York, NY

Merrill Lynch Pierce Fenner & Smith Inc.               TA IDEX Great Companies - America(SM)                    C          9.30%
Customer Accounts
Jacksonville, FL

Merrill Lynch Pierce Fenner & Smith Inc.               TA IDEX Great Companies - Technology(SM)                 C          9.00%
Customer Accounts
Jacksonville, FL

First Clearing, LLC                                    TA IDEX Great Companies - Technology(SM)                 C          5.54%
IRA Jeffrey L. Korach
Beachwood, OH

Merrill Lynch Pierce Fenner & Smith Inc.               TA IDEX Transamerica Small/Mid Cap Value                 C         15.89%
Customer Accounts
Jacksonville, FL

Citigroup Global Markets Inc                           TA IDEX Transamerica Balanced                            C          7.59%
House Account
New York, NY

Citigroup Global Markets Inc                           TA IDEX Transamerica Flexible Income                     C          6.31%
House Account
New York, NY

Citigroup Global Markets Inc                           TA IDEX Janus Growth                                     C         14.01%
House Account
New York, NY

Citigroup Global Markets Inc                           TA IDEX Jennison Growth                                  C          5.60%
House Account
New York, NY

Legg Mason Wood Walker Inc                             TA IDEX PIMCO Total Return                               C         20.53%
Baltimore, MD

Merrill Lynch Pierce Fenner & Smith Inc.               TA IDEX PIMCO Total Return                               C          7.21%
Customer Accounts
Jacksonville, FL

Transamerica Fund Advisors, Inc                        TA IDEX Evergreen Health Care                            C          8.05%
Seed money account
St. Petersburg, FL

Transamerica Fund Advisors, Inc                        TA IDEX Evergreen Health Care                            C          8.05%
Seed money account
St. Petersburg, FL

MG Trust                                               TA IDEX Evergreen Health Care                            C          7.17%
Brown Beradini & Dunning
Denver, CO

NFS LLC                                                TA IDEX T. Rowe Price Small Cap                          C          5.88%
The Johanna K. Black Trust
Boston, MA

Thomas Wiand                                           TA IDEX T. Rowe Price Tax-Efficient Growth               C          6.25%
Scottsdale, AZ




                                       85



                                                                                                             
Merrill Lynch Pierce Fenner & Smith Inc.               TA IDEX Transamerica High-Yield Bond                     C         16.62%
Customer Accounts
Jacksonville, FL

Citigroup Global Markets Inc                           TA IDEX Transamerica High-Yield Bond                     C          9.02%
House Account
New York, NY

International Alpaca Co                                TA IDEX Transamerica Convertible Securities              C         19.73%
Anthony Stachowski
Mantua, OH

Merrill Lynch Pierce Fenner & Smith Inc.               TA IDEX Transamerica Convertible Securities              C         10.47%
Customer Accounts
Jacksonville, FL

Merrill Lynch Pierce Fenner & Smith Inc.               TA IDEX Transamerica Equity                              C          6.05%
Customer Accounts
Jacksonville, FL

Merrill Lynch Pierce Fenner & Smith Inc.               TA IDEX Asset Allocation - Conservative Portfolio        C         23.49%
Customer Accounts
Jacksonville, FL

Citigroup Global Markets Inc                           TA IDEX Asset Allocation - Conservative Portfolio        C         13.21%
House Account
New York, NY

Merrill Lynch Pierce Fenner & Smith Inc.               TA IDEX Asset Allocation - Moderate Portfolio            C         26.06%
Customer Accounts
Jacksonville, FL

Citigroup Global Markets Inc                           TA IDEX Asset Allocation - Moderate Portfolio            C         11.22%
House Account
New York, NY

Merrill Lynch Pierce Fenner & Smith Inc.               TA IDEX Asset Allocation - Moderate Growth Portfolio     C         26.39%
Customer Accounts
Jacksonville, FL

Citigroup Global Markets Inc                           TA IDEX Asset Allocation - Moderate Growth Portfolio     C         15.84%
House Account
New York, NY

Merrill Lynch Pierce Fenner & Smith Inc.               TA IDEX Asset Allocation - Growth Portfolio              C         25.91%
Customer Accounts
Jacksonville, FL

Citigroup Global Markets Inc                           TA IDEX Asset Allocation - Growth Portfolio              C         18.75%
House Account
New York, NY

Citigroup Global Markets Inc                           TA IDEX Templeton Great Companies Global                 C         10.23%
House Account
New York, NY

Investors Bank & Trust Co                              TA IDEX Transamerica Small/Mid Cap Value                 A          5.51%
Retirement Plans
Purchase, NY

Merrill Lynch Pierce Fenner & Smith Inc.               TA IDEX PIMCO Real Return TIPS                           A          9.49%
Customer Accounts
Jacksonville, FL

Pershing LLC                                           TA IDEX PIMCO Real Return TIPS                           A          7.96%
Jersey City, NJ




                                       86



                                                                                                             
Pershing LLC                                           TA IDEX PIMCO Real Return TIPS                           A          6.77%
Jersey City, NJ

Terry W. Lester & Gayla B Lester                       TA IDEX PIMCO Real Return TIPS                           B          6.11%
Bradyville, TN

Merrill Lynch Pierce Fenner & Smith Inc.               TA IDEX PIMCO Real Return TIPS                           C         34.71%
Customer Accounts
Jacksonville, FL

Lawrence & Lori Corkery                                TA IDEX Protected Principal Stock                        A          7.09%
Union Planters Bank NA
Waterloo, IA

Robert W. Baird & Co, Inc.                             TA IDEX Protected Principal Stock                        A          6.32%
Milwaukee, WI

Citizens Bank Trust                                    TA IDEX Protected Principal Stock                        M         14.20%
Claude Anders Trust
Elizabethton, TN

Raymond James & Associates                             TA IDEX Protected Principal Stock                        M          7.10%
fbo Catherine Volz
St. Petersburg, FL

TA IDEX Asset Allocation - Moderate Growth Portfolio   TA IDEX American Century Large Company Value             I         45.98%
Investment Account
St. Petersburg, FL

TA IDEX Asset Allocation - Growth Portfolio            TA IDEX American Century Large Company Value             I         25.82%
Investment Account
St. Petersburg, FL

TA IDEX Asset Allocation - Moderate Portfolio          TA IDEX American Century Large Company Value             I         21.84%
Investment Account
St. Petersburg, FL

TA IDEX Asset Allocation - Conservative Portfolio      TA IDEX American Century Large Company Value             I          6.37%
Investment Account
St. Petersburg, FL

TA IDEX Asset Allocation - Moderate Growth Portfolio   TA IDEX Clarion Global Real Estate Securities            I         41.47%
Investment Account
St. Petersburg, FL

TA IDEX Asset Allocation - Moderate Portfolio          TA IDEX Clarion Global Real Estate Securities            I         27.94%
Investment Account
St. Petersburg, FL

TA IDEX Asset Allocation - Growth Portfolio            TA IDEX Clarion Global Real Estate Securities            I         24.12%
Investment Account
St. Petersburg, FL

TA IDEX Asset Allocation - Conservative Portfolio      TA IDEX Clarion Global Real Estate Securities            I          6.47%
Investment Account
St. Petersburg, FL

TA IDEX Asset Allocation - Moderate Growth Portfolio   TA IDEX Van Kampen Mid Cap Growth                        I         51.12%
Investment Account
St. Petersburg, FL

TA IDEX Asset Allocation - Growth Portfolio            TA IDEX Van Kampen Mid Cap Growth                        I         43.63%
Investment Account
St. Petersburg, FL




                                       87



                                                                                                             
TA IDEX Asset Allocation - Moderate Portfolio          TA IDEX Van Kampen Mid Cap Growth                        I          5.25%
Investment Account
St. Petersburg, FL

TA IDEX Asset Allocation - Conservative Portfolio      TA IDEX Great Companies America(SM)                      I        100.00%
Investment Account
St. Petersburg, FL

TA IDEX Asset Allocation - Moderate Growth Portfolio   TA IDEX Great Companies Technology(SM)                   I         52.26%
Investment Account
St. Petersburg, FL

TA IDEX Asset Allocation - Growth Portfolio            TA IDEX Great Companies Technology(SM)                   I         26.89%
Investment Account
St. Petersburg, FL

TA IDEX Asset Allocation - Moderate Portfolio          TA IDEX Great Companies Technology(SM)                   I         20.85%
Investment Account
St. Petersburg, FL

TA IDEX Asset Allocation - Moderate Growth Portfolio   TA IDEX Janus Growth                                     I         73.99%
Investment Account
St. Petersburg, FL

TA IDEX Asset Allocation - Moderate Portfolio          TA IDEX Janus Growth                                     I         16.67%
Investment Account
St. Petersburg, FL

TA IDEX Asset Allocation - Conservative Portfolio      TA IDEX Janus Growth                                     I          9.34%
Investment Account
St. Petersburg, FL

TA IDEX Asset Allocation - Growth Portfolio            TA IDEX Jennison Growth                                  I        100.00%
Investment Account
St. Petersburg, FL

TA IDEX Asset Allocation - Moderate Growth Portfolio   TA IDEX Marsico Growth                                   I         58.90%
Investment Account
St. Petersburg, FL

TA IDEX Asset Allocation - Moderate Portfolio          TA IDEX Marsico Growth                                   I         40.46%
Investment Account
St. Petersburg, FL

TA IDEX Asset Allocation - Moderate Portfolio          TA IDEX PIMCO Real Return TIPS                           I         25.88%
Investment Account
St. Petersburg, FL

TA IDEX Asset Allocation - Moderate Growth Portfolio   TA IDEX PIMCO Real Return TIPS                           I         20.12%
Investment Account
St. Petersburg, FL

TA IDEX Asset Allocation - Moderate Portfolio          TA IDEX PIMCO Real Return TIPS                           I         17.09%
Investment Account
St. Petersburg, FL




                                       88



                                                                                                             
TA IDEX Asset Allocation - Moderate Growth Portfolio   TA IDEX PIMCO Real Return TIPS                           I         16.56%
Investment Account
St. Petersburg, FL

TA IDEX Asset Allocation - Conservative Portfolio      TA IDEX PIMCO Real Return TIPS                           I         12.11%
Investment Account
St. Petersburg, FL

TA IDEX Asset Allocation - Conservative Portfolio      TA IDEX PIMCO Real Return TIPS                           I          8.24%
Investment Account
St. Petersburg, FL

TA IDEX Asset Allocation - Moderate Portfolio          TA IDEX PIMCO Total Return                               I         49.73%
Investment Account
St. Petersburg, FL

TA IDEX Asset Allocation - Moderate Growth Portfolio   TA IDEX PIMCO Total Return                               I         33.85%
Investment Account
St. Petersburg, FL

TA IDEX Asset Allocation - Conservative Portfolio      TA IDEX PIMCO Total Return                               I         16.42%
Investment Account
St. Petersburg, FL

TA IDEX Asset Allocation - Moderate Growth Portfolio   TA IDEX Salomon Investors Value                          I         94.85%
Investment Account
St. Petersburg, FL

TA IDEX Asset Allocation - Moderate Portfolio          TA IDEX Salomon Investors Value                          I          5.15%
Investment Account
St. Petersburg, FL

TA IDEX Asset Allocation - Moderate Growth Portfolio   TA IDEX Evergreen Health Care                            I         21.49%
Investment Account
St. Petersburg, FL

TA IDEX Asset Allocation - Moderate Growth Portfolio   TA IDEX Evergreen Health Care                            I         19.33%
Investment Account
St. Petersburg, FL

TA IDEX Asset Allocation - Moderate Portfolio          TA IDEX Evergreen Health Care                            I         13.19%
Investment Account
St. Petersburg, FL

TA IDEX Asset Allocation - Moderate Portfolio          TA IDEX Evergreen Health Care                            I         12.77%
Investment Account
St. Petersburg, FL

TA IDEX Asset Allocation - Growth Portfolio            TA IDEX Evergreen Health Care                            I         12.21%
Investment Account
St. Petersburg, FL

TA IDEX Asset Allocation - Growth Portfolio            TA IDEX Evergreen Health Care                            I         10.64%
Investment Account
St. Petersburg, FL




                                       89



                                                                                                             
TA IDEX Asset Allocation - Conservative Portfolio      TA IDEX Evergreen Health Care                            I          6.23%
Investment Account
St. Petersburg, FL

TA IDEX Asset Allocation - Conservative Portfolio      TA IDEX T. Rowe Price Small Cap                          I         50.93%
Investment Account
St. Petersburg, FL

TA IDEX Asset Allocation - Moderate Portfolio          TA IDEX T. Rowe Price Small Cap                          I         49.07%
Investment Account
St. Petersburg, FL

TA IDEX Asset Allocation - Moderate Portfolio          TA IDEX Templeton Great Companies Global                 I         58.53%
Investment Account
St. Petersburg, FL

TA IDEX Asset Allocation - Moderate Growth Portfolio   TA IDEX Templeton Great Companies Global                 I         19.74%
Investment Account
St. Petersburg, FL

TA IDEX Asset Allocation - Growth Portfolio            TA IDEX Templeton Great Companies Global                 I         15.17%
Investment Account
St. Petersburg, FL

TA IDEX Asset Allocation - Conservative Portfolio      TA IDEX Templeton Great Companies Global                 I          6.55%
Investment Account
St. Petersburg, FL

TA IDEX Asset Allocation - Moderate Growth Portfolio   TA IDEX Transamerica High-Yield Bond                     I         33.11%
Investment Account
St. Petersburg, FL

TA IDEX Asset Allocation - Moderate Portfolio          TA IDEX Transamerica High-Yield Bond                     I         32.21%
Investment Account
St. Petersburg, FL

TA IDEX Asset Allocation - Conservative Portfolio      TA IDEX Transamerica High-Yield Bond                     I         12.84%
Investment Account
St. Petersburg, FL

TA IDEX Asset Allocation - Moderate Growth Portfolio   TA IDEX Transamerica High-Yield Bond                     I          9.05%
Investment Account
St. Petersburg, FL

TA IDEX Asset Allocation - Conservative Portfolio      TA IDEX Transamerica High-Yield Bond                     I          7.74%
Investment Account
St. Petersburg, FL

TA IDEX Asset Allocation - Moderate Portfolio          TA IDEX Transamerica High-Yield Bond                     I          5.05%
Investment Account
St. Petersburg, FL

TA IDEX Asset Allocation - Moderate Growth Portfolio   TA IDEX Transamerica Convertible Securities              I         52.29%
Investment Account
St. Petersburg, FL




                                       90



                                                                                                             
TA IDEX Asset Allocation - Moderate Portfolio          TA IDEX Transamerica Convertible Securities              I         39.06%
Investment Account
St. Petersburg, FL

TA IDEX Asset Allocation - Conservative Portfolio      TA IDEX Transamerica Convertible Securities              I          8.65%
Investment Account
St. Petersburg, FL

TA IDEX Asset Allocation - Moderate Growth Portfolio   TA IDEX Transamerica Equity                              I         38.95%
Investment Account
St. Petersburg, FL

TA IDEX Asset Allocation - Growth Portfolio            TA IDEX Transamerica Equity                              I         34.70%
Investment Account
St. Petersburg, FL

TA IDEX Asset Allocation - Moderate Portfolio          TA IDEX Transamerica Equity                              I         20.85%
Investment Account
St. Petersburg, FL

TA IDEX Asset Allocation - Conservative Portfolio      TA IDEX Transamerica Equity                              I          5.50%
Investment Account
St. Petersburg, FL

TA IDEX Asset Allocation - Moderate Portfolio          TA IDEX Transamerica Flexible Income                     I         23.01%
Investment Account
St. Petersburg, FL

TA IDEX Asset Allocation - Moderate Growth Portfolio   TA IDEX Transamerica Flexible Income                     I         21.09%
Investment Account
St. Petersburg, FL

TA IDEX Asset Allocation - Moderate Growth Portfolio   TA IDEX Transamerica Flexible Income                     I         18.46%
Investment Account
St. Petersburg, FL

TA IDEX Asset Allocation - Conservative Portfolio      TA IDEX Transamerica Flexible Income                     I         15.38%
Investment Account
St. Petersburg, FL

TA IDEX Asset Allocation - Conservative Portfolio      TA IDEX Transamerica Flexible Income                     I         11.89%
Investment Account
St. Petersburg, FL

TA IDEX Asset Allocation - Moderate Portfolio          TA IDEX Transamerica Flexible Income                     I         10.18%
Investment Account
St. Petersburg, FL

TA IDEX Asset Allocation - Moderate Growth Portfolio   TA IDEX Transamerica Growth Opportunities                I         47.17%
Investment Account
St. Petersburg, FL

TA IDEX Asset Allocation - Growth Portfolio            TA IDEX Transamerica Growth Opportunities                I         28.46%
Investment Account
St. Petersburg, FL




                                       91



                                                                                                             
TA IDEX Asset Allocation - Moderate Portfolio          TA IDEX Transamerica Growth Opportunities                I         20.36%
Investment Account
St. Petersburg, FL

TA IDEX Asset Allocation - Moderate Growth Portfolio   TA IDEX Transamerica Small/Mid Cap Value                 I         40.45%
Investment Account
St. Petersburg, FL

TA IDEX Asset Allocation - Growth Portfolio            TA IDEX Transamerica Small/Mid Cap Value                 I         31.90%
Investment Account
St. Petersburg, FL

TA IDEX Asset Allocation - Moderate Portfolio          TA IDEX Transamerica Small/Mid Cap Value                 I         23.15%
Investment Account
St. Petersburg, FL

TA IDEX Asset Allocation - Conservative Portfolio      TA IDEX Transamerica Money Market                        I         65.92%
Investment Account
St. Petersburg, FL

TA IDEX Asset Allocation - Moderate Growth Portfolio   TA IDEX Transamerica Money Market                        I         26.81%
Investment Account
St. Petersburg, FL

TA IDEX Asset Allocation - Moderate Portfolio          TA IDEX Transamerica Money Market                        I          7.26%
Investment Account
St. Petersburg, FL

TA IDEX Asset Allocation - Moderate Growth Portfolio   TA IDEX Evergreen International Small Cap                I         28.81%
Investment Account
St. Petersburg, FL

TA IDEX Asset Allocation - Moderate Growth Portfolio   TA IDEX Evergreen International Small Cap                I         19.33%
Investment Account
St. Petersburg, FL

TA IDEX Asset Allocation - Moderate Portfolio          TA IDEX Evergreen International Small Cap                I         14.34%
Investment Account
St. Petersburg, FL

TA IDEX Asset Allocation - Growth Portfolio            TA IDEX Evergreen International Small Cap                I         12.07%
Investment Account
St. Petersburg, FL

TA IDEX Asset Allocation - Growth Portfolio            TA IDEX Evergreen International Small Cap                I         11.76%
Investment Account
St. Petersburg, FL

TA IDEX Asset Allocation - Moderate Portfolio          TA IDEX Evergreen International Small Cap                I          7.16%
Investment Account
St. Petersburg, FL

TA IDEX Asset Allocation - Moderate Growth Portfolio   TA IDEX J.P. Morgan Mid Cap Value                        I         50.84%
Investment Account
St. Petersburg, FL




                                       92



                                                                                                             
TA IDEX Asset Allocation - Growth Portfolio            TA IDEX J.P. Morgan Mid Cap Value                        I         29.81%
Investment Account
St. Petersburg, FL

TA IDEX Asset Allocation - Moderate Portfolio          TA IDEX J.P. Morgan Mid Cap Value                        I         15.27%
Investment Account
St. Petersburg, FL

TA IDEX Asset Allocation - Moderate Growth Portfolio   TA IDEX Marsico International Growth                     I         25.26%
Investment Account
St. Petersburg, FL

TA IDEX Asset Allocation - Moderate Growth Portfolio   TA IDEX Marsico International Growth                     I         21.04%
Investment Account
St. Petersburg, FL

TA IDEX Asset Allocation - Moderate Portfolio          TA IDEX Marsico International Growth                     I         14.50%
Investment Account
St. Petersburg, FL

TA IDEX Asset Allocation - Growth Portfolio            TA IDEX Marsico International Growth                     I         11.52%
Investment Account
St. Petersburg, FL

TA IDEX Asset Allocation - Growth Portfolio            TA IDEX Marsico International Growth                     I         11.52%
Investment Account
St. Petersburg, FL

TA IDEX Asset Allocation - Moderate Portfolio          TA IDEX Marsico International Growth                     I          9.32%
Investment Account
St. Petersburg, FL

TA IDEX Asset Allocation - Moderate Growth Portfolio   TA IDEX Mercury Large Cap Value                          I         53.45%
Investment Account
St. Petersburg, FL

TA IDEX Asset Allocation - Growth Portfolio            TA IDEX Mercury Large Cap Value                          I         46.55%
Investment Account
St. Petersburg, FL

TA IDEX Asset Allocation - Moderate Portfolio          TA IDEX Transamerica Short-Term Bond                     I         37.37%
Investment Account
St. Petersburg, FL

TA IDEX Asset Allocation - Conservative Portfolio      TA IDEX Transamerica Short-Term Bond                     I         24.29%
Investment Account
St. Petersburg, FL

TA IDEX Asset Allocation - Moderate Portfolio          TA IDEX Transamerica Short-Term Bond                     I         23.40%
Investment Account
St. Petersburg, FL

TA IDEX Asset Allocation - Conservative Portfolio      TA IDEX Transamerica Short-Term Bond                     I         14.94%
Investment Account
St. Petersburg, FL




                                       93



                                                                                                             
TA IDEX Asset Allocation - Moderate Portfolio          TA IDEX UBS Large Cap Value                              I         49.58%
Investment Account
St. Petersburg, FL

TA IDEX Asset Allocation - Growth Portfolio            TA IDEX UBS Large Cap Value                              I         28.09%
Investment Account
St. Petersburg, FL

TA IDEX Asset Allocation - Conservative Portfolio      TA IDEX UBS Large Cap Value                              I         14.43%
Investment Account
St. Petersburg, FL

TA IDEX Asset Allocation - Conservative Portfolio      TA IDEX UBS Large Cap Value                              I          7.90%
Investment Account
St. Petersburg, FL

TA IDEX Asset Allocation - Moderate Portfolio          TA IDEX Van Kampen Emerging Markets Debt                 I         30.44%
Investment Account
St. Petersburg, FL

TA IDEX Asset Allocation - Moderate Growth Portfolio   TA IDEX Van Kampen Emerging Markets Debt                 I         20.19%
Investment Account
St. Petersburg, FL

TA IDEX Asset Allocation - Moderate Portfolio          TA IDEX Van Kampen Emerging Markets Debt                 I         19.27%
Investment Account
St. Petersburg, FL

TA IDEX Asset Allocation - Moderate Growth Portfolio   TA IDEX Van Kampen Emerging Markets Debt                 I         12.97%
Investment Account
St. Petersburg, FL

TA IDEX Asset Allocation - Conservative Portfolio      TA IDEX Van Kampen Emerging Markets Debt                 I          9.95%
Investment Account
St. Petersburg, FL

TA IDEX Asset Allocation - Conservative Portfolio      TA IDEX Van Kampen Emerging Markets Debt                 I          7.17%
Investment Account
St. Petersburg, FL

TA IDEX Asset Allocation - Moderate Growth Portfolio   TA IDEX Van Kampen Small Company Growth                  I         30.48%
Investment Account
St. Petersburg, FL

TA IDEX Asset Allocation - Moderate Growth Portfolio   TA IDEX Van Kampen Small Company Growth                  I         23.74%
Investment Account
St. Petersburg, FL

TA IDEX Asset Allocation - Growth Portfolio            TA IDEX Van Kampen Small Company Growth                  I         23.10%
Investment Account
St. Petersburg, FL

TA IDEX Asset Allocation - Growth Portfolio            TA IDEX Van Kampen Small Company Growth                  I         13.34%
Investment Account
St. Petersburg, FL




                                       94



                                                                                                             
TA IDEX Asset Allocation - Moderate Portfolio          TA IDEX Van Kampen Small Company Growth                  I          9.34%
Investment Account
St. Petersburg, FL

TA IDEX Asset Allocation - Moderate Growth Portfolio   TA IDEX AllianceBernstein International Value            I         24.16%
Investment Account
St. Petersburg, FL

TA IDEX Asset Allocation - Moderate Portfolio          TA IDEX AllianceBernstein International Value            I         19.02%
Investment Account
St. Petersburg, FL

TA IDEX Asset Allocation - Moderate Portfolio          TA IDEX AllianceBernstein International Value            I         15.79%
Investment Account
St. Petersburg, FL

TA IDEX Asset Allocation - Moderate Growth Portfolio   TA IDEX AllianceBernstein International Value            I         15.22%
Investment Account
St. Petersburg, FL

TA IDEX Asset Allocation - Growth Portfolio            TA IDEX AllianceBernstein International Value            I          8.33%
Investment Account
St. Petersburg, FL

TA IDEX Asset Allocation - Growth Portfolio            TA IDEX AllianceBernstein International Value            I          6.83%
Investment Account
St. Petersburg, FL

TA IDEX Asset Allocation - Conservative Portfolio      TA IDEX AllianceBernstein International Value            I          6.28%
Investment Account
St. Petersburg, FL

TA IDEX Asset Allocation - Moderate Growth Portfolio   TA IDEX Neuberger Berman International                   I         19.57%
Investment Account
St. Petersburg, FL

TA IDEX Asset Allocation - Moderate Growth Portfolio   TA IDEX Neuberger Berman International                   I         18.01%
Investment Account
St. Petersburg, FL

TA IDEX Asset Allocation - Growth Portfolio            TA IDEX Neuberger Berman International                   I         17.10%
Investment Account
St. Petersburg, FL

TA IDEX Asset Allocation - Moderate Portfolio          TA IDEX Neuberger Berman International                   I         13.47%
Investment Account
St. Petersburg, FL

TA IDEX Asset Allocation - Growth Portfolio            TA IDEX Neuberger Berman International                   I         12.31%
Investment Account
St. Petersburg, FL

TA IDEX Asset Allocation - Moderate Portfolio          TA IDEX Neuberger Berman International                   I         11.89%
Investment Account
St. Petersburg, FL




                                       95



                                                                                                             
TA IDEX Asset Allocation - Moderate Growth Portfolio   TA IDEX Oppenheimer Developing Markets                   I         26.47%
Investment Account
St. Petersburg, FL

TA IDEX Asset Allocation - Moderate Growth Portfolio   TA IDEX Oppenheimer Developing Markets                   I         20.68%
Investment Account
St. Petersburg, FL

TA IDEX Asset Allocation TA IDEX Asset Allocation -    TA IDEX Oppenheimer Developing Markets                   I         14.52%
Growth Portfolio
Investment Account
St. Petersburg, FL

TA IDEX Asset Allocation - Growth Portfolio            TA IDEX Oppenheimer Developing Markets                   I         14.15%
Investment Account
St. Petersburg, FL

TA IDEX Asset Allocation - Moderate Portfolio          TA IDEX Oppenheimer Developing Markets                   I         13.17%
Investment Account
St. Petersburg, FL

TA IDEX Asset Allocation - Moderate Portfolio          TA IDEX Oppenheimer Developing Markets                   I          8.70%
Investment Account
St. Petersburg, FL

TA IDEX Asset Allocation - Moderate Portfolio          TA IDEX JPMorgan International Bond                      I         37.50%
Investment Account
St. Petersburg, FL

TA IDEX Asset Allocation - Moderate Portfolio          TA IDEX JPMorgan International Bond                      I         21.04%
Investment Account
St. Petersburg, FL

TA IDEX Asset Allocation - Moderate Growth Portfolio   TA IDEX JPMorgan International Bond                      I         13.22%
Investment Account
St. Petersburg, FL

TA IDEX Asset Allocation - Moderate Growth Portfolio   TA IDEX JPMorgan International Bond                      I         11.13%
Investment Account
St. Petersburg, FL

TA IDEX Asset Allocation - Conservative Portfolio      TA IDEX JPMorgan International Bond                      I         10.42%
Investment Account
St. Petersburg, FL

TA IDEX Asset Allocation - Conservative Portfolio      TA IDEX JPMorgan International Bond                      I          6.70%
Investment Account
St. Petersburg, FL

TA IDEX Asset Allocation - Moderate Portfolio          TA IDEX Federated Market Opportunity                     I         50.84%
Investment Account
St. Petersburg, FL

TA IDEX Asset Allocation - Conservative Portfolio      TA IDEX Federated Market Opportunity                     I         49.16%
Investment Account
St. Petersburg, FL




                                       96



                                                                                                             
TA IDEX Asset Allocation - Moderate Growth Portfolio   TA IDEX Mercury Global Allocation                        I         34.57%
Investment Account
St. Petersburg, FL

TA IDEX Asset Allocation - Moderate Growth Portfolio   TA IDEX Mercury Global Allocation                        I         28.25%
Investment Account
St. Petersburg, FL

TA IDEX Asset Allocation - Growth Portfolio            TA IDEX Mercury Global Allocation                        I         19.94%
Investment Account
St. Petersburg, FL

TA IDEX Asset Allocation - Growth Portfolio            TA IDEX Mercury Global Allocation                        I         17.24%
Investment Account
St. Petersburg, FL



                                  MISCELLANEOUS

ORGANIZATION

Each fund is a series of Transamerica IDEX, a Delaware statutory trust that
currently is governed by an Agreement and Declaration of Trust ("Declaration of
Trust") dated February 25, 2005.

On September 20, 1996 in a tax-free reorganization, TA IDEX Janus Growth
(formerly IDEX II Growth Fund) acquired all of the assets and assumed all of the
liabilities of IDEX Fund and IDEX Fund 3 in exchange for Class T shares of IDEX
Janus Growth which were then distributed on a pro rata basis to the respective
shareholders of IDEX Fund and IDEX Fund 3. Upon closing of the reorganization,
IDEX II Series Fund changed its name to IDEX Series Fund. IDEX Series Fund
became IDEX Mutual Funds effective March 1, 1999. Effective March 1, 2004, IDEX
Mutual Funds changed its name to Transamerica IDEX Mutual Funds.

Transamerica IDEX held a special meeting of shareholders on February 25, 2005
for the purposes of approving, among other things, reorganizing TA IDEX from a
Massachusetts business trust to a Delaware statutory trust. The shareholders of
Transamerica IDEX approved this reorganization, and the funds that were formed
as part of the Delaware statutory trust which are identical to the current funds
assumed the assets and liabilities of the current funds; and the Delaware
statutory trust assumed the registration statement of the Massachusetts business
trust.

SHARES OF BENEFICIAL INTEREST

The Declaration of Trust permits Transamerica IDEX to issue an unlimited number
of shares of beneficial interest. Shares of Transamerica IDEX are fully paid and
nonassessable when issued. Shares of Transamerica IDEX have no preemptive,
cumulative voting, conversion or subscription rights. Shares of Transamerica
IDEX are fully transferable but Transamerica IDEX is not bound to recognize any
transfer until it is recorded on the books.

The shares of beneficial interest of each fund are divided into several classes:
Class A, Class B, Class C, Class I, Class M (TA IDEX Protected Principal Stock
only), Class R (TA IDEX Asset Allocation funds only) and Class T (TA IDEX Janus
Growth only). Each class represents interests in the same assets of the fund and
differ as follows: each class of shares has exclusive voting rights on matters
pertaining to its plan of distribution or any other matter appropriately limited
to that class; Class A shares (except TA IDEX Transamerica Money Market) are
subject to an initial sales charge and are subject to a CDSC on purchases of $1
million or more if redeemed within 24 months after purchase unless purchased
through a qualified retirement plan; Class B shares are subject to a CDSC, or
back- end load, at a declining rate; Class C shares are not subject to an
initial sales charge and are subject to a 1% CDSC if redeemed during the first
12 months after purchase; Class M shares are subject to an initial sales charge
and a 1% CDSC if redeemed during the first 18 months after purchase; Class B,
Class C and Class M shares are subject to higher ongoing distribution and
service fees; each class may bear differing amounts of certain class-specific
expenses; and each class has a separate exchange privilege. Class T shares of TA
IDEX Janus Growth are subject to an initial sales charge and are subject to a
CDSC if redeemed within 24 months after purchase. Class T shares have no annual
distribution and service fees. Class T shares are NOT available to new
investors; only existing Class T shareholders (who were shareholders of IDEX
Fund or IDEX Fund 3 on September 20, 1996) may purchase additional Class T
shares. (All shares designated as Class C shares prior to March 1, 2004 were


                                       97


renamed as Class C2 shares on that date. All shares designated as Class L shares
prior to March 1, 2004 were renamed as Class C shares with different fees and
expenses than the previous Class L shares. All shares previously designated as
Class C2 shares on March 1, 2004 were converted to Class C shares on June 15,
2004. On September 24, 2004, Class M shares were converted into Class C shares,
except in TA IDEX Protected Principal Stock). Transamerica IDEX does not
anticipate that there will be any conflicts between the interests of holders of
the different classes of shares of the same fund by virtue of these classes. On
an ongoing basis, the Board of Trustees will consider whether any such conflict
exists and, if so, take appropriate action. On any matter submitted to a vote of
shareholders of a series or class, each full issued and outstanding share of
that series or class has one vote.

The Declaration of Trust provides that each of the Trustees will continue in
office until the termination of TA IDEX or his earlier death, resignation,
bankruptcy or removal. Vacancies may be filled by a majority of the remaining
trustees, subject to certain limitations imposed by the 1940 Act. Therefore, it
is not anticipated that annual or regular meetings of shareholders normally will
be held, unless otherwise required by the Declaration of Trust or the 1940 Act.
Subject to the foregoing, shareholders have the power to vote for the election
and removal of trustees, to terminate or reorganize Transamerica IDEX, to amend
the Declaration of Trust, on whether to bring certain derivative actions and on
any other matters on which a shareholder vote is required by the 1940 Act, the
Declaration of Trust, the Transamerica IDEX bylaws, or at the request of the
Trustees.

INDEPENDENT REGISTERED CERTIFIED PUBLIC ACCOUNTING FIRM

PricewaterhouseCoopers, LLP, located at 101 East Kennedy Boulevard, Suite 1500,
Tampa, Florida 33602, serves as independent registered certified public
accounting firm for Transamerica IDEX.

CODES OF ETHICS

Transamerica IDEX, TFAI, each sub-adviser and AFSG each has adopted a code of
ethics, as required by applicable law, which is designed to prevent affiliated
persons of Transamerica IDEX, TFAI, a sub-adviser and AFSG from engaging in
deceptive, manipulative, or fraudulent activities in connection with securities
held or to be acquired by the funds (which may also be held by persons subject
to a code of ethics). There can be no assurance that the codes of ethics will be
effective in preventing such activities.

PROXY VOTING POLICIES AND PROCEDURES

As detailed in the Transamerica IDEX Proxy Voting Policies and Procedures below,
Transamerica IDEX uses the proxy voting policies and procedures of the
sub-advisers to determine how to vote proxies relating to securities held by the
Transamerica IDEX funds. The proxy voting policies and procedures of TFAI and
each sub-adviser are attached or summarized in Appendix A.

Transamerica IDEX files a new SEC Form N-PX, with the complete proxy voting
records of the funds for the 12 months ended June 30th, no later than August
31st of each year. The latest filing of Form N-PX was made on August 30, 2005,
for the 12 month-period ended June 30, 2005. The form is available without
charge: (1) from Transamerica IDEX, upon request by calling 1-888-233-4339; and
(2) on the SEC's website at www.sec.gov.

TRANSAMERICA IDEX PROXY VOTING POLICIES AND PROCEDURES - ADOPTED EFFECTIVE JUNE
10, 2003.

I. STATEMENT OF PRINCIPLE

Transamerica IDEX seeks to assure that proxies received by the funds are voted
in the best interests of the funds' stockholders and have accordingly adopted
these procedures.

II. DELEGATION OF PROXY VOTING/ADOPTION OF ADVISER AND SUB-ADVISER POLICIES

Each fund delegates the authority to vote proxies related to portfolio
securities to Transamerica Fund Advisors, Inc. (the "Adviser"), as investment
adviser to Transamerica IDEX, which in turn delegates proxy voting authority for
most portfolios of Transamerica IDEX to the sub-adviser retained to provide
day-to-day portfolio management for that fund. The Board of Trustees of
Transamerica IDEX adopts the proxy voting policies and procedures of the Adviser
and sub-advisers as the proxy voting policies and procedures that will be used
by each of these respective entities when exercising voting authority on behalf
of Transamerica IDEX.


                                       98



III. PROXY COMMITTEE

The Board of Trustees of Transamerica IDEX has appointed a committee of the
Board (the "Proxy Committee") for the purpose of providing the fund's consent to
vote in matters where the Adviser or sub-adviser seeks such consent because of a
conflict of interest that arises in connection with a particular vote, or for
other reasons. The Proxy Committee also may review the Adviser's and each
sub-adviser's proxy voting policies and procedures in lieu of submission of the
policies and procedures to the entire Board for approval.

IV. ANNUAL REVIEW OF PROXY VOTING POLICIES OF ADVISER AND SUB-ADVISERS

The Board of Trustees of Transamerica IDEX or the Proxy Committee of
Transamerica IDEX will review on an annual basis the proxy voting policies of
the Adviser and sub-advisers applicable to Transamerica IDEX.

                             PERFORMANCE INFORMATION

Average Annual Total Return Quotation

Quotations of average annual total return for a particular class of shares of a
fund will be expressed in terms of the average annual compounded rate of return
of a hypothetical investment in the fund over periods of 1, 5, and 10 years.
These are the average annual compounded rates of return that would equate the
initial amount invested to the ending redeemable value. These rates of return
are calculated pursuant to the following formula:

                                 P(1 + T)n = ERV

Where:

   P = a hypothetical initial payment of $1,000,

   T = the average annual total return,

   n = the number of years, and

ERV = the ending redeemable value of a hypothetical $1,000 payment made at the
      beginning of the period.

Average Annual Total Return (After Taxes on Distributions) Quotation

Each fund may, from time to time, include "total return after taxes on
distributions" in advertisements or reports to shareholders or prospective
investors. Quotations of average annual total return after taxes on
distributions will be expressed in terms of the average annual compounded rate
of return of a hypothetical investment in a fund over periods of 1, 5 and 10
years (up to the life of the fund), calculated pursuant to the following formula
which is prescribed by the SEC:

                                P(1 + T)n = ATVD

Where:

   P = a hypothetical initial payment of $1,000,

   T = the average annual total return (after taxes on distributions),

   n = the number of years, and

ATVD = ending value of a hypothetical $1,000 payment made at the beginning of
       the 1-, 5-, or 10-year periods (or fractional portion), after taxes on
       fund distributions but not after taxes on redemptions.

All total return figures assume that all dividends are reinvested when paid.
Taxes are calculated using the highest individual marginal federal income tax
rates in effect on the reinvestment date. The rates used correspond to the
character of each component of the distributions (e.g., ordinary income rate for
ordinary income distributions, short-term capital gain rate for short-term
capital gain distributions, and long-term capital gain rate for long-term
capital gain distributions). The calculations do not consider any potential tax
liabilities other than federal tax liability.

From time to time, a fund may advertise its average annual total return over
various periods of time. These total return figures show the average percentage
change in value of an investment in the fund from the beginning date of the
measuring period. These figures reflect changes in the price of the fund's
shares and assume that any income dividends and/or capital gains distributions
made by the fund during the period were reinvested in shares of the fund.
Figures will be given for one, five and ten year periods (if applicable) and may
be given for other periods as well (such as from commencement of the fund's
operations, or on a year-by-year basis).


                                       99



Average Annual Total Return (After Taxes on Distributions and Redemption)
Quotation

Each fund may, from time to time, include "total return after taxes on
distributions and redemption" in advertisements or reports to shareholders or
prospective investors. Quotations of average annual total return after taxes on
distributions and redemption will be expressed in terms of the average annual
compounded rate of return of a hypothetical investment in a fund over periods of
1, 5 and 10 years (up to the life of the fund), calculated pursuant to the
following formula which is prescribed by the SEC:

                                P(1 + T)n = ATVDR

Where:

    P = a hypothetical initial payment of $1,000,

    T = the average annual total return (after taxes on distributions and
        redemptions),

    n = the number of years, and

ATVDR = ending value of a hypothetical $1,000 payment made at the beginning of
        the 1-, 5-, or 10-year periods (or fractional portion), after taxes on
        fund distributions and redemptions.

All total return figures assume that all dividends are reinvested when paid.
Taxes are calculated using the highest individual marginal federal income tax
rates in effect on the reinvestment date. The rates used correspond to the
character of each component of the distributions (e.g., ordinary income rate for
ordinary income distributions, short-term capital gain rate for short-term
capital gain distributions, and long-term capital gain rate for long-term
capital gain distributions). The ending value is determined by subtracting
capital gain taxes resulting from the redemption and adding the tax benefit from
capital losses resulting from the redemption. The calculations do not consider
any potential tax liabilities other than federal tax liability.

From time to time, a fund may advertise its average annual total return over
various periods of time. These total return figures show the average percentage
change in value of an investment in the fund from the beginning date of the
measuring period. These figures reflect changes in the price of the fund's
shares and assume that any income dividends and/or capital gains distributions
made by the fund during the period were reinvested in shares of the fund.
Figures will be given for one, five and ten year periods (if applicable) and may
be given for other periods as well (such as from commencement of the fund's
operations, or on a year-by-year basis).

The current yield for a particular class of shares of each of TA IDEX
Transamerica Flexible Income, TA IDEX Asset Allocation - Conservative Portfolio,
TA IDEX Transamerica Convertible Securities, TA IDEX Transamerica High-Yield
Bond, TA IDEX Transamerica Balanced or TA IDEX Transamerica Value Balanced is
computed in accordance with a standardized method prescribed by rules of the
SEC. The yield is computed by dividing the fund's investment income per share
earned during a particular 30-day base period (including dividends, if any and
interest earned, minus expenses excluding reductions for affiliated brokerage
and custody earnings credits accrued during the period) by the maximum offering
price per share on the last day of the base period and then annualizing the
result.

TA IDEX TRANSAMERICA MONEY MARKET PERFORMANCE

From time to time, Transamerica IDEX may advertise performance for TA IDEX
Transamerica Money Market, including "yield." This figure is based upon
historical earnings and is not representative of the future performance of the
fund. The yield of the fund refers to the net investment income generated by a
hypothetical investment in the fund over a specific seven-day period. This net
investment income is then annualized, which means that the net investment income
generated during the seven-day period is assumed to be generated each week over
an annual period and is shown as a percentage of the investment.

The fund's seven-day yield is computed in accordance with a standardized method
prescribed by rules of the SEC. Under that method, the yield quotation is based
on a seven-day period and is computed for the fund as follows: The first
calculation is net investment income per share, which is accrued interest on
portfolio securities, plus or minus amortized discount or premium, less accrued
expenses. This number is then divided by the price per share (expected to remain
constant at $1.00) at the beginning of the period ("base period return"). The
result is then divided by 7 and multiplied by 365 and the resulting yield figure
is carried to the nearest one-hundredth of one percent. Realized capital gains
or losses and unrealized appreciation or depreciation of investments are not
included in the calculations.


                                      100



The fund's seven-day effective yield is determined by taking the base period
return (computed as described above) and calculating the effect of assumed
compounding. The formula for the seven-day effective yield is: (seven-day base
period return +1) 365/7-1. The fund may also advertise a thirty-day effective
yield in which case the formula is (thirty-day base period return +1) 365/30-1.

Average annual total return ("AATR") is found for a specific period by first
taking a hypothetical $1,000 investment ("initial investment") on the first day
of the period and computing the "redeemable value" of that investment at the end
of the period. The redeemable value is then divided by the initial investment,
and this quotient is taken to the Nth root (N representing the number of years
in the period) and 1 is subtracted from the result, which is then expressed as a
percentage. The calculation assumes that all dividends have been reinvested at
net asset value on the reinvestment dates.

Total return is not calculated according to a standard formula, except when
calculated for the "Financial Highlights" table in the financial statements.
Total return is calculated similarly to AATR but is not annualized. It may be
shown as a percentage on the increased dollar value of the hypothetical
investment over the period.

                              FINANCIAL STATEMENTS

Audited financial statements for the funds for the fiscal year ended October 31,
2005 are incorporated herein by reference from the Transamerica IDEX Annual
Report dated October 31, 2005.


                                      101



                                   APPENDIX A

TRANSAMERICA FUND ADVISORS, INC.

PROXY VOTING POLICIES AND PROCEDURES ("TFAI PROXY POLICY")

I.   Purpose

II.  The TFAI Proxy Policy is adopted in accordance with Rule 206(4)-6 under the
     Investment Advisers Act of 1940 (the "Advisers Act") and TFAI's fiduciary
     and other duties to its clients. The purpose of the TFAI Proxy Policy is to
     ensure that where TFAI exercises proxy voting authority with respect to
     client securities it does so in the best interests of the client, and that
     Sub-Advisers (as defined below) to TFAI clients exercise voting authority
     with respect to TFAI client securities in accordance with policies and
     procedures adopted by the Sub-Advisers under Rule 206(4)-6 and approved by
     the TFAI client.

III. TFAI's Advisory Activities

IV.  TFAI acts as investment adviser to Transamerica IDEX Mutual Funds,
     Transamerica Income Shares, Inc. and AEGON/ Transamerica Series Trust
     (collectively, the "Funds"). For most of the investment portfolios
     comprising the Funds, TFAI has delegated day-to-day management of the
     portfolio, including the authority to buy, sell, or hold securities in the
     portfolio and to exercise proxy voting authority with respect to those
     securities, to one or more investment sub-advisers, pursuant to
     sub-advisory agreements entered into between TFAI and each sub-adviser
     (each, a "Sub-Adviser" and collectively, the "Sub-Advisers") and approved
     by the Board of Trustees/Directors of the client Fund (the "Board"). TFAI
     serves as a "manager of managers" with respect to the Sub-Advisers and
     monitors their activities in accordance with the terms of an exemptive
     order granted by the Securities and Exchange Commission (Release No.
     IC-23379, August 5, 1998).

V.   Summary of the TFAI Proxy Policy

VI.  TFAI delegates the responsibility to exercise voting authority with respect
     to securities held in the Funds' portfolios for which one or more
     Sub-Advisers has been retained to the Sub-Adviser(s) for each such
     portfolio, in accordance with each applicable Sub-Adviser Proxy Policy (as
     defined below). TFAI will collect and review each Sub-Adviser Proxy Policy,
     together with a certification from the Sub-Adviser that the Sub-Adviser
     Proxy Policy complies with Rule 206(4)-6, and submit these materials to the
     Board for approval. In the event that TFAI is called upon to exercise
     voting authority with respect to client securities, TFAI generally will
     vote in accordance with the recommendation of Institutional Shareholder
     Services, Inc. ("ISS") or another qualified independent third party, except
     that if TFAI believes the recommendation would not be in the best interest
     of the relevant portfolio and its shareholders, TFAI will consult the Board
     of the relevant Fund (or a Committee of the Board) and vote in accordance
     with instructions from the Board or Committee.

VII. Delegation of Proxy Voting Authority to Sub-Advisers

VIII. TFAI delegates to each Sub-Adviser the responsibility to exercise voting
     authority with respect to securities held by the portfolio(s), or portion
     thereof, managed by the Sub-Adviser. Each Sub-Adviser is responsible for
     monitoring, evaluating and voting on all proxy matters with regard to
     investments the Sub-Adviser manages for the Funds in accordance with the
     Sub-Adviser's proxy voting policies and procedures adopted to comply with
     Rule 206(4)-6 (each, a "Sub-Adviser Proxy Policy" and collectively, the
     "Sub-Adviser Proxy Policies").

IX.  Administration, Review and Submission to Board of Sub-Adviser Proxy
     Policies A. Appointment of Proxy Administrator

X.   TFAI will appoint an officer to be responsible for collecting and reviewing
     the Sub-Adviser Proxy Policies and carrying out the other duties set forth
     herein (the "Proxy Administrator").

     A.   Initial Review

          1.   The Proxy Administrator will collect from each Sub-Adviser:

               a)   its Sub-Adviser Proxy Policy;

               b)   a certification from the Sub-Adviser that (i) its
                    Sub-Adviser Proxy Policy is reasonably designed to ensure
                    that the Sub-Adviser votes client securities in the best
                    interest of clients, and that the Sub-Adviser Proxy Policy
                    includes an explanation of how the Sub-Adviser addresses
                    material conflicts that may arise between the Sub-Adviser's
                    interests and those of its clients, (ii) the Sub-Adviser
                    Proxy Policy has been adopted in


                                       A-1



                    accordance with Rule 206(4)-6, and (iii) the Sub-Adviser
                    Proxy Policy complies the terms of Rule 206(4)-6; and

               c)   a summary of the Sub-Adviser Proxy Policy suitable for
                    inclusion in the client Fund's registration statement, in
                    compliance with Item 13(f) of Form N-1A, and a certification
                    to that effect.

          2.   The Proxy Administrator will review each Sub-Adviser Proxy Policy
               with a view to TFAI making a recommendation to the Board. In
               conducting its review, TFAI recognizes that the Securities and
               Exchange Commission has not adopted specific policies or
               procedures for advisers, or provided a list of approved
               procedures, but has left advisers the flexibility to craft
               policies and procedures suitable to their business and the nature
               of the conflicts they may face. As a consequence, Sub-Adviser
               Proxy Policies are likely to differ widely. Accordingly, the
               Proxy Administrator's review of the Sub-Adviser Proxy Policies
               will be limited to addressing the following matters:

               a)   whether the Sub-Adviser Proxy Policy provides that the
                    Sub-Adviser votes solely in the best interests of clients;

               b)   whether the Sub-Adviser Proxy Policy includes a description
                    of how the Sub-Adviser addresses material conflicts of
                    interest that may arise between the Sub-Adviser or its
                    affiliates and its clients; and

               c)   whether the Sub-Adviser Proxy Policy includes both general
                    policies and procedures as well as policies with respect to
                    specific types of issues (for this purpose general policies
                    include any delegation to a third party, policies relating
                    to matters that may substantially affect the rights or
                    privileges of security holders, and policies regarding the
                    extent of weight given to the view of the portfolio company
                    management; specific issues include corporate governance
                    matters, changes to capital structure, stock option plans
                    and other management compensation issues, and social
                    corporate responsibility issues, among others).

          3.   The Proxy Administrator will review the certification provided
               pursuant to paragraph 1(b) above for completeness, and will
               review the summary provided pursuant to paragraph 1(c) above for
               compliance with the requirements of Form N-1A.

          4.   TFAI will provide to the Board (or a Board Committee), the
               materials referred to in Section V.B.1. and a recommendation
               pursuant to the Proxy Administrator's review of the Sub-Adviser
               Proxy Policy provided for in Section V.B.2.

          5.   TFAI will follow the same procedure in connection with the
               engagement of any new Sub-Adviser.

     B.   Subsequent Review

XI.  TFAI will request that each Sub-Adviser provide TFAI with prompt notice of
     any material change in its Sub-Adviser Proxy Policy. TFAI will report any
     such changes at the next quarterly Board meeting of the applicable Fund. No
     less frequently than once each calendar year, TFAI will request that each
     Sub-Adviser provide TFAI with its current Sub-Adviser Proxy Policy, or
     certify that there have been no material changes to its Sub-Adviser Proxy
     Policy or that all material changes have been previously provided for
     review by TFAI and approval by the relevant Board(s), and that the
     Sub-Adviser Proxy Policy continues to comply with Rule 206(4)-6.

     A.   Record of Proxy Votes Exercised by Sub-Adviser

XII. The Proxy Administrator, or a third party as permitted by regulations
     issued by the Securities and Exchange Commission (such as ISS), will
     maintain a record of any proxy votes (including the information called for
     in Items 1(a) through (i) of Form N-PX) exercised by the Sub-Adviser on
     behalf of a portfolio of the Funds. The Proxy Administrator, or a third
     party as permitted by regulations issued by the Securities and Exchange
     Commission (such as ISS), will maintain a complete proxy voting record with
     respect to each Fund. If TFAI utilizes the services of a third party for
     maintaining the records above specified, TFAI shall obtain an undertaking
     from the third party that it will provide the records promptly upon
     request.


                                       A-2



XIII. TFAI Exercise of Proxy Voting Authority

     A.   Use of Independent Third Party

XIV. If TFAI is called upon to exercise voting authority on behalf of a Fund
     client, TFAI will vote in accordance with the recommendations of ISS or
     another qualified independent third party (the "Independent Third Party"),
     provided that TFAI agrees that the voting recommendation issued by the
     Independent Third Party reflects the best interests of the relevant
     portfolio and its shareholders.

     A.   Conflict with View of Independent Third Party

XV.  If, in its review of the Independent Third Party recommendation, TFAI
     believes that the recommendation is not in the best interests of the Fund
     client, TFAI will submit to the Board (or a Board Committee) its reasons
     for disagreeing with the Independent Third Party, as well as full
     disclosure of any conflict of interest between TFAI or its affiliates and
     the Fund in connection with the vote, and seek consent of the Board (or
     Committee) with respect to TFAI's proposed vote.

     A.   Asset Allocation Portfolios

XVI. For any asset allocation portfolio managed by TFAI and operated, in whole
     or in part, as a "fund of funds", TFAI will vote proxies in accordance with
     the recommendations of the Board(s) of the Fund(s). If any such asset
     allocation portfolio holds shares of a registered investment company that
     is not a portfolio of a Fund, TFAI will seek Board (or Committee) consent
     with respect to TFAI's proposed vote in accordance with the provisions of
     Section VI.B.

XVII. Conflicts of Interest Between TFAI or Its Affiliates and the Funds

XVIII. The TFAI Proxy Voting Policy addresses material conflicts that may arise
     between TFAI or its affiliates and the Funds by, in every case where TFAI
     exercises voting discretion, either (i) providing for voting in accordance
     with the recommendation of the Independent Third Party or Board(s); or (ii)
     obtaining the consent of the Board (or a Board Committee) with full
     disclosure of the conflict.

XIX. Recordkeeping

     A.   Records Generally Maintained

XX.  In accordance with Rule 204-2(c)(2) under the Advisers Act, the Proxy
     Administrator shall cause TFAI to maintain the following records: 1. the
     TFAI Proxy Voting Policy; and

          2.   records of Fund client requests for TFAI proxy voting
               information.

     B.   Records for TFAI Exercise of Proxy Voting Authority

XXI. In accordance with Rule 204-2(c)(2) under the Advisers Act, if TFAI
     exercises proxy voting authority pursuant to Section VI above, TFAI, or a
     third party as permitted by regulations issued by the Securities and
     Exchange Commission (such as ISS), shall make and maintain the following
     records:

          1.   proxy statements received regarding matters it has voted on
               behalf of Fund clients;

          2.   records of votes cast by TFAI; and

          3.   copies of any documents created by TFAI that were material to
               deciding how to vote proxies on behalf of Fund clients or that
               memorialize the basis for such a decision.

XXII. If TFAI utilizes the services of a third party for maintaining the records
     above specified, TFAI shall obtain an undertaking from the third party that
     it will provide the records promptly upon request.

     A.   Records Pertaining to Sub-Adviser Proxy Policies

XXIII. The Proxy Administrator will cause TFAI and/or a third party as permitted
     by regulations issued by the Securities and Exchange Commission (such as
     ISS), to maintain the following records:

          1.   each Sub-Adviser Proxy Policy; and

          2.   the materials delineated in Article V above.

XXIV. If TFAI utilizes the services of a third party for maintaining the records
     above specified, TFAI shall obtain an undertaking from the third party that
     it will provide the records promptly upon request.


                                       A-3



     A.   Time Periods for Record Retention

XXV. All books and records required to maintain under this Section VIII will be
     maintained in an easily accessible place for a period of not less than five
     years from the end of the fiscal year during which the last entry was made
     on the record, the first two years in an appropriate office of TFAI.

XXVI. Provision of TFAI Proxy Policy to Fund Clients

XXVII. The Proxy Administrator will provide each Fund's Board (or a Board
     Committee) a copy of the TFAI Proxy Policy at least once each calendar
     year.

AEGON USA INVESTMENT MANAGEMENT, LLC

Not Applicable

ALLIANCE CAPITAL MANAGEMENT L.P.

STATEMENT OF POLICIES AND PROCEDURES FOR PROXY VOTING

INTRODUCTION

As a registered investment adviser, Alliance Capital Management L.P. ("Alliance
Capital", "we" or "us") has a fiduciary duty to act solely in the best interests
of our clients. We recognize that this duty requires us to vote client
securities in a timely manner and make voting decisions that are in the best
interests of our clients. Consistent with these obligations, we will disclose
our clients' voting records only to them and as required by mutual fund vote
disclosure regulations. In addition, the proxy committees may, after careful
consideration, choose to respond to surveys regarding past votes.

This statement is intended to comply with Rule 206(4)-6 of the Investment
Advisers Act of 1940. It sets forth our policies and procedures for voting
proxies for our discretionary investment advisory clients, including investment
companies registered under the Investment Company Act of 1940. This statement
applies to Alliance Capital's growth and value investment groups investing on
behalf of clients in both US and non-US securities.

PROXY POLICIES

This statement is designed to be responsive to the wide range of proxy voting
subjects that can have a significant effect on the investment value of the
securities held in our clients' accounts. These policies are not exhaustive due
to the variety of proxy voting issues that we may be required to consider.
Alliance Capital reserves the right to depart from these guidelines in order to
avoid voting decisions that we believe may be contrary to our clients' best
interests. In reviewing proxy issues, we will apply the following general
policies:

CORPORATE GOVERNANCE: Alliance Capital's proxy voting policies recognize the
importance of good corporate governance in ensuring that management and the
board of directors fulfill their obligations to the shareholders. We favor
proposals promoting transparency and accountability within a company. We will
vote for proposals providing for equal access to the proxy materials so that
shareholders can express their views on various proxy issues. We also support
the appointment of a majority of independent directors on key committees and
separating the positions of chairman and chief executive officer.

ELECTIONS OF DIRECTORS: Unless there is a proxy fight for seats on the Board or
we determine that there are other compelling reasons for withholding votes for
directors, we will vote in favor of the management proposed slate of directors.
That said, we believe that directors have a duty to respond to shareholder
actions that have received significant shareholder support. We may withhold
votes for directors that fail to act on key issues such as failure to implement
proposals to declassify boards, failure to implement a majority vote
requirement, failure to submit a rights plan to a shareholder vote or failure to
act on tender offers where a majority of shareholders have tendered their
shares. In addition, we will withhold votes for directors who fail to attend at
least seventy-five percent of board meetings within a given year without a
reasonable excuse. Finally, we may withhold votes for directors of non-U.S.
issuers where there is insufficient information about the nominees disclosed in
the proxy statement.

APPOINTMENT OF AUDITORS: Alliance Capital believes that the company remains in
the best position to choose the auditors and will generally support management's
recommendation. However, we recognize that there may be inherent conflicts when
a company's independent auditor performs substantial non-audit related services
for the company. While we will recognize that there may be special circumstances
that could lead to high non-audit fees in some years, we would normally consider
non-audit fees in excess of 70% to be disproportionate. Therefore, we may vote
against the


                                       A-4



appointment of auditors if the fees for non-audit related services exceed 70% of
the total audit fees paid by the company or there are other reasons to question
the independence of the company's auditors.

CHANGES IN LEGAL AND CAPITAL STRUCTURE: Changes in a company's charter, articles
of incorporation or by-laws are often technical and administrative in nature.
Absent a compelling reason to the contrary, Alliance Capital will cast its votes
in accordance with the company's management on such proposals. However, we will
review and analyze on a case-by-case basis any non-routine proposals that are
likely to affect the structure and operation of the company or have a material
economic effect on the company. For example, we will generally support proposals
to increase authorized common stock when it is necessary to implement a stock
split, aid in a restructuring or acquisition or provide a sufficient number of
shares for an employee savings plan, stock option or executive compensation
plan. However, a satisfactory explanation of a company's intentions must be
disclosed in the proxy statement for proposals requesting an increase of greater
than one hundred percent of the shares outstanding. We will oppose increases in
authorized common stock where there is evidence that the shares will be used to
implement a poison pill or another form of anti-takeover device, or if the
issuance of new shares could excessively dilute the value of the outstanding
shares upon issuance.

CORPORATE RESTRUCTURINGS, MERGERS AND ACQUISITIONS: Alliance Capital believes
proxy votes dealing with corporate reorganizations are an extension of the
investment decision. Accordingly, we will analyze such proposals on a
case-by-case basis, weighing heavily the views of the research analysts that
cover the company and the investment professionals managing the portfolios in
which the stock is held.

PROPOSALS AFFECTING SHAREHOLDER RIGHTS: Alliance Capital believes that certain
fundamental rights of shareholders must be protected. We will generally vote in
favor of proposals that give shareholders a greater voice in the affairs of the
company and oppose any measure that seeks to limit those rights. However, when
analyzing such proposals we will weigh the financial impact of the proposal
against the impairment of shareholder rights.

ANTI-TAKEOVER MEASURES: Alliance Capital believes that measures that impede
takeovers or entrench management not only infringe on the rights of shareholders
but may also have a detrimental effect on the value of the company. We will
generally oppose proposals, regardless of whether they are advanced by
management or shareholders, the purpose or effect of which is to entrench
management or dilute shareholder ownership. Conversely, we support proposals
that would restrict or otherwise eliminate anti-takeover measures that have
already been adopted by corporate issuers. For example, we will support
shareholder proposals that seek to require the company to submit a shareholder
rights plan to a shareholder vote. We will evaluate, on a case by-case basis,
proposals to completely redeem or eliminate such plans. Furthermore, we will
generally oppose proposals put forward by management (including blank check
preferred stock, classified boards and supermajority vote requirements) that
appear to be intended as management entrenchment mechanisms.

EXECUTIVE COMPENSATION: Alliance Capital believes that company management and
the compensation committee of the board of directors should, within reason, be
given latitude to determine the types and mix of compensation and benefit awards
offered. Whether proposed by a shareholder or management, we will review
proposals relating to executive compensation plans on a case-by-case basis to
ensure that the long-term interests of management and shareholders are properly
aligned. We will analyze the proposed plans to ensure that shareholder equity
will not be excessively diluted, the option exercise price is not below market
price on the date of grant and an acceptable number of employees are eligible to
participate in such programs. We will generally oppose plans that permit
repricing of underwater stock options without shareholder approval. Other
factors such as the company's performance and industry practice will generally
be factored into our analysis. We will support proposals to submit severance
packages that do not exceed 2.99 times the sum of an executive officer's base
salary plus bonus that are triggered by a change in control to a shareholder
vote. Finally, we will support shareholder proposals requiring companies to
expense stock options because we view them as a large corporate expense.

SOCIAL AND CORPORATE RESPONSIBILITY: Alliance Capital will review and analyze on
a case-by-case basis proposals relating to social, political and environmental
issues to determine whether they will have a financial impact on shareholder
value. We will vote against proposals that are unduly burdensome or result in
unnecessary and excessive costs to the company. We may abstain from voting on
social proposals that do not have a readily determinable financial impact on
shareholder value.

PROXY VOTING COMMITTEES

Our growth and value investment groups have formed separate proxy voting
committees to establish general proxy policies for Alliance Capital and consider
specific proxy voting matters as necessary. These committees periodically review
these policies and new types of corporate governance issues, and decide how we
should vote on proposals not


                                       A-5



covered by these policies. When a proxy vote cannot be clearly decided by an
application of our stated policy, the proxy committee will evaluate the
proposal. In addition, the committees, in conjunction with the analyst that
covers the company, may contact corporate management and interested shareholder
groups and others as necessary to discuss proxy issues. Members of the committee
include senior investment personnel and representatives of the Legal and
Compliance Department. The committees may also evaluate proxies where we face a
potential conflict of interest (as discussed below). Finally, the committees
monitor adherence to these policies.

CONFLICTS OF INTEREST

Alliance Capital recognizes that there may be a potential conflict of interest
when we vote a proxy solicited by an issuer whose retirement plan we manage, or
we administer, who distributes Alliance Capital sponsored mutual funds, or with
whom we or an employee has another business or personal relationship that may
affect how we vote on the issuer's proxy. Similarly, Alliance may have a
potential material conflict of interest when deciding how to vote on a proposal
sponsored or supported by a shareholder group that is a client. We believe that
centralized management of proxy voting, oversight by the proxy voting committees
and adherence to these policies ensures that proxies are voted with only our
clients' best interests in mind. That said, we have implemented additional
procedures to ensure that our votes are not the product of a material conflict
of interests, including: (i) on an annual basis, the proxy committees will take
reasonable steps to evaluate the nature of Alliance Capital's and our employees'
material business and personal relationships (and those of our affiliates) with
any company whose equity securities are held in client accounts and any client
that has sponsored or has material interest in a proposal upon which we will be
eligible to vote; (ii) requiring anyone involved in the decision making process
to disclose to the chairman of the appropriate proxy committee any potential
conflict that they are aware of (including personal relationships) and any
contact that they have had with any interested party regarding a proxy vote;
(iii) prohibiting employees involved in the decision making process or vote
administration from revealing how we intend to vote on a proposal in order to
reduce any attempted influence from interested parties; and (iv) where a
material conflict of interests exists, reviewing our proposed vote by applying a
series of objective tests and, where necessary, considering the views of a third
party research service to ensure that our voting decision is consistent with our
clients' best interests.

Because under certain circumstances Alliance Capital considers the
recommendation of third party research services, the proxy committees will take
reasonable steps to verify that any third party research service is in fact
independent based on all of the relevant facts and circumstances. This includes
reviewing the third party research service's conflict management procedures and
ascertaining, among other things, whether the third party research service (i)
has the capacity and competency to adequately analyze proxy issues; and (ii) can
make such recommendations in an impartial manner and in the best interests of
our clients.

PROXIES OF CERTAIN NON-US ISSUERS

Proxy voting in certain countries requires "share blocking." Shareholders
wishing to vote their proxies must deposit their shares shortly before the date
of the meeting (usually one-week) with a designated depositary. During this
blocking period, shares that will be voted at the meeting cannot be sold until
the meeting has taken place and the shares are returned to the clients'
custodian banks. Alliance Capital may determine that the benefit to the client
of exercising the vote does not outweigh the cost of voting, which is not being
able to transact in the shares during this period. Accordingly, if share
blocking is required we may abstain from voting those shares. In addition,
voting proxies of issuers in non-US markets may give rise to a number of
administrative issues that may prevent Alliance Capital from voting such
proxies. For example, Alliance Capital may receive meeting notices without
enough time to fully consider the proxy or after the cut-off date for voting.
Other markets require Alliance Capital to provide local agents with power of
attorney prior to implementing Alliance Capital's voting instructions. Although
it is Alliance Capital's policy to seek to vote all proxies for securities held
in client accounts for which we have proxy voting authority, in the case of
non-US issuers, we vote proxies on a best efforts basis.

PROXY VOTING RECORDS

Clients may obtain information about how we voted proxies on their behalf by
contacting their Alliance Capital administrative representative. Alternatively,
clients may make a written request for proxy voting information to: Mark R.
Manley, Senior Vice President & Chief Compliance Officer, Alliance Capital
Management L.P., 1345 Avenue of the Americas, New York, NY 10105.


                                       A-6



AMERICAN CENTURY INVESTMENT MANAGEMENT, INC.

PROXY VOTING GUIDELINES. The Manager is responsible for exercising the voting
rights associated with the securities purchased and/or held by the funds. In
exercising its voting obligations, the Manager is guided by general fiduciary
principles. It must act prudently, solely in the interest of the funds, and for
the exclusive purpose of providing benefits to them. The Manager attempts to
consider all factors of its vote that could affect the value of the investment.
The funds' board of [directors/trustees] has approved the Manager's Proxy Voting
Guidelines to govern the Manager's proxy voting activities.

The Manager and the board have agreed on certain significant contributors to
shareholder value with respect to a number of matters that are often the subject
of proxy solicitations for shareholder meetings. The Proxy Voting Guidelines
specifically address these considerations and establish a framework for the
Manager's consideration of the vote that would be appropriate for the funds. In
particular, the Proxy Voting Guidelines outline principles and factors to be
considered in the exercise of voting authority for proposals addressing:

- -    Election of Directors

- -    Ratification of Selection of Auditors

- -    Equity-Based Compensation Plans

- -    Anti-Takeover Proposals

     -    Cumulative Voting

     -    Staggered Boards

     -    "Blank Check" Preferred Stock

     -    Elimination of Preemptive Rights

     -    Non-targeted Share Repurchase

     -    Increase in Authorized Common Stock

     -    "Supermajority" Voting Provisions or Super Voting Share Classes

     -    "Fair Price" Amendments

     -    Limiting the Right to Call Special Shareholder Meetings

     -    Poison Pills or Shareholder Rights Plans

     -    Golden Parachutes

     -    Reincorporation

     -    Confidential Voting

     -    Opting In or Out of State Takeover Laws

- -    Shareholder Proposals Involving Social, Moral or Ethical Matters

- -    Anti-Greenmail Proposals

- -    Changes to Indemnification Provisions

- -    Non-Stock Incentive Plans

- -    Director Tenure

- -    Directors' Stock Options Plans

- -    Director Share Ownership

Finally, the Proxy Voting Guidelines establish procedures for voting of proxies
in cases in which the Manager may have a potential conflict of interest.
Companies with which the Manager has direct business relationships could
theoretically use these relationships to attempt to unduly influence the manner
in which American Century votes on matters for the funds. To ensure that such a
conflict of interest does not affect proxy votes cast for the funds, all
discretionary (including case-by-case) voting for these companies will be voted
in direct consultation with a committee of the independent directors of the
funds.

A copy of the Manager's current Proxy Voting Guidelines are available on the
funds' website at www.americancentury.com.

EVERGREEN INVESTMENT MANAGEMENT COMPANY, LLC

                       PROXY VOTING POLICY AND PROCEDURES
                       ISS PROXY VOTING GUIDELINES SUMMARY

STATEMENT OF PRINCIPLES

          Evergreen Investment Management Company, LLC (EIMCO) recognizes it has
a fiduciary duty to vote proxies on behalf of clients who have delegated such
responsibility to EIMCO, and that in all cases proxies should be voted in a
manner reasonably believed to be in the clients' best interest.


                                       A-7



PROXY VOTING RECORDS

A copy of the proxy voting records indicating how the Evergreen funds voted
proxies relating to portfolio securities during the twelve-month period ended
June 30, 2005 may be obtained, without charge, by visiting our website at
EvergreenInvestments.com or the SEC's website at http://www.sec.gov.

CORPORATE GOVERNANCE COMMITTEE

EIMCO has established a corporate governance committee (Committee) which is a
sub-committee of EIMCO's Investment Policy Committee. The Committee is
responsible for approving EIMCO's proxy voting policies and procedures, for
overseeing the proxy voting process, and for reviewing proxy voting on a regular
basis. The Committee will meet quarterly to review reports of all proxies voted
for the prior period and to conduct other business as required.

CONFLICTS OF INTEREST

EIMCO recognizes that under certain circumstances it may have a conflict of
interest in voting proxies on behalf of its clients. Such circumstances may
include, but are not limited to, situations where EIMCO or one or more of its
affiliates has a client or customer relationship with the issuer of the security
that is the subject of the proxy vote.

In most cases, structural and informational barriers within EIMCO and Wachovia
Corporation will prevent EIMCO from becoming aware of the relationship giving
rise to the potential conflict of interest. In such circumstances, EIMCO will
vote the proxy according to its standard guidelines and procedures described
above.

If persons involved in proxy voting on behalf of EIMCO becomes aware of a
potential conflict of interest, the Committee shall consult with EIMCO's Legal
Department and consider whether to implement special procedures with respect to
the voting of that proxy, including whether an independent third party should be
retained to vote the proxy.

SHARE BLOCKING

EIMCO does not vote global proxies, with share blocking restrictions, requiring
shares to be prohibited from sale.

PROXY VOTING GUIDELINE SUMMARY

I. THE BOARD OF DIRECTORS

VOTING ON DIRECTOR NOMINEES IN UNCONTESTED ELECTIONS

Votes on director nominees should be made on a CASE-BY-CASE basis, examining the
following factors: composition of the board and key board committees, attendance
at board meetings, corporate governance provisions and takeover activity,
long-term company performance relative to a market index, directors' investment
in the company, whether the chairman is also serving as CEO, and whether a
retired CEO sits on the board. However, there are some actions by directors that
should result in votes being WITHHELD. These instances include directors who:

- -    Attend less than 75 percent of the board and committee meetings without a
     valid excuse

- -    Implement or renew a dead-hand or modified dead-hand poison pill

- -    Ignore a shareholder proposal that is approved by a majority of the shares
     outstanding

- -    Ignore a shareholder proposal that is approved by a majority of the votes
     cast for two consecutive years

- -    Have failed to act on takeover offers where the majority of the
     shareholders have tendered their shares

- -    Are inside directors and sit on the audit, compensation, or nominating
     committees

- -    Are inside directors and the full board serves as the audit, compensation,
     or nominating committee or the company does not have one of these
     committees

In addition, directors who enacted egregious corporate governance policies or
failed to replace management as appropriate would be subject to recommendations
to WITHHOLD votes.


                                       A-8



SEPARATING CHAIRMAN AND CEO

Vote on a CASE-BY-CASE basis on shareholder proposals requiring that the
positions of chairman and CEO be held separately.

PROPOSALS SEEKING A MAJORITY OF INDEPENDENT DIRECTORS

Shareholder proposals asking that a majority of directors be independent should
be evaluated on a CASE-BY-CASE basis. Vote FOR shareholder proposals asking that
board audit, compensation, and/or nominating committees be composed exclusively
of independent directors.

STOCK OWNERSHIP REQUIREMENTS

Vote AGAINST shareholder proposals requiring directors to own a minimum amount
of company stock in order to qualify as a director or to remain on the board.

TERM OF OFFICE

Vote against shareholder proposals to limit the tenure of outside directors.

AGE LIMITS

Vote AGAINST shareholder proposals to impose a mandatory retirement age for
outside directors.

DIRECTOR AND OFFICER INDEMNIFICATION AND LIABILITY PROTECTION

Proposals on director and officer indemnification and liability protection
should be evaluated on a CASE-BY-CASE basis, using Delaware law as the standard.
Vote AGAINST proposals to eliminate entirely directors' and officers' liability
for monetary damages for violating the duty of care. Vote AGAINST
indemnification proposals that would expand coverage beyond just legal expenses
to acts, such as negligence, that are more serious violations of fiduciary
obligation than mere carelessness. Vote FOR only those proposals providing such
expanded coverage in cases when a director's or officer's legal defense was
unsuccessful if: (1) the director was found to have acted in good faith and in a
manner that he reasonably believed was in the best interests of the company, and
(2) only if the director's legal expenses would be covered.

CHARITABLE CONTRIBUTIONS

Vote AGAINST proposals regarding charitable contributions.

II. PROXY CONTESTS

VOTING FOR DIRECTOR NOMINEES IN CONTESTED ELECTIONS

Votes in a contested election of directors must be evaluated on a CASE-BY-CASE
basis, considering the following factors: long-term financial performance of the
target company relative to its industry; management's track record; background
to the proxy contest; qualifications of director nominees (both slates);
evaluation of what each side is offering shareholders as well as the likelihood
that the proposed objectives and goals can be met; and stock ownership
positions.

REIMBURSE PROXY SOLICITATION EXPENSES

Voting to reimburse proxy solicitation expenses should be analyzed on a
CASE-BY-CASE basis. In cases where Evergreen recommends in favor of the
dissidents, we also recommend voting FOR reimbursing proxy solicitation
expenses.

III. AUDITORS

RATIFYING AUDITORS


                                       A-9



Vote FOR proposals to ratify auditors, unless: an auditor has a financial
interest in or association with the company, and is therefore not independent;
or there is reason to believe that the independent registered public accounting
firm has rendered an opinion which is neither accurate nor indicative of the
company's financial position.

IV. PROXY CONTEST DEFENSES

BOARD STRUCTURE: STAGGERED VS. ANNUAL ELECTIONS

Vote AGAINST proposals to classify the board.

Vote FOR proposals to repeal classified boards and to elect all directors
annually.

SHAREHOLDER ABILITY TO REMOVE DIRECTORS

Vote AGAINST proposals that provide that directors may be removed only for
cause.

Vote FOR proposals to restore shareholder ability to remove directors with or
without cause.

Vote AGAINST proposals that provide that only continuing directors may elect
replacements to fill board vacancies.

Vote FOR proposals that permit shareholders to elect directors to fill board
vacancies.

CUMULATIVE VOTING

Vote AGAINST proposals to eliminate cumulative voting.

Vote proposals to restore or permit cumulative voting on a CASE-BY-CASE basis
relative to the company's other governance provisions.

SHAREHOLDER ABILITY TO CALL SPECIAL MEETINGS

Vote AGAINST proposals to restrict or prohibit shareholder ability to call
special meetings.

Vote FOR proposals that remove restrictions on the right of shareholders to act
independently of management.

SHAREHOLDER ABILITY TO ACT BY WRITTEN CONSENT

Vote AGAINST proposals to restrict or prohibit shareholder ability to take
action by written consent.

Vote FOR proposals to allow or make easier shareholder action by written
consent.

SHAREHOLDER ABILITY TO ALTER THE SIZE OF THE BOARD

Vote FOR proposals that seek to fix the size of the board.

Vote AGAINST proposals that give management the ability to alter the size of the
board without shareholder approval.

V. TENDER OFFER DEFENSES

POISON PILLS

Vote FOR shareholder proposals that ask a company to submit its poison pill for
shareholder ratification.

Review on a CASE-BY-CASE basis shareholder proposals to redeem a company's
poison pill.

Review on a CASE-BY-CASE basis management proposals to ratify a poison pill.

FAIR PRICE PROVISIONS


                                      A-10



Vote proposals to adopt fair price provisions on a CASE-BY-CASE basis,
evaluating factors such as the vote required to approve the proposed
acquisition, the vote required to repeal the fair price provision, and the
mechanism for determining the fair price.

Generally, vote AGAINST fair price provisions with shareholder vote requirements
greater than a majority of disinterested shares.

GREENMAIL

Vote FOR proposals to adopt antigreenmail charter of bylaw amendments or
otherwise restrict a company's ability to make greenmail payments.

Review on a CASE-BY-CASE basis antigreenmail proposals when they are bundled
with other charter or bylaw amendments.

PALE GREENMAIL

Review on a CASE-BY-CASE basis restructuring plans that involve the payment of
pale greenmail.

UNEQUAL VOTING RIGHTS

Vote AGAINST dual-class exchange offers.

Vote AGAINST dual-class recapitalizations.

SUPERMAJORITY SHAREHOLDER VOTE REQUIREMENT TO AMEND THE CHARTER OR BYLAWS

Vote AGAINST management proposals to require a supermajority shareholder vote to
approve charter and bylaw amendments.

Vote FOR shareholder proposals to lower supermajority shareholder vote
requirements for charter and bylaw amendments.

SUPERMAJORITY SHAREHOLDER VOTE REQUIREMENT TO APPROVE MERGERS

Vote AGAINST management proposals to require a supermajority shareholder vote to
approve mergers and other significant business combinations.

Vote FOR shareholder proposals to lower supermajority shareholder vote
requirements for mergers and other significant business combinations.

WHITE SQUIRE PLACEMENTS

Vote FOR shareholder proposals to require approval of blank check preferred
stock Issues for other than general corporate purposes.

VI. MISCELLANEOUS GOVERNANCE PROVISIONS

CONFIDENTIAL VOTING

Vote FOR shareholder proposals that request companies to adopt confidential
voting, use independent tabulators, and use independent inspectors of election
as long as the proposals include clauses for proxy contests as follows: In the
case of a contested election, management should be permitted to request that the
dissident group honor its confidential voting policy. If the dissidents agree,
the policy remains in place. If the dissidents do not agree, the confidential
voting policy is waived.

Vote FOR management proposals to adopt confidential voting.

EQUAL ACCESS


                                      A-11



Vote FOR shareholder proposals that would allow significant company shareholders
equal access to management's proxy material in order to evaluate and propose
voting recommendations on proxy proposals and director nominees, and in order to
nominate their own candidates to the board.

BUNDLED PROPOSALS

Review on a CASE-BY-CASE basis bundled or "conditioned" proxy proposals. In the
case of items that are conditioned upon each other, examine the benefits and
costs of the packaged items. In instances when the joint effect of the
conditioned items is not in shareholders' best interests, vote against the
proposals. If the combined effect is positive, support such proposals.

SHAREHOLDER ADVISORY COMMITTEES

Review on a CASE-BY-CASE basis proposals to establish a shareholder advisory
committee.

VII. CAPITAL STRUCTURE

COMMON STOCK AUTHORIZATION

Review proposals to increase the number of shares of common stock authorized for
issue on a CASE-BY-CASE basis.

Vote AGAINST proposals to increase the number of authorized shares of the class
of stock that has superior voting rights in companies that have dual-class
capitalization structures.

STOCK DISTRIBUTIONS: SPLITS AND DIVIDENDS

Vote FOR management proposals to increase common share authorization for a stock
split, provided that the increase in authorized shares would not result in an
excessive number of shares available for issuance given a company's industry and
performance in terms of shareholder returns.

REVERSE STOCK SPLITS

Vote FOR management proposals to implement a reverse stock split when the number
of shares will be proportionately reduced to avoid delisting.

Review on a CASE-BY-CASE basis on proposals to implement a reverse stock split
that do not proportionately reduce the number of shares authorized for Issue.

PREFERRED STOCK

Vote AGAINST proposals authorizing the creation of new classes of preferred
stock with unspecified voting, conversion, dividend distribution, and other
rights ("blank check" preferred stock).

Vote FOR proposals to create blank check preferred stock in cases when the
company expressly states that the stock will not be used as a takeover defense.

Vote FOR proposals to authorize preferred stock in cases where the company
specifies the voting, dividend, conversion, and other rights of such stock and
the terms of the preferred stock appear reasonable.

Vote CASE-BY-CASE on proposals to increase the number of blank check preferred
shares after analyzing the number of preferred shares available for Issue given
a company's industry and performance in terms of shareholder returns.

SHAREHOLDER PROPOSALS REGARDING BLANK CHECK PREFERRED STOCK

Vote FOR shareholder proposals to have blank check preferred stock placements,
other than those shares issued for the purpose of raising capital or making
acquisitions in the normal course of business, submitted for shareholder
ratification.

ADJUSTMENTS TO PAR VALUE OF COMMON STOCK

Vote FOR management proposals to reduce the par value of common stock.


                                      A-12


PREEMPTIVE RIGHTS

Review on a CASE-BY-CASE basis shareholder proposals that seek preemptive
rights. In evaluating proposals on preemptive rights, consider the size of a
company and the characteristics of its shareholder base.

DEBT RESTRUCTURINGS

Review on a CASE-BY-CASE basis proposals to increase common and/or preferred
shares and to Issue shares as part of a debt restructuring plan. Consider the
following Issues: Dilution--How much will ownership interest of existing
shareholders be reduced, and how extreme will dilution to any future earnings
be? Change in Control--Will the transaction result in a change in control of the
company? Bankruptcy--Generally, approve proposals that facilitate debt
restructurings unless there are clear signs of self-dealing or other abuses.

SHARE REPURCHASE PROGRAMS

Vote FOR management proposals to institute open-market share repurchase plans in
which all shareholders may participate on equal terms.

TRACKING STOCK

Votes on the creation of tracking stock are determined on a CASE-BY-CASE basis,
weighing the strategic value of the transaction against such factors as:

- -    adverse governance changes

- -    excessive increases in authorized capital stock

- -    unfair method of distribution

- -    diminution of voting rights

- -    adverse conversion features

- -    negative impact on stock option plans

- -    other alternatives such as spinoff

VIII. EXECUTIVE AND DIRECTOR COMPENSATION

Votes with respect to compensation plans should be determined on a CASE-BY-CASE
basis.

Our new methodology for reviewing compensation plans primarily focuses on the
transfer of shareholder wealth (the dollar cost of pay plans to shareholders
instead of simply focusing on voting power dilution). Using the expanded
compensation data disclosed under the SEC's new rules, Evergreen will value
every award type. Evergreen will include in its analyses an estimated dollar
cost for the proposed plan and all continuing plans. This cost, dilution to
shareholders' equity, will also be expressed as a percentage figure for the
transfer of shareholder wealth, and will be considered along with dilution to
voting power. Once Evergreen determines the estimated cost of the plan, we
compare it to a company-specific dilution cap.

Our model determines a company-specific allowable pool of shareholder wealth
that may be transferred from the company to executives, adjusted for (1)
long-term corporate performance (on an absolute basis and relative to a standard
industry peer group and an appropriate market index), (2) cash compensation, and
(3) categorization of the company as emerging, growth, or mature. These
adjustments are pegged to market capitalization. Evergreen will continue to
examine other features of proposed pay plans such as administration, payment
terms, plan duration, and whether the administering committee is permitted to
reprice underwater stock options without shareholder approval.

MANAGEMENT PROPOSALS SEEKING APPROVAL TO REPRICE OPTIONS

Vote on management proposals seeking approval to reprice options on a
CASE-BY-CASE basis.


                                      A-13


DIRECTOR COMPENSATION

Votes on stock-based plans for directors are made on a CASE-BY-CASE basis.

EMPLOYEE STOCK PURCHASE PLANS

Votes on employee stock purchase plans should be made on a CASE-BY-CASE basis.

OBRA-RELATED COMPENSATION PROPOSALS:
AMENDMENTS THAT PLACE A CAP ON ANNUAL GRANTS OR AMEND ADMINISTRATIVE FEATURES

Vote FOR plans that simply amend shareholder-approved plans to include
administrative features or place a cap on the annual grants any one participant
may receive to comply with the provisions of Section 162(m) of OBRA.

AMENDMENTS TO ADDED PERFORMANCE-BASED GOALS

Vote FOR amendments to add performance goals to existing compensation plans to
comply with the provisions of Section 162(m) of OBRA.

AMENDMENTS TO INCREASE SHARES AND RETAIN TAX DEDUCTIONS UNDER OBRA

Votes on amendments to existing plans to increase shares reserved and to qualify
the plan for favorable tax treatment under the provisions of Section 162(m)
should be evaluated on a CASE-BY-CASE basis.

APPROVAL OF CASH OR CASH-AND-STOCK BONUS PLANS

Vote FOR cash or cash-and-stock bonus plans to exempt the compensation from
taxes under the provisions of Section 162(m) of OBRA.

SHAREHOLDER PROPOSALS TO LIMIT EXECUTIVE AND DIRECTOR PAY

Generally, vote FOR shareholder proposals that seek additional disclosure of
executive and director pay information.

Review on a CASE-BY-CASE basis all other shareholder proposals that seek to
limit executive and director pay.

GOLDEN AND TIN PARACHUTES

Vote FOR shareholder proposals to have golden and tin parachutes submitted for
shareholder ratification.

Review on a CASE-BY-CASE basis all proposals to ratify or cancel golden or tin
parachutes.

EMPLOYEE STOCK OWNERSHIP PLANS (ESOPS)

Vote FOR proposals that request shareholder approval in order to implement an
ESOP or to increase authorized shares for existing ESOPs, except in cases when
the number of shares allocated to the ESOP is "excessive" (i.e., generally
greater than five percent of outstanding shares).

401(K) EMPLOYEE BENEFIT PLANS

Vote FOR proposals to implement a 401(k) savings plan for employees.

IX. STATE OF INCORPORATION

VOTING ON STATE TAKEOVER STATUTES

Review on a CASE-BY-CASE basis proposals to opt in or out of state takeover
statutes (including control share acquisition statutes, control share cash-out
statutes, freezeout provisions, fair price provisions, stakeholder laws, poison
pill endorsements, severance pay and labor contract provisions, antigreenmail
provisions, and disgorgement provisions).


                                      A-14



VOTING ON REINCORPORATION PROPOSALS

Proposals to change a company's state of incorporation should be examined on a
CASE-BY-CASE basis.

X. MERGERS AND CORPORATE RESTRUCTURINGS

MERGERS AND ACQUISITIONS

Votes on mergers and acquisitions should be considered on a CASE-BY-CASE basis,
taking into account at least the following: anticipated financial and operating
benefits; offer price (cost vs. premium); prospects of the combined companies;
how the deal was negotiated; and changes in corporate governance and their
impact on shareholder rights.

CORPORATE RESTRUCTURING

Votes on corporate restructuring proposals, including minority squeezeouts,
leveraged buyouts, spinoffs, liquidations, and asset sales should be considered
on a CASE-BY-CASE basis.

SPINOFFS

Votes on spinoffs should be considered on a CASE-BY-CASE basis depending on the
tax and regulatory advantages, planned use of sale proceeds, market focus, and
managerial incentives.

ASSET SALES

Votes on asset sales should be made on a CASE-BY-CASE basis after considering
the impact on the balance sheet/working capital, value received for the asset,
and potential elimination of diseconomies.

LIQUIDATIONS

Votes on liquidations should be made on a CASE-BY-CASE basis after reviewing
management's efforts to pursue other alternatives, appraisal value of assets,
and the compensation plan for executives managing the liquidation.

APPRAISAL RIGHTS

Vote FOR proposals to restore, or provide shareholders with, rights of
appraisal.

CHANGING CORPORATE NAME

Vote FOR changing the corporate name.

XI. MUTUAL FUND PROXIES

ELECTION OF DIRECTORS

Vote the election of directors on a CASE-BY-CASE basis, considering the
following factors: board structure; director independence and qualifications;
and compensation of directors within the fund and the family of funds attendance
at board and committee meetings.

Votes should be withheld from directors who:

- -    attend less than 75 percent of the board and committee meetings without a
     valid excuse for the absences. Valid reasons include illness or absence due
     to company business. Participation via telephone is acceptable. In
     addition, if the director missed only one meeting or one day's meetings,
     votes should not be withheld even if such absence dropped the director's
     attendance below 75 percent.

- -    ignore a shareholder proposal that is approved by a majority of shares
     outstanding

- -    ignore a shareholder proposal that is approved by a majority of the votes
     cast for two consecutive years


                                      A-15



- -    are interested directors and sit on the audit or nominating committee

- -    are interested directors and the full board serves as the audit or
     nominating committee or the company does not have one of these committees.

CONVERTING CLOSED-END FUND TO OPEN-END FUND

Vote conversion proposals on a CASE-BY-CASE basis, considering the following
factors: past performance as a closed-end fund; market in which the fund
invests; measures taken by the board to address the discount; and past
shareholder activism, board activity, and votes on related proposals.

PROXY CONTESTS

Vote proxy contests on a CASE-BY-CASE basis, considering the following factors:
past performance; market in which fund invests; and measures taken by the board
to address the Issues past shareholder activism, board activity, and votes on
related proposals.

INVESTMENT ADVISORY AGREEMENTS

Vote the investment advisory agreements on a CASE-BY-CASE basis, considering the
following factors: proposed and current fee schedules; fund category/investment
objective; performance benchmarks; share price performance as compared with
peers; and the magnitude of any fee increase.

APPROVING NEW CLASSES OR SERIES OF SHARES

Vote FOR the establishment of new classes or series of shares.

PREFERRED STOCK PROPOSALS

Vote the authorization for or increase in preferred shares on a CASE-BY-CASE
basis, considering the following factors: stated specific financing purpose and
other reasons management gives possible dilution for common shares.

1940 ACT POLICIES

Vote these proposals on a CASE-BY-CASE basis, considering the following factors:
potential competitiveness; regulatory developments; current and potential
returns; and current and potential risk.

CHANGING A FUNDAMENTAL RESTRICTION TO A NONFUNDAMENTAL RESTRICTION

Vote these proposals on a CASE-BY-CASE basis, considering the following factors:
fund's target investments; reasons given by fund for change; and the projected
impact of change on portfolio.

CHANGE FUNDAMENTAL INVESTMENT OBJECTIVE TO NONFUNDAMENTAL

Vote AGAINST proposals to change a fund's fundamental investment objective to
nonfundamental.

NAME RULE PROPOSALS

Vote these proposals on a CASE-BY-CASE basis, considering the following factors:
political/economic changes in target market; bundling with quorum requirements;
bundling with asset allocation changes; and consolidation in the fund's target
market.

DISPOSITION OF ASSETS/TERMINATION/LIQUIDATION

Vote this proposal on a CASE-BY-CASE basis, considering the following factors:
strategies employed to salvage the company; company's past performance; and
terms of the liquidation.

CHANGES TO THE CHARTER DOCUMENT


                                      A-16



Vote changes to the charter document on a CASE-BY-CASE basis, considering the
following factors: degree of change implied by the proposal; efficiencies that
could result; state of incorporation; and regulatory standards and implications.

CHANGING THE DOMICILE OF A FUND

Vote reincorporations on a CASE-BY-CASE basis, considering the following
factors: state regulations of both states; required fundamental policies of both
states; and the increased flexibility available.

CHANGE IN FUND'S SUBCLASSIFICATION

Vote these proposals on a CASE-BY-CASE basis, considering the following factors:
potential competitiveness; current and potential returns; risk of concentration;
and consolidation in the target industry.

AUTHORIZING THE BOARD TO HIRE AND TERMINATE SUBADVISORS WITHOUT SHAREHOLDER
APPROVAL

Vote AGAINST these proposals.

DISTRIBUTION AGREEMENTS

Vote these proposals on a CASE-BY-CASE basis, considering the following factors:
fees charged to comparably sized funds with similar objectives; proposed
distributor's reputation and past performance; and competitiveness of fund in
industry.

MASTER-FEEDER STRUCTURE

Vote FOR the establishment of a master-feeder structure.

CHANGES TO THE CHARTER DOCUMENT

Vote changes to the charter document on a CASE-BY-CASE basis, considering the
following factors: degree of change implied by the proposal; efficiencies that
could result; state of incorporation; and regulatory standards and implications.

MERGERS

Vote merger proposals on a CASE-BY-CASE basis, considering the following
factors: resulting fee structure; performance of both funds; and continuity of
management personnel.

SHAREHOLDER PROPOSALS

ESTABLISH DIRECTOR OWNERSHIP REQUIREMENT

Vote against the establishment of a director ownership requirement.

REIMBURSE SHAREHOLDER FOR EXPENSES INCURRED

Voting to reimburse proxy solicitation expenses should be analyzed on a
CASE-BY-CASE basis. In cases where Evergreen recommends in favor of the
dissidents, we also recommend voting FOR reimbursing proxy solicitation
expenses.

TERMINATE THE INVESTMENT ADVISOR

Vote to terminate the investment advisor on a CASE-BY-CASE basis, considering
the following factors: performance of the fund's NAV and the history of
shareholder relations.

XII. SOCIAL AND ENVIRONMENTAL ISSUES

ENERGY AND ENVIRONMENT


                                      A-17



In most cases, Evergreen refrains from providing a vote recommendation on
proposals that request companies to file the CERES Principles.

Generally, vote FOR disclosure reports that seek additional information,
particularly when it appears companies have not adequately addressed
shareholders' environmental concerns.

SOUTH AFRICA

In most cases, Evergreen refrains from providing a vote recommendation on
proposals pertaining to South Africa.

Generally, vote FOR disclosure reports that seek additional information such as
the amount of business that could be lost by conducting business in South
Africa.

NORTHERN IRELAND

In most cases, Evergreen refrains from providing a vote recommendation on
proposals pertaining to the MacBride Principles.

Generally, vote FOR disclosure reports that seek additional information about
progress being made toward eliminating employment discrimination, particularly
when it appears companies have not adequately addressed shareholder concerns.

MILITARY BUSINESS

In most cases, Evergreen refrains from providing a vote recommendation on
defense Issue proposals.

Generally, vote FOR disclosure reports that seek additional information on
military related operations, particularly when the company has been unresponsive
to shareholder requests.

MAQUILADORA STANDARDS AND INTERNATIONAL OPERATIONS POLICIES

In most cases, Evergreen refrains from providing a vote recommendation on
proposals relating to the Maquiladora Standards and international operating
policies.

Generally, vote FOR disclosure reports on these Issues, particularly when it
appears companies have not adequately addressed shareholder concerns.

WORLD DEBT CRISIS

In most cases, Evergreen refrains from providing a vote recommendation on
proposals dealing with third world debt.

Generally, vote FOR disclosure reports on these Issues, particularly when it
appears companies have not adequately addressed shareholder concerns.

EQUAL EMPLOYMENT OPPORTUNITY AND DISCRIMINATION

In most cases, Evergreen refrains from providing a vote recommendation on
proposals regarding equal employment opportunities and discrimination.

Generally, vote FOR disclosure reports that seek additional information about
affirmative action efforts, particularly when it appears companies have been
unresponsive to shareholder requests.

ANIMAL RIGHTS

In most cases, Evergreen refrains from providing a vote recommendation on
proposals that deal with animal rights.

PRODUCT INTEGRITY AND MARKETING


                                      A-18



In most cases, Evergreen refrains from providing a vote recommendation on
proposals that ask companies to end their production of legal, but socially
questionable, products.

Generally, vote FOR disclosure reports that seek additional information
regarding product integrity and marketing Issues, particularly when it appears
companies have been unresponsive to shareholder requests.

HUMAN RESOURCES ISSUES

In most cases, Evergreen refrains from providing a vote recommendation on
proposals regarding human resources Issues.

Generally, vote FOR disclosure reports that seek additional information
regarding human resources Issues, particularly when it appears companies have
been unresponsive to shareholder requests.

FEDERATED EQUITY MANAGEMENT COMPANY OF PENNSYLVANIA

PROXY VOTING PROCEDURES

Federated Equity Management Company of Pennsylvania, ("Federated") has adopted
the following procedures to implement its Proxy Voting Policies and Practices
(the "Proxy Policies") in compliance with Rule 206(4)-6 of the Investment
Advisers Act of 1940.

VOTING PROXIES ON FUND PORTFOLIO SECURITIES

The Board has delegated to Federated authority to vote proxies on the securities
held in the Fund's portfolio. The Board has also approved Federated's policies
and procedures for voting the proxies, which are described below.

PROXY VOTING POLICIES

Federated's general policy is to cast proxy votes in favor of proposals that
Federated anticipates will enhance the long-term value of the securities being
voted. Generally, this will mean voting for proposals that Federated believes
will: improve the management of a company; increase the rights or preferences of
the voted securities; and/or increase the chance that a premium offer would be
made for the company or for the voted securities.

The following examples illustrate how these general policies may apply to
proposals submitted by a company's board of directors. However, whether
Federated supports or opposes a proposal will always depend on the specific
circumstances described in the proxy statement and other available information.

On matters of corporate governance, generally Federated will vote for proposals
to: require independent tabulation of proxies and/or confidential voting by
shareholders; reorganize in another jurisdiction (unless it would reduce the
rights or preferences of the securities being voted); and repeal a shareholder
rights plan (also known as a "poison pill"). Federated will generally vote
against the adoption of such a plan (unless the plan is designed to facilitate,
rather than prevent, unsolicited offers for the company).

On matters of capital structure, generally Federated will vote: against
proposals to authorize or issue shares that are senior in priority or voting
rights to the securities being voted; for proposals to grant preemptive rights
to the securities being voted; and against proposals to eliminate such
preemptive rights.

On matters relating to management compensation, generally Federated will vote:
for stock incentive plans that align the recipients' interests with the
interests of shareholders without creating undue dilution; and against proposals
that would permit the amendment or replacement of outstanding stock incentives
with new stock incentives having more favorable terms.

On matters relating to corporate transactions, Federated will vote proxies
relating to proposed mergers, capital reorganizations, and similar transactions
in accordance with the general policy, based upon its analysis of the proposed
transaction. Federated will vote proxies in contested elections of directors in
accordance with the general policy, based upon its analysis of the opposing
slates and their respective proposed business strategies. Some transactions may
also involve proposed changes to the company's corporate governance, capital
structure or management compensation. Federated will vote on such changes based
on its evaluation of the proposed transaction or contested election. In these
circumstances, Federated may vote in a manner contrary to the general practice
for similar proposals made outside the context of such a proposed transaction or
change in the board. For example, if Federated decides to vote against a


                                      A-19



proposed transaction, it may vote for anti-takeover measures reasonably designed
to prevent the transaction, even though Federated typically votes against such
measures in other contexts.

Federated generally votes against proposals submitted by shareholders without
the favorable recommendation of a company's board. Federated believes that a
company's board should manage its business and policies, and that shareholders
who seek specific changes should strive to convince the board of their merits or
seek direct representation on the board.

In addition, Federated will not vote if it determines that the consequences or
costs outweigh the potential benefit of voting. For example, if a foreign market
requires shareholders casting proxies to retain the voted shares until the
meeting date (thereby rendering the shares "illiquid" for some period of time),
Federated will not vote proxies for such shares.

PROXY VOTING PROCEDURES

Federated has established a Proxy Voting Committee (Proxy Committee), to
exercise all voting discretion granted to Federated by the Board in accordance
with the proxy voting policies. Federated has hired Investor Responsibility
Research Center (IRRC) to obtain, vote, and record proxies in accordance with
the Proxy Committee's directions. The Proxy Committee directs IRRC by means of
Proxy Voting Guidelines, and IRRC may vote any proxy as directed in the Proxy
Voting Guidelines without further direction from the Proxy Committee (and may
make any determinations required to implement the Proxy Voting Guidelines).
However, if the Proxy Voting Guidelines require case-by-case direction for a
proposal, IRRC will provide the Proxy Committee with all information that it has
obtained regarding the proposal and the Proxy Committee will provide specific
direction to IRRC. Federated's proxy voting procedures generally permit the
Proxy Committee to amend the Proxy Voting Guidelines, or override the directions
provided in such Guidelines, whenever necessary to comply with the proxy voting
policies.

CONFLICTS OF INTEREST

Federated has adopted procedures to address situations where a matter on which a
proxy is sought may present a potential conflict between the interests of the
Fund (and its shareholders) and those of Federated or Distributor. This may
occur where a significant business relationship exists between Federated (or its
affiliates) and a company involved with a proxy vote. A company that is a
proponent, opponent, or the subject of a proxy vote, and which to the knowledge
of the Proxy Committee has this type of significant business relationship, is
referred to as an "Interested Company."

Federated has implemented the following procedures in order to avoid concerns
that the conflicting interests of Federated have influenced proxy votes. Any
employee of Federated who is contacted by an Interested Company regarding
proxies to be voted by Federated must refer the Interested Company to a member
of the Proxy Committee, and must inform the Interested Company that the Proxy
Committee has exclusive authority to determine how Federated will vote. Any
Proxy Committee member contacted by an Interested Company must report it to the
full Proxy Committee and provide a written summary of the communication. Under
no circumstances will the Proxy Committee or any member of the Proxy Committee
make a commitment to an Interested Company regarding the voting of proxies or
disclose to an Interested Company how the Proxy Committee has directed such
proxies to be voted. If the Proxy Voting Guidelines already provide specific
direction on the proposal in question, the Proxy Committee shall not alter or
amend such directions. If the Proxy Voting Guidelines require the Proxy
Committee to provide further direction, the Proxy Committee shall do so in
accordance with the proxy voting policies, without regard for the interests of
Federated with respect to the Interested Company. If the Proxy Committee
provides any direction as to the voting of proxies relating to a proposal
affecting an Interested Company, it must disclose to the Fund's Board
information regarding: the significant business relationship; any material
communication with the Interested Company; the matter(s) voted on; and how, and
why, Federated voted as it did.

If the Fund holds shares of another investment company for which Federated (or
an affiliate) acts as an investment adviser, the Proxy Committee will vote the
Fund's proxies in the same proportion as the votes cast by shareholders who are
not clients of Federated at any shareholders' meeting called by such investment
company, unless otherwise directed by the Board.

GATEWAY INVESTMENT ADVISERS, L.P.

PROXY VOTING POLICIES AND PROCEDURES (JULY 1, 2003)

The following are the proxy voting policies and procedures of Gateway Investment
Advisers, L.P. for its clients who desire Gateway to vote on their behalf,
including registered investment companies which Gateway manages or sub-advises.

INTRODUCTION


                                      A-20



Gateway Investment Advisers, L.P. (hereinafter "Gateway") recognizes that voting
rights are financial assets of its clients and that they must be managed
accordingly; with voting decisions being made in the best interests of its
clients who wish Gateway to exercise such authority and of shareholders of the
registered investment companies for which it acts as adviser or sub-adviser
(hereinafter referred collectively as "Clients"). Gateway, in accordance with
general fiduciary principles, is responsible for voting proxies on behalf of its
Clients. Gateway, in turn, has formally adopted the Institutional Shareholder
Services ("ISS") proxy voting guidelines to determine how each issue on proxy
ballots is to be voted and appointed ISS as its proxy agent to recommend how to
vote each proxy as well as administer the voting of proxies on behalf of
Gateway. A summary of ISS's proxy voting guidelines ("ISS Guidelines") can be
found below in the section entitled, "Proxy Voting Guidelines Summary". The
Directors of Gateway Investment Advisers, Inc., the general partner of Gateway
will review these proxy policies and voting procedures on a periodic basis.

ROLE OF PROXY VOTING AGENT

Gateway has engaged ISS, an independent proxy voting service, to assist in the
voting of proxies. ISS is responsible for coordinating with each Client's
custodian, to ensure that all proxy ballots relating to a Client's portfolio
securities are processed in a timely manner. ISS, with its vast research
capabilities, has developed its US Proxy Voting Manual, which provides
guidelines for proxy voting that are designed to serve the best interests of
investors. These guidelines outline the rationale for determining how particular
issues should be voted. Gateway has adopted these ISS Guidelines and has
instructed ISS to vote in accordance with them unless the following conditions
apply:

     -    Gateway's portfolio management team has decided to override the ISS
          vote recommendation for a Client based on it own determination that
          the Client would best be served with a vote contrary to the ISS
          recommendation. Such decision(s) will be documented by Gateway and
          communicated to ISS;

     -    ISS does not give a vote recommendation, in which case Gateway will
          independently determine how a particular issue should be voted. In
          these instances, Gateway, through its portfolio management team will
          document the reason(s) used in determining a vote and communicate
          Gateway's voting instruction to ISS. The Adviser will generally seek
          to vote in accordance with ISS's guidelines.

CONFLICTS OF INTEREST

From time to time, Gateway or an employee or other affiliate of Gateway may have
a conflict of interest with respect to a proxy vote. A conflict of interest may
exist, for example, if Gateway has a business relationship (or potential
business relationship) with either the company soliciting the proxy or a third
party that has a material interest in the outcome of a proxy vote or that is
actively lobbying for a particular outcome of a proxy vote.

ONLY in those instances where an ISS voting recommendation is not being
followed, any individual with knowledge of any actual or potential conflict of
interest, such as a personal conflict of interest (e.g. familial relationship
with company management) or of a business relationship (e.g. Gateway is the
investment manager to a soliciting company), shall disclose that conflict to the
Legal and Compliance Department. In such cases, the Legal and Compliance
Department will determine how the proxies in question shall be voted and such
determinations shall be recorded and reported to the Board of Directors of
Gateway Investment Advisers, Inc.

RECORDKEEPING

In accordance with Rule 204-2(c)(2) under the Advisers Act of 1940, as amended,
Gateway will maintain the following records for a period of not less than five
years:

     -    this Gateway proxy voting policy;

     -    records of Clients' written requests for this policy and/or their
          voting record;

     -    Gateway's written response to such written or oral requests;

     -    a copy of any document created by Gateway that was material to making
          a decision in those instances where ISS does not make a vote
          recommendation or where Gateway's portfolio management team votes
          contrary to ISS's recommendation.

ISS will make and retain, on Gateway's behalf (as evidenced by an undertaking
from ISS to provide a copy promptly upon request) the following documents:

     -    a copy of a proxy statement*;

     -    a record of each vote cast by Gateway on behalf of a Client;

     -    a copy of any document that was material to making a decision how to
          vote proxies on behalf of a Client or that memorialized the basis of
          that decision. * Gateway may also rely on obtaining a copy from the
          EDGAR system

HOW TO OBTAIN VOTING INFORMATION


                                      A-21



At any time, a Client may obtain this entire Proxy Voting Policies and
Procedures and his or her voting record upon the Client's written or oral
request to Gateway. The information in this paragraph will also be included in
Gateway's Form ADV Part II.

PROXY VOTING GUIDELINES SUMMARY

See the attached Proxy Voting Guidelines Summary

1. OPERATIONAL ITEMS

ADJOURN MEETING

Generally vote AGAINST proposals to provide management with the authority to
adjourn an annual or special meeting absent compelling reasons to support the
proposal.

AMEND QUORUM REQUIREMENTS

Vote AGAINST proposals to reduce quorum requirements for shareholder meetings
below a majority of the shares outstanding unless there are compelling reasons
to support the proposal.

AMEND MINOR BYLAWS

Vote FOR bylaw or charter changes that are of a housekeeping nature (updates or
corrections).

CHANGE COMPANY NAME

Vote FOR proposals to change the corporate name.

CHANGE DATE, TIME, OR LOCATION OF ANNUAL MEETING

Vote FOR management proposals to change the date/time/location of the annual
meeting unless the proposed change is unreasonable.

Vote AGAINST shareholder proposals to change the date/time/location of the
annual meeting unless the current scheduling or location is unreasonable.

RATIFYING AUDITORS

Vote FOR proposals to ratify auditors, unless any of the following apply:

- -    An auditor has a financial interest in or association with the company, and
     is therefore not independent

- -    Fees for non-audit services are excessive, or

- -    There is reason to believe that the independent auditor has rendered an
     opinion which is neither accurate nor indicative of the company's financial
     position.

Vote CASE-BY-CASE on shareholder proposals asking companies to prohibit or limit
their auditors from engaging in non-audit services.

Vote FOR shareholder proposals asking for audit firm rotation, unless the
rotation period is so short (less than five years) that it would be unduly
burdensome to the company.

TRANSACT OTHER BUSINESS

Vote AGAINST proposals to approve other business when it appears as voting item.

2. BOARD OF DIRECTORS

VOTING ON DIRECTOR NOMINEES IN UNCONTESTED ELECTIONS

Votes on director nominees should be made on a CASE-BY-CASE basis, examining the
following factors: composition of the board and key board committees, attendance
at board meetings, corporate governance provisions and takeover activity,
long-term company performance relative to a market index, directors' investment
in the company, whether the chairman is also serving as CEO, and whether a
retired CEO sits on the board. However, there are some actions by directors that
should result in votes being withheld. These instances include directors who:

     -    Attend less than 75 percent of the board and committee meetings
          without a valid excuse

     -    Implement or renew a dead-hand or modified dead-hand poison pill

     -    Ignore a shareholder proposal that is approved by a majority of the
          shares outstanding

     -    Ignore a shareholder proposal that is approved by a majority of the
          votes cast for two consecutive years

     -    Failed to act on takeover offers where the majority of the
          shareholders tendered their shares

     -    Are inside directors or affiliated outsiders and sit on the audit,
          compensation, or nominating committees

     -    Are inside directors or affiliated outsiders and the full board serves
          as the audit, compensation, or nominating committee or the company
          does not have one of these committees

     -    Are audit committee members and the non-audit fees paid to the auditor
          are excessive.


                                      A-22



In addition, directors who enacted egregious corporate governance policies or
failed to replace management as appropriate would be subject to recommendations
to withhold votes.

AGE LIMITS

Vote AGAINST shareholder proposals to impose a mandatory retirement age for
outside directors.

BOARD SIZE

Vote FOR proposals seeking to fix the board size or designate a range for the
board size.

Vote AGAINST proposals that give management the ability to alter the size of the
board outside of a specified range without shareholder approval.

CLASSIFICATION/DECLASSIFICATION OF THE BOARD

Vote AGAINST proposals to classify the board.

Vote FOR proposals to repeal classified boards and to elect all directors
annually.

CUMULATIVE VOTING

Vote AGAINST proposals to eliminate cumulative voting.

Vote proposals to restore or permit cumulative voting on a CASE-BY-CASE basis
relative to the company's other governance provisions.

DIRECTOR AND OFFICER INDEMNIFICATION AND LIABILITY PROTECTION

Proposals on director and officer indemnification and liability protection
should be evaluated on a CASE-BY-CASE basis, using Delaware law as the standard.
Vote AGAINST proposals to eliminate entirely directors' and officers' liability
for monetary damages for violating the duty of care. Vote AGAINST
indemnification proposals that would expand coverage beyond just legal expenses
to acts, such as negligence, that are more serious violations of fiduciary
obligation than mere carelessness. Vote FOR only those proposals providing such
expanded coverage in cases when a director's or officer's legal defense was
unsuccessful if both of the following apply:

- -    The director was found to have acted in good faith and in a manner that he
     reasonably believed was in the best interests of the company, and

- -    Only if the director's legal expenses would be covered.

ESTABLISH/AMEND NOMINEE QUALIFICATIONS

Vote CASE-BY-CASE on proposals that establish or amend director qualifications.
Votes should be based on how reasonable the criteria are and to what degree they
may preclude dissident nominees from joining the board. Vote AGAINST shareholder
proposals requiring two candidates per board seat.

FILLING VACANCIES/REMOVAL OF DIRECTORS

Vote AGAINST proposals that provide that directors may be removed only for
cause. Vote FOR proposals to restore shareholder ability to remove directors
with or without cause. Vote AGAINST proposals that provide that only continuing
directors may elect replacements to fill board vacancies. Vote FOR proposals
that permit shareholders to elect directors to fill board vacancies.

INDEPENDENT CHAIRMAN (SEPARATE CHAIRMAN/CEO)

Vote on a CASE-BY-CASE basis shareholder proposals requiring that the positions
of chairman and CEO be held separately. Because some companies have governance
structures in place that counterbalance a combined position, the following
factors should be taken into account in determining whether the proposal
warrants support:

- -    Designated lead director appointed from the ranks of the independent board
     members with clearly delineated duties


- -    Majority of independent directors on board

- -    All-independent key committees

- -    Committee chairpersons nominated by the independent directors

- -    CEO performance reviewed annually by a committee of outside directors

- -    Established governance guidelines

- -    Company performance.

MAJORITY OF INDEPENDENT DIRECTORS/ESTABLISHMENT OF COMMITTEES

Vote FOR shareholder proposals asking that a majority or more of directors be
independent unless the board composition already meets the proposed threshold by
ISS's definition of independence. Vote FOR shareholder proposals asking that
board audit, compensation, and/or nominating committees be composed exclusively
of independent directors if they currently do not meet that standard.


                                      A-23



STOCK OWNERSHIP REQUIREMENTS

Generally vote AGAINST shareholder proposals that mandate a minimum amount of
stock that directors must own in order to qualify as a director or to remain on
the board. While ISS favors stock ownership on the part of directors, the
company should determine the appropriate ownership requirement.

TERM LIMITS

Vote AGAINST shareholder proposals to limit the tenure of outside directors.

3. PROXY CONTESTS

VOTING FOR DIRECTOR NOMINEES IN CONTESTED ELECTIONS

Votes in a contested election of directors must be evaluated on a CASE-BY-CASE
basis, considering the following factors:

- -    Long-term financial performance of the target company relative to its
     industry; management's track record

- -    Background to the proxy contest

- -    Qualifications of director nominees (both slates)

- -    Evaluation of what each side is offering shareholders as well as the
     likelihood that the proposed objectives and goals can be met; and stock
     ownership positions.

REIMBURSING PROXY SOLICITATION EXPENSES

Voting to reimburse proxy solicitation expenses should be analyzed on a
CASE-BY-CASE basis. In cases where ISS recommends in favor of the dissidents, we
also recommend voting for reimbursing proxy solicitation expenses.

CONFIDENTIAL VOTING

Vote FOR shareholder proposals requesting that corporations adopt confidential
voting, use independent vote tabulators and use independent inspectors of
election, as long as the proposal includes a provision for proxy contests as
follows: In the case of a contested election, management should be permitted to
request that the dissident group honor its confidential voting policy. If the
dissidents agree, the policy remains in place. If the dissidents will not agree,
the confidential voting policy is waived. Vote FOR management proposals to adopt
confidential voting.

4. ANTITAKEOVER DEFENSES AND VOTING RELATED ISSUES

ADVANCE NOTICE REQUIREMENTS FOR SHAREHOLDER PROPOSALS/NOMINATIONS

Votes on advance notice proposals are determined on a CASE-BY-CASE basis, giving
support to those proposals which allow shareholders to submit proposals as close
to the meeting date as reasonably possible and within the broadest window
possible.

AMEND BYLAWS WITHOUT SHAREHOLDER CONSENT

Vote AGAINST proposals giving the board exclusive authority to amend the bylaws.
Vote FOR proposals giving the board the ability to amend the bylaws in addition
to shareholders.

POISON PILLS

Vote FOR shareholder proposals that ask a company to submit its poison pill for
shareholder ratification.

Review on a CASE-BY-CASE basis shareholder proposals to redeem a company's
poison pill. Review on a CASE-BY-CASE basis management proposals to ratify a
poison pill.

SHAREHOLDER ABILITY TO ACT BY WRITTEN CONSENT

Vote AGAINST proposals to restrict or prohibit shareholder ability to take
action by written consent. Vote FOR proposals to allow or make easier
shareholder action by written consent.

SHAREHOLDER ABILITY TO CALL SPECIAL MEETINGS

Vote AGAINST proposals to restrict or prohibit shareholder ability to call
special meetings. Vote FOR proposals that remove restrictions on the right of
shareholders to act independently of management.

SUPERMAJORITY VOTE REQUIREMENTS

Vote AGAINST proposals to require a supermajority shareholder vote. Vote FOR
proposals to lower supermajority vote requirements.

5. MERGERS AND CORPORATE RESTRUCTURINGS

APPRAISAL RIGHTS


                                      A-24



Vote FOR proposals to restore, or provide shareholders with, rights of
appraisal.

ASSET PURCHASES

Vote CASE-BY-CASE on asset purchase proposals, considering the following
factors:

- -    Purchase price

- -    Fairness opinion

- -    Financial and strategic benefits

- -    How the deal was negotiated

- -    Conflicts of interest

- -    Other alternatives for the business

- -    Noncompletion risk.

ASSET SALES

Votes on asset sales should be determined on a CASE-BY-CASE basis, considering
the following factors:

- -    Impact on the balance sheet/working capital

- -    Potential elimination of diseconomies

- -    Anticipated financial and operating benefits

- -    Anticipated use of funds

- -    Value received for the asset

- -    Fairness opinion

- -    How the deal was negotiated

- -    Conflicts of interest.

BUNDLED PROPOSALS

Review on a CASE-BY-CASE basis bundled or "conditioned" proxy proposals. In the
case of items that are conditioned upon each other, examine the benefits and
costs of the packaged items. In instances when the joint effect of the
conditioned items is not in shareholders' best interests, vote against the
proposals. If the combined effect is positive, support such proposals.

CONVERSION OF SECURITIES

Votes on proposals regarding conversion of securities are determined on a
CASE-BY-CASE basis. When evaluating these proposals the investor should review
the dilution to existing shareholders, the conversion price relative to market
value, financial issues, control issues, termination penalties, and conflicts of
interest. Vote FOR the conversion if it is expected that the company will be
subject to onerous penalties or will be forced to file for bankruptcy if the
transaction is not approved.

CORPORATE REORGANIZATION/DEBT RESTRUCTURING/PREPACKAGED
BANKRUPTCY PLANS/REVERSE LEVERAGED BUYOUTS/WRAP PLANS

Votes on proposals to increase common and/or preferred shares and to issue
shares as part of a debt restructuring plan are determined on a CASE-BY-CASE
basis, taking into consideration the following:

- -    Dilution to existing shareholders' position

- -    Terms of the offer

- -    Financial issues

- -    Management's efforts to pursue other alternatives

- -    Control issues

- -    Conflicts of interest.

Vote FOR the debt restructuring if it is expected that the company will file for
bankruptcy if the transaction is not approved.

FORMATION OF HOLDING COMPANY

Votes on proposals regarding the formation of a holding company should be
determined on a CASE-BY-CASE basis, taking into consideration the following:

- -    The reasons for the change

- -    Any financial or tax benefits

- -    Regulatory benefits

- -    Increases in capital structure

- -    Changes to the articles of incorporation or bylaws of the company.

Absent compelling financial reasons to recommend the transaction, vote AGAINST
the formation of a holding company if the transaction would include either of
the following:


                                      A-25



- -    Increases in common or preferred stock in excess of the allowable maximum
     as calculated by the ISS Capital Structure model

- -    Adverse changes in shareholder rights

GOING PRIVATE TRANSACTIONS (LBOS AND MINORITY SQUEEZEOUTS)

Vote going private transactions on a CASE-BY-CASE basis, taking into account the
following: offer price/premium, fairness opinion, how the deal was negotiated,
conflicts of interest, other alternatives/offers considered, and noncompletion
risk.

JOINT VENTURES

Votes CASE-BY-CASE on proposals to form joint ventures, taking into account the
following: percentage of assets/business contributed, percentage ownership,
financial and strategic benefits, governance structure, conflicts of interest,
other alternatives, and noncompletion risk.

LIQUIDATIONS

Votes on liquidations should be made on a CASE-BY-CASE basis after reviewing
management's efforts to pursue other alternatives, appraisal value of assets,
and the compensation plan for executives managing the liquidation. Vote FOR the
liquidation if the company will file for bankruptcy if the proposal is not
approved.

MERGERS AND ACQUISITIONS/ ISSUANCE OF SHARES TO FACILITATE MERGER OR
ACQUISITION

Votes on mergers and acquisitions should be considered on a CASE-BY-CASE basis,
determining whether the transaction enhances shareholder value by giving
consideration to the following:

- -    Prospects of the combined company, anticipated financial and operating
     benefits

- -    Offer price

- -    Fairness opinion

- -    How the deal was negotiated

- -    Changes in corporate governance

- -    Change in the capital structure

- -    Conflicts of interest.

PRIVATE PLACEMENTS/WARRANTS/CONVERTIBLE DEBENTURES

Votes on proposals regarding private placements should be determined on a
CASE-BY-CASE basis. When evaluating these proposals the investor should review:
dilution to existing shareholders' position, terms of the offer, financial
issues, management's efforts to pursue other alternatives, control issues, and
conflicts of interest. Vote FOR the private placement if it is expected that the
company will file for bankruptcy if the transaction is not approved.

SPINOFFS

Votes on spinoffs should be considered on a CASE-BY-CASE basis depending on:

- -    Tax and regulatory advantages

- -    Planned use of the sale proceeds

- -    Valuation of spinoff

- -    Fairness opinion

- -    Benefits to the parent company

- -    Conflicts of interest

- -    Managerial incentives

- -    Corporate governance changes

- -    Changes in the capital structure.

VALUE MAXIMIZATION PROPOSALS

Vote CASE-BY-CASE on shareholder proposals seeking to maximize shareholder value
by hiring a financial advisor to explore strategic alternatives, selling the
company or liquidating the company and distributing the proceeds to
shareholders. These proposals should be evaluated based on the following
factors: prolonged poor performance with no turnaround in sight, signs of
entrenched board and management, strategic plan in place for improving value,
likelihood of receiving reasonable value in a sale or dissolution, and whether
company is actively exploring its strategic options, including retaining a
financial advisor.

6. STATE OF INCORPORATION
CONTROL SHARE ACQUISITION PROVISIONS


                                      A-26



Vote FOR proposals to opt out of control share acquisition statutes unless doing
so would enable the completion of a takeover that would be detrimental to
shareholders. Vote AGAINST proposals to amend the charter to include control
share acquisition provisions. Vote FOR proposals to restore voting rights to the
control shares.

CONTROL SHARE CASHOUT PROVISIONS

Vote FOR proposals to opt out of control share cashout statutes.

DISGORGEMENT PROVISIONS

Vote FOR proposals to opt out of state disgorgement provisions.

FAIR PRICE PROVISIONS

Vote proposals to adopt fair price provisions on a CASE-BY-CASE basis,
evaluating factors such as the vote required to approve the proposed
acquisition, the vote required to repeal the fair price provision, and the
mechanism for determining the fair price. Generally, vote AGAINST fair price
provisions with shareholder vote requirements greater than a majority of
disinterested shares.

FREEZEOUT PROVISIONS

Vote FOR proposals to opt out of state freezeout provisions.

GREENMAIL

Vote FOR proposals to adopt antigreenmail charter of bylaw amendments or
otherwise restrict a company's ability to make greenmail payments. Review on a
CASE-BY-CASE basis antigreenmail proposals when they are bundled with other
charter or bylaw amendments.

REINCORPORATION PROPOSALS

Proposals to change a company's state of incorporation should be evaluated on a
CASE-BY-CASE basis, giving consideration to both financial and corporate
governance concerns, including the reasons for reincorporating, a comparison of
the governance provisions, and a comparison of the jurisdictional laws. Vote FOR
reincorporation when the economic factors outweigh any neutral or negative
governance changes.

STAKEHOLDER PROVISIONS

Vote AGAINST proposals that ask the board to consider nonshareholder
constituencies or other nonfinancial effects when evaluating a merger or
business combination.

STATE ANTITAKEOVER STATUTES

Review on a CASE-BY-CASE basis proposals to opt in or out of state takeover
statutes (including control share acquisition statutes, control share cash-out
statutes, freezeout provisions, fair price provisions, stakeholder laws, poison
pill endorsements, severance pay and labor contract provisions, antigreenmail
provisions, and disgorgement provisions).

7. CAPITAL STRUCTURE
ADJUSTMENTS TO PAR VALUE OF COMMON STOCK

Vote FOR management proposals to reduce the par value of common stock.

COMMON STOCK AUTHORIZATION

Votes on proposals to increase the number of shares of common stock authorized
for issuance are determined on a CASE-BY-CASE basis using a model developed by
ISS. Vote AGAINST proposals at companies with dual-class capital structures to
increase the number of authorized shares of the class of stock that has superior
voting rights. Vote FOR proposals to approve increases beyond the allowable
increase when a company's shares are in danger of being delisted or if a
company's ability to continue to operate as a going concern is uncertain.

DUAL-CLASS STOCK

Vote AGAINST proposals to create a new class of common stock with superior
voting rights. Vote FOR proposals to create a new class of nonvoting or
subvoting common stock if:

- -    It is intended for financing purposes with minimal or no dilution to
     current shareholders

- -    It is not designed to preserve the voting power of an insider or
     significant shareholder

ISSUE STOCK FOR USE WITH RIGHTS PLAN

Vote AGAINST proposals that increase authorized common stock for the explicit
purpose of implementing a shareholder rights plan (poison pill).


                                      A-27



PREEMPTIVE RIGHTS

Review on a CASE-BY-CASE basis shareholder proposals that seek preemptive
rights. In evaluating proposals on preemptive rights, consider the size of a
company, the characteristics of its shareholder base, and the liquidity of the
stock.

PREFERRED STOCK

Vote AGAINST proposals authorizing the creation of new classes of preferred
stock with unspecified voting, conversion, dividend distribution, and other
rights ("blank check" preferred stock). Vote FOR proposals to create "declawed"
blank check preferred stock (stock that cannot be used as a takeover defense).
Vote FOR proposals to authorize preferred stock in cases where the company
specifies the voting, dividend, conversion, and other rights of such stock and
the terms of the preferred stock appear reasonable. Vote AGAINST proposals to
increase the number of blank check preferred stock authorized for issuance when
no shares have been issued or reserved for a specific purpose. Vote CASE-BY-CASE
on proposals to increase the number of blank check preferred shares after
analyzing the number of preferred shares available for issue given a company's
industry and performance in terms of shareholder returns.

RECAPITALIZATION

Votes CASE-BY-CASE on recapitalizations (reclassifications of securities),
taking into account the following: more simplified capital structure, enhanced
liquidity, fairness of conversion terms, impact on voting power and dividends,
reasons for the reclassification, conflicts of interest, and other alternatives
considered.

REVERSE STOCK SPLITS

Vote FOR management proposals to implement a reverse stock split when the number
of authorized shares will be proportionately reduced. Vote FOR management
proposals to implement a reverse stock split to avoid delisting. Votes on
proposals to implement a reverse stock split that do not proportionately reduce
the number of shares authorized for issue should be determined on a CASE-BY-CASE
basis using a model developed by ISS.

SHARE REPURCHASE PROGRAMS

Vote FOR management proposals to institute open-market share repurchase plans in
which all shareholders may participate on equal terms.

STOCK DISTRIBUTIONS: SPLITS AND DIVIDENDS

Vote FOR management proposals to increase the common share authorization for a
stock split or share dividend, provided that the increase in authorized shares
would not result in an excessive number of shares available for issuance as
determined using a model developed by ISS.

TRACKING STOCK

Votes on the creation of tracking stock are determined on a CASE-BY-CASE basis,
weighing the strategic value of the transaction against such factors as: adverse
governance changes, excessive increases in authorized capital stock, unfair
method of distribution, diminution of voting rights, adverse conversion
features, negative impact on stock option plans, and other alternatives such as
spinoff.

8. EXECUTIVE AND DIRECTOR COMPENSATION

Votes with respect to compensation plans should be determined on a CASE-BY-CASE
basis. Our methodology for reviewing compensation plans primarily focuses on the
transfer of shareholder wealth (the dollar cost of pay plans to shareholders
instead of simply focusing on voting power dilution). Using the expanded
compensation data disclosed under the SEC's rules, ISS will value every award
type. ISS will include in its analyses an estimated dollar cost for the proposed
plan and all continuing plans. This cost, dilution to shareholders' equity, will
also be expressed as a percentage figure for the transfer of shareholder wealth,
and will be considered long with dilution to voting power. Once ISS determines
the estimated cost of the plan, we compare it to a company-specific dilution
cap. Our model determines a company-specific allowable pool of shareholder
wealth that may be transferred from the company to executives, adjusted for:

- -    Long-term corporate performance (on an absolute basis and relative to a
     standard industry peer group and an appropriate market index),

- -    Cash compensation, and

- -    Categorization of the company as emerging, growth, or mature.

These adjustments are pegged to market capitalization. ISS will continue to
examine other features of proposed pay plans such as administration, payment
terms, plan duration, and whether the administering committee is permitted to
reprice underwater stock options without shareholder approval.


                                      A-28


DIRECTOR COMPENSATION

Votes on compensation plans for directors are determined on a CASE-BY-CASE
basis, using a proprietary, quantitative model developed by ISS.

STOCK PLANS IN LIEU OF CASH

Votes for plans which provide participants with the option of taking all or a
portion of their cash compensation in the form of stock are determined on a
CASE-BY-CASE basis. Vote FOR plans which provide a dollar-for-dollar cash for
stock exchange. Votes for plans which do not provide a dollar-for-dollar cash
for stock exchange should be determined on a CASE-BY-CASE basis using a
proprietary, quantitative model developed by ISS.

DIRECTOR RETIREMENT PLANS

Vote AGAINST retirement plans for nonemployee directors. Vote FOR shareholder
proposals to eliminate retirement plans for nonemployee directors.

MANAGEMENT PROPOSALS SEEKING APPROVAL TO REPRICE OPTIONS

Votes on management proposals seeking approval to reprice options are evaluated
on a CASE-BY-CASE basis giving consideration to the following:

- -    Historic trading patterns

- -    Rationale for the repricing

- -    Value-for-value exchange

- -    Option vesting

- -    Term of the option

- -    Exercise price

- -    Participation.

EMPLOYEE STOCK PURCHASE PLANS

Votes on employee stock purchase plans should be determined on a CASE-BY-CASE
basis. Vote FOR employee stock purchase plans where all of the following apply:

- -    Purchase price is at least 85 percent of fair market value

- -    Offering period is 27 months or less, and

- -    Potential voting power dilution (VPD) is ten percent or less.

Vote AGAINST employee stock purchase plans where any of the following apply:

- -    Purchase price is less than 85 percent of fair market value, or

- -    Offering period is greater than 27 months, or

- -    VPD is greater than ten percent

INCENTIVE BONUS PLANS AND TAX DEDUCTIBILITY PROPOSALS (OBRA-RELATED COMPENSATION
PROPOSALS)

Vote FOR proposals that simply amend shareholder-approved compensation plans to
include administrative features or place a cap on the annual grants any one
participant may receive to comply with the provisions of Section 162(m). Vote
FOR proposals to add performance goals to existing compensation plans to comply
with the provisions of Section 162(m) unless they are clearly inappropriate.
Votes to amend existing plans to increase shares reserved and to qualify for
favorable tax treatment under the provisions of Section 162(m) should be
considered on a CASE-BYCASE basis using a proprietary, quantitative model
developed by ISS. Generally vote FOR cash or cash and stock bonus plans that are
submitted to shareholders for the purpose of exempting compensation from taxes
under the provisions of Section 162(m) if no increase in shares is requested.

EMPLOYEE STOCK OWNERSHIP PLANS (ESOPS)

Vote FOR proposals to implement an ESOP or increase authorized shares for
existing ESOPs, unless the number of shares allocated to the ESOP is excessive
(more than five percent of outstanding shares.)

401(K) EMPLOYEE BENEFIT PLANS

Vote FOR proposals to implement a 401(k) savings plan for employees.

SHAREHOLDER PROPOSALS REGARDING EXECUTIVE AND DIRECTOR PAY

Generally, vote FOR shareholder proposals seeking additional disclosure of
executive and director pay information, provided the information requested is
relevant to shareholders' needs, would not put the company at a competitive
disadvantage relative to its industry, and is not unduly burdensome to the
company. Vote AGAINST shareholder proposals seeking to set absolute levels on
compensation or otherwise dictate the amount or form of compensation. Vote
AGAINST shareholder proposals requiring director fees be paid in stock only.
Vote FOR shareholder proposals to put


                                      A-29



option repricings to a shareholder vote. Vote on a CASE-BY-CASE basis for all
other shareholder proposals regarding executive and director pay, taking into
account company performance, pay level versus peers, pay level versus industry,
and long term corporate outlook.

OPTION EXPENSING

Generally vote FOR shareholder proposals asking the company to expense stock
options, unless the company has already publicly committed to expensing options
by a specific date.

PERFORMANCE-BASED STOCK OPTIONS

Vote CASE-BY-CASE on shareholder proposals advocating the use of
performance-based stock options (indexed, premium-priced, and performance-vested
options), taking into account:

- -    Whether the proposal mandates that all awards be performance-based

- -    Whether the proposal extends beyond executive awards to those of
     lower-ranking employees

- -    Whether the company's stock-based compensation plans meet ISS's SVT
     criteria and do not violate our repricing guidelines

GOLDEN AND TIN PARACHUTES

Vote FOR shareholder proposals to require golden and tin parachutes (executive
severance agreements) to be submitted for shareholder ratification, unless the
proposal requires shareholder approval prior to entering into employment
contracts. Vote on a CASE-BY-CASE basis on proposals to ratify or cancel golden
or tin parachutes. An acceptable parachute should include the following:

- -    The parachute should be less attractive than an ongoing employment
     opportunity with the firm

- -    The triggering mechanism should be beyond the control of management

- -    The amount should not exceed three times base salary plus guaranteed
     benefits

9. SOCIAL AND ENVIRONMENTAL ISSUES

CONSUMER ISSUES AND PUBLIC SAFETY

ANIMAL RIGHTS

Vote CASE-BY-CASE on proposals to phase out the use of animals in product
testing, taking into account:

- -    The nature of the product and the degree that animal testing is necessary
     or federally mandated (such as medical products),

- -    The availability and feasibility of alternatives to animal testing to
     ensure product safety, and

- -    The degree that competitors are using animal-free testing.

- -    Generally vote FOR proposals seeking a report on the company's animal
     welfare standards unless:

- -    The company has already published a set of animal welfare standards and
     monitors compliance

- -    The company's standards are comparable to or better than those of peer
     firms, and

- -    There are no serious controversies surrounding the company's treatment of
     animals

DRUG PRICING

Vote CASE-BY-CASE on proposals asking the company to implement price restraints
on pharmaceutical products, taking into account:

- -    Whether the proposal focuses on a specific drug and region

- -    Whether the economic benefits of providing subsidized drugs (e.g., public
     goodwill) outweigh the costs in terms of reduced profits, lower R&D
     spending, and harm to competitiveness

- -    The extent that reduced prices can be offset through the company's
     marketing budget without affecting R&D spending

- -    Whether the company already limits price increases of its products

- -    Whether the company already contributes life-saving pharmaceuticals to the
     needy and Third World countries

- -    The extent that peer companies implement price restraints

GENETICALLY MODIFIED FOODS

Vote CASE-BY-CASE on proposals to label genetically modified (GMO) ingredients
voluntarily in the company's products, or alternatively to provide interim
labeling and eventually eliminate GMOs, taking into account:

- -    The costs and feasibility of labeling and/or phasing out

- -    The nature of the company's business and the proportion of it affected by
     the proposal

- -    The proportion of company sales in markets requiring labeling or GMO-free
     products

- -    The extent that peer companies label or have eliminated GMOs

- -    Competitive benefits, such as expected increases in consumer demand for the
     company's products

- -    The risks of misleading consumers without federally mandated, standardized
     labeling

- -    Alternatives to labeling employed by the company.


                                      A-30



Vote FOR proposals asking for a report on the feasibility of labeling products
containing GMOs.

Vote AGAINST proposals to completely phase out GMOs from the company's products.
Such resolutions presuppose that there are proven health risks to GMOs--an issue
better left to federal regulators--which outweigh the economic benefits derived
from biotechnology. Vote CASE-BY-CASE on reports outlining the steps necessary
to eliminate GMOs from the company's products, taking into account:

- -    The relevance of the proposal in terms of the company's business and the
     proportion of it affected by the resolution

- -    The extent that peer companies have eliminated GMOs

- -    The extent that the report would clarify whether it is viable for the
     company to eliminate GMOs from its products

- -    Whether the proposal is limited to a feasibility study or additionally
     seeks an action plan and timeframe actually to phase out GMOs

- -    The percentage of revenue derived from international operations,
     particularly in Europe, where GMOs are more regulated.

Vote AGAINST proposals seeking a report on the health and environmental effects
of GMOs and the company's strategy for phasing out GMOs in the event they become
illegal in the United States. Studies of this sort are better undertaken by
regulators and the scientific community. If made illegal in the United States,
genetically modified crops would automatically be recalled and phased out.

HANDGUNS

Generally vote AGAINST requests for reports on a company's policies aimed at
curtailing gun violence in the United States unless the report is confined to
product safety information. Criminal misuse of firearms is beyond company
control and instead falls within the purview of law enforcement agencies.

PREDATORY LENDING

Vote CASE-BY CASE on requests for reports on the company's procedures for
preventing predatory lending, including the establishment of a board committee
for oversight, taking into account:

- -    Whether the company has adequately disclosed mechanisms in place to prevent
     abusive lending practices

- -    Whether the company has adequately disclosed the financial risks of its
     subprime business

- -    Whether the company has been subject to violations of lending laws or
     serious lending controversies

- -    Peer companies' policies to prevent abusive lending practices.

TOBACCO

Most tobacco-related proposals should be evaluated on a CASE-BY-CASE basis,
taking into account the following factors: Second-hand smoke:

- -    Whether the company complies with all local ordinances and regulations

- -    The degree that voluntary restrictions beyond those mandated by law might
     hurt the company's competitiveness

- -    The risk of any health-related liabilities.

Advertising to youth:

- -    Whether the company complies with federal, state, and local laws on the
     marketing of tobacco or if it has been fined for violations

- -    Whether the company has gone as far as peers in restricting advertising

- -    Whether the company entered into the Master Settlement Agreement, which
     restricts marketing of tobacco to youth

- -    Whether restrictions on marketing to youth extend to foreign countries
     Cease production of tobacco-related products or avoid selling products to
     tobacco companies:

- -    The percentage of the company's business affected

- -    The economic loss of eliminating the business versus any potential
     tobacco-related liabilities.

- -    Spinoff tobacco-related businesses:

- -    The percentage of the company's business affected

- -    The feasibility of a spinoff

- -    Potential future liabilities related to the company's tobacco business.
     Stronger product warnings:

Vote AGAINST proposals seeking stronger product warnings. Such decisions are
better left to public health authorities.

Investment in tobacco stocks: Vote AGAINST proposals prohibiting investment in
tobacco equities. Such decisions are better left to portfolio managers.

ENVIRONMENT AND ENERGY


                                      A-31



ARCTIC NATIONAL WILDLIFE REFUGE

Vote CASE-BY-CASE on reports outlining potential environmental damage from
drilling in the Arctic National Wildlife Refuge (ANWR), taking into account:

- -    Whether there are publicly available environmental impact reports;

- -    Whether the company has a poor environmental track record, such as
     violations of federal and state regulations or accidental spills; and

- -    The current status of legislation regarding drilling in ANWR.

CERES PRINCIPLES

Vote CASE-BY-CASE on proposals to adopt the CERES Principles, taking into
account:

- -    The company's current environmental disclosure beyond legal requirements,
     including environmental health and safety (EHS) audits and reports that may
     duplicate CERES

- -    The company's environmental performance record, including violations of
     federal and state regulations, level of toxic emissions, and accidental
     spills

- -    Environmentally conscious practices of peer companies, including
     endorsement of CERES

- -    Costs of membership and implementation.

ENVIRONMENTAL REPORTS

Generally vote FOR requests for reports disclosing the company's environmental
policies unless it already has well-documented environmental management systems
that are available to the public.

GLOBAL WARMING

Generally vote FOR reports on the level of greenhouse gas emissions from the
company's operations and products, unless the report is duplicative of the
company's current environmental disclosure and reporting or is not integral to
the company's line of business. However, additional reporting may be warranted
if:

- -    The company's level of disclosure lags that of its competitors, or

- -    The company has a poor environmental track record, such as violations of
     federal and state regulations.

RECYCLING

Vote CASE-BY-CASE on proposals to adopt a comprehensive recycling strategy,
taking into account:

- -    The nature of the company's business and the percentage affected

- -    The extent that peer companies are recycling

- -    The timetable prescribed by the proposal

- -    The costs and methods of implementation

- -    Whether the company has a poor environmental track record, such as
     violations of federal and state regulations.

RENEWABLE ENERGY

Vote CASE-BY-CASE on proposals to invest in renewable energy sources, taking
into account:

- -    The nature of the company's business and the percentage affected

- -    The extent that peer companies are switching from fossil fuels to cleaner
     sources

- -    The timetable and specific action prescribed by the proposal

- -    The costs of implementation

- -    The company's initiatives to address climate change

Generally vote FOR requests for reports on the feasibility of developing
renewable energy sources, unless the report is duplicative of the company's
current environmental disclosure and reporting or is not integral to the
company's line of business.

GENERAL CORPORATE ISSUES

LINK EXECUTIVE COMPENSATION TO SOCIAL PERFORMANCE

Vote CASE-BY-CASE on proposals to review ways of linking executive compensation
to social factors, such as corporate downsizings, customer or employee
satisfaction, community involvement, human rights, environmental performance,
predatory lending, and executive/employee pay disparities. Such resolutions
should be evaluated in the context of:

- -    The relevance of the issue to be linked to pay

- -    The degree that social performance is already included in the company's pay
     structure and disclosed

- -    The degree that social performance is used by peer companies in setting pay

- -    Violations or complaints filed against the company relating to the
     particular social performance measure

- -    Artificial limits sought by the proposal, such as freezing or capping
     executive pay

- -    Independence of the compensation committee

- -    Current company pay levels.


                                      A-32



CHARITABLE/POLITICAL CONTRIBUTIONS

Generally vote AGAINST proposals asking the company to affirm political
nonpartisanship in the workplace so long as:

- -    The company is in compliance with laws governing corporate political
     activities, and

- -    The company has procedures in place to ensure that employee contributions
     to company-sponsored political action committees (PACs) are strictly
     voluntary and not coercive. Vote AGAINST proposals to report or publish in
     newspapers the company's political contributions. Federal and state laws
     restrict the amount of corporate contributions and include reporting
     requirements. Vote AGAINST proposals disallowing the company from making
     political contributions. Businesses are affected by legislation at the
     federal, state, and local level and barring contributions can put the
     company at a competitive disadvantage. Vote AGAINST proposals restricting
     the company from making charitable contributions. Charitable contributions
     are generally useful for assisting worthwhile causes and for creating
     goodwill in the community. In the absence of bad faith, self-dealing, or
     gross negligence, management should determine which contributions are in
     the best interests of the company. Vote AGAINST proposals asking for a list
     of company executives, directors, consultants, legal counsels, lobbyists,
     or investment bankers that have prior government service and whether such
     service had a bearing on the business of the company. Such a list would be
     burdensome to prepare without providing any meaningful information to
     shareholders.

LABOR STANDARDS AND HUMAN RIGHTS

CHINA PRINCIPLES

Vote AGAINST proposals to implement the China Principles unless:

- -    There are serious controversies surrounding the company's China operations,
     and

- -    The company does not have a code of conduct with standards similar to those
     promulgated by the International Labor Organization (ILO).

COUNTRY-SPECIFIC HUMAN RIGHTS REPORTS

Vote CASE-BY-CASE on requests for reports detailing the company's operations in
a particular country and steps to protect human rights, based on:

- -    The nature and amount of company business in that country

- -    The company's workplace code of conduct

- -    Proprietary and confidential information involved

- -    Company compliance with U.S. regulations on investing in the country

- -    Level of peer company involvement in the country.

INTERNATIONAL CODES OF CONDUCT/VENDOR STANDARDS

Vote CASE-BY-CASE on proposals to implement certain human rights standards at
company facilities or those of its suppliers and to commit to outside,
independent monitoring. In evaluating these proposals, the following should be
considered:

- -    The company's current workplace code of conduct or adherence to other
     global standards and the degree they meet the standards promulgated by the
     proponent

- -    Agreements with foreign suppliers to meet certain workplace standards o
     Whether company and vendor facilities are monitored and how

- -    Company participation in fair labor organizations

- -    Type of business

- -    Proportion of business conducted overseas

- -    Countries of operation with known human rights abuses

- -    Whether the company has been recently involved in significant labor and
     human rights controversies or violations

- -    Peer company standards and practices

- -    Union presence in company's international factories

- -    Generally vote FOR reports outlining vendor standards compliance unless any
     of the following apply:

- -    The company does not operate in countries with significant human rights
     violations

- -    The company has no recent human rights controversies or violations, or

- -    The company already publicly discloses information on its vendor standards
     compliance.

MACBRIDE PRINCIPLES

Vote CASE-BY-CASE on proposals to endorse or increase activity on the MacBride
Principles, taking into account:

- -    Company compliance with or violations of the Fair Employment Act of 1989

- -    Company antidiscrimination policies that already exceed the legal
     requirements

- -    The cost and feasibility of adopting all nine principles

- -    The cost of duplicating efforts to follow two sets of standards (Fair
     Employment and the MacBride Principles)

- -    The potential for charges of reverse discrimination

- -    The potential that any company sales or contracts in the rest of the United
     Kingdom could be negatively impacted


                                      A-33



- -    The level of the company's investment in Northern Ireland

- -    The number of company employees in Northern Ireland

- -    The degree that industry peers have adopted the MacBride Principles

- -    Applicable state and municipal laws that limit contracts with companies
     that have not adopted the MacBride Principles.

MILITARY BUSINESS

FOREIGN MILITARY SALES/OFFSETS

Vote AGAINST reports on foreign military sales or offsets. Such disclosures may
involve sensitive and confidential information. Moreover, companies must comply
with government controls and reporting on foreign military sales.

LANDMINES AND CLUSTER BOMBS

Vote CASE-BY-CASE on proposals asking a company to renounce future involvement
in antipersonnel landmine production, taking into account:

- -    Whether the company has in the past manufactured landmine components

- -    Whether the company's peers have renounced future production

Vote CASE-BY-CASE on proposals asking a company to renounce future involvement
in cluster bomb production, taking into account:

- -    What weapons classifications the proponent views as cluster bombs

- -    Whether the company currently or in the past has manufactured cluster bombs
     or their components

- -    The percentage of revenue derived from cluster bomb manufacture

- -    Whether the company's peers have renounced future production

NUCLEAR WEAPONS

Vote AGAINST proposals asking a company to cease production of nuclear weapons
components and delivery systems, including disengaging from current and proposed
contracts. Components and delivery systems serve multiple military and
non-military uses, and withdrawal from these contracts could have a negative
impact on the company's business.

SPACED-BASED WEAPONIZATION

Generally vote FOR reports on a company's involvement in spaced-based
weaponization unless:

- -    The information is already publicly available or

- -    The disclosures sought could compromise proprietary information.

WORKPLACE DIVERSITY

BOARD DIVERSITY

Generally vote FOR reports on the company's efforts to diversify the board,
unless:

- -    The board composition is reasonably inclusive in relation to companies of
     similar size and business or

- -    The board already reports on its nominating procedures and diversity
     initiatives.

- -    Vote CASE-BY-CASE on proposals asking the company to increase the
     representation of women and minorities on the board, taking into account:

- -    The degree of board diversity

- -    Comparison with peer companies

- -    Established process for improving board diversity

- -    Existence of independent nominating committee

- -    Use of outside search firm

- -    History of EEO violations.

EQUAL EMPLOYMENT OPPORTUNITY (EEO)

Generally vote FOR reports outlining the company's affirmative action
initiatives unless all of the following apply:

- -    The company has well-documented equal opportunity programs

- -    The company already publicly reports on its company-wide affirmative
     initiatives and provides data on its workforce diversity, and

- -    The company has no recent EEO-related violations or litigation.

Vote AGAINST proposals seeking information on the diversity efforts of suppliers
and service providers, which can pose a significant cost and administration
burden on the company.

GLASS CEILING

Generally vote FOR reports outlining the company's progress towards the Glass
Ceiling Commission's business recommendations, unless:

- -    The composition of senior management and the board is fairly inclusive


                                      A-34



- -    The company has well-documented programs addressing diversity initiatives
     and leadership development

- -    The company already issues public reports on its company-wide affirmative
     initiatives and provides data on its workforce diversity, and

- -    The company has had no recent, significant EEO-related violations or
     litigation

SEXUAL ORIENTATION

Vote CASE-BY-CASE on proposals to amend the company's EEO policy to include
sexual orientation, taking into account:

- -    Whether the company's EEO policy is already in compliance with federal,
     state and local laws

- -    Whether the company has faced significant controversies or litigation
     regarding unfair treatment of gay and lesbian employees

- -    The industry norm for including sexual orientation in EEO statements

- -    Existing policies in place to prevent workplace discrimination based on
     sexual orientation

Vote AGAINST proposals to extend company benefits to or eliminate benefits from
domestic partners. Benefit decisions should be left to the discretion of the
company.

10. MUTUAL FUND PROXIES
ELECTION OF DIRECTORS

Vote to elect directors on a CASE-BY-CASE basis, considering the following
factors:

- -    Board structure

- -    Director independence and qualifications

- -    Attendance at board and committee meetings.

Votes should be withheld from directors who:

- -    Attend less than 75 percent of the board and committee meetings without a
     valid excuse for the absences. Valid reasons include illness or absence due
     to company business. Participation via telephone is acceptable. In
     addition, if the director missed only one meeting or one day's meetings,
     votes should not be withheld even if such absence dropped the director's
     attendance below 75 percent.

- -    Ignore a shareholder proposal that is approved by a majority of shares
     outstanding

- -    Ignore a shareholder proposal that is approved by a majority of the votes
     cast for two consecutive years

- -    Are interested directors and sit on the audit or nominating committee, or

- -    Are interested directors and the full board serves as the audit or
     nominating committee or the company does not have one of these committees.

CONVERT CLOSED-END FUND TO OPEN-END FUND

Vote conversion proposals on a CASE-BY-CASE basis, considering the following
factors:

- -    Past performance as a closed-end fund

- -    Market in which the fund invests

- -    Measures taken by the board to address the discount

- -    Past shareholder activism, board activity

- -    Votes on related proposals.

PROXY CONTESTS

Votes on proxy contests should be determined on a CASE-BY-CASE basis,
considering the following factors:

- -    Past performance relative to its peers

- -    Market in which fund invests

- -    Measures taken by the board to address the issues

- -    Past shareholder activism, board activity, and votes on related proposals

- -    Strategy of the incumbents versus the dissidents

- -    Independence of directors

- -    Experience and skills of director candidates

- -    Governance profile of the company

- -    Evidence of management entrenchment

INVESTMENT ADVISORY AGREEMENTS

Votes on investment advisory agreements should be determined on a CASE-BY-CASE
basis, considering the following factors:

- -    Proposed and current fee schedules

- -    Fund category/investment objective

- -    Performance benchmarks

- -    Share price performance compared to peers


                                      A-35



- -    Resulting fees relative to peers

- -    Assignments (where the advisor undergoes a change of control).

APPROVE NEW CLASSES OR SERIES OF SHARES

Vote FOR the establishment of new classes or series of shares.

PREFERRED STOCK PROPOSALS

Votes on the authorization for or increase in preferred shares should be
determined on a CASE-BY-CASE basis, considering the following factors:

- -    Stated specific financing purpose

- -    Possible dilution for common shares

- -    Whether the shares can be used for antitakeover purposes.

1940 ACT POLICIES

Votes on 1940 Act policies should be determined on a CASE-BY-CASE basis,
considering the following factors:

- -    Potential competitiveness

- -    Regulatory developments

- -    Current and potential returns

- -    Current and potential risk.

Generally vote FOR these amendments as long as the proposed changes do not
fundamentally alter the investment focus of the fund and do comply with the
current SEC interpretation.

CHANGE FUNDAMENTAL RESTRICTION TO NONFUNDAMENTAL RESTRICTION

Proposals to change a fundamental restriction to a nonfundamental restriction
should be evaluated on a CASE-BY-CASE basis, considering the following factors:

- -    The fund's target investments

- -    The reasons given by the fund for the change

- -    The projected impact of the change on the portfolio.

CHANGE FUNDAMENTAL INVESTMENT OBJECTIVE TO NONFUNDAMENTAL

Vote AGAINST proposals to change a fund's fundamental investment objective to
nonfundamental.

NAME CHANGE PROPOSALS

Votes on name change proposals should be determined on a CASE-BY-CASE basis,
considering the following factors:

- -    Political/economic changes in the target market

- -    Consolidation in the target market

- -    Current asset composition

CHANGE IN FUND'S SUBCLASSIFICATION

Votes on changes in a fund's subclassification should be determined on a
CASE-BY-CASE basis, considering the following factors:

- -    Potential competitiveness

- -    Current and potential returns

- -    Risk of concentration

- -    Consolidation in target industry

DISPOSITION OF ASSETS/TERMINATION/LIQUIDATION

Vote these proposals on a CASE-BY-CASE basis, considering the following factors:

- -    Strategies employed to salvage the company

- -    The fund's past performance

- -    Terms of the liquidation.

CHANGES TO THE CHARTER DOCUMENT

Votes on changes to the charter document should be determined on a CASE-BY-CASE
basis, considering the following factors:

- -    The degree of change implied by the proposal

- -    The efficiencies that could result

- -    The state of incorporation


                                      A-36



- -    Regulatory standards and implications.

Vote AGAINST any of the following changes:

- -    Removal of shareholder approval requirement to reorganize or terminate the
     trust or any of its series

- -    Removal of shareholder approval requirement for amendments to the new
     declaration of trust

- -    Removal of shareholder approval requirement to amend the fund's management
     contract, allowing the contract to be modified by the investment manager
     and the trust management, as permitted by the 1940 Act

- -    Allow the trustees to impose other fees in addition to sales charges on
     investment in a fund, such as deferred sales charges and redemption fees
     that may be imposed upon redemption of a fund's shares

- -    Removal of shareholder approval requirement to engage in and terminate
     subadvisory arrangements

- -    Removal of shareholder approval requirement to change the domicile of the
     fund

CHANGE THE FUND'S DOMICILE

Vote reincorporations on a CASE-BY-CASE basis, considering the following
factors:

- -    Regulations of both states

- -    Required fundamental policies of both states

- -    Increased flexibility available.

AUTHORIZE THE BOARD TO HIRE AND TERMINATE SUBADVISORS WITHOUT SHAREHOLDER
APPROVAL

Vote AGAINST proposals authorizing the board to hire/terminate subadvisors
without shareholder approval.

DISTRIBUTION AGREEMENTS

Vote these proposals on a CASE-BY-CASE basis, considering the following factors:

- -    Fees charged to comparably sized funds with similar objectives

- -    The proposed distributor's reputation and past performance

- -    The competitiveness of the fund in the industry

- -    Terms of the agreement.

MASTER-FEEDER STRUCTURE

Vote FOR the establishment of a master-feeder structure.

MERGERS

Vote merger proposals on a CASE-BY-CASE basis, considering the following
factors:

- -    Resulting fee structure

- -    Performance of both funds

- -    Continuity of management personnel

- -    Changes in corporate governance and their impact on shareholder rights.

SHAREHOLDER PROPOSALS TO ESTABLISH DIRECTOR OWNERSHIP REQUIREMENT

Generally vote AGAINST shareholder proposals that mandate a specific minimum
amount of stock that directors must own in order to qualify as a director or to
remain on the board. While ISS favors stock ownership on the part of directors,
the company should determine the appropriate ownership requirement.

SHAREHOLDER PROPOSALS TO REIMBURSE PROXY SOLICITATION EXPENSES

Voting to reimburse proxy solicitation expenses should be analyzed on a
CASE-BY-CASE basis. In cases where ISS recommends in favor of the dissidents, we
also recommend voting for reimbursing proxy solicitation expenses.

SHAREHOLDER PROPOSALS TO TERMINATE INVESTMENT ADVISOR

Vote to terminate the investment advisor on a CASE-BY-CASE basis, considering
the following factors:

- -    Performance of the fund's NAV

- -    The fund's history of shareholder relations

- -    The performance of other funds under the advisor's management.

GREAT COMPANIES, L.L.C.

            PROXY VOTING POLICY (ISSUE DATE: 2/11/02, AMENDED 6/5/03)

I. INTRODUCTION. Great Companies, LLC Proxy Voting Policy specifically outlines
the firm's philosophy and practices of voting on assets under management
pursuant to guidelines under the Employee Retirement Income Security Act of 1974


                                      A-37



(ERISA) and guidance provided by other regulatory bodies for non-ERISA accounts.
This policy and its accompanying sections apply to voting of proxies on
securities held in all firm investment portfolios. In addition, this policy
provides guidance on the appropriateness under ERISA of active monitoring of
corporate management by plan fiduciaries. Great Companies, LLC has designated a
third party service Institutional Shareholder Services to act on its behalf to
provide guidance on proxy voting issues for companies' shares which are under
control by the firm through it's advisory or sub-adviser role pursuant to
existing advisory agreements. This policy is applicable only to supervised
assets under management.

The fiduciary duties described in ERISA Sec. 404(a)(1)(A) and (B), require that,
in voting proxies, the responsible fiduciary consider those factors that may
affect the value of the plan's investment and not subordinate the interests of
the participants and beneficiaries in their retirement income to unrelated
objectives. These duties also require that the named fiduciary appointing an
investment manager periodically monitor the activities of the investment manager
with respect to the management of plan assets, including decisions made and
actions taken by the investment manager with regard to proxy voting decisions.
The named fiduciary must carry out this responsibility solely in the interest of
the participants and beneficiaries and without regard to its relationship to the
plan sponsor.

It is the firm's view that compliance with this proxy policy necessitates proper
documentation of the activities that are subject to monitoring. Thus, the firm
is required to maintain accurate records as to proxy voting. Moreover, if the
named fiduciary is to be able to carry out its responsibilities under ERISA Sec.
404(a) in determining whether the firm is fulfilling its fiduciary obligations
in investing plans assets in a manner that justifies the continuation of the
management appointment, the proxy voting records must enable the named fiduciary
to review not only the firm's voting procedure with respect to plan-owned stock,
but also to review the actions taken in individual proxy voting situations.

The fiduciary obligations of prudence and loyalty to plan participants and
beneficiaries require the firm to vote proxies on issues that may affect the
value of the plan's investment. Although the same principles apply to proxies
appurtenant to shares of foreign corporations, the firm recognizes that in
voting such proxies, plans may, in some cases, incur additional costs. Thus,
Great Companies should consider whether the plan's vote, either by itself or
together with the votes of other shareholders, is expected to have an effect on
the value of the plan's investment that will outweigh the cost of voting.
Moreover, the firm, in deciding whether to purchase shares of a foreign
corporation, should consider whether the difficulty and expense in voting the
shares is reflected in its market price. This shall be applicable only to
non-ADR shares.

II. INVESTMENT ADVISERS ACT OF 1940--RULE 206(4)-6 REVISED RULE. Rule 206(4)-2
under the Advisers Act requires investment companies such as the TA IDEX funds
and their investment Advisers, and other SEC registered management companies to
adopt and implement written policies and procedures reasonably designed to
ensure that the adviser votes proxies in the best interests of its clients.
Great Companies, LLC has in place written policies and procedures for Proxy
Voting that outlines the firm's philosophy and practices of voting on fully
discretional assets under management pursuant to guidelines under the Employee
Retirement Income Security Act of 1974 (ERISA) and guidance provided by other
regulatory bodies for non ERISA clients. The firm's Investment Adviser Service
Agreement expressly authorized the firm to vote proxies on behalf of clients
unless notified in writing by the client that such services shall be the
responsibility of the client.

Decisions on voting of proxies will be made by the Adviser unless the client
specifically directs otherwise in writing. If the Client so directs that it or
another party shall vote proxies, then the Adviser shall have no liability or
responsibility whatsoever in connection with the voting of such proxies. If the
Adviser retains the responsibility to vote proxies, the Client acknowledges that
the Adviser may exercise such vote. The Client also acknowledges that the
Adviser may retain an independent third party proxy voting service to facilitate
the voting of proxies.

Great Companies, LLC utilizes Institutional Shareholder Services, Inc., ("ISS")
a non-affiliated, independent third party service to vote proxies on behalf of
clients of the firm. The company provides detailed reports on votes cast on
behalf of the firm's clients and such votes are made available via electronic
media for dissemination. A full version of the firm's policy may be obtained
upon request or via the company's website at www.greatcompanies.com or by phone
at 1-800-538-5111.

III. CONFLICT OF INTEREST. It is the policy of Great Companies, LLC to always in
the opinion of the firm, to vote proxies in the best interests of its clients.
The duty of care requires an adviser with proxy voting authority to monitor
corporate actions and to vote the proxies. To satisfy its duty of loyalty, Great
Companies, LLC must cast the proxy votes in a manner consistent with the best
interests of its clients, and must never put Great Companies' own interests
above those of its client.


                                      A-38



It is the policy of the firm to vote client securities in accordance with a
pre-determined policy, based upon the recommendations of an independent third
party, Institutional Shareholder Services, and when applicable upon the
discretion of the firm's portfolio management team.

It is difficult to determine what conflicts may arise in the proxy voting
process due to the numerous scenarios which could arise. For material conflicts
of interest that arise within the proxy voting process, the firm will seek the
clients' consent in writing and disclose all material conflicts to each client
before voting. Great Companies, LLC seeking client consent must provide the
client with sufficient information regarding the shareholder vote and the
adviser's conflict so that the client can make an informed decision whether or
not to consent. Absent disclosure and client consent, Great Companies, LLC must
take other steps designed to ensure, and must be able to demonstrate that these
steps resulted in, a voting decision that was based on the client's best
interest. The firm's portfolio management team and or Compliance Officer will be
responsible for documenting all issues relating to any particular conflict in
accordance with the firms Document & Electronic Communication Retention Policy.

It is the position of the Great Companies, LLC that in some cases, the firm may
decide to expressly give the vote back to the client or it's designee (of
course, the client must accept this responsibility in writing) the discretionary
authority to vote the proxy directly in the event that a material conflict
occurs.

It is the policy of the firm that it shall provide all clients with a copy of
any proxy voting results upon request, or shall make such votes available in a
manner convenient for all clients. The firm shall provide clients who the firm
provides continuous advisory services to, with its policies and procedures on
proxy voting, and the results of such votes, in a manner consistent with the
provisions of Rule 206(4)-6 of the Investment Advisers Act of 1940.

IV. PROXY POLICY GUIDELINES. THE FOLLOWING GUIDELINES INCLUDE PROXY-VOTING
RECOMMENDATIONS FOR GREAT COMPANIES, L.L.C.

THE BOARD OF DIRECTORS - VOTING ON DIRECTOR NOMINEES IN UNCONTESTED ELECTIONS -
Votes on director nominees should be made on a case-by-case basis, examining the
following factors: composition of the board and key board committees, attendance
at board meetings, corporate governance provisions and takeover activity,
long-term company performance relative to a market index, directors' investment
in the company, whether the chairman is also serving as CEO, and whether a
retired CEO sits on the board. However, there are some actions by directors that
should result in votes being withheld. These instances include directors who:

     -    Attend less than 75 percent of the board and committee meetings
          without a valid excuse

     -    Implement or renew a dead-hand or modified dead-hand poison pill

     -    Ignore a shareholder proposal that is approved by a majority of the
          shares outstanding

     -    Ignore a shareholder proposal that is approved by a majority of the
          votes cast for two consecutive years

     -    Have failed to act on takeover offers where the majority of the
          shareholders have tendered their shares

     -    Are inside directors and sit on the audit, compensation, or nominating
          committees

     -    Are inside directors and the full board serves as the audit,
          compensation, or nominating committee or the company does not have one
          of these committees

     -    In addition, directors who enacted egregious corporate governance
          policies or failed to replace management as appropriate would be
          subject to recommendations to withhold votes.

SEPARATING CHAIRMAN AND CEO - Vote on a case-by-case basis on shareholder
proposals requiring that the positions of chairman and CEO be held separately.

PROPOSALS SEEKING A MAJORITY OF INDEPENDENT DIRECTORS - Shareholder proposals
asking that a majority of directors be independent should be evaluated on a
case-by-case basis. Vote for shareholder proposals asking that board audit,
compensation, and/or nominating committees be composed exclusively of
independent directors.

STOCK OWNERSHIP REQUIREMENTS - Vote against shareholder proposals requiring
directors to own a minimum amount of company stock in order to qualify as a
director or to remain on the board.

TERM OF OFFICE - Vote against shareholder proposals to limit the tenure of
outside directors.

AGE LIMITS - Vote against shareholder proposals to impose a mandatory retirement
age for outside directors.

DIRECTOR AND OFFICER INDEMNIFICATION AND LIABILITY PROTECTION - Proposals on
director and officer indemnification and liability protection should be
evaluated on a case-by-case basis, using Delaware law as the standard. Vote
against proposals to eliminate entirely directors' and officers' liability for
monetary damages for violating the duty of care. Vote


                                      A-39



against indemnification proposals that would expand coverage beyond just legal
expenses to acts, such as negligence, that are more serious violations of
fiduciary obligation than mere carelessness. Vote for only those proposals
providing such expanded coverage in cases when a director's or officer's legal
defense was unsuccessful if: (1) the director was found to have acted in good
faith and in a manner that he reasonably believed was in the best interests of
the company, and (2) only if the director's legal expenses would be covered.

CHARITABLE CONTRIBUTIONS - Votes on proposals regarding charitable contributions
must be evaluated on a case-by-case basis.

PROXY CONTESTS - VOTING FOR DIRECTOR NOMINEES IN CONTESTED ELECTIONS - Votes in
a contested election of directors must be evaluated on a case-by case basis,
considering the following factors: long-term financial performance of the target
company relative to its industry; management's track record; background to the
proxy contest; qualifications of director nominees (both slates); evaluation of
what each side is offering shareholders as well as the likelihood that the
proposed objectives and goals can be met; and stock ownership positions.

REIMBURSE PROXY SOLICITATION EXPENSES - Voting to reimburse proxy solicitation
expenses should be analyzed on a case-by-case basis. In cases where ISS
recommends in favor of the dissidents, we also recommend voting for reimbursing
proxy solicitation expenses.

AUDITORS - RATIFYING AUDITORS -Vote for proposals to ratify auditors, unless: an
auditor has a financial interest in or association with the company, and is
therefore not independent; or there is reason to believe that the independent
auditor has rendered an opinion which is neither accurate nor indicative of the
company's financial position.

PROXY CONTEST DEFENSES - BOARD STRUCTURE: STAGGERED VS. ANNUAL ELECTIONS - Vote
against proposals to classify the board. - Vote for proposals to repeal
classified boards and to elect all directors annually.

SHAREHOLDER ABILITY TO REMOVE DIRECTORS - Vote against proposals that provide
that directors may be removed only for cause. Vote for proposals to restore
shareholder ability to remove directors with or without cause. Vote against
proposals that provide that only continuing directors may elect replacements to
fill board vacancies. Vote for proposals that permit shareholders to elect
directors to fill board vacancies.

CUMULATIVE VOTING - Vote against proposals to eliminate cumulative voting. Vote
proposals to restore or permit cumulative voting on a case-by-case basis
relative to the company's other governance provisions.

SHAREHOLDER ABILITY TO CALL SPECIAL MEETINGS - Vote against proposals to
restrict or prohibit shareholder ability to call special meetings. Vote for
proposals that remove restrictions on the right of shareholders to act
independently of management.

SHAREHOLDER ABILITY TO ACT BY WRITTEN CONSENT - Vote against proposals to
restrict or prohibit shareholder ability to take action by written consent. Vote
for proposals to allow or make easier shareholder action by written consent.

SHAREHOLDER ABILITY TO ALTER THE SIZE OF THE BOARD - Vote for proposals that
seek to fix the size of the board. Vote against proposals that give management
the ability to alter the size of the board without shareholder approval.

TENDER OFFER DEFENSES - POISON PILLS - Vote for shareholder proposals that ask a
company to submit its poison pill for shareholder ratification. Review on a
case-by-case basis shareholder proposals to redeem a company's poison pill.
Review on a case-by-case basis management proposals to ratify a poison pill.

FAIR PRICE PROVISIONS - Vote proposals to adopt fair price provisions on a
case-by-case basis, evaluating factors such as the vote required to approve the
proposed acquisition, the vote required to repeal the fair price provision, and
the mechanism for determining the fair price. Generally, vote against fair price
provisions with shareholder vote requirements greater than a majority of
disinterested shares.

GREENMAIL - Vote for proposals to adopt anti-greenmail charter of bylaw
amendments or otherwise restrict a company's ability to make greenmail payments.
Review on a case-by-case basis anti-greenmail proposals when they are bundled
with other charter or bylaw amendments.

PALE GREENMAIL - Review on a case-by-case basis restructuring plans that involve
the payment of pale greenmail.

UNEQUAL VOTING RIGHTS - Vote against dual-class exchange offers. Vote against
dual-class recapitalizations.


                                      A-40



SUPERMAJORITY SHAREHOLDER VOTE REQUIREMENT TO AMEND THE CHARTER OR BYLAWS - Vote
against management proposals to require a supermajority shareholder vote to
approve charter and bylaw amendments. Vote for shareholder proposals to lower
supermajority shareholder vote requirements for charter and bylaw amendments.

SUPERMAJORITY SHAREHOLDER VOTE REQUIREMENT TO APPROVE MERGERS - Vote against
management proposals to require a supermajority shareholder vote to approve
mergers and other significant business combinations. Vote for shareholder
proposals to lower supermajority shareholder vote requirements for mergers and
other significant business combinations.

WHITE SQUIRE PLACEMENTS - Vote for shareholder proposals to require approval of
blank check preferred stock issues for other than general corporate purposes.

MISCELLANEOUS GOVERNANCE PROVISIONS - CONFIDENTIAL VOTING - Vote for shareholder
proposals that request companies to adopt confidential voting, use independent
tabulators, and use independent inspectors of election as long as the proposals
include clauses for proxy contests as follows: In the case of a contested
election, management should be permitted to request that the dissident group
honor its confidential voting policy. If the dissidents agree, the policy
remains in place. If the dissidents do not agree, the confidential voting policy
is waived. Vote for management proposals to adopt confidential voting.

EQUAL ACCESS - Vote for shareholder proposals that would allow significant
company shareholders equal access to management's proxy material in order to
evaluate and propose voting recommendations on proxy proposals and director
nominees, and in order to nominate their own candidates to the board.

BUNDLED PROPOSALS - Review on a case-by-case basis bundled or "conditioned"
proxy proposals. In the case of items that are conditioned upon each other,
examine the benefits and costs of the packaged items. In instances when the
joint effect of the conditioned items is not in shareholders' best interests,
vote against the proposals. If the combined effect is positive, support such
proposals.

SHAREHOLDER ADVISORY COMMITTEES - Review on case-by-case basis proposals to
establish a shareholder advisory committee.

CAPITAL STRUCTURE - COMMON STOCK AUTHORIZATION - Review proposals to increase
the number of shares of common stock authorized for issue on a case-by-case
basis. Vote against proposals to increase the number of authorized shares of the
class of stock that has superior voting rights in companies that have dual-Class
capitalization structures.

STOCK DISTRIBUTIONS: SPLITS AND DIVIDENDS - Vote for management proposals to
increase common share authorization for a stock split, provided that the
increase in authorized shares would not result in an excessive number of shares
available for issuance given a company's industry and performance in terms of
shareholder returns.

REVERSE STOCK SPLITS - Vote for management proposals to implement a reverse
stock split when the number of shares will be proportionately reduced to avoid
delisting. Review on a case-by-case basis on proposals to implement a reverse
stock split that do not proportionately reduce the number of shares authorized
for issue.

PREFERRED STOCK - Vote against proposals authorizing the creation of new classes
of preferred stock with unspecified voting, conversion, dividend distribution,
and other rights ("blank check" preferred stock). Vote case-by-case for
proposals to create blank check preferred stock in cases when the company
expressly states that the stock will not be used as a takeover defense. Vote for
proposals to authorize preferred stock in cases where the company specifies the
voting, dividend, conversion, and other rights of such stock and the terms of
the preferred stock appear reasonable. Vote case-by-case on proposals to
increase the number of blank check preferred shares after analyzing the number
of preferred shares available for issue given a company's industry and
performance in terms of shareholder returns.

SHAREHOLDER PROPOSALS REGARDING BLANK CHECK PREFERRED STOCK - Vote for
shareholder proposals to have blank check preferred stock placements, other than
those shares issued for the purpose of raising capital or making acquisitions in
the normal course of business, submitted for shareholder ratification.

ADJUSTMENTS TO PAR VALUE OF COMMON STOCK - Vote for management proposals to
reduce the par value of common stock.

PREEMPTIVE RIGHTS - Review on a case-by-case basis shareholder proposals that
seek preemptive rights. In evaluating proposals on preemptive rights, consider
the size of a company and the characteristics of its shareholder base.


                                      A-41



DEBT RESTRUCTURINGS - Review on a case-by-case basis proposal to increase common
and/or preferred shares and to issue shares as part of a debt-restructuring
plan. Consider the following issues: Dilution--How much will ownership interest
of existing shareholders be reduced, and how extreme will dilution to any future
earnings be? Change in Control--Will the transaction result in a change in
control of the company? Bankruptcy-- Generally, approve proposals that
facilitate debt restructuring unless there are clear signs of self-dealing or
other abuses.

SHARE REPURCHASE PROGRAMS - Vote for management proposals to institute
open-market share repurchase plans in which all shareholders may participate on
equal terms.

TRACKING STOCK - Votes on the creation of tracking stock are determined on a
case-by-case basis, weighing the strategic value of the transaction against such
factors as:

     -    adverse governance changes

     -    excessive increases in authorized capital stock

     -    unfair method of distribution

     -    diminution of voting rights

     -    adverse conversion features

     -    negative impact on stock option plans

     -    other alternatives such as spin-off

EXECUTIVE AND DIRECTOR COMPENSATION - Votes with respect to compensation plans
should be determined on a case-by-case basis. Our methodology for reviewing
compensation plans should primarily focuses on the transfer of shareholder
wealth (the dollar cost of pay plans to shareholders instead of simply focusing
on voting power dilution). Using the expanded compensation data disclosed under
the SEC's new rules, ISS should value every award type. ISS should include in
its analyses an estimated dollar cost for the proposed plan and all continuing
plans. This cost, dilution to shareholders' equity, will also be expressed as a
percentage figure for the transfer of shareholder wealth, and should be
considered along with dilution to voting power. Once ISS determines the
estimated cost of the plan, we compare it to a company-specific dilution cap.
ISS' model should determine a company-specific allowable pool of shareholder
wealth that may be transferred from the company to executives, adjusted for (1)
long-term corporate performance (on an absolute basis and relative to a standard
industry peer group and an appropriate market index), (2) cash compensation, and
(3) categorization of the company as emerging, growth, or mature. These
adjustments should be pegged to market capitalization. ISS should continue to
examine other features of proposed pay plans such as administration, payment
terms, plan duration, and whether the administering committee is permitted to
reprice underwater stock options without shareholder approval.

MANAGEMENT PROPOSALS SEEKING APPROVAL TO REPRICE OPTIONS - Vote on management
proposals seeking approval to reprice options on a case-by-case basis.

DIRECTOR COMPENSATION - Votes on stock-based plans for directors are made on a
case-by-case basis.

EMPLOYEE STOCK PURCHASE PLANS - Votes on employee stock purchase plans should be
made on a case-by case basis.

OBRA-RELATED COMPENSATION PROPOSALS:

- -    AMENDMENTS THAT PLACE A CAP ON ANNUAL GRANTS OR AMEND ADMINISTRATIVE
     FEATURES - Vote for plans that simply amend shareholder-approved plans to
     include administrative features or place a cap on the annual grants any one
     participant may receive to comply with the provisions of Section 162(m) of
     OBRA.

- -    AMENDMENTS TO ADDED PERFORMANCE-BASED GOALS - Vote for amendments to add
     performance goals to existing compensation plans to comply with the
     provisions of Section 162(m) of OBRA.

- -    AMENDMENTS TO INCREASE SHARES AND RETAIN TAX DEDUCTIONS UNDER OBRA - Votes
     on amendments to existing plans to increase shares reserved and to qualify
     the plan for favorable tax treatment under the provisions of Section 162(m)
     should be evaluated on a case-by-case basis.

- -    APPROVAL OF CASH OR CASH-AND-STOCK BONUS PLANS - Review on case-by-case
     basis votes for cash or cash-and-stock bonus plans to exempt the
     compensation from taxes under the provisions of Section 162(m) of OBRA.

SHAREHOLDER PROPOSALS TO LIMIT EXECUTIVE AND DIRECTOR PAY - Generally, vote for
shareholder proposals that seek additional disclosure of executive and director
pay information. Review on a case-by-case basis all other shareholder proposals
that seek to limit executive and director pay.

GOLDEN AND TIN PARACHUTES - Vote for shareholder proposals to have golden and
tin parachutes submitted for shareholder ratification. Review on a case-by-case
basis all proposals to ratify or cancel golden or tin parachutes.


                                      A-42



EMPLOYEE STOCK OWNERSHIP PLANS (ESOPS) - Vote for proposals that request
shareholder approval in order to implement an ESOP or to increase authorized
shares for existing ESOPs, except in cases when the number of shares allocated
to the ESOP is "excessive" (i.e., generally greater than five percent of
outstanding shares).

401(K) EMPLOYEE BENEFIT PLANS - Vote for proposals to implement a 401(k) savings
plan for employees.

STATE OF INCORPORATION - VOTING ON STATE TAKEOVER STATUTES - Review on a
case-by-case basis proposals to opt in or out of state takeover statutes
(including control share acquisition statutes, control share cash-out statutes,
freeze-out provisions, fair price provisions, stakeholder laws, poison pill
endorsements, severance pay and labor contract provisions, anti-greenmail
provisions, and disgorgement provisions).

VOTING ON REINCORPORATION PROPOSALS - Proposals to change a company's state of
incorporation should be examined on a case-by-case basis.

MERGERS AND CORPORATE RESTRUCTURINGS - MERGERS AND ACQUISITIONS - Votes on
mergers and acquisitions should be considered on a case-by case basis, taking
into account at least the following: anticipated financial and operating
benefits; offer price (cost vs. premium); prospects of the combined companies;
how the deal was negotiated; and changes in corporate governance and their
impact on shareholder rights.

CORPORATE RESTRUCTURING - Votes on corporate restructuring proposals, including
minority squeeze-outs, leveraged buyouts, spin-offs, liquidations, and asset
sales should be considered on a case-by-case basis.

SPIN-OFFS - Votes on spin-offs should be considered on a case-by-case basis
depending on the tax and regulatory advantages, planned use of sale proceeds,
market focus, and managerial incentives.

ASSET SALES - Votes on asset sales should be made on a case-by-case basis after
considering the impact on the balance sheet/working capital, value received for
the asset, and potential elimination of diseconomies.

LIQUIDATIONS - Votes on liquidations should be made on a case-by-case basis
after reviewing management's efforts to pursue other alternatives, appraisal
value of assets, and the compensation plan for executives managing the
liquidation.

APPRAISAL RIGHTS - Vote for proposals to restore, or provide shareholders with,
rights of appraisal.

CHANGING CORPORATE NAME - Vote for changing the corporate name.

MUTUAL FUND PROXIES - ELECTION OF DIRECTORS - Vote the election of directors on
a case-by-case basis, considering the following factors: board structure;
director independence and qualifications; and compensation of directors within
the fund and the family of funds attendance at board and committee meetings.
Votes should be withheld from directors who:

     -    attend less than 75 percent of the board and committee meetings
          without a valid excuse for the absences. Valid reasons include illness
          or absence due to company business. Participation via telephone is
          acceptable. In addition, if the director missed only one meeting or
          one day's meetings, votes should not be withheld even if such absence
          dropped the director's attendance below 75 percent.

     -    ignore a shareholder proposal that is approved by a majority of shares
          outstanding

     -    ignore a shareholder proposal that is approved by a majority of the
          votes cast for two consecutive years

     -    are interested directors and sit on the audit or nominating committee

     -    are interested directors and the full board serves as the audit or
          nominating committee or the company does not have one of these
          committees.

CONVERTING CLOSED-END FUND TO OPEN-END FUND - Vote conversion proposals on a
case-by-case basis, considering the following factors: past performance as a
closed-end fund; market in which the fund invests; measures taken by the board
to address the discount; and past shareholder activism, board activity, and
votes on related proposals.

PROXY CONTESTS - Vote proxy contests on a case-by-case basis, considering the
following factors: past performance; market in which fund invests; and measures
taken by the board to address the issues past shareholder activism, board
activity, and votes on related proposals.

INVESTMENT ADVISORY AGREEMENTS - Vote the investment advisory agreements on a
case-by-case basis, considering the following factors: proposed and current fee
schedules; fund category/investment objective; performance benchmarks; share
price performance as compared with peers; and the magnitude of any fee increase.


                                      A-43


APPROVING NEW CLASSES OR SERIES OF SHARES - Vote for the establishment of new
classes or series of shares.

PREFERRED STOCK PROPOSALS - Vote the authorization for or increase in preferred
shares on a case-by case basis, considering the following factors: stated
specific financing purpose and other reasons management gives possible dilution
for common shares.

1940 ACT POLICIES - Vote these proposals on a case-by-case basis, considering
the following factors: potential competitiveness; regulatory developments;
current and potential returns; and current and potential risk.

CHANGING A FUNDAMENTAL RESTRICTION TO A NON-FUNDAMENTAL RESTRICTION - Vote these
proposals on a case-by-case basis, considering the following factors: fund's
target investments; reasons given by fund for change; and the projected impact
of change on portfolio.

CHANGE FUNDAMENTAL INVESTMENT OBJECTIVE TO NON FUNDAMENTAL - Vote against
proposals to change a fund's fundamental investment objective to nonfundamental.

NAME RULE PROPOSALS - Vote these proposals on a case-by-case basis, considering
the following factors: political/economic changes in target market; bundling
with quorum requirements; bundling with asset allocation changes; and
consolidation in the fund's target market.

DISPOSITION OF ASSETS/TERMINATION/LIQUIDATION - Vote this proposal on a
case-by-case basis, considering the following factors: strategies employed to
salvage the company; company's past performance; and terms of the liquidation.

CHANGES TO THE CHARTER DOCUMENT - Vote changes to the charter document on a
case-by-case basis, considering the following factors: degree of change implied
by the proposal; efficiencies that could result; state of incorporation; and
regulatory standards and implications.

CHANGING THE DOMICILE OF A FUND - Vote re-incorporations on a case-by-case
basis, considering the following factors: state regulations of both states;
required fundamental policies of both states; and the increased flexibility
available.

CHANGE IN FUND'S SUBCLASSIFICATION - Vote these proposals on a case-by-case
basis, considering the following factors: potential competitiveness; current and
potential returns; risk of concentration; and consolidation in the target
industry.

AUTHORIZING THE BOARD TO HIRE AND TERMINATE SUB-ADVISORS WITHOUT SHAREHOLDER
APPROVAL - Vote against these proposals.

DISTRIBUTION AGREEMENTS - Vote these proposals on a case-by-case basis,
considering the following factors: fees charged to comparably sized funds with
similar objectives; proposed distributor's reputation and past performance; and
competitiveness of fund in industry.

MASTER-FEEDER STRUCTURE - Vote for the establishment of a master-feeder
structure.

CHANGES TO THE CHARTER DOCUMENT - Vote changes to the charter document on a
case-by-case basis, considering the following factors: degree of change implied
by the proposal; efficiencies that could result; state of incorporation; and
regulatory standards and implications.

MERGERS - Vote merger proposals on a case-by-case basis, considering the
following factors: resulting fee structure; performance of both funds; and
continuity of management personnel.

SHAREHOLDER PROPOSALS - ESTABLISH DIRECTOR OWNERSHIP REQUIREMENT - Vote against
the establishment of a director ownership requirement.

REIMBURSE SHAREHOLDER FOR EXPENSES INCURRED - Voting to reimburse proxy
solicitation expenses should be analyzed on a case-by-case basis. In cases where
ISS recommends in favor of the dissidents, we also recommend voting for
reimbursing proxy solicitation expenses.

TERMINATE THE INVESTMENT ADVISOR - Vote to terminate the investment advisor on a
case-by-case basis, considering the following factors: performance of the fund's
NAV and the history of shareholder relations.


                                      A-44



SOCIAL AND ENVIRONMENTAL ISSUES - ENERGY AND ENVIRONMENT - In most cases, ISS
refrains from providing a vote recommendation on proposals that request
companies to file the CERES Principles. Generally, vote for disclosure reports
that seek additional information, particularly when it appears companies have
not adequately addressed shareholders' environmental concerns.

EQUAL EMPLOYMENT OPPORTUNITY AND DISCRIMINATION - In most cases, ISS refrains
from providing a vote recommendation on proposals regarding equal employment
opportunities and discrimination. Generally, vote for disclosure reports that
seek additional information about affirmative action efforts, particularly when
it appears companies have been unresponsive to shareholder requests.

CONCLUSION - It is the policy of Great Companies that it shall have a written
proxy policy that always puts the interest of our clients ahead of our own and
the companies in which we invest. This proxy voting policy should be adhered to
in a manner consistent with the provisions of ERISA and all other regulatory
guidance provided by federal agencies.

ING CLARION REAL ESTATE SECURITIES LP

PROXY VOTING POLICIES AND PROCEDURES (AS OF JULY 31, 2004)

Proxy voting is an important right of shareholders, and reasonable care and
diligence must be undertaken to ensure that such rights are properly and timely
exercised. When ING Clarion Real Estate Securities ("Clarion") has discretion to
vote the proxies of its clients, it will vote those proxies in the best interest
of its clients and in accordance with these policies and procedures.

It will be the responsibility of the Compliance Officer to keep a record of each
proxy received, forward the proxy to the appropriate analyst, and determine
which accounts managed by Clarion hold the security to which the proxy relates.
Additionally, the Compliance Officer will provide Clarion's proxy voting agent,
Investor Responsibility Research Center ("IRRC"), with a list of accounts that
hold the security, together with the number of votes each account controls, and
will coordinate with IRRC and the analyst to ensure the vote decision is
processed in a timely fashion. The Compliance Officer will monitor IRRC to
assure that all proxies are being properly voted and appropriate records are
being retained. IRRC retains a copy of each proxy statement that IRRC receives
on Clarion's behalf, and these statements will be available to Clarion upon
request. Additionally, Clarion will rely on IRRC to retain a copy of the votes
cast, also available to Clarion upon request.

In the absence of specific voting guidelines from the client, Clarion will vote
proxies in the best interests of each particular client, which may result in
different voting results for proxies for the same issuer. The Compliance Officer
will identify any conflicts that exist between the interests of Clarion and its
clients. This examination will include a review of the relationship of Clarion
and its affiliates with the issuer of each security (and any of the issuer's
affiliates) to determine if the issuer is a client of Clarion, or an affiliate
of Clarion, or has some other relationship with Clarion or a client of Clarion.
If a material conflict exists, Clarion will determine whether voting in
accordance with the voting guidelines and factors described above is in the best
interests of the client. Clarion will also determine whether it is appropriate
to disclose the conflict to the affected clients and, except in the case of
clients that are subject to the Employee Retirement Income Security Act of 1974,
as amended ("ERISA"), will give the clients the opportunity to vote their
proxies themselves. In the case of ERISA clients, if the Investment Management
Agreement reserves to the ERISA client the authority to vote proxies when
Clarion determines it has a material conflict that affects its best judgment as
an ERISA fiduciary, Clarion will give the ERISA client the opportunity to vote
the proxies themselves.

The Compliance Officer will maintain files relating to Clarion's proxy voting
procedures in an easily accessible place. Records will be maintained and
preserved for five years from the end of the fiscal year during which the last
entry was made on a record, with records for the first two years kept in the
offices of Clarion. These files will include (1) copies of the proxy voting
policies and procedures and any amendments thereto, (2) a copy of any document
Clarion created that was material to making a decision how to vote proxies or
that memorializes that decision, and (3) a copy of each written client request
for information on how Clarion voted such client's proxies and a copy of any
written response to any (written or oral) client request for information on how
Clarion voted its proxies.

Clients may contact the Compliance Officer, Heather A. Trudel, via e-mail at
heather.trudel@ingclarion.com, or telephone (610) 995-8907, to obtain a copy of
these policies and procedures or to request information on such client's
proxies. A written response will list, with respect to each voted proxy that the
client has inquired about, (1) the name of the issuer, (2) the proposal voted
upon, and (3) how Clarion voted the client's proxy.


                                      A-45



JANUS CAPITAL MANAGEMENT LLC
PROXY VOTING GUIDELINES (DECEMBER 2004)

The Janus Proxy Voting Guidelines (the "Guidelines") below summarize Janus
Capital Management LLC's ("Janus") positions on various issues of concern to
investors and give a general indication of how portfolio securities will be
voted on proposals dealing with particular issues. The Guidelines, together with
the Janus Proxy Voting Procedures (the "Procedures"), will be used for voting
proxies on behalf of all Janus clients (including mutual funds) for which Janus
has voting authority. Janus will only accept direction from a client to vote
proxies for that client's account pursuant to: 1) the Guidelines; 2) the
recommendations of Institutional Shareholder Services ("ISS"); or 3) the
recommendations of ISS under their Proxy Voter Services program.

Janus has retained the services of ISS (the "Proxy Voting Service"), an industry
expert in proxy issues and corporate governance matters. The Proxy Voting
Service provides Janus with in-depth analysis and recommendations on complex
proxy issues. While Janus attempts to apply the following Guidelines to proxy
proposals, Janus reserves the right to use the Proxy Voting Service's expertise
and recommendations on more complex issues, including: executive compensation,
foreign issuer proxies, and proposals that may not otherwise be addressed by the
Guidelines. The Proxy Voting Service is instructed to vote all proxies relating
to portfolio securities in accordance with these Guidelines, except as otherwise
instructed by Janus.

The Guidelines are not exhaustive and do not include all potential voting
issues. Because proxy issues and the circumstances of individual companies are
so varied, there may be instances when Janus may not vote in strict adherence to
the Guidelines. In addition, Janus portfolio managers and assistant portfolio
managers are responsible for monitoring significant corporate developments,
including proxy proposals submitted to shareholders and notifying the Proxy
Administrator in the Investment Accounting Group of circumstances where the
interests of Janus' clients may warrant a vote contrary to the Guidelines. In
such instances, the portfolio manager or assistant portfolio manager will submit
a written rationale to the Proxy Voting Committee. The Proxy Voting Committee
reviews the rationale to determine: i) whether the rationale appears reasonable;
and ii) whether any business relationship with the issuer of the proxy could
have created a conflict of interest influencing the vote (see Procedures for
additional Conflicts of Interest details).

In many foreign markets, shareholders who vote proxies for shares of a foreign
issuer are not able to trade in that company's stock within a given period of
time on or around the shareholder meeting date. This practice is known as "share
blocking." In countries where share blocking is practiced, Janus will only vote
proxies if the portfolio manager or assistant portfolio manager determines that
the shareholder benefit of voting the proxies outweighs the risk of not being
able to sell the securities. In addition, international issuers may be subject
to corporate governance standards and a proxy solicitation process that
substantially differs from domestic standards and practices. Janus will
generally vote international issuer proxies using the Guidelines unless; the
application of the Guidelines is inconsistent with corporate governance
standards and practices in the foreign market.

The Janus funds participate in a securities lending program under which shares
of an issuer could be on loan while that issuer is conducting a proxy
solicitation. As part of the securities lending program, if the securities stay
on loan during the proxy solicitation, the fund lending the security cannot vote
that proxy. In this situation, the fund will attempt to call back the loan and
vote the proxy if time permits.

In circumstances where the Janus funds held a security as of record date, but
Janus sells its holdings prior to the shareholder meeting, Janus will abstain
from voting that proxy.

The following guidelines are grouped according to the types of proposals
generally presented to shareholders.

Board of Directors Issues

The quality of management is a key consideration in the decision to invest in a
company. Because management is in the best possible position to evaluate the
qualifications and needs of a particular board, Janus considers the
recommendation of management to be an important factor in making these
decisions.

     1.   For domestic market and applicable foreign market issuers, Janus will
          generally vote in favor of slates of director candidates that have a
          majority independent directors and oppose slates of director
          candidates that do not have a majority independent director.


                                      A-46



     2.   After taking into consideration country-specific practices, Janus will
          generally vote in favor of uncontested director candidates, unless
          they:

               -    attend less than 75% of the board and committee meetings
                    without a valid excuse;

               -    ignore shareholder proposals that are approved by a majority
                    of the shares outstanding;

               -    are non-independent directors and sit on the audit,
                    compensation or nominating committees;

               -    are non-independent directors and the board does not have an
                    audit, compensation, or nominating committees; or

               -    are audit committee members and the non-audit fees paid to
                    the auditor are 'excessive' (as determined by the Proxy
                    Voting Service).

     3.   Janus will evaluate proposals relating to contested director
          candidates and/or contested slates of directors on case-by-case
          basis.*

     4.   Janus will generally vote in favor of proposals to increase the
          minimum number of independent directors.

     5.   Janus believes that attracting qualified director candidates is
          important to overall company success and effective corporate
          governance. As such, Janus will generally vote in favor of proposals
          regarding director indemnification arrangements.

     6.   Janus will generally vote in favor of proposals to increase the size
          of a board of directors so long as the board has a majority
          independent directors.

     7.   If the purpose of the proposal is to promote anti-takeover measures,
          Janus will generally vote against proposals relating to decreasing the
          size of a board of directors.

     8.   Janus will generally vote against proposals advocating classified or
          staggered boards of directors.

     9.   Janus will generally vote with management regarding proposals to
          declassify a board.

     10.  Janus will generally vote in favor of proposals to separate the role
          of the Chairman from the role of the CEO.

AUDITORS

     11.  Janus will vote in favor of proposals asking for approval of auditors
          unless: (1) an auditor has a financial interest in or association with
          the company, and is therefore not independent; (2) fees for non-audit
          services are excessive (more than 50% of total fees); or (3) there is
          reason to believe that the independent auditor has rendered an
          opinion, which is neither accurate nor indicative of the company's
          financial position.

     12.  Janus will evaluate proposals relating to contested auditors on a
          case-by-case basis.*

     13.  Janus will generally vote in favor of proposals to appoint internal
          statutory auditors.

EQUITY BASED COMPENSATION PLANS

Equity based compensation plans are important tools in attracting and retaining
desirable employees. Janus believes these plans should be carefully applied with
the intention of maximizing shareholder value. With this in mind, Janus will
evaluate proposals relating to executive and director compensation plans on a
case-by case basis.

Janus will assess the potential cost of an equity based compensation plan using
the research provided by the Proxy Voting Service. The research is designed to
estimate the total cost of a proposed plan, both in terms of voting dilution
cost and transfer of shareholder value. Janus will evaluate whether the
estimated cost is reasonable by comparing the cost to an allowable cap. The
allowable cap is industry-specific, market cap-based, and pegged to the average
amount paid by companies performing in the top quartile of their peer groups. If
the proposed cost is above the allowable cap, Janus will vote against the plan.
For foreign issuers, Janus will oppose plans where dilution: i) is in excess of
5 percent for mature companies; and ii) in excess of 10% for growth companies
(as determined by research received from the Proxy Voting Service).

In addition, Janus will generally oppose plans that:

     -    provide for repricing of underwater options;

     -    provide for automatic replenishment ("evergreen") or reload options;
          and/or


                                      A-47



     -    create an inconsistent relationship between long term share
          performance and compensation increases.

Other Compensation Related Proposals

     14.  Janus will generally vote in favor of proposals relating to ESPPs - so
          long as shares purchased through plans are priced no less than 15%
          below market value.

     15.  Janus will generally vote in favor of proposals requiring the
          expensing of options.

     16.  Janus will generally oppose proposals requesting approval to make
          material amendments to equity based compensation plans without
          shareholder approval.

     17.  Janus will generally oppose proposals regarding the repricing of
          underwater options.

     18.  Janus will generally oppose proposals requesting approval of loans to
          officers, executives and board members of an issuer.

     19.  Janus will generally oppose proposals requesting approval of automatic
          share replenishment ("evergreen") features of equity based
          compensation plans.

     20.  Janus will generally oppose the issuance of reload options (stock
          option that is automatically granted if an outstanding stock option is
          exercised during a window period).

     21.  Janus will vote in favor of proposals to require golden parachutes or
          executive severance agreements to be submitted for shareholder
          ratification, unless the proposal requires shareholder approval prior
          to entering into employment contracts.

     22.  Janus will vote on a case-by-case basis on proposals to ratify or
          cancel golden or tin parachutes. An acceptable parachute should
          include the following:

               -    The parachute should be less attractive than an ongoing
                    employment opportunity with the firm;

               -    The triggering mechanism should be beyond the control of
                    management; and

               -    The amount should not exceed three times base salary plus
                    guaranteed benefits.

     23.  Janus will generally vote in favor of proposals intended to increase
          long-term stock ownership by executives, officers and directors. These
          may include:

               -    requiring executive officers and directors to hold a minimum
                    amount of stock in the company;

               -    requiring stock acquired through exercised options to be
                    held for a certain period of time; and

               -    using restricted stock grants instead of options.

OTHER CORPORATE MATTERS

     24.  Janus will generally vote in favor of proposals relating to the
          issuance of dividends and stock splits.

     25.  Janus will generally vote against proposals regarding supermajority
          voting rights (for example to approve acquisitions or mergers).

     26.  Janus will generally oppose proposals for different classes of stock
          with different voting rights.

     27.  Janus will evaluate proposals relating to issuances with and without
          preemptive rights on a case-by-case basis. For foreign issuer proxies,
          Janus will solicit research from the Proxy Voting Service.*

     28.  Janus will generally vote against proposals seeking to implement
          measures designed to prevent or obstruct corporate takeovers (includes
          "poison pills").

     29.  Janus will evaluate proposals seeking to increase the number of shares
          of common stock authorized for issue on a case-by-case basis. For
          domestic issuers, Janus will use quantitative criteria provided by the
          Proxy Voting Service to measure the reasonableness of the proposed
          share increase as compared against a measure of industry peers. For
          foreign issuer proxies, Janus will solicit research from the Proxy
          Voting Service.


                                      A-48



     30.  Janus will evaluate proposals regarding the issuance of debt,
          including convertible debt, on a case-by-case basis.

     31.  Janus will generally vote in favor of proposals regarding the
          authorization of the issuer's Board of Directors to repurchase shares.

     32.  Janus will evaluate plans of reorganization, on a case-by-case basis.*

     33.  Janus will generally vote in favor of proposals regarding changes in
          the state of incorporation of an issuer.

     34.  Janus will generally vote in favor of proposals regarding changes in
          company name.

     35.  Janus will evaluate proposals relating to the continuance of a
          company, on a case-by-case basis.*

     36.  Janus will evaluate proposals regarding acquisitions, mergers, tender
          offers or changes in control, on a case-by-case basis.*

     37.  Janus will generally oppose proposals to authorize preferred stock
          whose voting, conversion, dividend and other rights are determined at
          the discretion of the Board of Directors when the stock is issued
          ("blank check stock").

     38.  Janus will generally vote in favor of proposals to lower the barriers
          to shareholder action (i.e., limited rights to call special meetings,
          limited rights to act by written consents).

     39.  Janus will generally vote in favor of proposals to adopt cumulative
          voting.

     40.  Janus will generally vote in favor of proposals to require that voting
          be confidential.

     41.  Janus will generally oppose proposals requesting authorization of
          political contributions (mainly foreign).

     42.  Janus will generally vote in favor of proposals relating to the
          administration of an annual shareholder meeting.

     43.  Janus will vote against proposals to approve "other business" when it
          appears as voting item.

     Shareholder Proposals

     Janus Capital is primarily concerned with the economic impact of
     shareholder proposals on a company's short and long-term share value. Janus
     will generally apply the Guidelines to shareholder proposals while weighing
     the following considerations:

     44.  Janus will generally abstain from voting on shareholder proposals that
          relate to social, moral or ethical issues, or issues that place
          arbitrary constraints on the board or management of a company.

     45.  For shareholder proposals outside the scope of the Guidelines, Janus
          will solicit additional research and a recommendation from the Proxy
          Voting Service. Janus will always reserve the right to over-ride a
          recommendation provided by the Proxy Voting Service.*

- ----------
*    All discretionary votes of this nature are cast solely in the interests of
     shareholders and without regard to any other Janus relationship, business
     or otherwise.

PROXY VOTING PROCEDURES (DECEMBER 2005)

The following represents the procedures for Janus Capital Management LLC
("Janus") with respect to the voting of proxies on behalf of all clients,
including mutual funds advised by Janus, for which Janus has voting
responsibility and the keeping of records relating to proxy voting.

GENERAL POLICY. Janus votes proxies in the best interest of if its clients.
Janus will not accept direction as to how to vote individual proxies for which
it has voting responsibility from any other person or organization (other than
the research and information provided by the Proxy Voting Service). Janus will
only accept direction from a client to vote proxies for that client's account
pursuant to 1) Janus' Proxy Voting Guidelines 2) the recommendations of
Institutional Shareholder Services or 3) the recommendations of Institutional
Shareholder Services under their Proxy Voter Services program.


                                      A-49



ERISA PLAN POLICY. On behalf of client accounts subject to ERISA, Janus seeks to
discharge its fiduciary duty by voting proxies solely in the best interest of
the participants and beneficiaries of such plans. Janus recognizes that the
exercise of voting rights on securities held by ERISA plans for which Janus has
voting responsibility is a fiduciary duty that must be exercised with care,
skill, prudence and diligence. In voting proxies for ERISA accounts, Janus will
exercise its fiduciary responsibility to vote all proxies for shares for which
it has investment discretion as investment manager unless the power to vote such
shares has been retained by the appointing fiduciary as set forth in the
documents in which the named fiduciary has appointed Janus as investment
manager.

PROXY VOTING COMMITTEE. The Janus Proxy Voting Committee (the "Committee")
develops Janus' positions on all major corporate issues, creates guidelines and
oversees the voting process. The Committee is comprised of the Vice President of
Investment Accounting, the Assistant Vice President of Compliance and a
Portfolio Management representative (or their designees). Internal legal counsel
serves as a consultant to the Committee and is a non-voting member. A quorum is
required for all Committee meetings. In creating proxy voting recommendations,
the Committee analyzes proxy proposals from the prior year and evaluates whether
those proposals would adversely affect shareholders' interests. Once the
Committee establishes its recommendations, they are distributed to Janus'
portfolio managers(1) for review and comment. Following portfolio manager input
on the recommendations, they are implemented as the Janus Proxy Voting
Guidelines (the "Guidelines"). While the Committee sets the Guidelines and
serves as a resource for Janus portfolio management, it does not have proxy
voting authority for any proprietary or non-proprietary mutual fund or any
investment advisory client. The portfolio managers are responsible for proxy
votes on securities they own in the portfolios they manage. Most portfolio
managers vote consistently with the Guidelines. However, a portfolio manager may
choose to vote contrary to the Guidelines. When portfolio managers cast votes
which are contrary to the Guidelines, they are required to document their
reasons in writing for the Committee. In many cases, a security may be held by
multiple portfolio managers. Portfolio managers are not required to cast
consistent votes. Annually the Janus Funds Board of Trustees, or a committee
thereof, will review Janus' proxy voting process, policies and voting records.

INVESTMENT ACCOUNTING GROUP. The Investment Accounting Group is responsible for
administering the proxy voting process as set forth in these procedures. The
Proxy Administrator in the Investment Accounting Group works with the proxy
voting service and is responsible for ensuring that all meeting notices are
reviewed against the Guidelines and proxy matters are communicated to the
portfolio managers and analysts for consideration pursuant to the Guidelines.

VOTING AND USE OF PROXY VOTING SERVICE. Janus has engaged an independent Proxy
Voting Service to assist in the voting of proxies. The Proxy Voting Service is
responsible for coordinating with the clients' custodians to ensure that all
proxy materials received by the custodians relating to the clients' portfolio
securities are processed in a timely fashion. In addition, the Proxy Voting
Service is responsible for maintaining copies of all proxy statements received
by issuers and to promptly provide such materials to Janus upon request.

To the extent applicable, the Proxy Voting Service will process all proxy votes
in accordance with the Guidelines. Portfolio managers may decide to vote their
proxies consistent with the Guidelines and instruct the Proxy Administrator to
vote all proxies accordingly. In such cases, he or she may request to review the
vote recommendations and sign-off on all the proxies before the votes are cast,
or may choose to only sign-off on those votes cast against management. The
portfolio managers are also given the option of reviewing and determining the
votes on all proxies without utilizing the Guidelines. In all cases, the
portfolio mangers may elect to receive a weekly report summarizing all proxy
votes in his or her client accounts. Portfolio managers who vote their proxies
inconsistent with the Guidelines are required to document the rationale for
their vote. The Proxy Administrator is responsible for maintaining this
documentation. If the Proxy Administrator does not receive a voting instruction
from a Portfolio Manager, and the Guidelines require Portfolio Manager input on
the issue, the vote will be cast by the Chief Investment Officer or the Director
of Research.

The Proxy Voting Service will refer proxy questions to the Proxy Administrator
for instructions under circumstances where: (1) the application of the
Guidelines is unclear; (2) a particular proxy question is not covered by the
Guidelines; or (3) the Guidelines call for Janus portfolio manager input. The
Proxy Administrator solicits feedback from the Portfolio Manager or the
Committee as required. Janus also utilizes research services relating to proxy
questions provided by the Proxy Voting Service.

PROCEDURES FOR PROXY ISSUES OUTSIDE THE GUIDELINES. In situations where the
Proxy Voting Service refers a proxy question to the Proxy Administrator, the
Proxy Administrator will consult with the portfolio manager regarding how the
shares will be voted. The Proxy Administrator will refer such questions, through
a written request, to the portfolio manager(s) who holds the security for a
voting recommendation. The Proxy Administrator may also refer such questions,

- ----------
(1)  All references to portfolio managers include assistant portfolio managers.


                                      A-50



through a written request to any member of the Committee, but the Committee
cannot direct the Proxy Administrator how to vote. If the proxy issue raises a
conflict of interest (see Conflict of Interest discussion below), the portfolio
manager will document how the proxy should be voted and the rationale for such
recommendation. If the portfolio manager has had any contact with persons
outside of Janus (excluding routine communications with proxy solicitors)
regarding the proxy issue, the portfolio manager will disclose that contact to
the Committee. The Committee will review the portfolio manager's voting
recommendation. If the Committee believes a conflict exists and that the
portfolio manager's voting recommendation is not in the best interests of the
shareholders, the Committee will refer the issue to the Janus Chief Investment
Officer (or the Director of Research in his/her absence) to determine how to
vote.

PROCEDURES FOR VOTING JANUS "FUNDS OF FUNDS". Janus advises certain portfolios
or "funds of funds" that invest in other Janus funds. From time to time, a fund
of funds may be required to vote proxies for the underlying Janus fund(s) in
which it is invested. If an underlying Janus fund submits a matter to a vote of
its shareholders, votes for and against such matters on behalf of the owner fund
of funds will be cast in the same proportion as the votes of the other
shareholders in the underlying fund (also know as "echo-voting").

CONFLICTS OF INTEREST. The Committee is responsible for monitoring and resolving
possible material conflicts with respect to proxy voting. Because the Guidelines
are pre-determined and designed to be in the best interests of shareholders,
application of the Guidelines to vote client proxies should, in most cases,
adequately address any possible conflicts of interest. In instances where a
portfolio manager proposes to vote a proxy inconsistent with the Guidelines, the
Committee will review the proxy votes to determine whether the portfolio
manager's voting rationale appears reasonable and no material conflict exists.

A conflict of interest may exist, for example, if Janus has a business
relationship with (or is actively soliciting business from) either the company
soliciting the proxy or a third party that has a material interest in the
outcome of a proxy vote or that is actively lobbying for a particular outcome of
a proxy vote. In addition, any portfolio manager with knowledge of a personal
conflict of interest (i.e., a family member in a company's management) relating
to a particular referral item shall disclose that conflict to the Committee and
may be required to recuse himself or herself from the proxy voting process.
Issues raising possible conflicts of interest are referred by the Proxy
Administrator to the Committee for resolution. If the Committee does not agree
that the portfolio manager's rationale is reasonable, the Committee will refer
the matter to the Chief Investment Officer (or the Director of Research) to vote
the proxy.

REPORTING AND RECORD RETENTION. Upon request, on an annual basis, Janus will
provide its non-mutual fund clients with the proxy voting record for that
client's account. Starting in August 2004, on an annual basis, Janus will
provide its proxy voting record for each proprietary mutual fund for the
one-year period ending on June 30th on Janus' website.

Janus retains proxy statements received regarding client securities, records of
votes cast on behalf of clients, records of client requests for proxy voting
information and all documents prepared by Janus regarding votes cast in
contradiction to the Janus guidelines. In addition, any document prepared by
Janus that is material to a proxy voting decision such as the Janus Proxy Voting
Guidelines, Proxy Voting Committee materials and other internal research
relating to voting decisions will be kept. Proxy statements received from
issuers are either available on the SEC's EDGAR database or are kept by a third
party voting service and are available on request. All proxy voting materials
and supporting documentation are retained for a minimum of 6 years.

JENNISON ASSOCIATES, LLC

                           PROXY VOTING POLICY SUMMARY

Jennison Associates LLC ("Jennison") actively manages publicly traded equity
securities and fixed income securities. It is the policy of Jennison that where
proxy voting authority has been delegated to and accepted by Jennison, all
proxies shall be voted by investment professionals in the best interest of the
client without regard to the interests of Jennison or other related parties,
based on recommendations as determined by pre-established guidelines either
adopted by Jennison or provided by the client. Secondary consideration may be
given to the public and social value of each issue. For purposes of this policy,
the "best interests of clients" shall mean, unless otherwise specified by the
client, the clients' best economic interest over the long term - that is, the
common interest that all clients' share in seeing the value of a common
investment increase over time. Any proxy vote that may represent a potential
material conflict is reviewed by Jennison Compliance and Compliance determines
that a material conflict exists.

In voting proxies for international holdings, we will generally apply the same
principles as those for U.S. holdings. However, in some countries, voting
proxies result in additional restrictions that have an economic impact or cost
to the security, such as "share blocking", where Jennison would be restricted
from selling the shares of the security for a period


                                      A-51



of time if Jennison exercised its ability to vote the proxy. As such, we
consider whether the vote, either itself or together with the votes of other
shareholders, is expected to have an effect on the value of the investment that
will outweigh the cost of voting. Our policy is to note vote these types of
proxies when the cost far outweighs the benefit of voting, as in share blocking.

It is further the policy of Jennison that complete and accurate disclosure
concerning its proxy voting policies and procedures and proxy voting records, as
required by the Advisers Act, is to be made available to clients.

J. P. MORGAN INVESTMENT MANAGEMENT, INC.

As an investment adviser, JPMorgan may be granted by its clients the authority
to vote the proxies of the securities held in client portfolios. To ensure that
the proxies are voted in the best interests of its clients, JPMorgan and its
affiliated advisers have adopted detailed proxy voting procedures ("Procedures")
that incorporate detailed proxy guidelines ("Guidelines") for voting proxies on
specific types of issues.

JPMorgan is part of a global asset management organization with the capability
to invest in securities of issuers located around the globe. Because the
regulatory framework and the business cultures and practices vary from region to
region the Guidelines are customized for each region to take into account such
variations. Separate Guidelines cover the regions of (1) North America, (2)
Europe, (3) Asia (ex-Japan) and (4) Japan, respectively. As a general rule, in
routine proxies of a particular security, the guidelines of the region in which
the issuer of such security is organized will be applied.

Pursuant to the Procedures, most routine proxy matters will be voted in
accordance with the Guidelines, which have been developed with the objective of
encouraging corporate action that enhances shareholder value. For proxy matters
that are not covered by the Guidelines, matters that require a case-by-case
determination or where a vote contrary to the Guidelines is considered
appropriate, the Procedures require a certification and review process to be
completed before the vote is cast. That process is designed to identify actual
or potential material conflicts of interest and ensure that the proxy vote is
cast in the best interests of clients.

To oversee and monitor the proxy-voting process, JPMorgan has established a
proxy committee and appointed a proxy administrator in each global location
where proxies are voted. The primary function of each proxy committee is to
review periodically general proxy-voting matters, review and approve the
Guidelines annually, and provide advice and recommendations on general
proxy-voting matters as well as on specific voting issues implemented by
JPMorgan. The procedures permit an independent voting service; currently
Institutional Shareholder Services, Inc. in the United States, to perform
certain services otherwise carried out or coordinated by the proxy
administrator.

A copy of the JPMFAM proxy voting procedures and guidelines are available upon
request by contacting your client service representative.

MARSICO CAPITAL MANAGEMENT LLC

Summary of Proxy Voting Policy

It is the policy of Marsico Capital Management, LLC ("MCM") to vote all proxies
over which it has voting authority in the best interests of MCM's clients, as
summarized here.

Under MCM's investment discipline, one of the qualities MCM seeks in companies
it invests in for client portfolios is good management. Because MCM generally
has confidence that the management of the portfolio companies it invests in for
clients seek to serve shareholders' best interests, we believe that voting
proxies in our clients' best economic interest ordinarily means voting with
these management's recommendations.

Although MCM ordinarily will vote proxies with management recommendations, MCM's
analysts generally review proxy proposals as part of our normal monitoring of
portfolio companies and their managements. In rare cases, MCM might decide to
vote a proxy against a management recommendation. MCM may notify affected
clients of such a decision if it is reasonably feasible to do so.

MCM generally will abstain from voting, or take no action on, proxies issued by
companies that we have decided to sell, or proxies issued by foreign companies
that impose burdensome voting requirements. MCM also may abstain from voting, or
take no action on, proxies in other circumstances, such as when voting with
management may not be in the best economic interest of clients, or as an
alternative to voting with management. MCM will not notify clients of these
routine abstentions or decisions not to take action.


                                      A-52



In circumstances when there may be an apparent material conflict of interest
between MCM's interests and clients' interests in how proxies are voted (such as
when MCM knows that a proxy issuer is also an MCM client), MCM generally will
resolve any potential conflict by causing those proxies to be "echo voted" or
"mirror voted" in the same proportion as other votes, or by voting the proxies
as recommended by an independent service provider. MCM will not notify clients
if it uses these routine procedures to resolve an apparent conflict. In rare
cases, MCM might use other procedures to resolve an apparent conflict, and give
notice to clients if it is reasonably feasible to do so.

MCM need not vote or otherwise act upon proxy ballots that are not received or
processed in a timely manner due to functional limitations of the proxy voting
system or other factors beyond MCM's control. Such ballots may include, without
limitation, ballots for securities out on loan under securities lending programs
initiated by the client or its custodian, ballots not timely forwarded by a
custodian, or ballots for which MCM does not receive timely notice from a proxy
voting service provider.

MCM generally uses an independent service provider to help vote proxies, keep
voting records, and disclose voting information to clients. MCM's proxy voting
policy and information about the voting of a client's proxies are available to
the client on request.

FUND ASSET MANAGEMENT, L.P.(DBA MERCURY ADVISORS), A DIVISION OF MERRILL LYNCH
INVESTMENT MANAGERS

PROXY VOTING GUIDELINES

Fund Asset Management, L.P., Merrill Lynch Investment Managers, L.P. and QA
Advisers, L.L.C. (collectively, "MLIM") are each registered investment advisers
that serve as the investment manager for mutual funds, other commingled
investment vehicles and/or separate accounts of institutional and other clients.
The right to vote proxies for securities held in such accounts belong to the
clients, and certain clients of MLIM have retained the right to vote such
proxies in general or in specific circumstances.

Other clients, however, have delegated to MLIM the right to vote proxies for
securities held in their accounts as part of MLIM's authority to manage, acquire
and dispose of account assets.

When MLIM votes proxies for such a client, it acts as the agent for the client
and is subject to a fiduciary duty to vote proxies in a manner MLIM believes is
consistent with the best interests of the client that owns the related security
(Letter from Harvey L. Pitt, Chairman, SEC, to John P.M. Higgins, President, Ram
Trust Services (February 12, 2002) (Section 206 of the Investment Advisers Act
imposes a fiduciary responsibility to vote proxies fairly and in the best
interests of clients)), whether or not the client's proxy voting is subject to
the fiduciary standards of the Employee Retirement Securities Act of 1974
("ERISA") (DOL Interpretative Bulletin of Sections 402, 403 and 404 of ERISA at
29 C.F.R. 2509.94-2). When voting proxies for client accounts (including mutual
funds), MLIM's primary objective is to make voting decisions solely in the best
interests of clients and ERISA clients' plan beneficiaries and participants. In
fulfilling its obligations to clients, MLIM will seek to act in a manner it
believes is most likely to enhance the economic value of the underlying
securities held in client accounts. It is imperative to MLIM's integrity and
reputation that it considers the interests of its clients, and not the interests
of Merrill Lynch, when voting proxies. In certain situations, a client may
direct MLIM to vote in accordance with the client's proxy voting policies. In
these situations, MLIM will seek to comply with such policies to the extent it
would not be inconsistent with other MLIM legal responsibilities. Proxy voting
decisions, like other investment matters, are covered by MLIM's "Policies and
Procedures Concerning Communications Between Merrill Lynch Investment Managers
Companies and Merrill Lynch Investment Banking, Trading and Research Areas"
(MLIM's "Ethical Wall" policies). One of the principal purposes of the Ethical
Wall is to prohibit communications intended to place unusual pressure on a
portfolio manager or analyst at MLIM to favor the interests of Merrill Lynch's
investment banking clients over the interests of MLIM's investment advisory
clients. To that end, as described herein, all proxy voting decisions will be
made under the supervision of MLIM's Proxy Voting Committee, which will include
representatives of MLIM management and MLIM's Legal Advisory Department. No MLIM
employee may discuss pending corporate governance issues relating to securities
held by MLIM clients with other Merrill Lynch employees if such discussions
would violate MLIM's Ethical Wall policies. Any communication relating to
corporate governance matters that a MLIM employee reasonably believes could
constitute a violation of such policies should immediately be reported to the
Secretary of the Proxy Voting Committee and/or MLIM"s Director of Compliance or
General Counsel. In light of such fiduciary duties, and given the complexity of
the issues that may be raised in connection with proxy votes, MLIM has formed a
Proxy Voting Committee (the "Committee") to address proxy voting issues on
behalf of MLIM.

I. SCOPE OF COMMITTEE RESPONSIBILITIES


                                      A-53



The Committee shall have the responsibility for determining how to address proxy
votes made on behalf of all MLIM clients, except for clients who have retained
the right to vote their own proxies, either generally or on any specific matter.
In so doing, the Committee shall seek to ensure that proxy votes are made in the
best interests of clients, and that proxy votes are determined in a manner free
from unwarranted influences. The Committee shall also oversee the overall
administration of proxy voting for MLIM accounts. To assist MLIM in voting
proxies, the Committee has retained Institutional Shareholder Services ("ISS").
ISS is an independent adviser that specializes in providing a variety of
fiduciary-level proxy-related services to institutional investment managers,
plan sponsors, custodians, consultants, and other institutional investors. The
services provided to MLIM include in-depth research, voting recommendations,
vote execution, and recordkeeping. The Committee shall establish MLIM's proxy
voting policies, with such advice, participation and research as the Committee
deems appropriate from portfolio managers, proxy voting services or other
knowledgeable interested parties. If invited to do so by the Proxy Voting
Committee, Merrill Lynch personnel from investment banking, trading, retail
brokerage and research areas ("Affiliate Personnel") may present their views to
MLIM's Proxy Voting Committee on proxy voting issues on which they have
expertise to the same extent as other outside parties invited to present to the
Proxy Voting Committee. Affiliated Personnel, however, may not serve as members
of the Proxy Voting Committee or be allowed to participate in its decision
making (other than as presenters).

As it is anticipated that there will not be a "right" way to vote proxies on any
given issue applicable to all facts and circumstances, the Committee shall also
be responsible for determining how the proxy voting policies will be applied to
specific proxy votes, in light of each company's unique structure, management,
strategic options and probable economic consequences of alternative actions. In
so doing, the Committee may determine to vote a particular proxy in a manner
contrary to its stated policies.

The Committee may determine that the subject matter of a recurring proxy issue
is not suitable for general voting guidelines and requires a case-by-case
determination, in which case the Committee will not adopt a voting policy. MLIM
believes that certain proxy voting issues require investment analysis - such as
approval of mergers and other significant corporate transactions - akin to
investment decisions, and are therefore not suitable for general guidelines. The
Committee may adopt a common MLIM position on proxy votes that are akin to
investment decisions, or determine to permit portfolio managers to make
individual decisions on how best to maximize economic value for the accounts for
which they are responsible (similar to normal buy/sell investment decisions made
by such portfolio managers). The Committee will normally defer to portfolio
managers on proxy votes that are akin to investment decisions except for proxy
votes that involve a MLIM client as issuer. Where a material issue is involved
and the issuer is a client of MLIM, the Committee shall determine, in its
discretion, whether, for the purposes of ensuring that an independent
determination is reached, to retain sole discretion to cast a vote for MLIM
clients. While it is expected that MLIM, as a fiduciary, will generally seek to
vote proxies in a uniform manner for all clients, the Committee, in conjunction
with the portfolio manager of an account, may determine that the specific
circumstances of such account require that such account's proxies be voted
differently due to such account's investment objective or other factors that
differentiate it from other accounts. In addition, on proxy votes that are akin
to investment decisions, MLIM believes portfolio managers may from time to time
legitimately reach differing but equally valid views, as fiduciaries for their
clients, on how best to maximize economic value in respect of a particular
investment. The Committee will be responsible for documenting the basis for (a)
any determination to vote a particular proxy in a manner contrary to its stated
policies, (b) any determination to vote a particular proxy in a non-uniform
manner, and (c) any other material determination made by the Committee, as well
as for ensuring the maintenance of records of each proxy vote. All
determinations will be made, and all records maintained, in accordance with the
proxy voting standards of ERISA (notwithstanding that ERISA may not apply to all
client accounts). Except as may be required by such standards or other
applicable legal requirements, or as otherwise set forth herein, the
determinations and records of the Committee shall be treated as proprietary,
nonpublic and confidential. The Committee may delegate the actual maintenance of
such records to ISS or another outside service provider.

II. COMMITTEE MEMBERSHIP

The Committee will be chaired by the Chief Investment Officer of MLIM, who will
be assisted by MLIM's Head of Active Equity Management or another senior MLIM
investment professional. The Committee shall consist of portfolio managers and
investment analysts appointed by them who are representative of the Active
Equity, Private Investors and Quantitative Advisers divisions of MLIM, and such
other personnel with investment or other relevant experience, as the Chief
Investment Officer deems appropriate. No MLIM employee whose responsibilities
relate primarily to Marketing or Sales may serve as a member of the Committee.
Two members of MLIM's Legal Advisory Department will be non-voting members of
the Committee, one of whom shall serve as the Committee's Secretary and
principal legal counsel and the other of whom shall serve as Assistant
Secretary. The Committee's membership shall be limited to full-time employees of
MLIM. No person with any investment banking, trading, retail brokerage or
research responsibilities for MLIM's affiliates may serve as a member of the
Committee or participate in its decision making (except to the extent such a
person is


                                      A-54



asked by the Committee to present information to the Committee, on the same
basis as other interested knowledgeable parties not affiliated with MLIM).

III. SPECIAL CIRCUMSTANCES

SECURITIES ON LOAN. Many MLIM clients participate in securities lending
programs, either through Merrill Lynch Global Securities Financing (MLIM's
securities lending affiliate) or lending agents unaffiliated with MLIM (such as
their custodian). Under most securities arrangements, securities on loan may not
be voted by the lender (unless the loan is recalled) (See, e.g., BMA Master
Securities Loan Agreement, 1993 version, paragraph 6). MLIM believes that, if a
client has determined to participate in a securities lending program to seek
enhanced returns, MLIM should cooperate with the client's determination that
securities lending is beneficial to the account and not attempt to seek recalls
for the purpose of voting routine proxies. Therefore, it is MLIM's policy that,
in the event that MLIM manages an account for a client that employs a lending
agent unaffiliated with MLIM, MLIM will generally not seek to vote proxies
relating to securities on loan. When MLIM manages an account for a client that
employs Merrill Lynch Global Securities Financing as its lending agent, MLIM
will also generally not seek to vote proxies relating to securities on loan
UNLESS the MLIM portfolio manager responsible for the account has determined
that voting the proxy is in the client's best interest and has requested Merrill
Lynch Global Securities Financing to recall the security in timely manner, in
accordance with MLIM's internal loan procedures in effect from time to time.

VOTING PROXIES FOR FOREIGN COMPANIES. While the proxy voting process is well
established in the United States, voting proxies of foreign companies frequently
involves logistical issues which can affect MLIM's ability to vote such proxies,
as well as the desirability of voting such proxies. These issues include (but
are not limited to): (i) untimely notice of shareholder meetings, (ii)
restrictions on a foreigner's ability to exercise votes, (iii) requirements to
vote proxies in person, (iv) "shareblocking" (requirements that investors who
exercise their voting rights surrender the right to dispose of their holdings
for some specified period in proximity to the shareholder meeting), and (v)
requirements to provide local agents with unrestricted powers of attorney to
facilitate voting instructions.

As a consequence, MLIM votes proxies of non-US companies only on a "best
efforts" basis. In addition, the Committee may determine that it is generally in
the best interests of MLIM clients NOT to vote proxies of companies in certain
countries if the Committee determines that the costs (including opportunity
costs associated with shareblocking constraints) associated with exercising a
vote outweighs the benefit the client will derive by voting on the company's
proposal. If the Committee so determines in the case of a particular country,
the Committee (upon advice from MLIM portfolio managers) may override such
determination with respect to a particular company's shareholder meeting if it
believe the benefits of seeking to exercise a vote at such meeting outweighs the
costs, in which case MLIM will seek to vote on a best-efforts basis.

MLIM AFFILIATES. Where a material issue is involved and the issuer is an
affiliate of MLIM, the Committee may, in its discretion for the purposes of
ensuring that an independent determination is reached, retain an independent
fiduciary to advise the Committee on how to vote or to cast votes on behalf of
MLIM's clients.9

IV. VOTING POLICIES

The Committee will analyze each proxy individually. The Committee has adopted
the following voting guidelines, which represent the Committee's usual voting
position on certain recurring proxy issues that do not involve unusual
circumstances. With respect to any proxy issue, however, the Committee may vote
differently than a voting guideline if the Committee determines that doing so is
in the best interest of its clients. The guidelines may be reviewed at any time
upon the request of any Committee member and may be amended or deleted upon the
vote of a majority of voting Committee members present at a Committee meeting
for which there is a quorum.

A. BOARDS OF DIRECTORS

These proposals concern those issues submitted to shareholders related to the
composition of the Board of Directors. As a general matter, the Committee
believes that a company's Board of Directors (rather than shareholders) is most
likely to have access to important, nonpublic information regarding a company's
business and prospects, and is therefore best-positioned to set corporate policy
and oversee management. The Committee therefore believes that the foundation of
good corporate governance is the election of qualified, independent corporate
directors who are likely to diligently represent the interests of shareholders
and oversee management of the corporation in a manner that will seek to maximize
shareholder value over time. In individual cases, the Committee may look at a
nominee's history of representing shareholder interests as a director of other
companies, to the extent the Committee deems relevant.


                                      A-55



The Committee's general policy is to vote:

A.1 FOR nominees for director of United States companies in uncontested
elections, except for nominees who: (i) have missed at least two meetings and,
as a result, attended less than 75% of meetings of the Board of Directors and
its committees the previous year, unless the nominee missed the meeting due to
illness or company business, (ii) voted to implement or renew a "dead-hand"
poison pill, (iii) ignore a shareholder proposal that was approved by either a
majority of the shares outstanding in any year or by the majority of votes cast
for two consecutive years, (iv) fail to act on takeover offers where the
majority of the shareholders have tendered their shares, (v) are corporate
insiders who serve of the Audit, Compensation or Nominating Committees or on a
full Board that does not have such committees composed exclusively of
independent Directors, or (vi) on a case-by-case basis, have served as directors
of other companies with allegedly poor corporate governance.

A.2 FOR nominees for directors of non-U.S. companies in uncontested elections,
except for nominees from whom the Committee determines to withhold votes due to
the nominees' poor records of representing shareholder interests, on a
case-by-case basis.

A.3 FOR proposals to declassify.

A.4 AGAINST proposals to classify Boards of Directors.

A.5 AGAINST proposals supporting cumulative voting.

A.6 FOR proposals eliminating cumulative voting.

A.7 FOR proposals supporting confidential voting.

A.8 FOR proposals seeking election of supervisory board members.

A.9 AGAINST proposals seeking additional representation of women and/or
minorities generally (i.e., not specific individuals) to a Board of Directors.

A.10 AGAINST proposals for term limits for directors.

A.11 AGAINST proposals to establish a mandatory retirement age for directors.

A.12 AGAINST proposals requiring directors to own a minimum amount of company
stock.

A.13 FOR proposals requiring a majority of independent directors on a Board of
Directors.

A.14 FOR proposals to allow a Board of Directors to delegate powers to a
committee or committees.

A.15 FOR proposals to require Audit, Compensation and/or Nominating Committees
of a Board of Directors to consist exclusively of independent directors.

A.16 AGAINST proposals seeking to prohibit a single person from occupying the
roles of chairman and chief executive officer.

A.17 FOR proposals to elect account inspectors.

A.18 FOR proposals to fix the membership of a Board of Directors at a specified
size.

A.19 FOR proposals permitting shareholder ability to nominate directors
directly.

A.20 AGAINST proposals to eliminate shareholder ability to nominate directors
directly.

A.21 FOR proposals permitting shareholder ability to remove directors directly.

A.22 AGAINST proposals to eliminate shareholder ability to remove directors
directly.

B. AUDITORS


                                      A-56



These proposals concern those issues submitted to shareholders related to the
selection of auditors. As a general matter, the Committee believes that
corporate auditors have a responsibility to represent the interests of
shareholders and provide an independent view on the propriety of financial
reporting decisions of corporate management. While the Committee will generally
defer to a corporation's choice of auditor, in individual cases, the Committee
may look at an auditors' history of representing shareholder interests as
auditor of other companies, to the extent the Committee deems relevant.

The Committee's general policy is to vote:

B.1 FOR approval of independent auditors, except for: (i) auditors that have a
financial interest in, or material association with, the company they are
auditing, and are therefore believed not to be independent, (ii) auditors who
have rendered an opinion to any company which is either not consistent with best
accounting practices or not indicative of the company's financial situation, or
(iii) on a case-by-case basis, auditors who provide a significant amount of
non-audit services to the company.

B.2 FOR proposal seeking authorization to fix the remuneration of auditors.

B.3 FOR approving internal statutory auditors.

C. COMPENSATION AND BENEFITS

These proposals concern those issues submitted to shareholders related to
management compensation and employee benefits. As a general matter, the
Committee opposes egregiously excessive compensation, but believes that
compensation matters are normally best determined by a corporation's board of
directors, rather than shareholders. Proposals to "micro-manage" a company's
compensation practices or to set arbitrary restrictions on compensation or
benefits will therefore generally not be supported.

The Committee's general policy is to vote:

C.1 IN ACCORDANCE WITH THE RECOMMENDATION OF ISS on compensation plans if the
ISS recommendation is based solely on whether or not the company's plan
satisfies the allowable cap as calculated by ISS. If the recommendation of ISS
is based on factors other than whether the plan satisfies the allowable cap the
Committee will analyze the particular proposed plan. This policy applies to
amendments of plans as well as to initial approvals.

C.2 FOR proposals to eliminate retirement benefits for outside directors.

C.3 AGAINST proposals to establish retirement benefits for outside directors.

C.4 FOR proposals approving the remuneration of directors or of supervisory
board members.

C.5 AGAINST proposals to reprice stock options.

C.6 FOR proposals to approve employee stock purchase plans that apply to all
employees. This policy applies to proposals to amend SPPs if the plan as amended
applies to all employees.

C.7 FOR proposals to pay retirement bonuses to directors of Japanese companies
unless the directors have served less than three years

C.8 AGAINST proposals seeking to pay outside directors only in stock.

C.9 AGAINST proposals seeking further disclosure of executive pay for United
States companies.

D. CAPITAL STRUCTURE

These proposals relate to various requests, principally from management, for
approval of amendments that would alter the capital structure of a company, such
as an increase in authorized shares. As a general matter, the Committee will
support requests that enhance the rights of common shareholders and oppose
requests that appear to be unreasonably dilutive. The Committee's general policy
is to vote:


                                      A-57



D.1 AGAINST proposals seeking authorization to issue shares without preemptive
rights.

D.2 FOR proposals seeking preemptive rights or seeking authorization to issue
shares with preemptive rights.

D.3 FOR proposals approving share repurchase programs.

D.4 FOR proposals to split a company's stock.

D.5 FOR proposals to denominate or authorize denomination of securities or other
obligations or assets in Euros.

E. CORPORATE CHARTER AND BY-LAWS

These proposals relate to various requests for approval of amendments to a
corporation's charter or by-laws, principally for the purpose of adopting or
redeeming "poison pills". As a general matter, the Committee opposes poison pill
provisions.

The Committee's general policy is to vote:

E.1 AGAINST proposals seeking to adopt a poison pill.

E.2 FOR proposals seeking to redeem a poison pill.

E.3 FOR proposals seeking to have poison pills submitted to shareholders for
ratification.

E.4 FOR proposals to change the company's name.

F. CORPORATE MEETINGS

These are routine proposals relating to various requests regarding the
formalities of corporate meetings. The Committee's general policy is to vote:

F.1 AGAINST proposals that seek authority to act on "any other business that may
arise"

F.2 FOR proposals designating two shareholders to keep minutes of the meeting

F.3 FOR proposals concerning accepting or approving financial statements and
statutory reports

F.4 FOR proposals approving the discharge of management and the supervisory
board

F.5 FOR proposals approving the allocation of income and the dividend

F.6 FOR proposals seeking authorization to file required documents/other
formalities

F.7 FOR proposals to authorize the corporate board to ratify and execute
approved resolutions

F.8 FOR proposals appointing inspectors of elections

F.9 FOR proposals electing a chair of the meeting

F.10 FOR proposals to permit "virtual" shareholder meetings over the Internet

F.11 AGAINST proposals to require rotating sites for shareholder meetings

G. ENVIRONMENTAL AND SOCIAL ISSUES

These are shareholder proposals to limit corporate conduct in some manner that
relates to the shareholder's environmental or social concerns. The Committee
generally believes that annual shareholder meetings are inappropriate forums for
discussion of larger social issues, and opposes shareholder resolutions
"micromanaging" corporate conduct or requesting release of information that
would not help a shareholder evaluate an investment in the corporation as an
economic matter. While the Committee is generally supportive of proposals to
require corporate disclosure of matters that


                                      A-58


seem relevant to the economic interests of shareholders, the Committee is
generally not supportive of proposals to require disclosure of corporate matters
for other purposes.

The Committee's general policy is to vote:

G.1 AGAINST proposals seeking to have companies adopt international codes of
conduct

G.2 AGAINST proposals seeking to have companies report on: (i) environmental
liabilities; (ii) bank lending policies; (iii) corporate political contributions
or activities; (iv) alcohol advertising and efforts to discourage drinking by
minors; (v) costs and risk of doing business in any individual country; or (vi)
involvement in nuclear defense systems

G.3 AGAINST proposals requesting reports on Maquiladora operations or on CERES
principles

G.4 AGAINST proposals seeking implementation of the CERES principles

NOTICE TO CLIENTS

MLIM will make a record of any proxy vote it has made on behalf of a client
available to such client upon request. MLIM will otherwise use its best efforts
to treat proxy votes as confidential, except as may be necessary to effect such
votes or as may be required by law. MLIM encourage clients with an interest in
particular proxy voting issues to make their views known to MLIM, provided that,
in the absence specific written direction from a client on how to vote that
client's proxies, MLIM reserves the right to vote any proxy in a manner it deems
in the best interests of its clients, as it determines in its sole discretion.
These policies are as of the date indicated on the cover hereof. The Committee
may subsequently amend these policies at any time, without notice. MLIM will,
however, provide a revised copy of these policies promptly following any
amendment to any current client who expresses an interest in receiving updates.

MORGAN STANLEY INVESTMENT MANAGEMENT INC.

MORGAN STANLEY INVESTMENT MANAGEMENT
PROXY VOTING POLICY AND PROCEDURES

I. POLICY STATEMENT

Introduction - Morgan Stanley Investment Management's ("MSIM") policy and
procedures for voting proxies ("Policy") with respect to securities held in the
accounts of clients applies to those MSIM entities that provide discretionary
investment management services and for which a MSIM entity has authority to vote
proxies. The Policy will be reviewed and, updated, as necessary, to address new
or revised proxy voting issues. The MSIM entities covered by the Policy
currently include the following: Morgan Stanley Investment Advisors Inc., Morgan
Stanley AIP GP LP, Morgan Stanley Investment Management Inc., Morgan Stanley
Investment Management Limited, Morgan Stanley Investment Management Company,
Morgan Stanley Asset & Investment Trust Management Co., Limited, Morgan Stanley
Investment Management Private Limited, Morgan Stanley Hedge Fund Partners GP LP,
Morgan Stanley Hedge Fund Partners LP, Van Kampen Asset Management, and Van
Kampen Advisors Inc. (each an "MSIM Affiliate" and collectively referred to as
the "MSIM Affiliates").

Each MSIM Affiliate will use its best efforts to vote proxies as part of its
authority to manage, acquire and dispose of account assets. With respect to the
MSIM registered management investment companies (Van Kampen, Institutional and
Advisor Funds)(collectively referred to herein as the "MSIM Funds"), each MSIM
Affiliate will vote proxies under this Policy (except for the Morgan Stanley KLD
Social Index Fund, which votes proxies pursuant to the Institutional Shareholder
Services' Social Investment Research Proxy Voting Guidelines) pursuant to
authority granted under its applicable investment advisory agreement or, in the
absence of such authority, as authorized by the Board of Directors or Trustees
of the MSIM Funds. A MSIM Affiliate will not vote proxies if the "named
fiduciary" for an ERISA account has reserved the authority for itself, or in the
case of an account not governed by ERISA, the investment management or
investment advisory agreement does not authorize the MSIM Affiliate to vote
proxies. MSIM Affiliates will, in a prudent and diligent manner, vote proxies in
the best interests of clients, including beneficiaries of and participants in a
client's benefit plan(s) for which the MSIM Affiliates manage assets, consistent
with the objective of maximizing long-term investment returns ("Client Proxy
Standard"). In certain situations, a client or its fiduciary may provide a MSIM
Affiliate with a proxy voting policy. In these situations, the MSIM Affiliate
will comply with the client's policy.


                                      A-59



Proxy Research Services - Institutional Shareholder Services ("ISS") and Glass
Lewis (together with other proxy research providers as MSIM Affiliates may
retain from time to time, the "Research Providers") are independent advisers
that specialize in providing a variety of fiduciary-level proxy-related services
to institutional investment managers, plan sponsors, custodians, consultants,
and other institutional investors. The services provided include in-depth
research, global issuer analysis, and voting recommendations. While the MSIM
Affiliates may review and utilize the recommendations of the Research Providers
in making proxy voting decisions, they are in no way obligated to follow such
recommendations. In addition to research, ISS provides vote execution,
reporting, and recordkeeping. MSIM's Proxy Review Committee (see Section IV.A.
below) will carefully monitor and supervise the services provided by the
Research Providers.

Voting Proxies for Certain Non-U.S. Companies - While the proxy voting process
is well established in the United States and other developed markets with a
number of tools and services available to assist an investment manager, voting
proxies of non-U.S. companies located in certain jurisdictions, particularly
emerging markets, may involve a number of problems that may restrict or prevent
a MSIM Affiliate's ability to vote such proxies. These problems include, but are
not limited to: (i) proxy statements and ballots being written in a language
other than English; (ii) untimely and/or inadequate notice of shareholder
meetings; (iii) restrictions on the ability of holders outside the issuer's
jurisdiction of organization to exercise votes; (iv) requirements to vote
proxies in person, (v) the imposition of restrictions on the sale of the
securities for a period of time in proximity to the shareholder meeting; and
(vi) requirements to provide local agents with power of attorney to facilitate
the MSIM Affiliate's voting instructions. As a result, clients' non-U.S. proxies
will be voted on a best efforts basis only, after weighing the costs and
benefits to MSIM's clients of voting such proxies, consistent with the Client
Proxy Standard. ISS has been retained to provide assistance to the MSIM
Affiliates in connection with voting their clients' non-U.S. proxies.

II. GENERAL PROXY VOTING GUIDELINES

To ensure consistency in voting proxies on behalf of its clients, MSIM
Affiliates will follow (subject to any exception set forth herein) this Policy,
including the guidelines set forth below. These guidelines address a broad range
of issues, including board size and composition, executive compensation,
anti-takeover proposals, capital structure proposals and social responsibility
issues and are meant to be general voting parameters on issues that arise most
frequently. The MSIM Affiliates, however, may, pursuant to the procedures set
forth in Section IV. below, vote in a manner that is not in accordance with the
following general guidelines, provided the vote is approved by the Proxy Review
Committee and is consistent with the Client Proxy Standard. Morgan Stanley AIP
GP LP will follow the procedures as described in Appendix A. A MSIM Affiliate
will not generally vote a proxy if it has sold the affected security between the
record date and the meeting date.

III. GUIDELINES

A. CORPORATE GOVERNANCE MATTERS. The following proposals will generally be voted
as indicated below, unless otherwise determined by the Proxy Review Committee.

i. General.

     1.   Generally, routine management proposals will be supported. The
          following are examples of routine management proposals:

          -    Approval of financial statements, director and auditor reports.

          -    General updating/corrective amendments to the charter.

          -    Proposals related to the conduct of the annual meeting, except
               those proposals that relate to the "transaction of such other
               business which may come before the meeting."

     2.   Proposals to eliminate cumulative voting generally will be supported;
          proposals to establish cumulative voting in the election of directors
          will not be supported.

     3.   Proposals requiring confidential voting and independent tabulation of
          voting results will be supported.


                                      A-60



     4.   Proposals requiring a U.S. company to have a separate Chairman and CEO
          will not be supported. Proposals requiring non-U.S. companies to have
          a separate Chairman and CEO will be supported.

     5.   Proposals by management of non-U.S. companies regarding items that are
          clearly related to the regular course of business will be supported.

     6.   Proposals to require the company to expense stock options will be
          supported.

     7.   Open-ended requests for adjournment generally will not be supported.
          However, where management specifically states the reason for
          requesting an adjournment and the requested adjournment is necessary
          to permit a proposal that would otherwise be supported under this
          Policy to be carried out (i.e. an uncontested corporate transaction),
          the adjournment request will be supported.

     8.   Proposals to declassify the Board of Directors (if management supports
          a classified board) generally will not be supported.

     9.   Proposal requiring that the company prepare reports that are costly to
          provide or that would require duplicative efforts or expenditures that
          are of a non-business nature or would provide no pertinent information
          from the perspective of institutional shareholders generally will not
          be supported.

     ii. Election of Directors. In situations where no conflict exists and where
     no specific governance deficiency has been noted, unless otherwise
     determined by the Proxy Review Committee, proxies will be voted in support
     of nominees of management.

     1. The following proposals generally will be supported:

          -    Proposals requiring that a certain percentage (up to 66 2/3%) of
               the company's board members be independent directors.

          -    Proposals requiring that members of the company's compensation,
               nominating and audit committees be comprised of independent or
               unaffiliated directors.

     2. Unless otherwise determined by the Proxy Review Committee, a withhold
     vote will be made in the following circumstances:

          (a)  If a company's board is not comprised of a majority of
               disinsterested directors, a withhold vote will be made for
               interested directors. A director nominee may be deemed to be
               interested if the nominee has, or any time during the previous
               five years had, a relationship with the issuer (e.g., investment
               banker, counsel or other professional service provider, or
               familial relationship with a senior officer of the issuer) that
               may impair his or her independence;

          (b)  If a nominee who is interested is standing for election as a
               member of the company's compensation, nominating or audit
               committees;

          (c)  A direct conflict exists between the interests of the nominee and
               the public shareholders;

          (d)  Where the nominees standing for election have not taken action to
               implement generally accepted governance practices for which there
               is a "bright line" test. These would include elimination of dead
               hand or slow hand poison pills, requiring audit, compensation or
               nominating committees to be composed of independent directors and
               requiring a majority independent board;

          (e)  A nominee has failed to attend at least 75% of board meetings
               within a given year without a reasonable excuse; or

          (f)  A nominee serves on the board of directors for more than six
               companies (excluding investment companies).

     iii. Auditors


                                      A-61



     1.   Generally, management proposals for selection or ratification of
          auditors will be supported. However, such proposals may not be
          supported if the audit fees are excessive. Generally, to determine if
          audit fees are excessive, a 50% test will be applied: i.e., non-audit
          fees should be less than 50% of the total fees paid to the auditor.

     2.   Proposals requiring auditors to attend the annual meeting of
          shareholders will be supported.

     3.   Proposals to indemnify auditors will not be supported.

          iv. Anti-Takeover Matters

     1.   Proposals to modify or rescind existing supermajority vote
          requirements to amend the charter or bylaws will be supported;
          proposals to amend by-laws to require a supermajority shareholder vote
          to pass or repeal certain provisions will not be supported.

     2.   Proposals relating to the adoption of anti-greenmail provisions will
          be supported, provided that the proposal: (i) defines greenmail; (ii)
          prohibits buyback offers to large block holders (holders of at least
          1% of the outstanding shares and in certain cases, a greater amount,
          as determined by the Proxy Review Committee) not made to all
          shareholders or not approved by disinterested shareholders; and (iii)
          contains no anti-takeover measures or other provisions restricting the
          rights of shareholders.

     3.   Proposals requiring shareholder approval or ratification of a
          shareholder rights plan or poison pill will be supported.

B. CAPITALIZATION CHANGES. The following proposals generally will be voted as
indicated below, unless otherwise determined by the Proxy Review Committee.

     1.   The following proposals generally will be supported:

          -    Proposals relating to capitalization changes that eliminate other
               classes of stock and/or eliminate unequal voting rights.

          -    Proposals to increase the authorization of existing classes of
               common stock (or securities convertible into common stock) if:
               (i) a clear and legitimate business purpose is stated; (ii) the
               number of shares requested is reasonable in relation to the
               purpose for which authorization is requested; and (iii) the
               authorization does not exceed 100% of shares currently authorized
               and at least 30% of the new authorization will be outstanding.

          -    Proposals to create a new class of preferred stock or for
               issuances of preferred stock up to 50% of issued capital.

          -    Proposals for share repurchase plans.

          -    Proposals to reduce the number of authorized shares of common or
               preferred stock, or to eliminate classes of preferred stock.

          -    Proposals to effect stock splits.

          -    Proposals to effect reverse stock splits if management
               proportionately reduces the authorized share amount set forth in
               the corporate charter. Reverse stock splits that do not adjust
               proportionately to the authorized share amount generally will be
               approved if the resulting increase in authorized shares coincides
               with the proxy guidelines set forth above for common stock
               increases.

     2.   The following proposals generally will not be supported
          (notwithstanding management support).

          -    Proposals relating to capitalization changes that add classes of
               stock which substantially dilute the voting interests of existing
               shareholders.


                                      A-62



          -    Proposals to increase the authorized number of shares of existing
               classes of stock that carry preemptive rights or supervoting
               rights.

          -    Proposals to create "blank check" preferred stock.

          -    Proposals relating to changes in capitalization by 100% or more.

C. COMPENSATION. The following proposals generally will be voted as indicated
below, unless otherwise determined by the Proxy Review Committee.

     1.   The following proposals generally will be supported:

          -    Proposals relating to director fees, provided the amounts are not
               excessive relative to other companies in the country or industry.

          -    Proposals for employee stock purchase plans that permit discounts
               up to 15%, but only for grants that are part of a broad-based
               employee plan, including all non-executive employees.

          -    Proposals for the establishment of employee stock option plans
               and other employee ownership plans, provided that our research
               does not indicate that approval of the plan would be against
               shareholder interest.

          -    Proposals for the establishment of employee retirement and
               severance plans, provided that our research does not indicate
               that approval of the plan would be against shareholder interest.

     2.   Blanket proposals requiring shareholder approval of all severance
          agreements will not be supported, however, proposals that require
          shareholder approval for agreements in excess of three times the
          annual compensation (salary and bonus) generally will be supported.

     3.   Blanket proposals requiring shareholder approval of executive
          compensation generally will not be supported.

     4.   Proposals that request or require disclosure of executive compensation
          in addition to the disclosure required by the Securities and Exchange
          Commission ("SEC") regulations generally will not be supported.

D. OTHER RECURRING ITEMS. The following proposals generally will be voted as
indicated below, unless otherwise determined by the Proxy Review Committee.

     1.   Proposals to add restrictions related to social, political,
          environmental or special interest issues that do not relate directly
          to the business of the company and which do not appear to be directed
          specifically to the business or financial interest of the company
          generally will not be supported.

     2.   Proposals requiring adherence to workplace standards that are not
          required or customary in market(s) to which the proposals relate will
          not be supported.

E. ITEMS TO BE REVIEWED BY THE PROXY REVIEW COMMITTEE

The following types of non-routine proposals, which potentially may have a
substantive financial or best interest impact on an issuer, will be voted as
determined by the Proxy Review Committee.

     i.   CORPORATE TRANSACTIONS

          -    Proposals relating to mergers, acquisitions and other special
               corporate transactions (i.e., takeovers, spin-offs, sales of
               assets, reorganizations, restructurings and recapitalizations)
               will be examined on a case-by-case basis. In all cases, Research
               Providers' research and analysis will be used along with MSIM
               Affiliates' research and analysis, including, among other things,
               MSIM internal company-specific knowledge. Proposals for mergers
               or other significant transactions that are friendly, approved by
               the Research Providers, where there is no portfolio manager
               objection and where there


                                      A-63



               is no material conflict of interest, generally will be supported
               and will not need to be reviewed by the Proxy Review Committee.

     ii.  Compensation

          -    Proposals relating to change-in-control provisions in non-salary
               compensation plans, employment contracts, and severance
               agreements that benefit management and would be costly to
               shareholders if triggered. With respect to proposals related to
               severance and change of control situations, MSIM Affiliates will
               support a maximum of three times salary and bonus.

          -    Proposals relating to Executive/Director stock option plans.
               Generally, stock option plans should be incentive based. The
               Proxy Review Committee will evaluate the quantitative criteria
               used by a Research Provider when considering such Research
               Provider's recommendation. If the Proxy Review Committee
               determines that the criteria used by the Research Provider is
               reasonable, the proposal will be supported if it falls within a
               5% band above the Research Provider's threshold.

          -    Compensation proposals that allow for discounted stock options
               that have not been offered to employees in general.

     iii. Other

          -    Proposals for higher dividend payouts.

          -    Proposals recommending set retirement ages or requiring specific
               levels of stock ownership by directors.

          -    Proposals for election of directors, where a director nominee is
               related to MSIM (i.e. on an MSIM Fund's Board of
               Directors/Trustees or part of MSIM senior management) must be
               considered by the Proxy Review Committee. If the proposal relates
               to a director nominee who is on a Van Kampen Fund's Board of
               Directors/Trustees, to the extent that the shares of the relevant
               company are held by a Van Kampen Fund, the Van Kampen Board shall
               vote the proxies with respect to those shares, to the extent
               practicable. In the event that the Committee cannot contact the
               Van Kampen Board in advance of the shareholder meeting, the
               Committee will vote such shares pursuant to the Proxy Voting
               Policy.

          -    Proposals requiring diversity of board membership relating to
               broad based social, religious or ethnic groups.

          -    Proposals to limit directors' liability and/or broaden
               indemnification of directors. Generally, the Proxy Review
               Committee will support such proposals provided that the officers
               and directors are eligible for indemnification and liability
               protection if they have acted in good faith on company business
               and were found innocent of any civil or criminal charges for
               duties performed on behalf of the company.

F. FUND OF FUNDS. Certain Funds advised by an MSIM Affiliate invest only in
other MSIM funds. If an underlying fund has a shareholder meeting, in order to
avoid any potential conflict of interest, such proposals will be voted in the
same proportion as the votes of the other shareholders of the underlying fund,
unless otherwise determined by the Proxy Review Committee.

IV. ADMINISTRATION OF POLICY

A. PROXY REVIEW COMMITTEE

     1.   The MSIM Proxy Review Committee ("Committee") is responsible for
          creating and implementing the Policy and, in this regard, has
          expressly adopted it.

          (a)  The Committee, which is appointed by MSIM's Chief Investment
               Officer ("CIO"), consists of senior investment professionals who
               represent the different investment disciplines and geographic
               locations of the firm. The Committee is responsible for
               establishing MSIM's Policy and determining how MSIM will vote
               proxies on an ongoing basis.


                                      A-64



          (b)  The Committee will periodically review and have the authority to
               amend, as necessary, the Policy and establish and direct voting
               positions consistent with the Client Proxy Standard.

          (c)  The Committee will meet at least monthly to (among other
               matters): (1) address any outstanding issues relating to the
               Policy and (2) review proposals at upcoming shareholder meetings
               of MSIM portfolio companies in accordance with this Policy
               including, as appropriate, the voting results of prior
               shareholder meetings of the same issuer where a similar proposal
               was presented to shareholders. The Committee, or its designee,
               will timely communicate to ISS MSIM's Policy (and any amendments
               to them and/or any additional guidelines or procedures it may
               adopt).

          (d)  The Committee will meet on an ad hoc basis to (among other
               matters): (1) authorize "split voting" (i.e., allowing certain
               shares of the same issuer that are the subject of the same proxy
               solicitation and held by one or more MSIM portfolios to be voted
               differently than other shares) and/or "override voting" (i.e.,
               voting all MSIM portfolio shares in a manner contrary to the
               Policy); (2) review and approve upcoming votes, as appropriate,
               for matters for which specific direction has been provided in
               this Policy; and (3) determine how to vote matters for which
               specific direction has not been provided in this Policy. Split
               votes generally will not be approved within a single Global
               Investor Group investment team. The Committee may take into
               account Research Providers' recommendations and research as well
               as any other relevant information they may request or receive,
               including portfolio manager and/or analyst research, as
               applicable. Generally, proxies related to securities held in
               accounts that are managed pursuant to quantitative, index or
               index-like strategies ("Index Strategies") will be voted in the
               same manner as those held in actively managed accounts. Because
               accounts managed using Index Strategies are passively managed
               accounts, research from portfolio managers and/or analysts
               related to securities held in these accounts may not be
               available. If the affected securities are held only in accounts
               that are managed pursuant to Index Strategies, and the proxy
               relates to a matter that is not described in this Policy, the
               Committee will consider all available information from the
               Research Providers, and to the extent that the holdings are
               significant, from the portfolio managers and/or analysts.

          (e)  In addition to the procedures discussed above, if the Committee
               determines that an issue raises a potential material conflict of
               interest, or gives rise to the appearance of a potential material
               conflict of interest, the Committee will request a special
               committee to review, and recommend a course of action with
               respect to, the conflict(s) in question ("Special Committee").
               The Special Committee shall be comprised of the Chairperson of
               the Proxy Review Committee, the Compliance Director for the area
               of the firm involved or his/her designee, a senior portfolio
               manager (if practicable, one who is a member of the Proxy Review
               Committee) designated by the Proxy Review Committee, and MSIM's
               Chief Investment Officer or his/her designee. The Special
               Committee may request the assistance of MSIM's General Counsel or
               his/her designee and will have sole discretion to cast a vote. In
               addition to the research provided by Research Providers, the
               Special Committee may request analysis from MSIM Affiliate
               investment professionals and outside sources to the extent it
               deems appropriate.

          (f)  The Committee and the Special Committee, or their designee(s),
               will document in writing all of their decisions and actions,
               which documentation will be maintained by the Committee and the
               Special Committee, or their designee(s), for a period of at least
               6 years. To the extent these decisions relate to a security held
               by a MSIM U.S. registered investment company, the Committee and
               Special Committee, or their designee(s), will report their
               decisions to each applicable Board of Trustees/Directors of those
               investment companies at each Board's next regularly scheduled
               Board meeting. The report will contain information concerning
               decisions made by the Committee and Special Committee during the
               most recently ended calendar quarter immediately preceding the
               Board meeting.

          (g)  The Committee and Special Committee, or their designee(s), will
               timely communicate to applicable portfolio managers, the
               Compliance Departments and, as necessary, to ISS, decisions of
               the Committee and Special Committee so that, among other things,
               ISS will vote proxies consistent with their decisions.

B.   IDENTIFICATION OF MATERIAL CONFLICTS OF INTEREST


                                      A-65




     1.   If there is a possibility that a vote may involve a material conflict
          of interest, the vote must be decided by the Special Committee in
          consultation with MSIM's General Counsel or his/her designee.

     2.   A material conflict of interest could exist in the following
          situations, among others:

          (a)  The issuer soliciting the vote is a client of MSIM or an
               affiliate of MSIM and the vote is on a material matter affecting
               the issuer;

          (b)  The proxy relates to Morgan Stanley common stock or any other
               security issued by Morgan Stanley or its affiliates; or

          (c)  Morgan Stanley has a material pecuniary interest in the matter
               submitted for a vote (e.g., acting as a financial advisor to a
               party to a merger or acquisition for which Morgan Stanley will be
               paid a success fee if completed).

C.   PROXY VOTING REPORTS

     (a)  MSIM will promptly provide a copy of this Policy to any client
          requesting them. MSIM will also, upon client request, promptly provide
          a report indicating how each proxy was voted with respect to
          securities held in that client's account.

     (b)  MSIM's legal department is responsible for filing an annual Form N-PX
          on behalf of each registered management investment company for which
          such filing is required, indicating how all proxies were voted with
          respect to such investment company's holdings.

NEUBERGER BERMAN, LLC
NEUBERGER BERMAN MANAGEMENT INC.

PROXY VOTING POLICIES AND PROCEDURES

NON-SOCIALLY RESPONSIVE CLIENTS

I. INTRODUCTION AND GENERAL PRINCIPLES

A. Neuberger Berman, LLC and Neuberger Berman Management Inc. (collectively,
"NB") have been delegated the authority and responsibility to vote the proxies
of their respective investment advisory clients, including both ERISA and
non-ERISA clients.

B. NB understands that proxy voting is an integral aspect of investment
management. Accordingly, proxy voting must be conducted with the same degree of
prudence and loyalty accorded any fiduciary or other obligation of an investment
manager.

C. NB believes that the following policies and procedures are reasonably
expected to ensure that proxy matters are conducted in the best interest of
clients, in accordance with NB's fiduciary duties, applicable rules under the
Investment Advisers Act of 1940 and fiduciary standards and responsibilities for
ERISA clients set out in Department of Labor interpretations.

D. In instances where NB does not have authority to vote client proxies, it is
the responsibility of the client to instruct the relevant custody bank or banks
to mail proxy material directly to such client.

E. In all circumstances, NB will comply with specific client directions to vote
proxies, whether or not such client directions specify voting proxies in a
manner that is different from NB's policies and procedures.

F. There may be circumstances under which NB may abstain from voting a client
proxy for cost reasons (e.g., non-U.S. securities). NB understands that it must
weigh the costs and benefits of voting proxy proposals relating to foreign


                                      A-66



securities and make an informed decision with respect to whether voting a given
proxy proposal is prudent and solely in the interests of the client and, in the
case of an ERISA client, the plan's participants and beneficiaries. NB's
decision in such circumstances will take into account the effect that the proxy
vote, either by itself or together with other votes, is expected to have on the
value of the client's investment and whether this expected effect would outweigh
the cost of voting.

II. RESPONSIBILITY AND OVERSIGHT

A. NB has designated a Proxy Committee with the responsibility for administering
and overseeing the proxy voting process, including:

(1) developing, authorizing, implementing and updating NB's policies and
procedures;

(2) overseeing the proxy voting process; and

(3) engaging and overseeing any third-party vendors as voting delegate to
review, monitor and/or vote proxies.

B. Such Proxy Committee will meet as frequently and in such manner as necessary
or appropriate to fulfill its responsibilities.

C. The members of the Proxy Committee will be appointed from time to time and
will include the Chief Investment Officer, a senior portfolio manager and senior
members of the Legal and Compliance and Portfolio Administration Departments.

D. In the event that one or more members of the Proxy Committee are not
independent with respect to a particular matter, the Proxy Committee shall
appoint an independent subcommittee of the Proxy Committee, which will have full
authority to act upon such matter.

III. PROXY VOTING GUIDELINES

A. NB has determined that, except as set forth below, proxies will be voted in
accordance with the voting recommendations contained in the applicable domestic
or global ISS Proxy Voting Manual, as in effect from time to time. A summary of
the current applicable ISS proxy voting guidelines is attached to these NB
Voting Policies and Procedures as Exhibit A.

B. Except as set forth in Section III, Paragraph D below, in the event the
foregoing proxy voting guidelines do not address how a proxy should be voted,
the proxy will be voted in accordance with ISS recommendations. In the event
that ISS refrains from making a recommendation, the Proxy Committee will follow
the procedures set forth in Section V, Paragraph D.

C. There may be circumstances under which the Chief Investment Officer, a
portfolio manager or other NB investment professional ("NB Investment
Professional") believes that it is in the best interest of a client or clients
to vote proxies in a manner inconsistent with the foregoing proxy voting
guidelines or in a manner inconsistent with ISS recommendations. In such event,
the procedures set forth in Section V, Paragraph C will be followed.

IV. PROXY VOTING PROCEDURES

A. NB will vote client proxies in accordance with a client's specific request
even if it is in a manner inconsistent with NB's policies and procedures. Such
specific requests must be made in writing by the individual client or by an
authorized officer, representative or named fiduciary of a client.

B. At the recommendation of the Proxy Committee, NB has engaged ISS as its
voting delegate to:

(1) research and make voting determinations in accordance with the proxy voting
guidelines described in Section III;

(2) vote and submit proxies in a timely manner;

(3) handle other administrative functions of proxy voting;

(4) maintain records of proxy statements received in connection with proxy votes
and provide copies of such proxy statements promptly upon request;


                                      A-67



(5) maintain records of votes cast; and

(6) provide recommendations with respect to proxy voting matters in general.

C. Except in instances where clients have retained voting authority, NB will
instruct custodians of client accounts to forward all proxy statements and
materials received in respect of client accounts to ISS.

D. Notwithstanding the foregoing, NB retains final authority and fiduciary
responsibility for proxy voting.

V. CONFLICTS OF INTEREST

A. NB has obtained a copy of ISS Policies, Procedures and Practices regarding
potential conflicts of interest that could arise in ISS proxy voting services to
NB as a result of business conducted by ISS. NB believes that potential
conflicts of interest by ISS are minimized by these Policies, Procedures and
Practices, a copy of which is attached hereto as Exhibit B.

B. As ISS will vote proxies in accordance with the proxy voting guidelines
described in Section III or as ISS recommends., NB believes that this process is
reasonably designed to address material conflicts of interest that may arise
between NB and a client as to how proxies are voted.

C. In the event that an NB Investment Professional believes that it is in the
best interest of a client or clients to vote proxies in a manner inconsistent
with the proxy voting guidelines described in Section III or in a manner
inconsistent with ISS recommendations, such NB Investment Professional will
contact a member of the Proxy Committee and complete and sign a questionnaire in
the form adopted by the Proxy Committee from time to time. Such questionnaire
will require specific information, including the reasons the NB Investment
Professional believes a proxy vote in this manner is in the best interest of a
client or clients and disclosure of specific ownership, business or personal
relationship or other matters that may raise a potential material conflict of
interest between NB and the client or clients with respect to the voting of the
proxy in that manner.

The Proxy Committee will review the questionnaire completed by the NB Investment
Professional and consider such other matters as it deems appropriate to
determine that there is no material conflict of interest between NB and the
client or clients with respect to the voting of the proxy in that manner. The
Proxy Committee shall document its consideration of such other matters in a form
adopted by the Proxy Committee from time to time.

In the event that the Proxy Committee determines that such vote will not present
a material conflict between NB and the client or clients, the Proxy Committee
will make a determination whether to vote such proxy as recommended by the NB
Investment Professional. In the event of a determination to vote the proxy as
recommended by the NB Investment Professional, an authorized member of the Proxy
Committee shall instruct ISS to vote in such manner with respect to such client
or clients.

In the event that the Proxy Committee determines that the voting of a proxy as
recommended by the NB Investment Professional presents a material conflict of
interest between NB and the client or clients with respect to the voting of the
proxy, the Proxy Committee shall: (i) take no further action, in which case ISS
shall vote such proxy in accordance with the proxy voting guidelines described
in Section III or as ISS recommends; (ii) disclose such conflict to the client
or clients and obtain written direction from the client or clients as to how to
vote the proxy; (iii) suggest that the client or clients engage another party to
determine how to vote the proxy; or (iv) engage another independent third party
to determine how to vote the proxy.

D. In the event that the proxy voting guidelines described in Section III do not
address how a proxy should be voted and ISS refrains from making a
recommendation as to how such proxy should be voted, the Proxy Committee will
make a determination as to how the proxy should be voted. After determining how
it believes the proxy should be voted, the Proxy Committee will consider such
matters as it deems appropriate to determine that there is no material conflict
of interest between NB and the client or clients with respect to the voting of
the proxy in that manner. The Proxy Committee shall document its consideration
of such matters in a form adopted by the Proxy Committee from time to time.

In the event that the Proxy Committee determines that such vote will not present
a material conflict between NB and the client, an authorized member of the Proxy
Committee shall instruct ISS to vote in such manner with respect to such client
or clients. In the event that the Proxy Committee determines that such vote
presents a material conflict of interest between NB and the client or clients
with respect to the voting of the proxy, the Proxy Committee shall: (i) disclose
such conflict to


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the client or clients and obtain written direction from the client or clients as
to how to vote the proxy; (ii) suggest that the client or clients engage another
party to determine how proxies should be voted; or (iii) engage another
independent third party to determine how proxies should be voted.

E. Material conflicts cannot be resolved by simply abstaining from voting.

VI. RECORDKEEPING

NB will maintain records relating to the implementation of these proxy voting
policies and procedures, including:

(1) a copy of these policies and procedures, which shall be made available to
clients, upon request;

(2) proxy statements received regarding client securities (which will be
satisfied by relying on EDGAR or ISS);

(3) a record of each vote cast (which ISS maintains on NB's behalf);

(4) a copy of each questionnaire completed by any NB Investment Professional
under Section V above;

(5) any other document created by NB that was material to making a decision how
to vote proxies on behalf of a client or that memorializes the basis for that
decision; and

(6) each written client request for proxy voting records and NB's written
response to any client request (written or oral) for such records.

Such proxy voting books and records shall be maintained in an easily accessible
place for a period of five years, the first two by the Proxy Committee member
who represents the Portfolio Administration Department.

VII. DISCLOSURE

Except as otherwise required by law or with the consent of the client, NB has a
general policy of not disclosing to any issuer or third party how NB or its
voting delegate voted a client's proxy.

OPPENHEIMERFUNDS, INC.

OppenheimerFunds, Inc. ("Oppenheimer"), has adopted Portfolio Proxy Voting
Policies and Procedures under which Oppenheimer votes proxies relating to
securities ("portfolio proxies") held by the fund. Oppenheimer's primary
consideration in voting portfolio proxies is the financial interests of the fund
and its shareholders. The fund has retained an unaffiliated third-party as its
agent to vote portfolio proxies in accordance with the fund's Portfolio Proxy
Voting Guidelines and to maintain records of such portfolio proxy voting. The
Proxy Voting Guidelines include provisions to address conflicts of interest that
may arise between the fund and the portfolio manager where a directly-controlled
affiliate of the portfolio manager manages or administers the assets of a
pension plan of a company soliciting the proxy. The fund's Portfolio Proxy
Voting Guidelines on routine and non-routine proxy proposals are summarized
below.

     -    The fund votes with the recommendation of the issuer's management on
          routine matters, including election of directors nominated by
          management and ratification of the independent registered public
          accounting firm, unless circumstances indicate otherwise.

     -    In general, the fund opposes "anti-takeover" proposals and supports
          the elimination of anti-takeover proposals, absent unusual
          circumstances.

     -    The fund supports shareholder proposals to reduce a super-majority
          vote requirement, and opposes management proposals to add a
          super-majority vote requirement.

     -    The fund opposes proposals to classify the board of directors.

     -    The fund supports proposals to eliminate cumulative voting.

     -    The fund opposes re-pricing of stock options.

     -    The fund generally considers executive compensation questions such as
          stock option plans and bonus plans to be ordinary business activity.
          The fund analyzes stock option plans, paying particular attention to
          their dilutive effect. While the fund generally supports management
          proposals, the Fund opposes plans it considers to be excessive.


                                      A-69



PACIFIC INVESTMENT MANAGEMENT COMPANY LLC

DESCRIPTION OF PROXY VOTING POLICIES AND PROCEDURES. Pacific Investment
Management Company LLC ("PIMCO") has adopted written proxy voting policies and
procedures ("Proxy Policy") as required by Rule 206(4)-6 under the Investment
Advisers Act of 1940, as amended. PIMCO has implemented the Proxy Policy for
each of its clients as required under applicable law, unless expressly directed
by a client in writing to refrain from voting that client's proxies. Recognizing
that proxy voting is a rare event in the realm of fixed income investing and is
typically limited to solicitation of consent to changes in features of debt
securities, the Proxy Policy also applies to any voting rights and/or consent
rights of PIMCO, on behalf of its clients, with respect to debt securities,
including but not limited to, plans of reorganization, and waivers and consents
under applicable indentures.

The Proxy Policy is designed and implemented in a manner reasonably expected to
ensure that voting and consent rights are exercised in the best interests of
PIMCO's clients. Each proxy is voted on a case-by-case basis taking into
consideration any relevant contractual obligations as well as other relevant
facts and circumstances at the time of the vote. In general, PIMCO reviews and
considers corporate governance issues related to proxy matters and generally
supports proposals that foster good corporate governance practices. PIMCO may
vote proxies as recommended by management on routine matters related to the
operation of the issuer and on matters not expected to have a significant
economic impact on the issuer and/or its shareholders.

PIMCO will supervise and periodically review its proxy voting activities and
implementation of the Proxy Policy. PIMCO will review each proxy to determine
whether there may be a material conflict between PIMCO and its client. If no
conflict exists, the proxy will be forwarded to the appropriate portfolio
manager for consideration. If a conflict does exist, PIMCO will seek to resolve
any such conflict in accordance with the Proxy Policy. PIMCO seeks to resolve
any material conflicts of interest by voting in good faith in the best interest
of its clients. If a material conflict of interest should arise, PIMCO will seek
to resolve such conflict in the client's best interest by pursuing any one of
the following courses of action: (i) convening a committee to assess and resolve
the conflict; (ii) voting in accordance with the instructions of the client;
(iii) voting in accordance with the recommendation of an independent third-party
service provider; (iv) suggesting that the client engage another party to
determine how the proxy should be voted; (v) delegating the vote to a
third-party service provider; or (vi) voting in accordance with the factors
discussed in the Proxy Policy.

Clients may obtain a copy of PIMCO's written Proxy Policy and the factors that
PIMCO may consider in determining how to vote a client's proxy. Except as
required by law, PIMCO will not disclose to third parties how it voted on behalf
of a client. However, upon request from an appropriately authorized individual,
PIMCO will disclose to its clients or the entity delegating the voting authority
to PIMCO for such clients, how PIMCO voted such client's proxy. In addition, a
client may obtain copies of PIMCO's Proxy Policy and information as to how its
proxies have been voted by contacting PIMCO.

SALOMON BROTHERS ASSET MANAGEMENT INC.

The following is a brief overview of the Proxy Voting Policies and Procedures
(the "Policies") that CAM has adopted to seek to ensure that CAM votes proxies
relating to equity securities in the best interest of clients.

CAM votes proxies for each client account with respect to which it has been
authorized to vote proxies. In voting proxies, CAM is guided by general
fiduciary principles and seeks to act prudently and solely in the best interest
of clients. CAM attempts to consider all factors that could affect the value of
the investment and will vote proxies in the manner that it believes will be
consistent with efforts to maximize shareholder values. CAM may utilize an
external service provider to provide it with information and/or a recommendation
with regard to proxy votes. However, the CAM adviser (business unit) continues
to retain responsibility for the proxy vote.

In the case of a proxy issue for which there is a stated position in the
Policies, CAM generally votes in accordance with such stated position. In the
case of a proxy issue for which there is a list of factors set forth in the
Policies that CAM considers in voting on such issue, CAM votes on a case-by-case
basis in accordance with the general principles set forth above and considering
such enumerated factors. In the case of a proxy issue for which there is no
stated position or list of factors that CAM considers in voting on such issue,
CAM votes on a case-by-case basis in accordance with the general principles set
forth above. Issues for which there is a stated position set forth in the
Policies or for which there is a list of factors set forth in the Policies that
CAM considers in voting on such issues fall into a variety of categories,
including election of directors, ratification of auditors, proxy and tender
offer defenses, capital structure issues, executive and director compensation,
mergers and corporate restructurings, and social and environmental issues. The
stated position on an issue set forth in the Policies can always be superseded,
subject to the duty to act solely in the best interest of the beneficial owners
of accounts, by the investment management professionals responsible for the
account whose shares


                                      A-70



are being voted. Issues applicable to a particular industry may cause CAM to
abandon a policy that would have otherwise applied to issuers generally. As a
result of the independent investment advisory services provided by distinct CAM
business units, there may be occasions when different business units or
different portfolio managers within the same business unit vote differently on
the same issue. A CAM business unit or investment team (e.g. CAM's Social
Awareness Investment team) may adopt proxy voting policies that supplement these
policies and procedures. In addition, in the case of Taft-Hartley clients, CAM
will comply with a client direction to vote proxies in accordance with
Institutional Shareholder Services' (ISS) PVS Voting Guidelines, which ISS
represents to be fully consistent with AFL-CIO guidelines.

In furtherance of CAM's goal to vote proxies in the best interest of clients,
CAM follows procedures designed to identify and address material conflicts that
may arise between CAM's interests and those of its clients before voting proxies
on behalf of such clients. To seek to identify conflicts of interest, CAM
periodically notifies CAM employees in writing that they are under an obligation
(i) to be aware of the potential for conflicts of interest on the part of CAM
with respect to voting proxies on behalf of client accounts both as a result of
their personal relationships and due to special circumstances that may arise
during the conduct of CAM's business, and (ii) to bring conflicts of interest of
which they become aware to the attention of CAM's compliance personnel. CAM also
maintains and considers a list of significant CAM relationships that could
present a conflict of interest for CAM in voting proxies. CAM is also sensitive
to the fact that a significant, publicized relationship between an issuer and a
non-CAM Legg Mason affiliate might appear to the public to influence the manner
in which CAM decides to vote a proxy with respect to such issuer. Absent special
circumstances or a significant, publicized non-CAM Legg Mason affiliate
relationship that CAM for prudential reasons treats as a potential conflict of
interest because such relationship might appear to the public to influence the
manner in which CAM decides to vote a proxy, CAM generally takes the position
that relationships between a non-CAM Legg Mason affiliate and an issuer (e.g.
investment management relationship between an issuer and a non-CAM Legg Mason
affiliate) do not present a conflict of interest for CAM in voting proxies with
respect to such issuer. Such position is based on the fact that CAM is operated
as an independent business unit from other Legg Mason business units as well as
on the existence of information barriers between CAM and certain other Legg
Mason business units.

CAM maintains a Proxy Voting Committee to review and address conflicts of
interest brought to its attention by CAM compliance personnel. A proxy issue
that will be voted in accordance with a stated CAM position on such issue or in
accordance with the recommendation of an independent third party is not brought
to the attention of the Proxy Voting Committee for a conflict of interest review
because CAM's position is that to the extent a conflict of interest issue
exists, it is resolved by voting in accordance with a pre-determined policy or
in accordance with the recommendation of an independent third party. With
respect to a conflict of interest brought to its attention, the Proxy Voting
Committee first determines whether such conflict of interest is material. A
conflict of interest is considered material to the extent that it is determined
that such conflict is likely to influence, or appear to influence, CAM's
decision-making in voting proxies. If it is determined by the Proxy Voting
Committee that a conflict of interest is not material, CAM may vote proxies
notwithstanding the existence of the conflict.

If it is determined by the Proxy Voting Committee that a conflict of interest is
material, the Proxy Voting Committee is responsible for determining an
appropriate method to resolve such conflict of interest before the proxy
affected by the conflict of interest is voted. Such determination is based on
the particular facts and circumstances, including the importance of the proxy
issue and the nature of the conflict of interest.

(1) Citigroup Asset Management comprises CAM North America, LLC, Salomon
Brothers Asset Management Inc, Smith Barney Fund Management LLC, and other
affiliated investment advisory firms. On December 1, 2005, Citigroup Inc.
("Citigroup") sold substantially all of its worldwide asset management business,
Citigroup Asset Management, to Legg Mason, Inc. ("Legg Mason"). As part of this
transaction, CAM North America, LLC, Salomon Brothers Asset Management Inc and
Smith Barney Fund Management LLC became wholly-owned subsidiaries of Legg Mason.
Under a licensing agreement between Citigroup and Legg Mason, the names of CAM
North America, LLC, Salomon Brothers Asset Management Inc, Smith Barney Fund
Management LLC and their affiliated advisory entities, as well as all logos,
trademarks, and service marks related to Citigroup or any of its affiliates
("Citi Marks") are licensed for use by Legg Mason. Citi Marks include, but are
not limited to, "Citigroup Asset Management," "Salomon Brothers Asset
Management" and "CAM". All Citi Marks are owned by Citigroup, and are licensed
for use until no later than one year after the date of the licensing agreement.
Legg Mason and its subsidiaries, including CAM North America, LLC, Salomon
Brothers Asset Management Inc, and Smith Barney Fund Management LLC are not
affiliated with Citigroup.

T. ROWE PRICE ASSOCIATES, INC.

                T. ROWE PRICE PROXY VOTING - PROCESS AND POLICIES


                                      A-71



T. Rowe Price Associates, Inc. and T. Rowe Price International, Inc. recognize
and adhere to the principle that one of the privileges of owning stock in a
company is the right to vote on issues submitted to shareholder vote--such as
election of directors and important matters affecting a company's structure and
operations. As an investment adviser with a fiduciary responsibility to its
clients, T. Rowe Price analyzes the proxy statements of issuers whose stock is
owned by the investment companies that it sponsors and serves as investment
adviser. T. Rowe Price also is involved in the proxy process on behalf of its
institutional and private counsel clients who have requested such service. For
those private counsel clients who have not delegated their voting responsibility
but who request advice, T. Rowe Price makes recommendations regarding proxy
voting.

PROXY ADMINISTRATION

The T. Rowe Price Proxy Committee develops our firm's positions on all major
corporate issues, creates guidelines, and oversees the voting process. The Proxy
Committee, composed of portfolio managers, investment operations managers, and
internal legal counsel, analyzes proxy policies based on whether they would
adversely affect shareholders' interests and make a company less attractive to
own. In evaluating proxy policies each year, the Proxy Committee relies upon our
own fundamental research, independent proxy research provided by third parties
such as Institutional Shareholder Services and Glass Lewis, and information
presented by company managements and shareholder groups.

Once the Proxy Committee establishes its recommendations, they are distributed
to the firm's portfolio managers as voting guidelines. Ultimately, the portfolio
manager decides how to vote on the proxy proposals of companies in his or her
portfolio. Because portfolio managers may have differences of opinion on
portfolio companies and their proxies, or their portfolios may have different
investment objectives, these factors, among others, may lead to different votes
between portfolios on the same proxies. When portfolio managers cast votes that
are counter to the Proxy Committee's guidelines, they are required to document
their reasons in writing to the Proxy Committee. Annually, the Proxy Committee
reviews T. Rowe Price's proxy voting process, policies, and voting records.

T. Rowe Price has retained Institutional Shareholder Services, an expert in the
proxy voting and corporate governance area, to provide proxy advisory and voting
services. These services include in-depth research, analysis, and voting
recommendations as well as vote execution, reporting, auditing and consulting
assistance for the handling of proxy voting responsibility and corporate
governance-related efforts. While the Proxy Committee relies upon ISS research
in establishing T. Rowe Price's voting guidelines--many of which are consistent
with ISS positions--T. Rowe Price may deviate from ISS recommendations on
general policy issues or specific proxy proposals.

FIDUCIARY CONSIDERATIONS

T. Rowe Price's decisions with respect to proxy issues are made in light of the
anticipated impact of the issue on the desirability of investing in the
portfolio company. Proxies are voted solely in the interests of the client,
Price Fund shareholders or, where employee benefit plan assets are involved, in
the interests of plan participants and beneficiaries. Practicalities and costs
involved with international investing may make it impossible at times, and at
other times disadvantageous, to vote proxies in every instance. For example, we
might refrain from voting if we or our agents are required to appear in person
at a shareholder meeting or if the exercise of voting rights results in the
imposition of trading or other ownership restrictions.

CONSIDERATION GIVEN MANAGEMENT RECOMMENDATIONS

When determining whether to invest in a particular company, one of the key
factors T. Rowe Price considers is the quality and depth of its management. As a
result, T. Rowe Price believes that recommendations of management on most issues
should be given weight in determining how proxy issues should be voted.

T. ROWE PRICE VOTING POLICIES

Specific voting guidelines have been established by the Proxy Committee for
recurring issues that appear on proxies, which are available to clients upon
request. The following is a summary of the more significant T. Rowe Price
policies:

Election of Directors

T. Rowe Price generally supports slates with a majority of independent
directors. We withhold votes for outside directors that do not meet certain
criteria relating to their independence or their inability to dedicate
sufficient time to their board duties due to their commitment to other boards.
We also withhold votes for inside directors serving on compensation, nominating
and audit committees and for directors who miss more than one-fourth of the
scheduled board meetings. T. Rowe Price supports shareholder proposals calling
for a majority vote threshold for the election of directors.

Executive Compensation

Our goal is to assure that a company's equity-based compensation plan is aligned
with shareholders' long-term interests. While we evaluate most plans on a
case-by-case basis, T. Rowe Price generally opposes compensation packages that


                                      A-72


provide what we view as excessive awards to a few senior executives or that
contain excessively dilutive stock option plans. We base our review on criteria
such as the costs associated with the plan, plan features, burn rates which are
excessive in relation to the company's peers, dilution to shareholders and
comparability to plans in the company's peer group. We generally oppose plans
that give a company the ability to reprice options or to grant options at below
market prices.

Anti-takeover, Capital Structure and Corporate Governance Issues

T. Rowe Price generally opposes anti-takeover measures and other proposals
designed to limit the ability of shareholders to act on possible transactions.
Such anti-takeover mechanisms include classified boards, supermajority voting
requirements, dual share classes and poison pills. We also oppose proposals
which give management a "blank check" to create new classes of stock with
disparate rights and privileges. We generally support proposals to permit
cumulative voting and those that seek to prevent potential acquirers from
receiving a takeover premium for their shares. When voting on corporate
governance proposals, we will consider the dilutive impact to shareholders and
the effect on shareholder rights. With respect to proposals for the approval of
a company's auditor, we typically oppose auditors who have a significant
non-audit relationship with the company.

Social and Corporate Responsibility Issues

T. Rowe Price generally votes with a company's management on social issues
unless they have substantial economic implications for the company's business
and operations that have not been adequately addressed by management.

MONITORING AND RESOLVING CONFLICTS OF INTEREST

The Proxy Committee is also responsible for monitoring and resolving possible
material conflicts between the interests of T. Rowe Price and those of its
clients with respect to proxy voting. We believe that due to the client-focused
nature of our investment management business that the potential for conflicts of
interests are relatively infrequent. Nevertheless, we have adopted safeguards to
ensure that our proxy voting is not influenced by interests other than those of
our clients. While membership on the Proxy Committee is diverse, it does not
include individuals whose primary duties relate to client relationship
management, marketing or sales. Since our voting guidelines are pre-determined
by the Proxy Committee using recommendations from ISS, an independent third
party, application of the T. Rowe Price guidelines to vote clients' proxies
should in most instances adequately address any possible conflicts of interest.
However, for proxy votes inconsistent with T. Rowe Price guidelines, the Proxy
Committee reviews all such proxy votes in order to determine whether the
portfolio manager's voting rationale appears reasonable. The Proxy Committee
also assesses whether any business or other relationships between T. Rowe Price
and a portfolio company could have influenced an inconsistent vote on that
company's proxy. Issues raising possible conflicts of interest are referred to
designated members of the Proxy Committee for immediate resolution prior to the
time T. Rowe Price casts its vote. With respect to personal conflicts of
interest, T. Rowe Price's Code of Ethics requires all employees to avoid placing
themselves in a "compromising position" where their interests may conflict with
those of our clients and restricts their ability to engage in certain outside
business activities. Portfolio managers or Proxy Committee members with a
personal conflict of interest regarding a particular proxy vote must recuse
themselves and not participate in the voting decisions with respect to that
proxy.

                    ADMINISTRATION OF POLICIES AND PROCEDURES

PROXY COMMITTEE. T. Rowe Price's Proxy Committee ("Proxy Committee") is
responsible for establishing positions with respect to corporate governance and
other proxy issues, including those involving social responsibility issues. The
Proxy Committee also reviews questions and responds to inquiries from clients
and mutual fund shareholders pertaining to proxy issues of corporate
responsibility. While the Proxy Committee sets voting guidelines and serves as a
resource for T. Rowe Price portfolio management, it does not have proxy voting
authority for any Price Fund or counsel client. Rather, this responsibility is
held by the Chairperson of the Fund's Investment Advisory Committee or the
counsel client's portfolio manager.

INVESTMENT SUPPORT GROUP. The Investment Support Group ("Investment Support
Group") is responsible for administering the proxy voting process as set forth
in the Policies and Procedures.

PROXY ADMINISTRATOR. The Investment Support Group will assign a Proxy
Administrator ("Proxy Administrator") who will be responsible for ensuring that
all meeting notices are reviewed and important proxy matters are communicated to
the portfolio managers and regional managers for consideration.

                  HOW PROXIES ARE REVIEWED, PROCESSED AND VOTED


                                      A-73



In order to facilitate the proxy voting process, T. Rowe Price has retained
Institutional Shareholder Services ("ISS") as an expert in the proxy voting and
corporate governance area. ISS specializes in providing a variety of
fiduciary-level proxy advisory and voting services. These services include
in-depth research, analysis, and voting recommendations as well as vote
execution, reporting, auditing and consulting assistance for the handling of
proxy voting responsibility and corporate governance-related efforts. While the
Proxy Committee relies upon ISS research in establishing T. Rowe Price's proxy
voting guidelines, and many of our guidelines are consistent with ISS positions,
T. Rowe Price may deviate from ISS recommendations on general policy issues or
specific proxy proposals.

MEETING NOTIFICATION T. Rowe Price utilizes ISS' voting agent services to notify
us of upcoming shareholder meetings for portfolio companies held in client
accounts and to transmit votes to the various custodian banks of our clients.
ISS tracks and reconciles T. Rowe Price holdings against incoming proxy ballots.
If ballots do not arrive on time, ISS procures them from the appropriate
custodian or proxy distribution agent. Meeting and record date information is
updated daily, and transmitted to T. Rowe Price through ProxyMaster.com, an ISS
web-based application. ISS is also responsible for maintaining copies of all
proxy statements received by issuers and to promptly provide such materials to
T. Rowe Price upon request.

VOTE DETERMINATION ISS provides comprehensive summaries of proxy proposals
(including social responsibility issues), publications discussing key proxy
voting issues, and specific vote recommendations regarding portfolio company
proxies to assist in the proxy research process. Upon request, portfolio
managers may receive any or all of the above-mentioned research materials to
assist in the vote determination process. The final authority and responsibility
for proxy voting decisions remains with T. Rowe Price. Decisions with respect to
proxy matters are made primarily in light of the anticipated impact of the issue
on the desirability of investing in the company from the viewpoint of our
clients.

Portfolio managers may decide to vote their proxies consistent with T. Rowe
Price's policies as set by the Proxy Committee and instruct our Proxy
Administrator to vote all proxies accordingly. In such cases, he or she may
request to review the vote recommendations and sign-off on all the proxies
before the votes are cast, or may choose only to sign-off on those votes cast
against management. The portfolio managers are also given the option of
reviewing and determining the votes on all proxies without utilizing the vote
guidelines of the Proxy Committee. In all cases, the portfolio managers may
elect to receive a weekly report summarizing all proxy votes in his or her
client accounts. Portfolio managers who vote their proxies inconsistent with T.
Rowe Price guidelines are required to document the rationale for their vote. The
Proxy Administrator is responsible for maintaining this documentation and
assuring that it adequately reflects the basis for any vote which is cast in
opposition to T. Rowe Price policy.

T. ROWE PRICE VOTING POLICIES. Specific voting guidelines have been adopted by
the Proxy Committee for routine anti-takeover, executive compensation and
corporate governance proposals, as well as other common shareholder proposals,
and are available to clients upon request. The following is a summary of the
significant T. Rowe Price policies:

Election of Directors - T. Rowe Price generally supports slates with a majority
of independent directors and nominating committees chaired by an independent
board member. We withhold votes for inside directors serving on compensation and
audit committees and for directors who miss more than one-fourth of the
scheduled board meetings. We vote against management efforts to stagger board
member terms because a staggered board may act as a deterrent to takeover
proposals.

Anti-takeover and Corporate Governance Issues - T. Rowe Price generally opposes
anti-takeover measures since they adversely impact shareholder rights. Also, T.
Rowe Price will consider the dilutive impact to shareholders and the effect on
shareholder rights when voting on corporate governance proposals.

Executive Compensation Issues - T. Rowe Price's goal is to assure that a
company's equity-based compensation plan is aligned with shareholders' long-term
interests. While we evaluate most plans on a case-by-case basis, T. Rowe Price
generally opposes compensation packages that provide what we view as excessive
awards to a few senior executives or that contain excessively dilutive stock
option grants based on a number of criteria such as the costs associated with
the plan, plan features, dilution to shareholders and comparability to plans in
the company's peer group. We generally oppose efforts to reprice options in the
event of a decline in value of the underlying stock.

Social and Corporate Responsibility Issues - Vote determinations for corporate
responsibility issues are made by the Proxy Committee using ISS voting
recommendations. T. Rowe Price generally votes with a company's management on
the following social issues unless the issue has substantial economic
implications for the company's business and operations which have not been
adequately addressed by management:

- -    Corporate environmental practices;


                                      A-74



- -    Board diversity;

- -    Employment practices and employment opportunity;

- -    Military, nuclear power and related energy issues;

- -    Tobacco, alcohol, infant formula and safety in advertising practices;

- -    Economic conversion and diversification;

- -    International labor practices and operating policies;

- -    Genetically-modified foods;

- -    Animal rights; and

- -    Political contributions/activities and charitable contributions.

Global Portfolio Companies - ISS applies a two-tier approach to determining and
applying global proxy voting policies. The first tier establishes baseline
policy guidelines for the most fundamental issues, which span the corporate
governance spectrum without regard to a company's domicile. The second tier
takes into account various idiosyncrasies of different countries, making
allowances for standard market practices, as long as they do not violate the
fundamental goals of good corporate governance. The goal is to enhance
shareholder value through effective use of shareholder franchise, recognizing
that application of policies developed for U.S. corporate governance issues are
not necessarily appropriate for foreign markets. The Proxy Committee has
reviewed ISS' general global policies and has developed international proxy
voting guidelines which in most instances are consistent with ISS
recommendations.

Votes Against Company Management - Where ISS recommends a vote against
management on any particular proxy issue, the Proxy Administrator ensures that
the portfolio manager reviews such recommendations before a vote is cast. If a
research analyst or portfolio manager believes that management's view on a
particular proxy proposal may adversely affect the investment merits of owning
stock in a particular company, he/she may elect to vote contrary to management.

Index and Passively Managed Accounts - Proxy voting for index and other
passively-managed portfolios is administered by the Investment Support Group
using ISS voting recommendations when their recommendations are consistent with
T. Rowe Price's policies as set by the Proxy Committee. If a portfolio company
is held in both an actively managed account and an index account, the index
account will default to the vote as determined by the actively managed proxy
voting process.

Divided Votes - In the unusual situation where a decision is made which is
contrary to the policies established by the Proxy Committee, or differs from the
vote for any other client or Price Fund, the Investment Support Group advises
the portfolio managers involved of the divided vote. The persons representing
opposing views may wish to confer to discuss their positions. Opposing votes
will be cast only if it is determined to be prudent to do so in light of each
client's investment program and objectives. In such instances, it is the normal
practice for the portfolio manager to document the reasons for the vote if it is
against T. Rowe Price policy. The Proxy Administrator is responsible for
assuring that adequate documentation is maintained to reflect the basis for any
vote which is cast in opposition to T. Rowe Price policy.

Shareblocking - Shareblocking is the practice in certain foreign countries of
"freezing" shares for trading purposes in order to vote proxies relating to
those shares. In markets where shareblocking applies, the custodian or
sub-custodian automatically freezes shares prior to a shareholder meeting once a
proxy has been voted. Shareblocking typically takes place between one and
fifteen (15) days before the shareholder meeting, depending on the market. In
markets where shareblocking applies, there is a potential for a pending trade to
fail if trade settlement takes place during the blocking period. Depending upon
market practice and regulations, shares can sometimes be unblocked, allowing the
trade to settle but negating the proxy vote. T. Rowe Price's policy is generally
to vote all shares in shareblocking countries unless, in its experience, trade
settlement would be unduly restricted.

Securities on Loan - The T. Rowe Price Funds and our institutional clients may
participate in securities lending programs to generate income. Generally, the
voting rights pass with the securities on loan; however, lending agreements give
the lender the right to terminate the loan and pull back the loaned shares
provided sufficient notice is given to the custodian bank in advance of the
voting deadline. T. Rowe Price's policy is generally not to vote securities on
loan unless the portfolio manager has knowledge of a material voting event that
could affect the value of the loaned securities. In this event, the portfolio
manager has the discretion to instruct the Proxy Administrator to pull back the
loaned securities in order to cast a vote at an upcoming shareholder meeting.

VOTE EXECUTION AND MONITORING OF VOTING PROCESS. Once the vote has been
determined, the Proxy Administrator enters votes electronically into ISS's
ProxyMaster system. ISS then transmits the votes to the proxy agents or
custodian banks and sends electronic confirmation to T. Rowe Price indicating
that the votes were successfully transmitted.


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On a daily basis, the Proxy Administrator queries the ProxyMaster system to
determine newly announced meetings and meetings not yet voted. When the date of
the stockholders' meeting is approaching, the Proxy Administrator contacts the
applicable portfolio manager if the vote for a particular client or Price Fund
has not yet been recorded in the computer system.

Should a portfolio manager wish to change a vote already submitted, the
portfolio manager may do so up until the deadline for vote submission, which
varies depending on the company's domicile.

MONITORING AND RESOLVING CONFLICTS OF INTEREST. The Proxy Committee is also
responsible for monitoring and resolving possible material conflicts between the
interests of T. Rowe Price and those of its clients with respect to proxy
voting.

Application of the T. Rowe Price guidelines to vote clients proxies should in
most instances adequately address any possible conflicts of interest since our
voting guidelines are pre-determined by the Proxy Committee using
recommendations from ISS, an independent third party. However, for proxy votes
inconsistent with T. Rowe Price guidelines, the Proxy Administrator and the
Proxy Committee review all such proxy votes in order to determine whether the
portfolio manager's voting rationale appears reasonable. The Proxy Committee
also assesses whether any business or other relationships between T. Rowe Price
and a portfolio company could have influenced an inconsistent vote on that
company's proxy. Issues raising possible conflicts of interest are referred by
the Proxy Administrator to designated members of the Proxy Committee for
immediate resolution. Voting of T. Rowe Price Group, Inc. common stock (sym:
TROW) by certain T. Rowe Price Index Funds will be done in all instances
accordance with T. Rowe Price policy and votes inconsistent with policy will not
be permitted.

REPORTING AND RECORD RETENTION. Vote Summary Reports will be generated for each
client that requests T. Rowe Price to furnish proxy voting records. The report
specifies the portfolio companies, meeting dates, proxy proposals, and votes
which have been cast for the client during the period and the position taken
with respect to each issue. Reports normally cover quarterly or annual periods.
All client requests for proxy information will be recorded and fulfilled by the
Proxy Administrator.

T. Rowe Price retains proxy solicitation materials, memoranda regarding votes
cast in opposition to the position of a company's management, and documentation
on shares voted differently. In addition, any document which is material to a
proxy voting decision such as the T. Rowe Price voting guidelines, Proxy
Committee meeting materials, and other internal research relating to voting
decisions will be kept. Proxy statements received from issuers (other than those
which are available on the SEC's EDGAR database) are kept by ISS in its capacity
as voting agent and are available upon request. All proxy voting materials and
supporting documentation are retained for six years.

                       PROXY VOTING - PROCESS AND POLICIES

T. Rowe Price Associates, Inc. and T. Rowe Price International, Inc. recognize
and adhere to the principle that one of the privileges of owning stock in a
company is the right to vote on issues submitted to shareholder vote--such as
election of directors and important matters affecting a company's structure and
operations. As an investment adviser with a fiduciary responsibility to its
clients, T. Rowe Price analyzes the proxy statements of issuers whose stock is
owned by the investment companies that it sponsors and serves as investment
adviser. T. Rowe Price also is involved in the proxy process on behalf of its
institutional and private counsel clients who have requested such service. For
those private counsel clients who have not delegated their voting responsibility
but who request advice, T. Rowe Price makes recommendations regarding proxy
voting.

PROXY ADMINISTRATION. The T. Rowe Price Proxy Committee develops our firm's
positions on all major corporate issues, creates guidelines, and oversees the
voting process. The Proxy Committee, composed of portfolio managers, investment
operations managers, and internal legal counsel, analyzes proxy policies based
on whether they would adversely affect shareholders' interests and make a
company less attractive to own. In evaluating proxy policies each year, the
Proxy Committee relies upon our own fundamental research, independent research
provided by third parties, and information presented by company managements and
shareholder groups.

Once the Proxy Committee establishes its recommendations, they are distributed
to the firm's portfolio managers as voting guidelines. Ultimately, the portfolio
manager votes on the proxy proposals of companies in his or her portfolio. When
portfolio managers cast votes that are counter to the Proxy Committee's
guidelines, they are required to document their reasons in writing to the Proxy
Committee. Annually, the Proxy Committee reviews T. Rowe Price's proxy voting
process, policies, and voting records.


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T. Rowe Price has retained Institutional Shareholder Services, an expert in the
proxy voting and corporate governance area, to provide proxy advisory and voting
services. These services include in-depth research, analysis, and voting
recommendations as well as vote execution, reporting, auditing and consulting
assistance for the handling of proxy voting responsibility and corporate
governance-related efforts. While the Proxy Committee relies upon ISS research
in establishing T. Rowe Price's voting guidelines--many of which are consistent
with ISS positions--T. Rowe Price may deviate from ISS recommendations on
general policy issues or specific proxy proposals.

FIDUCIARY CONSIDERATIONS. T. Rowe Price's decisions with respect to proxy issues
are made in light of the anticipated impact of the issue on the desirability of
investing in the portfolio company. Proxies are voted solely in the interests of
the client, Price Fund shareholders or, where employee benefit plan assets are
involved, in the interests of plan participants and beneficiaries.
Practicalities involved with international investing may make it impossible at
times, and at other times disadvantageous, to vote proxies in every instance.

CONSIDERATION GIVEN MANAGEMENT RECOMMENDATIONS. When determining whether to
invest in a particular company, one of the key factors T. Rowe Price considers
is the quality and depth of its management. As a result, T. Rowe Price believes
that recommendations of management on most issues should be given weight in
determining how proxy issues should be voted.

T. ROWE PRICE VOTING POLICIES. Specific voting guidelines have been established
by the Proxy Committee for recurring issues that appear on proxies, which are
available to clients upon request. The following is a summary of the more
significant T. Rowe Price policies:

Election of Directors

T. Rowe Price generally supports slates with a majority of independent directors
and nominating committees chaired by an independent board member. We withhold
votes for inside directors serving on compensation and audit committees and for
directors who miss more than one-fourth of the scheduled board meetings.

Executive Compensation

Our goal is to assure that a company's equity-based compensation plan is aligned
with shareholders' long-term interests. While we evaluate most plans on a
case-by-case basis, T. Rowe Price generally opposes compensation packages that
provide what we view as excessive awards to a few senior executives or that
contain excessively dilutive stock option plans. We base our review on criteria
such as the costs associated with the plan, plan features, dilution to
shareholders and comparability to plans in the company's peer group. We
generally oppose plans that give a company the ability to reprice options.

Anti-takeover and Corporate Governance Issues

T. Rowe Price generally opposes anti-takeover measures and other proposals
designed to limit the ability of shareholders to act on possible transactions.
When voting on corporate governance proposals, we will consider the dilutive
impact to shareholders and the effect on shareholder rights.

Social and Corporate Responsibility Issues

T. Rowe Price generally votes with a company's management on social issues
unless they have substantial economic implications for the company's business
and operations that have not been adequately addressed by management.

MONITORING AND RESOLVING CONFLICTS OF INTEREST. The Proxy Committee is also
responsible for monitoring and resolving possible material conflicts between the
interests of T. Rowe Price and those of its clients with respect to proxy
voting. Since our voting guidelines are pre-determined by the Proxy Committee
using recommendations from ISS, an independent third party, application of the
T. Rowe Price guidelines to vote clients' proxies should in most instances
adequately address any possible conflicts of interest. However, for proxy votes
inconsistent with T. Rowe Price guidelines, the Proxy Committee reviews all such
proxy votes in order to determine whether the portfolio manager's voting
rationale appears reasonable. The Proxy Committee also assesses whether any
business or other relationships between T. Rowe Price and a portfolio company
could have influenced an inconsistent vote on that company's proxy. Issues
raising possible conflicts of interest are referred to designated members of the
Proxy Committee for immediate resolution.

REPORTING. Vote Summary Reports are generated for each client that requests T.
Rowe Price to furnish proxy voting records. The report specifies the portfolio
companies, meeting dates, proxy proposals, votes cast for the client during the
period, and the position taken with respect to each issue. Reports normally
cover quarterly or annual periods. If you wish to receive a copy of your
account's voting record, please contact your T. Rowe Price Client Relationship
Manager.

TEMPLETON INVESTMENT COUNSEL, LLC


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Templeton Investment Counsel, LLC (hereinafter "Adviser") has delegated its
administrative duties with respect to voting proxies to the Proxy Group within
Franklin Templeton Companies, LLC (the "Proxy Group"), an affiliate and wholly
owned subsidiary of Franklin Resources, Inc.

All proxies received by the Proxy Group will be voted based upon Adviser's
instructions and/or policies. To assist it in analyzing proxies, Adviser
subscribes to Institutional Shareholder Services ("ISS"), an unaffiliated third
party corporate governance research service that provides in-depth analyses of
shareholder meeting agendas, vote recommendations, record keeping and vote
disclosure services. In addition, Adviser subscribes to Glass Lewis & Co., LLC
("Glass Lewis"), an unaffiliated third party analytical research firm, to
receive analyses and vote recommendations on the shareholder meetings of
publicly held U.S. companies. Although ISS' and/or Glass Lewis' analyses are
thoroughly reviewed and considered in making a final voting decision, Adviser
does not consider recommendations from ISS, Glass Lewis, or any other third
party to be determinative of Adviser's ultimate decision. Adviser votes proxies
solely in the interests of the client, Adviser-managed fund shareholders or,
where employee benefit plan assets are involved, in the interests of plan
participants and beneficiaries (collectively "Advisory Clients"). As a matter of
policy, the officers, directors and employees of Adviser and the Proxy Group
will not be influenced by outside sources whose interests conflict with the
interests of Advisory Clients. In situations where Adviser perceives a material
conflict of interest, Adviser may: disclose the conflict to the relevant
Advisory Clients; defer to the voting recommendation of the Advisory Clients,
ISS, Glass Lewis, or those of another independent third party provider of proxy
services; send the proxy directly to the relevant Advisory Client for a
decision, or take such other action in good faith (in consultation with counsel)
which would protect the interests of the Advisory Clients.

As a matter of practice, the votes with respect to most issues are cast in
accordance with the position of the company's management. Each issue, however,
is considered on its own merits, and Adviser will not support the position of
the company's management in any situation where it deems that the ratification
of management's position would adversely affect the investment merits of owning
that company's shares.

The Proxy Group is part of the Franklin Templeton Companies, LLC Corporate Legal
Department and is overseen by legal counsel. For each shareholder meeting, a
member of the Proxy Group will consult with the research analyst that follows
the security and will provide the analyst with the meeting notice, agenda, ISS
and/or Glass Lewis analyses, recommendations and any other available
information. Adviser's research analyst and relevant portfolio manager(s) are
responsible for making the final voting decision based on their review of the
agenda, ISS and/or Glass Lewis analyses, their knowledge of the company and any
other information readily available. The Proxy Group must obtain voting
instructions from Adviser's research analyst, relevant portfolio manager(s)
and/or legal counsel prior to submitting the vote.

Adviser has adopted general proxy voting guidelines that are reviewed
periodically by various members of Adviser's organization, including portfolio
management, legal counsel and Adviser's officers, and are subject to change.
These guidelines cannot provide an exhaustive list of all the issues that may
arise nor can Adviser anticipate all future situations. The guidelines cover
such agenda items as the election of directors, ratification of auditors,
management and director compensation, anti-takeover mechanisms, changes to
capital structure, mergers and corporate restructuring, social and corporate
policy issues, and global corporate governance.

The Proxy Group is fully cognizant of its responsibility to process proxies and
maintain proxy records pursuant to SEC rules and regulations. In addition,
Adviser understands its fiduciary duty to vote proxies and that proxy voting
decisions may affect the value of shareholdings. Therefore, Adviser will attempt
to process every proxy it receives for all domestic and foreign proxies.
However, there may be situations in which Adviser cannot process proxies, for
example, where a meeting notice was received too late, or sell orders preclude
the ability to vote. In addition, Adviser may abstain from voting under certain
circumstances or vote against items such as "Other Business" when Adviser is not
given adequate information from the company.

The Proxy Group is responsible for maintaining the documentation that supports
Adviser's voting position. The Proxy Group is also responsible for maintaining
appropriate proxy voting supporting documentation and records. Such records may
include, but are not limited to, a copy of all materials returned to the issuer
and/or its agent, the documentation described above, listings of proxies voted
by issuer and by client, and any other relevant information. The Proxy Group may
use an outside service such as ISS to support this function. All files will be
retained for at least five years, the first two of which will be on-site.
Advisory Clients may view Adviser's complete proxy voting policies and
procedures on-line at www.franklintempleton.com, request copies of their proxy
voting records and Adviser's complete proxy voting policies and procedures by
calling the Proxy Group collect at 1-954-847-2268 or send a written request to:
Franklin Templeton Companies, LLC, 500 East Broward Boulevard, Suite 1500, Fort
Lauderdale, FL 33394, Attention: Proxy Group. In addition, the Proxy Group is
responsible for ensuring that the proxy voting policies, procedures and records
of Adviser are


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made available as required by law and is responsible for overseeing the filing
of such policies and procedures with the SEC.

TRANSAMERICA INVESTMENT MANAGEMENT, LLC

PROXY VOTING POLICY

                                  INTRODUCTION

Normally, clients for which Transamerica Investment Management, LLC ("TIM") has
full discretionary investment authority expect TIM to vote proxies in accordance
with TIM's Proxy Voting Policy (the "Policy"). As such, TIM will vote on behalf
of all accounts for which it has discretionary authority unless clients notify
TIM in writing that they have retained the authority to vote their own proxies.
Clients may also ask TIM to vote their proxies in accordance with specific
Client Proxy guidelines.

                               STATEMENT OF POLICY

It is the policy of TIM to vote proxies in the best interest of its clients at
all times.

TIM has proxy voting policy guidelines (the "Guidelines") regarding certain
issues that may come before shareholders from time to time. These Guidelines
provide a roadmap for arriving at voting decisions and are not meant to be
exhaustive of all issues that may be raised in any or all proxy ballots. The
Guidelines are attached to this Policy as Appendix A.

                                 PROXY COMMITTEE

In order to implement and monitor this Policy, TIM shall establish a Proxy
Committee (the "Committee"), which will have responsibility for review of
proxies voted by or to be voted by TIM, as well as to resolve issues which may
arise in the process of voting proxies.

The Committee shall meet at a minimum annually and on an as needed basis. It
shall not be required that the Committee members meet in person; in fact, it is
contemplated that certain Committee members will take part in meetings via
teleconference. The Committee shall consist of at least one Portfolio Manager, a
member of the Legal/Compliance department, and other staff members of TIM as may
be designated from time to time. Committee members may select designees in the
event that they are unable to convene with the Committee.

It shall be the Committee's responsibility to ensure that proxy votes are made
in accordance with the Policy. Issues shall be raised to the Committee when
needed and as appropriate to effectively carry out TIM's proxy decisions. When
applicable, the Committee shall review written materials pertinent to the vote
at hand and shall hear verbal opinions from relevant portfolio managers and/or
analysts as needed to fully consider the investment merits of the vote.
Committee decisions and a record of Committee meetings shall be recorded and
maintained by the Legal/Compliance department.

                         USE OF INDEPENDENT THIRD PARTY

TIM will maintain the services of a qualified independent third party (the
"Independent Third Party") to provide guidance on proxy voting issues. The
Independent Third Party selected by TIM is institutional Shareholder Services,
Inc. TIM will consider the research provided by the Independent Third Party when
making voting decisions on proxy issues, however, the final determination on
voting rests with TIM.

                  CONFLICTS OF INTEREST BETWEEN TIM AND CLIENTS

TIM recognizes the potential for material conflicts that may arise between its
own interests and those of the Clients. To address these concerns, TIM will take
one of the following steps to avoid any impropriety or the appearance of
impropriety: a) Vote in accordance with the recommendation of the Independent
Third Party; or b) Obtain the consent(s) of the Client(s) whose accounts are
involved in the conflict.

                    PROVISION OF TIM PROXY POLICY TO CLIENTS


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TIM will make available to all Clients a copy of its Policy by maintaining a
current version of the Policy on its website (www.timllc.com). Also, a copy of
the Policy will be mailed to any Client at any time upon request.

The following is a concise summary of TIM's proxy voting policy guidelines.

1. AUDITORS

Vote FOR proposals to ratify auditors, unless any of the following apply:

- -    An auditor has a financial interest in or association with the company, and
     is therefore not independent

- -    Fees for non-audit services are excessive, or

- -    There is reason to believe that the independent auditor has rendered an
     opinion that is neither accurate nor indicative of the company's financial
     position.

2. BOARD OF DIRECTORS

VOTING ON DIRECTOR NOMINEES IN UNCONTESTED ELECTIONS

Votes on director nominees should be made on a CASE-BY-CASE basis, examining the
following factors: independence of the board and key board committees,
attendance at board meetings, corporate governance provisions and takeover
activity, long-term company performance, responsiveness to shareholder
proposals, any egregious board actions, and any excessive non-audit fees or
other potential auditor conflicts.

CLASSIFICATION/DECLASSIFICATION OF THE BOARD

Vote AGAINST proposals to classify the board.

Vote FOR proposals to repeal classified boards and to elect all directors
annually.

INDEPENDENT CHAIRMAN (SEPARATE CHAIRMAN/CEO)

Vote on a CASE-BY-CASE basis shareholder proposals requiring that the positions
of chairman and CEO be held separately. Because some companies have governance
structures in place that counterbalance a combined position, certain factors
should be taken into account in determining whether the proposal warrants
support. These factors include the presence of a lead director, board and
committee independence, governance guidelines, company performance, and annual
review by outside directors of CEO pay.

MAJORITY OF INDEPENDENT DIRECTORS/ESTABLISHMENT OF COMMITTEES

Vote FOR shareholder proposals asking that a majority or more of directors be
independent unless the board composition already meets the proposed threshold by
TIM's definition of independence. Vote FOR shareholder proposals asking that
board audit, compensation, and/or nominating committees be composed exclusively
of independent directors if they currently do not meet that standard.

3. SHAREHOLDER RIGHTS

SHAREHOLDER ABILITY TO ACT BY WRITTEN CONSENT

Vote AGAINST proposals to restrict or prohibit shareholder ability to take
action by written consent.

Vote FOR proposals to allow or make easier shareholder action by written
consent.

SHAREHOLDER ABILITY TO CALL SPECIAL MEETINGS

Vote AGAINST proposals to restrict or prohibit shareholder ability to call
special meetings.

Vote FOR proposals that remove restrictions on the right of shareholders to act
independently of management.

SUPERMAJORITY VOTE REQUIREMENTS

Vote AGAINST proposals to require a supermajority shareholder vote.

Vote FOR proposals to lower supermajority vote requirements.

CUMULATIVE VOTING

Vote AGAINST proposals to eliminate cumulative voting.

Vote proposals to restore or permit cumulative voting on a CASE-BY-CASE basis
relative to the company's other governance provisions.

CONFIDENTIAL VOTING

Vote FOR shareholder proposals requesting that corporations adopt confidential
voting, use independent vote tabulators and use independent inspectors of
election, as long as the proposal includes a provision for proxy contests as
follows: In


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the case of a contested election, management should be permitted to request that
the dissident group honor its confidential voting policy. If the dissidents
agree, the policy remains in place. If the dissidents will not agree, the
confidential voting policy is waived.

Vote FOR management proposals to adopt confidential voting.

4. PROXY CONTESTS

VOTING FOR DIRECTOR NOMINEES IN CONTESTED ELECTIONS

Votes in a contested election of directors must be evaluated on a CASE-BY-CASE
basis, considering the factors that include the long-term financial performance,
management's track record, qualifications of director nominees (both slates),
and an evaluation of what each side is offering shareholders.

5. POISON PILLS

Vote FOR shareholder proposals that ask a company to submit its poison pill for
shareholder ratification. Review on a CASE-BY-CASE basis shareholder proposals
to redeem a company's poison pill and management proposals to ratify a poison
pill.

6. MERGERS AND CORPORATE RESTRUCTURINGS

Vote CASE-BY-CASE on mergers and corporate restructurings based on such features
as the fairness opinion, pricing, strategic rationale, and the negotiating
process.

7. REINCORPORATION PROPOSALS

Proposals to change a company's state of incorporation should be evaluated on a
CASE-BY-CASE basis, giving consideration to both financial and corporate
governance concerns, including the reasons for reincorporating, a comparison of
the governance provisions, and a comparison of the jurisdictional laws. Vote FOR
reincorporation when the economic factors outweigh any neutral or negative
governance changes.

8. CAPITAL STRUCTURE

COMMON STOCK AUTHORIZATION

Votes on proposals to increase the number of shares of common stock authorized
for issuance are determined on a CASE-BY-CASE basis.

Vote AGAINST proposals at companies with dual-Class Capital structures to
increase the number of authorized shares of the class of stock that has superior
voting rights.

Vote FOR proposals to approve increases beyond the allowable increase when a
company's shares are in danger of being delisted or if a company's ability to
continue to operate as a going concern is uncertain.

DUAL-CLASS STOCK

Vote AGAINST proposals to create a new class of common stock with superior
voting rights.

Vote FOR proposals to create a new class of nonvoting or subvoting common stock
if:

It is intended for financing purposes with minimal or no dilution to current
shareholders

It is not designed to preserve the voting power of an insider or significant
shareholder

9. EXECUTIVE AND DIRECTOR COMPENSATION

Votes with respect to compensation plans should be determined on a CASE-BY-CASE
basis. TIM reviews Executive and Director compensation plans (including
broad-based option plans) in the context of the transfer of shareholder wealth.
This review encompasses not only a comparison of a plan relative to peer
companies, but also on an absolute basis, considering the cost of the plan vs.
the operating income and overall profitability of the firm in question.

Vote AGAINST equity plans that explicitly permit repricing or where the company
has a history of repricing without shareholder approval.

MANAGEMENT PROPOSALS SEEKING APPROVAL TO REPRICE OPTIONS

Vote AGAINST proposals by management seeking approval to reprice options.

EMPLOYEE STOCK PURCHASE PLANS

Votes on employee stock purchase plans should be determined on a CASE-BY-CASE
basis.


                                      A-81



Vote FOR employee stock purchase plans where all of the following apply:

     -    Purchase price is at least 85 percent of fair market value

     -    Offering period is 27 months or less, and

     -    Potential voting power dilution (VPD) is ten percent or less. Vote
          AGAINST employee stock purchase plans where any of the opposite
          conditions obtain.

SHAREHOLDER PROPOSALS ON COMPENSATION

Vote on a CASE-BY-CASE basis for all other shareholder proposals regarding
executive and director pay, taking into account company performance, pay level
versus peers, pay level versus industry, and long term corporate outlook.

10. SOCIAL AND ENVIRONMENTAL ISSUES

These issues cover a wide range of topics, including consumer and public safety,
environment and energy, general corporate issues, labor standards and human
rights, military business, and workplace diversity. In general, vote
CASE-BY-CASE. While a wide variety of factors goes into each analysis, the
overall principal guiding all vote recommendations focuses on how the proposal
will enhance the economic value of the company.

UBS GLOBAL ASSET MANAGEMENT AMERICAS INC.

GLOBAL PROXY VOTING AND CORPORATE GOVERNANCE POLICY

PHILOSOPHY

     Our philosophy, guidelines and policy are based on our active investment
style and structure whereby we have detailed knowledge of the investments we
make on behalf of our clients and therefore are in a position to judge what is
in the best interests of our clients as shareholders. We believe voting rights
have economic value and must be treated accordingly. Proxy votes that impact the
economic value of client investments involve the exercise of fiduciary
responsibility. Good corporate governance should, in the long term, lead toward
both better corporate performance and improved shareholder value. Thus, we
expect board members of companies we have invested in (the "company" or
"companies") to act in the service of the shareholders, view themselves as
stewards of the financial assets of the company, exercise good judgment and
practice diligent oversight with the management of the company.

A.   GENERAL CORPORATE GOVERNANCE BENCHMARKS UBS Global Asset Management (US)
     Inc. and UBS Global Asset Management (Americas) Inc. (collectively, "UBS
     Global AM") will evaluate issues that may have an impact on the economic
     value of client investments during the time period it expects to hold the
     investment. While there is no absolute set of rules that determine
     appropriate governance under all circumstances and no set of rules will
     guarantee ethical behavior, there are certain benchmarks, which, if
     substantial progress is made toward, give evidence of good corporate
     governance. Therefore, we will generally exercise voting rights on behalf
     of clients in accordance with this policy.

PRINCIPLE 1: INDEPENDENCE OF BOARD FROM COMPANY MANAGEMENT

GUIDELINES:

     -    Board exercises judgment independently of management.

     -    Separate Chairman and Chief Executive.

     -    Board has access to senior management members.

     -    Board is comprised of a significant number of independent outsiders.

     -    Outside directors meet independently.

     -    CEO performance standards are in place.

     -    CEO performance is reviewed annually by the full board.

     -    CEO succession plan is in place.


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     -    Board involvement in ratifying major strategic initiatives.

     -    Compensation, audit and nominating committees are led by a majority of
          outside directors.

PRINCIPLE 2: QUALITY OF BOARD MEMBERSHIP

GUIDELINES:

     -    Board determines necessary board member skills, knowledge and
          experience.

     -    Board conducts the screening and selection process for new directors.

     -    Shareholders should have the ability to nominate directors.

     -    Directors whose present job responsibilities change are reviewed as to
          the appropriateness of continued directorship.

     -    Directors are reviewed every 3-5 years to determine appropriateness of
          continued directorship.

     -    Board meets regularly (at least four times annually).

PRINCIPLE 3: APPROPRIATE MANAGEMENT OF CHANGE IN CONTROL

GUIDELINES:

     -    Protocols should ensure that all bid approaches and material proposals
          by management are brought forward for board consideration.

     -    Any contracts or structures, which impose financial constraints on
          changes in control, should require prior shareholder approval.

     -    Employment contracts should not entrench management.

     -    Management should not receive substantial rewards when employment
          contracts are terminated for performance reasons.

PRINCIPLE 4: REMUNERATION POLICIES ARE ALIGNED WITH SHAREHOLDER INTERESTS

GUIDELINES:

     -    Executive remuneration should be commensurate with responsibilities
          and performance.

     -    Incentive schemes should align management with shareholder objectives.

     -    Employment policies should encourage significant shareholding by
          management and board members.

     -    Incentive rewards should be proportionate to the successful
          achievement of pre-determined financial targets.

     -    Long-term incentives should be linked to transparent long-term
          performance criteria.

     -    Dilution of shareholders' interests by share issuance arising from
          egregious employee share schemes and management incentives should be
          limited by shareholder resolution.

PRINCIPLE 5: AUDITORS ARE INDEPENDENT

GUIDELINES:

     -    Auditors are approved by shareholders at the annual meeting.


                                      A-83



     -    Audit, consulting and other fees to the auditor are explicitly
          disclosed.

     -    The Audit Committee should affirm the integrity of the audit has not
          been compromised by other services provided by the auditor firm.

     -    Periodic (every 5 years) tender of the audit firm or audit partner.

B.   PROXY VOTING GUIDELINES - MACRO RATIONALES Macro Rationales are used to
     explain why we vote on each proxy issue. The Macro Rationales reflect our
     guidelines enabling voting consistency between offices yet allowing for
     flexibility so the local office can reflect specific knowledge of the
     company as it relates to a proposal.

     1.   GENERAL GUIDELINES

          a.   When our view of the issuer's management is favorable, we
               generally support current management initiatives. When our view
               is that changes to the management structure would probably
               increase shareholder value, we may not support existing
               management proposals.

          b.   If management's performance has been questionable we may abstain
               or vote against specific proxy proposals.

          c.   Where there is a clear conflict between management and
               shareholder interests, even in those cases where management has
               been doing a good job, we may elect to vote against management.

          d.   In general, we oppose proposals, which in our view, act to
               entrench management.

          e.   In some instances, even though we strongly support management,
               there are some corporate governance issues that, in spite of
               management objections, we believe should be subject to
               shareholder approval.

          f.   We will vote in favor of shareholder resolutions for confidential
               voting.

     2.   BOARD OF DIRECTORS AND AUDITORS

          a.   Unless our objection to management's recommendation is strenuous,
               if we believe auditors to be competent and professional, we
               support continuity in the appointed auditing firm subject to
               regular review.

          b.   We generally vote for proposals that seek to fix the size of the
               board and/or require shareholder approval to alter the size of
               the board and that allow shareholders to remove directors with or
               without cause.

          c.   We generally vote for proposals that permit shareholders to act
               by written consent and/or give the right to shareholders to call
               a special meeting.

          d.   We generally oppose proposals to limit or restrict shareholder
               ability to call special meetings.

          e.   We will vote for separation of Chairman and CEO if we believe it
               will lead to better company management, otherwise, we will
               support an outside lead director board structure.

     3.   COMPENSATION

          a.   We will not try to micro-manage compensation schemes, however, we
               believe remuneration should not be excessive, and we will not
               support compensation plans that are poorly structured or
               otherwise egregious.

          b.   Senior management compensation should be set by independent
               directors according to industry


                                      A-84



               standards, taking advice from benefits consultants where
               appropriate.

          c.   All senior management and board compensation should be disclosed
               within annual financial statements, including the value of fringe
               benefits, company pension contributions, deferred compensation
               and any company loans.

          d.   We may vote against a compensation or incentive program if it is
               not adequately tied to a company's fundamental financial
               performance;, is vague;, is not in line with market practices;,
               allows for option re-pricing;, does not have adequate performance
               hurdles; or is highly dilutive.

          e.   Where company and management's performance has been poor, we may
               object to the issuance of additional shares for option purposes
               such that management is rewarded for poor performance or further
               entrenches its position.

          f.   Given the increased level of responsibility and oversight
               required of directors, it is reasonable to expect that
               compensation should increase commensurably. We consider that
               there should be an appropriate balance between fixed and variable
               elements of compensation and between short and long term
               incentives.

     4.   GOVERNANCE PROVISIONS

          a.   We believe that votes at company meetings should be determined on
               the basis of one share one vote. We will vote against cumulative
               voting proposals.

          b.   We believe that "poison pill" proposals, which dilute an issuer's
               stock when triggered by particular events, such as take over bids
               or buy-outs, should be voted on by the shareholders and will
               support attempts to bring them before the shareholders.

          c.   Any substantial new share issuance should require prior
               shareholder approval.

          d.   We believe proposals that authorize the issuance of new stock
               without defined terms or conditions and are intended to thwart a
               take-over or restrict effective control by shareholders should be
               discouraged.

          e.   We will support directives to increase the independence of the
               board of directors when we believe that the measures will improve
               shareholder value.

          f.   We generally do not oppose management's recommendation to
               implement a staggered board and generally support the regular
               re-election of directors on a rotational basis as it may provide
               some continuity of oversight.

          g.   We will support proposals that enable shareholders to directly
               nominate directors.

     5.   CAPITAL STRUCTURE AND CORPORATE RESTRUCTURING

          a.   It is difficult to direct where a company should incorporate,
               however, in instances where a move is motivated solely to
               entrench management or restrict effective corporate governance,
               we will vote accordingly.

          b.   In general we will oppose management initiatives to create dual
               classes of stock, which serves to insulate company management
               from shareholder opinion and action. We support shareholder
               proposals to eliminate dual class schemes.

     6.   MERGERS, TENDER OFFERS AND PROXY CONTESTS

          a.   Based on our analysis and research we will support proposals that
               increase shareholder value and vote against proposals that do
               not.


                                      A-85



     7.   SOCIAL, ENVIRONMENTAL, POLITICAL AND CULTURAL

          a.   Depending on the situation, we do not typically vote to prohibit
               a company from doing business anywhere in the world.

          b.   There are occasional issues, we support, that encourage
               management to make changes or adopt more constructive policies
               with respect to social, environmental, political and other
               special interest issues, but in many cases we believe that the
               shareholder proposal may be too binding or restrict management's
               ability to find an optimal solution. While we wish to remain
               sensitive to these issues, we believe there are better ways to
               resolve them than through a proxy proposal. We prefer to address
               these issues through engagement.

          c.   Unless directed by clients to vote in favor of social,
               environmental, political and other special interest proposals, we
               are generally opposed to special interest proposals that involve
               an economic cost to the company or that restrict the freedom of
               management to operate in the best interest of the company and its
               shareholders.

     8.   ADMINISTRATIVE AND OPERATIONS

          a.   Occasionally, stockholder proposals, such as asking for reports
               and donations to the poor, are presented in a way that appear to
               be honest attempts at bringing up a worthwhile issue.
               Nevertheless, judgment must be exercised with care, as we do not
               expect our shareholder companies to be charitable institutions.

          b.   We are sympathetic to shareholders who are long-term holders of a
               company's stock, who desire to make concise statements about the
               long-term operations of the company in the proxy statement.
               However, because regulatory agencies do not require such actions,
               we may abstain unless we believe there are compelling reasons to
               vote for or against.

     9.   MISCELLANEOUS

          a.   Where a client has given specific direction as to how to exercise
               voting rights on its behalf, we will vote in accordance with a
               client's direction.

          b.   Where we have determined that the voting of a particular proxy is
               of limited benefit to clients or where the costs of voting a
               proxy outweigh the benefit to clients, we may abstain or choose
               not to vote. Among others, such costs may include the cost of
               translating a proxy, a requirement to vote in person at a
               shareholders meeting or if the process of voting restricts our
               ability to sell for a period of time (an opportunity cost).

          c.   For holdings managed pursuant to quantitative, index or
               index-like strategies, we may delegate the authority to exercise
               voting rights for such strategies to an independent proxy voting
               and research service with the direction that the votes be
               exercised in accordance with this Policy. If such holdings are
               also held in an actively managed strategy, we will exercise the
               voting rights for the passive holdings according to the active
               strategy.

          d.   In certain instances when we do not have enough information we
               may choose to abstain or vote against a particular Proposal.

C.   PROXY VOTING DISCLOSURE GUIDELINES

     -    UBS Global AM will disclose to clients, as required by the Investment
          Advisers Act of 1940, how they may obtain information about how we
          voted with respect to their securities. This disclosure may be made on
          Form ADV.


                                      A-86



     -    UBS Global AM will disclose to clients, as required by the Investment
          Advisers Act of 1940, these procedures and will furnish a copy of
          these procedures to any client upon request. This disclosure may be
          made on Form ADV.

     -    Upon request or as required by law or regulation, UBS Global AM will
          disclose to a client or a client's fiduciaries, the manner in which we
          exercised voting rights on behalf of the client.

     -    Upon request, we will inform a client of our intended vote. Note,
          however, in some cases, because of the controversial nature of a
          particular proxy, our intended vote may not be available until just
          prior to the deadline. If the request involves a conflict due to the
          client's relationship with the company that has issued the proxy, the
          Legal and Compliance Department should be contacted immediately to
          ensure adherence to UBS Global AM Corporate Governance Principles.
          (See Proxy Voting Conflict Guidelines below.)

     -    Other than as described herein, we will not disclose our voting
          intentions or make public statements to any third party (except
          electronically to our proxy vote processor or regulatory agencies)
          including but not limited to proxy solicitors, non-clients, the media,
          or other UBS divisions, but we may inform such parties of the
          provisions of our Policy. We may communicate with other shareholders
          regarding a specific proposal but will not disclose our voting
          intentions or agree to vote in concert with another shareholder
          without approval from the Chairman of the Global Corporate Governance
          Committee and regional Legal and Compliance representative.

     -    Any employee, officer or director of UBS Global AM receiving an
          inquiry directly from a company will notify the appropriate industry
          analyst and persons responsible for voting the company's proxies.

     -    Proxy solicitors and company agents will not be provided with either
          our votes or the number of shares we own in a particular company.

     -    In response to a proxy solicitor or company agent, we will acknowledge
          receipt of the proxy materials, inform them of our intent to vote or
          that we have voted, but not the result of the vote itself.

     -    We may inform the company (not their agent) where we have decided to
          vote against any material resolution at their company.

     -    The Chairman of the Global Corporate Governance Committee and the
          applicable Chair of the Local Corporate Governance Committee must
          approve exceptions to this disclosure policy.

     Nothing in this policy should be interpreted as to prevent dialogue with
the company and its advisers by the industry analyst, proxy voting delegate or
other appropriate senior investment personnel when a company approaches us to
discuss governance issues or resolutions they wish to include in their proxy
statement.

D.   PROXY VOTING CONFLICT GUIDELINES In addition to the Proxy Voting Disclosure
     Guidelines above, UBS Global AM has implemented the following guidelines to
     address conflicts of interests that arise in connection with our exercise
     of voting rights on behalf of clients:

     -    Under no circumstances will general business, sales or marketing
          issues influence our proxy votes.

     -    UBS Global AM and its affiliates engaged in banking, broker-dealer and
          investment banking activities ("Affiliates") have policies in place
          prohibiting the sharing of certain sensitive information. These
          policies prohibit our personnel from disclosing information regarding
          our voting intentions to any Affiliate. Any of our personnel involved
          in the proxy voting process who are contacted by an Affiliate
          regarding the manner in which we intend to vote on a specific issue,
          must terminate the contact and notify the Legal and Compliance
          Department immediately. [Note: Legal and Compliance personnel may have
          contact with their counterparts working for an Affiliate on matters
          involving information barriers.] In the event of any issue arising in
          relation to Affiliates, the Chair of the Global Corporate Governance
          Committee must be advised, who will in turn advise the Chief Risk
          Officer.

E.   SPECIAL DISCLOSURE GUIDELINES FOR REGISTERED INVESTMENT COMPANY CLIENTS


                                      A-87



1.   REGISTRATION STATEMENT (OPEN-END AND CLOSED-END FUNDS) MANAGEMENT IS
     RESPONSIBLE FOR ENSURING THE FOLLOWING:

     -    That these procedures, which are the procedures used by the investment
          adviser on the Funds' behalf, are described in the Statement of
          Additional Information (SAI). The procedures may be described in the
          SAI or attached as an exhibit to the registration statement.

     -    That the SAI disclosure includes the procedures that are used when a
          vote presents a conflict between the interests of Fund shareholders,
          on the one hand; and those of the Funds investment adviser, principal
          underwriter or any affiliated person of the Fund, its investment
          adviser or principal underwriter, on the other.

     -    That the SAI disclosure states that information regarding how the Fund
          voted proxies during the most recent 12-month period ended June 30 is
          available (i) without charge, upon request, by calling a specified
          toll-free (or collect) telephone number; or on or through the Fund's
          website, or both; and (ii) on the Commission's website. If a request
          for the proxy voting record is received, the Fund must comply within
          three business days by first class mail. If website disclosure is
          elected, Form N-PX must be posted as soon as reasonably practicable
          after filing the report with the Commission, and must remain available
          on the website as long as the Fund discloses that it its available on
          the website.

2.   SHAREHOLDER ANNUAL AND SEMI-ANNUAL REPORT (OPEN-END AND CLOSED-END FUNDS)
     Management is responsible for ensuring the following:

     -    That each Fund's shareholder report contain a statement that a
          description of these procedures is available (i) without charge, upon
          request, by calling a toll-free or collect telephone number; (ii) on
          the Fund's website, if applicable; and (iii) on the Commission's
          website. If a request for the proxy voting record is received, the
          Fund must comply within three business days by first class mail.

     -    That the report contain a statement that information regarding how the
          Fund voted proxies during the most recent 12-month period ended June
          30 is available (i) without charge, upon request, by calling a
          specified toll-free (or collect) telephone number; or on or through
          the Fund's website, or both; and (ii) on the Commission's website. If
          a request for the proxy voting record is received, the Fund must
          comply within three business days by first class mail. If website
          disclosure is elected, Form N-PX must be posted as soon as reasonably
          practicable after filing the report with the Commission, and must
          remain available on the website as long as the Fund discloses that it
          its available on the website.

3.   FORM N-CSR (CLOSED-END FUND ANNUAL REPORTS ONLY) Management is responsible
     for ensuring the following:

     -    That these procedures are described in Form N-CSR. In lieu of
          describing the procedures, a copy of these procedures may simply be
          included with the filing. However, the SEC's preference is that the
          procedures be included directly in Form N-CSR and not attached as an
          exhibit to the N-CSR filing.

     -    That the N-CSR disclosure includes the procedures that are used when a
          vote presents a conflict between the interests of Fund shareholders,
          on the one hand, and those of the Funds' investment adviser, principal
          underwriter or any affiliated person of the Fund, its investment
          adviser or principal underwriter, on the other.

4.   FORM N-PX (OPEN-END AND CLOSED-END FUNDS) Management is responsible for
     ensuring the following:

     -    That each Fund files its complete proxy voting record on Form N-PX for
          the 12 month period ended June 30 by no later than August 31 of each
          year.

     -    Fund management is responsible for reporting to the Funds' Chief
          Compliance Officer any material issues that arise in connection with
          the voting of Fund proxies or the preparation, review and filing of
          the Funds' Form N-PX.


                                      A-88



5.   OVERSIGHT OF DISCLOSURE The Funds' Chief Compliance Officer shall be
     responsible for ensuring that the required disclosures listed in these
     procedures are implemented and complied with. The Funds' Chief Compliance
     Officer shall recommend to each Fund's Board any changes to these policies
     and procedures that he or she deems necessary or appropriate to ensure the
     Funds' compliance with relevant federal securities laws.


                                      A-89


                                   APPENDIX B

                               PORTFOLIO MANAGERS

TA IDEX ALLIANCE BERNSTEIN INTERNATIONAL VALUE

As of October 31, 2005, Henry S. D'Auria and Kevin F. Simms, the portfolio
managers of the fund, also managed, as part of the Bernstein Global Value
Investment Policy Group, 7 other registered funds with total assets of
$829,851,460; 4 pooled accounts with assets of $250,751,510; and 86 unregistered
accounts with assets of $12,879,491,069. They managed 2 accounts with
performance based fees and assets of $1,058,418,124.

As of October 31, 2005, the portfolio managers Investment are subject to the
oversight monitoring to ensure that all clients are treated equitably. The
sub-adviser places the interests of its clients first and expect all of our
employees to meet their fiduciary duties. Alliance has adopted a Code of
Business Conduct and Ethics that is designed to detect and prevent conflicts of
interest when investment professionals and other personnel of Alliance own, buy
or sell securities which may be owned by, or bought or sold for, clients.
Personal securities transactions by an employee may raise a potential conflict
of interest when an employee owns or trades in a security that is owned or
considered for purchase or sale by a client, or recommended for purchase or sale
by an employee to a client. Subject to the reporting requirements and other
limitations of its Code of Business Conduct and Ethics, Alliance permits its
employees to engage in personal securities transactions, and also allows them to
acquire investments in the AllianceBernstein Mutual funds through direct
purchase, 401K/profit sharing plan investment and/or notionally in connection
with deferred incentive compensation awards. Alliance's Code of Ethics and
Business Conduct requires disclosure of all personal accounts and maintenance of
brokerage accounts with designated broker-dealers approved by Alliance. The Code
also requires preclearance of all securities transactions and imposes a one-year
holding period for securities purchased by employees to discourage short-term
trading. Alliance has compliance policies and oversight monitoring in place to
address conflicts of interest relating to the management of multiple accounts
for multiple clients. Conflicts of interest may arise when an investment
professional has responsibilities for the investments of more than one account
because the investment professional may be unable to devote equal time and
attention to each account. The investment professional or investment
professional teams for each client may have responsibilities for managing all or
a portion of the investments of multiple accounts with a common investment
strategy, including other registered investment companies, unregistered
investment vehicles, such as hedge funds, pension plans, separate accounts,
collective trusts and charitable foundations. Among other things, Alliance's
policies and procedures provide for the prompt dissemination to investment
professionals of initial or changed investment recommendations by analysts so
that investment professionals are better able to develop investment strategies
for all accounts they manage. In addition, investment decisions by investment
professionals are reviewed for the purpose of maintaining uniformity among
similar accounts and ensuring that accounts are treated equitably. No investment
professional that manages client accounts carrying performance fees is
compensated directly or specifically for the performance of those accounts.
Investment professional compensation reflects a broad contribution in multiple
dimensions to long-term investment success for our clients and is not tied
specifically to the performance of any particular client's account, nor is it
directly tied to the level or change in the level of assets under management.
Alliance has policies and procedures intended to address conflicts of interest
relating to the allocation of investment opportunities. These policies and
procedures are designed to ensure that information relevant to investment
decisions is disseminated promptly within its portfolio management teams and
investment opportunities are allocated equitably among different clients. The
investment professionals at Alliance routinely are required to select and
allocate investment opportunities among accounts. Portfolio holdings, position
sizes, and industry and sector exposures tend to be similar across similar
accounts, which minimizes the potential for conflicts of interest relating to
the allocation of investment opportunities. Nevertheless, investment
opportunities may be allocated differently among accounts due to the particular
characteristics of an account, such as size of the account, cash position, tax
status, risk tolerance and investment restrictions or for other reasons.
Alliance's procedures are also designed to prevent potential conflicts of
interest that may arise when Alliance has a particular financial incentive, such
as a performance-based management fee, relating to an account. An investment
professional may perceive that he or she has an incentive to devote more time to
developing and analyzing investment strategies and opportunities or allocating
securities preferentially to accounts for which Alliance could share in
investment gains. To address these conflicts of interest, Alliance's policies
and procedures require, among other things, the prompt dissemination to
investment professionals of any initial or changed investment recommendations by
analysts; the aggregation of orders to facilitate best execution for all
accounts; price averaging for all aggregated orders; objective allocation for
limited investment opportunities (e.g., on a rotational basis) to ensure fair
and equitable allocation among accounts; and limitations on short sales of
securities. These procedures also require documentation and review of
justifications for any decisions to make investments only for select accounts or
in a manner disproportionate to the size of the account.


                                      B-1



As of October 31, 2005, each portfolio manager's compensation consisted of a
fixed base salary, a discretionary incentive compensation in the form of an
annual cash bonus, a discretionary incentive compensation in the form of awards
under Alliance's Partners Compensation Plan ("deferred awards") and
contributions under Alliance's Profit Sharing/401(k) Plan. Investment
professionals do not receive any direct compensation based upon the investment
returns of any individual client account, nor is compensation tied directly to
the level or change in the level of assets under management. The portfolio
managers' fixed base salaries generally the smallest portion of compensation.
The base salary is a relatively low, fixed salary within a similar range for all
investment professionals. The base salary is determined at the outset of
employment based on level of experience, does not change significantly from
year-to-year, and hence, is not particularly sensitive to performance.
Alliance's overall profitability determines the total amount of incentive
compensation available to investment professionals. This portion of compensation
is determined subjectively based on qualitative and quantitative factors. In
evaluating this component of an investment professional's compensation, Alliance
considers the contribution to his/her team or discipline as it relates to that
team's overall contribution to the long-term investment success, business
results and strategy of Alliance. Quantitative factors considered include, among
other things, relative investment performance (e.g., by comparison to competitor
or peer group funds or similar styles of investments, and appropriate,
broad-based or specific market indices), and consistency of performance. There
are no specific formulas used to determine this part of an investment
professional's compensation and the compensation is not tied to any
pre-determined or specified level of performance. Alliance also considers
qualitative factors such as the complexity and risk of investment strategies
involved in the style or type of assets managed by the investment professional;
success of marketing/business development efforts and client servicing;
seniority/length of service with the firm; management and supervisory
responsibilities; and fulfillment of Alliance's leadership criteria. Alliance's
overall profitability determines the total amount of deferred awards available
to investment professionals. The deferred awards are allocated among investment
professionals based on criteria similar to those used to determine the annual
cash bonus. There is no fixed formula for determining these amounts. Deferred
awards, for which there are various investment options, vest over a four-year
period and are generally forfeited if the employee resigns or Alliance
terminates his/her employment. Investment options under the deferred awards plan
include many of the same AllianceBernstein Mutual funds offered to mutual fund
investors, thereby creating a close alignment between the financial interests of
the investment professionals and those of Alliance's clients and mutual fund
shareholders with respect to the performance of those mutual funds. Alliance
also permits deferred award recipients to allocate up to 50% of their award to
investments in Alliance's publicly traded equity securities The contributions to
Alliance's Profit Sharing/401(k) Plan are based on Alliance's overall
profitability. The amount and allocation of the contributions are determined at
the sole discretion of Alliance.

As of October 31, 2005, neither of the portfolio managers beneficially owned any
equity securities in the fund.

TA IDEX AMERICAN CENTURY INTERNATIONAL

As of October 31, 2005, Keith S. Creveling and Michael M. Perelstein, portfolio
managers of the fund, also managed nine other registered investment companies
with total assets of approximately $7.75 billion, one other pooled investment
vehicle with total assets of approximately $36.67 million and one other account
with total assets of approximately $184.17 million. None of these has an
advisory fee based on the performance of the account.

As of October 31, 2005, American Century, the sub-adviser for the fund, believed
that certain conflicts of interest may arise in connection with the management
of multiple portfolios. Potential conflicts include, for example, conflicts
among investment strategies and conflicts in the allocation of investment
opportunities. American Century has adopted policies and procedures that are
designed to minimize the effects of these conflicts. Responsibility for managing
American Century client portfolios is organized according to investment
discipline. Investment disciplines include, for example, quantitative equity,
small- and mid-cap growth, large-cap growth, value, international, fixed income,
asset allocation, and sector funds. Within each discipline are one or more
portfolio teams responsible for managing specific client portfolios. Generally,
client portfolios with similar strategies are managed by the same team using the
same objective, approach, and philosophy. Accordingly, portfolio holdings,
position sizes, and industry and sector exposures tend to be similar across
similar portfolios, which minimizes the potential for conflicts of interest. For
each investment strategy, one portfolio is generally designated as the "policy
portfolio." Other portfolios with similar investment objectives, guidelines and
restrictions are referred to as "tracking portfolio." When managing policy and
tracking portfolios, a portfolio team typically purchases and sells securities
across all portfolios that the team manages. American Century's trading systems
include various order entry programs that assist in the management of multiple
portfolios, such as the ability to purchase or sell the same relative amount of
one security across several funds. In some cases a tracking portfolio may have
additional restrictions or limitations that cause it to be managed separately
from the policy portfolio. Portfolio managers make purchase and sale decisions
for such portfolios alongside the policy portfolio to the extent the overlap is
appropriate, and separately, if the overlap is not. American Century may
aggregate orders to purchase or sell the same security for multiple portfolios
when it believes such aggregation is consistent with its duty to seek best
execution on behalf of its


                                      B-2



clients. Orders of certain client portfolios may, by investment restriction or
otherwise, be determined not available for aggregation. American Century has
adopted policies and procedures to minimize the risk that a client portfolio
could be systematically advantaged or disadvantaged in connection with the
aggregation of orders. To the extent equity trades are aggregated, shares
purchased or sold are generally allocated to the participating portfolios pro
rata based on order size. Because initial public offerings (IPOs) are usually
available in limited supply and in amounts too small to permit across-the-board
pro rata allocations, American Century has adopted special procedures designed
to promote a fair and equitable allocation of IPO securities among clients over
time. Fixed income securities transactions are not executed through a
centralized trading desk. Instead, portfolio teams are responsible for executing
trades with broker/dealers in a predominantly dealer marketplace. Trade
allocation decisions are made by the portfolio manager at the time of trade
execution and orders entered on the fixed income order management system.
Finally, investment of American Century's corporate assets in proprietary
accounts may raise additional conflicts of interest. To mitigate these potential
conflicts of interest, American Century has adopted policies and procedures
intended to provide that trading in proprietary accounts is performed in a
manner that does not give improper advantage to American Century to the
detriment of client portfolios.

As of October 31, 2005, the portfolio managers' compensation included a base
salary, a bonus, restricted stock plans and deferred compensation plans. The
portfolio managers' compensation is not directly tied to the value of assets
held in client portfolios. The base salary is in the form of a fixed annual
salary. The annual bonus is determined by a combination of factors. One factor
is fund investment performance. For policy portfolios, investment performance is
measured by a combination of one- and three-year pre-tax performance relative to
a pre-established, internally-customized peer group and/or market benchmark.
Custom peer groups are constructed using all the funds in appropriate Lipper or
Morningstar categories as a starting point. Funds are then eliminated from the
peer group based on a standardized methodology designed to result in a final
peer group that more closely represents the fund's true peers based on internal
investment mandates and that it is more stable (i.e., has less peer turnover)
over the long-term. In cases where a portfolio manager has responsibility for
more than one policy portfolio, the performance of each is assigned a percentage
weight commensurate with the portfolio manager's level of responsibility. With
regard to tracking portfolios, investment performances may be measured in a
number of ways. The performance of the tracking portfolio may be measured
against a customized peer group and/or market benchmark as described above for
policy portfolios. Alternatively, the tracking portfolio may be evaluated
relative to the performance of its policy portfolio, with the goal of matching
the policy portfolio's performance as closely as possible. In some cases, the
performance of a tracking portfolio is not separately considered; rather, the
performance of the policy portfolio is the key metric. This is the case for TA
IDEX American Century International. The starting point for the custom peer
group of its policy portfolio is the Lipper International funds, excluding
Value, and its market benchmark for compensation purposes is the MSCI EAFE
index. A second factor in the bonus calculation refers to the performance of all
American Century funds managed according to a particular investment style, such
as U.S. growth or value. Performance is measured for each product individually
as described above and then combined to create an overall composite for the
product group. These composites may measure one-year performance (equal
weighted) or a combination of one- and three-year performance (asset weighted)
depending on the portfolio manager's responsibilities and products managed. This
feature is designed to encourage effective teamwork among portfolio management
teams in achieving long-term investment success for similarly styled portfolios.
A portion of some portfolio managers' bonuses may be tied to individual
performance goals, such as research projects and the development of new
products. Finally, portfolio manager bonuses may occasionally be affected by
extraordinarily positive or negative financial performance by American Century
Companies, Inc. ("ACC"), the adviser's privately-held parent company. This
feature has been designed to maintain investments performance as the primary
component of portfolio manager bonuses while also providing a link to the
adviser's ability to pay. Portfolio managers are eligible for grants of
restricted stock of ACC. These grants are discretionary, and eligibility and
availability can vary from year to year. The size of an individual's grant is
determined by individual and product performance as well as other
product-specific considerations. Grants can appreciate/depreciate in value based
on the performance of the ACC stock during the restriction period (generally
three years). Portfolio managers are eligible for grants of deferred
compensation. These grants are used in limited situations, primarily for
retention purposes. Grants are fixed and can appreciate/depreciate in value
based on the performance of the American Century mutual funds in which the
portfolio manager chooses to invest them.

As of October 31, 2005, neither of the portfolio managers beneficially owned any
equity securities in the fund.

TA IDEX AMERICAN CENTURY LARGE COMPANY VALUE

As of October 31, 2005, Brendan Healy, Mark Mallon and Charles A. Ritter,
portfolio managers of the fund, also managed 10 other registered investment
companies with total assets of approximately $6.45 billion and three other
accounts with total assets of approximately $212.14 million. None of these has
an advisory fee based on the performance of the account.


                                      B-3



As of October 31, 2005, American Century, the sub-adviser for the funds,
believed that certain conflicts of interest may arise in connection with the
management of multiple portfolios. Potential conflicts include, for example,
conflicts among investment strategies and conflicts in the allocation of
investment opportunities. American Century has adopted policies and procedures
that are designed to minimize the effects of these conflicts. Responsibility for
managing American Century client portfolios is organized according to investment
discipline. Investment disciplines include, for example, quantitative equity,
small- and mid-cap growth, large-cap growth, value, international, fixed income,
asset allocation, and sector funds. Within each discipline are one or more
portfolio teams responsible for managing specific client portfolios. Generally,
client portfolios with similar strategies are managed by the same team using the
same objective, approach, and philosophy. Accordingly, portfolio holdings,
position sizes, and industry and sector exposures tend to be similar across
similar portfolios, which minimizes the potential for conflicts of interest. For
each investment strategy, one portfolio is generally designated as the "policy
portfolio." Other portfolios with similar investment objectives, guidelines and
restrictions are referred to as "tracking portfolio." When managing policy and
tracking portfolios, a portfolio team typically purchases and sells securities
across all portfolios that the team manages. American Century's trading systems
include various order entry programs that assist in the management of multiple
portfolios, such as the ability to purchase or sell the same relative amount of
one security across several funds. In some cases a tracking portfolio may have
additional restrictions or limitations that cause it to be managed separately
from the policy portfolio. Portfolio managers make purchase and sale decisions
for such portfolios alongside the policy portfolio to the extent the overlap is
appropriate, and separately, if the overlap is not. American Century may
aggregate orders to purchase or sell the same security for multiple portfolios
when it believes such aggregation is consistent with its duty to seek best
execution on behalf of its clients. Orders of certain client portfolios may, by
investment restriction or otherwise, be determined not available for
aggregation. American Century has adopted policies and procedures to minimize
the risk that a client portfolio could be systematically advantaged or
disadvantaged in connection with the aggregation of orders. To the extent equity
trades are aggregated, shares purchased or sold are generally allocated to the
participating portfolios pro rata based on order size. Because initial public
offerings (IPOs) are usually available in limited supply and in amounts too
small to permit across-the-board pro rata allocations, American Century has
adopted special procedures designed to promote a fair and equitable allocation
of IPO securities among clients over time. Fixed income securities transactions
are not executed through a centralized trading desk. Instead, portfolio teams
are responsible for executing trades with broker/dealers in a predominantly
dealer marketplace. Trade allocation decisions are made by the portfolio manager
at the time of trade execution and orders entered on the fixed income order
management system. Finally, investment of American Century's corporate assets in
proprietary accounts may raise additional conflicts of interest. To mitigate
these potential conflicts of interest, American Century has adopted policies and
procedures intended to provide that trading in proprietary accounts is performed
in a manner that does not give improper advantage to American Century to the
detriment of client portfolios.

As of October 31, 2005, the portfolio managers' compensation included a base
salary, a bonus, restricted stock plans and deferred compensation plans. The
portfolio managers' compensation is not directly tied to the value of assets
held in client portfolios. The base salary is in the form of a fixed annual
salary. The annual bonus determined by a combination of factors. One factor is
fund investment performance. For policy portfolios, investment performance is
measured by a combination of one- and three-year pre-tax performance relative to
a pre-established, internally-customized peer group and/or market benchmark.
Custom peer groups are constructed using all the funds in appropriate Lipper or
Morningstar categories as a starting point. funds are then eliminated from the
peer group based on a standardized methodology designed to result in a final
peer group that more closely represents the fund's true peers based on internal
investment mandates and that it is more stable (i.e., has less peer turnover)
over the long-term. In cases where a portfolio manager has responsibility for
more than one policy portfolio, the performance of each is assigned a percentage
weight commensurate with the portfolio manager's level of responsibility. With
regard to tracking portfolios, investment performances may be measured in a
number of ways. The performance of the tracking portfolio may be measured
against a customized peer group and/or market benchmark as described above for
policy portfolios. Alternatively, the tracking portfolio may be evaluated
relative to the performance of its policy portfolio, with the goal of matching
the policy portfolio's performance as closely as possible. In some cases, the
performance of a tracking portfolio is not separately considered; rather, the
performance of the policy portfolio is the key metric. This is the case for TA
IDEX American Century International. The starting point for the custom peer
group of its policy portfolio is the Lipper International funds, excluding
Value, and its market benchmark for compensation purposes is the MSCI EAFE
index. A second factor in the bonus calculation refers to the performance of all
American Century funds managed according to a particular investment style, such
as U.S. growth or value. Performance is measured for each product individually
as described above and then combined to create an overall composite for the
product group. These composites may measure one-year performance (equal
weighted) or a combination of one- and three-year performance (asset weighted)
depending on the portfolio manager's responsibilities and products managed. This
feature is designed to encourage effective teamwork among portfolio management
teams in achieving long-term investment success for similarly styled portfolios.
A portion of some portfolio managers' bonuses may be tied to individual
performance goals, such as research projects and the development of new
products. Finally, portfolio manager bonuses may occasionally be affected by
extraordinarily positive or negative


                                      B-4



financial performance by American Century Companies, Inc. ("ACC"), the adviser's
privately-held parent company. This feature has been designed to maintain
investments performance as the primary component of portfolio manager bonuses
while also providing a link to the adviser's ability to pay. Portfolio managers
are eligible for grants of restricted stock of ACC. These grants are
discretionary, and eligibility and availability can vary from year to year. The
size of an individual's grant is determined by individual and product
performance as well as other product-specific considerations. Grants can
appreciate/depreciate in value based on the performance of the ACC stock during
the restriction period (generally three years). Portfolio managers are eligible
for grants of deferred compensation. These grants are used in limited
situations, primarily for retention purposes. Grants are fixed and can
appreciate/depreciate in value based on the performance of the American Century
mutual funds in which the portfolio manager chooses to invest them.

As of October 31, 2005, none of the portfolio managers beneficially owned any
equity securities in the 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
FUND

As of October 31, 2005, Todd Porter, the portfolio manager of the funds also
managed 8,015 managed retirement accounts with total assets of approximately
$240,000,000. None of these accounts had an advisory fee based on the
performance of the account.

As of October 31, 2005, Morningstar Associates, the Portfolio Construction
Manager of the funds, had discretionary management authority over 8,015
individual retirement accounts, through its Retirement Manager service, which is
made available through retirement plan providers and sponsors. If one of the
funds were an offering in one of the retirement plans that offers Morningstar
Associates discretionary retirement account management, then any allocation to
that fund could be deemed a Prohibited Transaction under ERISA. To prevent this
from occurring, Morningstar Associates has asserted that it is putting in place
systematic controls that prevent any allocation to one of the funds assets
within its Retirement Manager service.

As of October 31, 2005, the portfolio manager's compensation includes salary,
annual bonus, and stock option grants. The salary is set as a fixed amount and
is determined by the president of the Institutional Investment Consulting
business unit of Morningstar Associates. The portfolio manager's annual bonus is
paid from a bonus pool which is a function of the earnings of the Investment
Consulting business unit of Morningstar Associates, and the distribution of that
pool is at the discretion of the president of the Investment Consulting business
unit of Morningstar Associates, who may or may not account for the performance
of the funds in allocating that pool. The fee for consulting on the funds
accounts for a substantial portion of the revenue and earnings of the Investment
Consulting business unit of Morningstar Associates, and because that fee is
based on the assets under management in the funds, there is an indirect
relationship between the assets under management in the funds and the bonus
payout to the portfolio manager. The stock option grants are made to the
portfolio manager from a pool that is distributed at the discretion of the
president of the Investment Consulting business unit of Morningstar Associates.
The options are based on the stock of the parent company, Morningstar, Inc., and
vest in equal parts over a four-year period.

As of October 31, 2005, the portfolio manager did not beneficially own any
equity securities in the funds.

TA IDEX CLARION GLOBAL REAL ESTATE SECURITIES

As of October 31, 2005, T. Ritson Ferguson, a portfolio manager of the fund,
also managed four other registered investment companies with total assets of
approximately $3.527 billion, two other pooled investment vehicles with total
assets of approximately $168.6 million and 38 other accounts with total assets
of approximately $2.58 billion. None of these has an advisory fee based on the
performance of the account. As of October 31, 2005, T. Ritson Ferguson, Joseph
P, Smith and Steven D. Burton, portfolio managers of the fund, also managed as a
team four other registered investment companies with total assets of
approximately $3.527 billion, two other pooled investment vehicles with total
assets of approximately $168.6 million and 38 other accounts with total assets
of approximately $2.58 billion. None of these has an advisory fee based on the
performance of the account.

As of October 31, 2005, there were no material conflicts of interest, and any
conflicts of interest that may arise are mitigated by the following allocation
procedures. The Investment Policy Committee (IPC) reviews all client accounts
and determines the desired holdings and percentage of a specific security in
those client accounts. These allocation models are entered into the
sub-adviser's "Moxy" system, which automates the allocation of all purchases and
sales according to


                                      B-5



the established targets. A pre-allocation is entered initially into Moxy. Each
portfolio receives its proportionate share of the amount executed, whether in
its entirety or a partial execution. Allocations are done on a total portfolio
market value so no account receives a disproportionate amount over another. Each
advisory client account is treated equally. No one is favored. A security matrix
report is generated a week before month end to compare the percentage of each
holding in relation to the other accounts in that model. Any large deviations
are connected before month end. Likewise, allocations of initial public
offerings are allocated pro-rata to eligible accounts.

As of October 31, 2005, the portfolio managers did not beneficially own equity
securities in the fund.

TA IDEX EVERGREEN HEALTH CARE

As of October 31, 2005, Liu-Er Chen, portfolio manager of the fund, also managed
three other registered investment companies with total assets of approximately
$803.02 million. None of these had an advisory fee based on the performance of
the accounts.

The portfolio managers for TA IDEX Evergreen Health Care and TA IDEX Evergreen
International Small Cap may experience certain conflicts of interest in managing
the Portfolios' investments, on the one hand, and the investments of other
accounts, including other Evergreen funds, on the other. For example, if a
portfolio manager identifies a limited investment opportunity, such as an
initial public offering, that may be suitable for more than one fund or other
account, a Portfolio may not be able to take full advantage of that opportunity
due to an allocation of that investment across all eligible funds and accounts.
Evergreen Investment Management Company, LLC ("Evergreen") has policies and
procedures to address potential conflicts of interest relating to the allocation
of investment opportunities. Evergreen's policies and procedures relating to the
allocation of investment opportunities address these potential conflicts by
limiting portfolio manager discretion and are intended to result in fair and
equitable allocations among all products managed by that portfolio manager or
team that might be eligible for a particular investment. However, there is no
guarantee that such procedures will detect each and every situation where a
conflict arises.

The management of multiple funds and other accounts may give rise to potential
conflicts of interest, particularly if the funds and accounts have different
objectives, benchmarks and time horizons, as the portfolio manager must allocate
his or her time and investment ideas across multiple funds and accounts. For
example, in certain instances, a portfolio manager may take conflicting
positions in a particular security for different accounts, by selling a security
for one account and continuing to hold it for another account. In addition, the
management of other accounts may require the portfolio manager to devote less
than all of his or her time to a Portfolio, which may constitute a conflict with
the interest of the Portfolio. Evergreen seeks to manage such competing
interests for the time and attention of portfolio managers by having portfolio
managers focus on a particular investment discipline, such as investing in large
capitalization equity securities. Accordingly, portfolio holdings, position
sizes, and industry and sector exposures tend to be similar across similar
portfolios, which may minimize the potential for conflicts of interest.

Evergreen does not receive a performance fee for its management of the
Portfolios, but it does receive a performance fee with respect to its management
of Evergreen Large Cap Equity Fund. Evergreen and/or a portfolio manager may
have an incentive to allocate favorable or limited opportunity investments or
structure the timing of investments to favor accounts other than the Portfolios
- - for instance, those that pay a higher advisory fee and/or have a performance
fee. The policies of Evergreen, however, require that portfolio managers treat
all accounts they manage equitably and fairly.

Evergreen has a policy allowing it to aggregate sale and purchase orders of
securities for all accounts with similar orders if, in Evergreen's reasonable
judgment, such aggregation is reasonably likely to result generally in lower
per-share brokerage commission costs. In such event, each client may be charged
or credited, as the case may be, the average transaction price of all securities
purchased or sold in such transaction. As a result, however, the price may be
less favorable to a client than it would be if similar transactions were not
being executed concurrently for other accounts. In addition, in many instances,
the purchase or sale of securities for accounts will be effected simultaneously
with the purchase or sale of like securities for other accounts. Such
transactions may be made at slightly different prices, due to the volume of
securities purchased or sold. Evergreen has also adopted policies and procedures
in accordance with Rule 17a-7 under the 1940 Act relating to transfers effected
without a broker-dealer between registered investment companies or a registered
investment company client and another advisory client, to ensure compliance with
the rule and fair and equitable treatment of both clients involved in such
transactions.

Portfolio managers may also experience certain conflicts between their own
personal interests and the interests of the accounts they manage, including the
Portfolios. One potential conflict arises from the weighting methodology used in
determining bonuses, as described below, which may give a portfolio manager an
incentive to allocate a particular investment opportunity to a product that has
a greater weighting in determining his or her bonus. Another potential


                                      B-6



conflict may arise if a portfolio manager were to have a larger personal
investment in one fund than he or she does in another, giving the portfolio
manager an incentive to allocate a particular investment opportunity to the fund
in which he or she holds a larger stake. Evergreen's Code of Ethics addresses
potential conflicts of interest that may arise in connection with a portfolio
manager's activities outside Evergreen by prohibiting, without prior written
approval from the Code of Ethics Compliance Officer, portfolio managers from
participating in investment clubs and from providing investment advice to, or
managing, any account or portfolio in which the portfolio manager does not have
a beneficial interest and that is not a client of Evergreen.

COMPENSATION

For Evergreen, portfolio managers' compensation consists primarily of a base
salary and an annual bonus. Each portfolio manager's base salary is reviewed
annually and adjusted based on consideration of various factors specific to the
individual portfolio manager, including, among others, experience, quality of
performance record and breadth of management responsibility, and based on a
comparison to competitive market data provided by external compensation
consultants. The annual bonus pool for portfolio managers and other employees
that are eligible to receive bonuses is determined based on the overall
profitability of the firm during the relevant year.

The annual bonus has an investment performance component, which accounts for a
majority of the annual bonus, and a subjective evaluation component. The amount
of the investment performance component is based on the pre-tax investment
performance of the funds and accounts managed by the individual (or one or more
appropriate composites of such funds and accounts) over the prior five years
compared to the performance over the same time period of an appropriate
benchmark (typically a broad-based index or universe of external funds or
managers with similar characteristics). See the information below relating to
other funds and accounts managed by the portfolio managers for the specific
benchmarks used in evaluating performance. In calculating the amount of the
investment performance component, performance for the most recent year is
weighted 25%, performance for the most recent three-year period is weighted 50%
and performance for the most recent five-year period is weighted 25%. In
general, the investment performance component is determined using a weighted
average of investment performance of each product managed by the portfolio
manager, with the weighting done based on the amount of assets the portfolio
manager is responsible for in each such product. For example, if a portfolio
manager was to manage a mutual fund with $400 million in assets and separate
accounts totaling $100 million in assets, performance with respect to the mutual
fund would be weighted 80% and performance with respect to the separate accounts
would be weighted 20%. In certain cases, portfolio weights within the composite
may differ from the actual weights as determined by assets. For example, a very
small fund's weight within a composite may be increased to create a meaningful
contribution.

To be eligible for an investment performance related bonus, the time-weighted
average percentile rank must be above the 50th percentile. A portfolio manager
has the opportunity to maximize the investment component of the incentive payout
by generating performance at or above the 25th percentile level.

In determining the subjective evaluation component of the bonus, each manager is
measured against predetermined objectives and evaluated in light of other
discretionary considerations. Objectives are set in several categories,
including teamwork, participation in various assignments, leadership, and
development of staff.

For calendar year 2004, the investment performance component of each portfolio
manager's bonus will be determined based on comparisons to the benchmarks
(either to the individual benchmark or one or more composites of all or some of
such benchmarks) indicated below. The benchmarks may change for purposes of
calculating bonus compensation for calendar year 2005.

The investment performance component of the bonus of the portfolio manager for
TA IDEX Evergreen Health Care is determined based on comparisons to Lipper
Health/BioTech, Lipper Emerging Markets, Lipper International MultiCap Core,
Lipper International Small Cap, Lipper Global Small Cap Growth, Lipper Gold
Oriented Funds, and Callan Institutional International Equity composites.

The investment performance component of the bonus of the portfolio manager for
TA IDEX Evergreen International Small Cap is determined based on comparisons to
Lipper International Small Cap Growth, Lipper Global Small/Midcap Growth, Lipper
International MultiCap Core, Lipper Emerging Markets, Lipper Health Care, Lipper
Gold Oriented, and Callan International Equity composites.

Evergreen portfolio managers may also receive equity incentive awards
(non-qualified stock options and/or restricted stock) in Wachovia Corporation,
Evergreen's publicly traded parent company, based on their performance and/or


                                      B-7



positions held. Equity incentive awards are made based on subjective review of
the factors that are considered in determining base salary and the annual bonus.

In addition, portfolio managers may participate, at their election, in various
benefits programs, including the following:

     -    medical, dental, vision and prescription benefits,

     -    life, disability and long-term care insurance,

     -    before-tax spending accounts relating to dependent care, health care,
          transportation and parking, and

     -    various other services, such as family counseling and employee
          assistance programs, prepaid or discounted legal services, health care
          advisory programs and access to discount retail services.

These benefits are broadly available to Evergreen employees. Senior level
employees, including many portfolio managers but also including many other
senior level executives, may pay more or less than employees that are not senior
level for certain benefits, or be eligible for, or required to participate in,
certain benefits programs not available to employees who are not senior level.
For example, only senior level employees above a certain compensation level are
eligible to participate in the Wachovia Corporation deferred compensation plan,
and certain senior level employees are required to participate in the deferred
compensation plan.

TA IDEX EVERGREEN INTERNATIONAL SMALL CAP

As of October 31, 2005, Francis Claro, portfolio manager of the fund, also
managed three other registered investment companies with total assets of
approximately $470.42 million. None of these had an advisory fee based on the
performance of the accounts.

As of October 31, 2005, Liu-Er Chen, portfolio manager of the fund, also managed
three other registered investment companies with total assets of approximately
$803.02 million. None of these had an advisory fee based on the performance of
the accounts.

The portfolio managers for TA IDEX Evergreen Health Care and TA IDEX Evergreen
International Small Cap may experience certain conflicts of interest in managing
the Portfolios' investments, on the one hand, and the investments of other
accounts, including other Evergreen funds, on the other. For example, if a
portfolio manager identifies a limited investment opportunity, such as an
initial public offering, that may be suitable for more than one fund or other
account, a Portfolio may not be able to take full advantage of that opportunity
due to an allocation of that investment across all eligible funds and accounts.
Evergreen Investment Management Company, LLC ("Evergreen") has policies and
procedures to address potential conflicts of interest relating to the allocation
of investment opportunities. Evergreen's policies and procedures relating to the
allocation of investment opportunities address these potential conflicts by
limiting portfolio manager discretion and are intended to result in fair and
equitable allocations among all products managed by that portfolio manager or
team that might be eligible for a particular investment. However, there is no
guarantee that such procedures will detect each and every situation where a
conflict arises.

The management of multiple funds and other accounts may give rise to potential
conflicts of interest, particularly if the funds and accounts have different
objectives, benchmarks and time horizons, as the portfolio manager must allocate
his or her time and investment ideas across multiple funds and accounts. For
example, in certain instances, a portfolio manager may take conflicting
positions in a particular security for different accounts, by selling a security
for one account and continuing to hold it for another account. In addition, the
management of other accounts may require the portfolio manager to devote less
than all of his or her time to a Portfolio, which may constitute a conflict with
the interest of the Portfolio. Evergreen seeks to manage such competing
interests for the time and attention of portfolio managers by having portfolio
managers focus on a particular investment discipline, such as investing in large
capitalization equity securities. Accordingly, portfolio holdings, position
sizes, and industry and sector exposures tend to be similar across similar
portfolios, which may minimize the potential for conflicts of interest.

Evergreen does not receive a performance fee for its management of the
Portfolios, but it does receive a performance fee with respect to its management
of Evergreen Large Cap Equity Fund. Evergreen and/or a portfolio manager may
have an incentive to allocate favorable or limited opportunity investments or
structure the timing of investments to favor accounts


                                      B-8



other than the Portfolios - for instance, those that pay a higher advisory fee
and/or have a performance fee. The policies of Evergreen, however, require that
portfolio managers treat all accounts they manage equitably and fairly.

Evergreen has a policy allowing it to aggregate sale and purchase orders of
securities for all accounts with similar orders if, in Evergreen's reasonable
judgment, such aggregation is reasonably likely to result generally in lower
per-share brokerage commission costs. In such event, each client may be charged
or credited, as the case may be, the average transaction price of all securities
purchased or sold in such transaction. As a result, however, the price may be
less favorable to a client than it would be if similar transactions were not
being executed concurrently for other accounts. In addition, in many instances,
the purchase or sale of securities for accounts will be effected simultaneously
with the purchase or sale of like securities for other accounts. Such
transactions may be made at slightly different prices, due to the volume of
securities purchased or sold. Evergreen has also adopted policies and procedures
in accordance with Rule 17a-7 under the 1940 Act relating to transfers effected
without a broker-dealer between registered investment companies or a registered
investment company client and another advisory client, to ensure compliance with
the rule and fair and equitable treatment of both clients involved in such
transactions.

Portfolio managers may also experience certain conflicts between their own
personal interests and the interests of the accounts they manage, including the
Portfolios. One potential conflict arises from the weighting methodology used in
determining bonuses, as described below, which may give a portfolio manager an
incentive to allocate a particular investment opportunity to a product that has
a greater weighting in determining his or her bonus. Another potential conflict
may arise if a portfolio manager were to have a larger personal investment in
one fund than he or she does in another, giving the portfolio manager an
incentive to allocate a particular investment opportunity to the fund in which
he or she holds a larger stake. Evergreen's Code of Ethics addresses potential
conflicts of interest that may arise in connection with a portfolio manager's
activities outside Evergreen by prohibiting, without prior written approval from
the Code of Ethics Compliance Officer, portfolio managers from participating in
investment clubs and from providing investment advice to, or managing, any
account or portfolio in which the portfolio manager does not have a beneficial
interest and that is not a client of Evergreen.

COMPENSATION

For Evergreen, portfolio managers' compensation consists primarily of a base
salary and an annual bonus. Each portfolio manager's base salary is reviewed
annually and adjusted based on consideration of various factors specific to the
individual portfolio manager, including, among others, experience, quality of
performance record and breadth of management responsibility, and based on a
comparison to competitive market data provided by external compensation
consultants. The annual bonus pool for portfolio managers and other employees
that are eligible to receive bonuses is determined based on the overall
profitability of the firm during the relevant year.

The annual bonus has an investment performance component, which accounts for a
majority of the annual bonus, and a subjective evaluation component. The amount
of the investment performance component is based on the pre-tax investment
performance of the funds and accounts managed by the individual (or one or more
appropriate composites of such funds and accounts) over the prior five years
compared to the performance over the same time period of an appropriate
benchmark (typically a broad-based index or universe of external funds or
managers with similar characteristics). See the information below relating to
other funds and accounts managed by the portfolio managers for the specific
benchmarks used in evaluating performance. In calculating the amount of the
investment performance component, performance for the most recent year is
weighted 25%, performance for the most recent three-year period is weighted 50%
and performance for the most recent five-year period is weighted 25%. In
general, the investment performance component is determined using a weighted
average of investment performance of each product managed by the portfolio
manager, with the weighting done based on the amount of assets the portfolio
manager is responsible for in each such product. For example, if a portfolio
manager was to manage a mutual fund with $400 million in assets and separate
accounts totaling $100 million in assets, performance with respect to the mutual
fund would be weighted 80% and performance with respect to the separate accounts
would be weighted 20%. In certain cases, portfolio weights within the composite
may differ from the actual weights as determined by assets. For example, a very
small fund's weight within a composite may be increased to create a meaningful
contribution.

To be eligible for an investment performance related bonus, the time-weighted
average percentile rank must be above the 50th percentile. A portfolio manager
has the opportunity to maximize the investment component of the incentive payout
by generating performance at or above the 25th percentile level.

In determining the subjective evaluation component of the bonus, each manager is
measured against predetermined objectives and evaluated in light of other
discretionary considerations. Objectives are set in several categories,
including teamwork, participation in various assignments, leadership, and
development of staff.


                                      B-9



For calendar year 2004, the investment performance component of each portfolio
manager's bonus will be determined based on comparisons to the benchmarks
(either to the individual benchmark or one or more composites of all or some of
such benchmarks) indicated below. The benchmarks may change for purposes of
calculating bonus compensation for calendar year 2005.

The investment performance component of the bonus of the portfolio manager for
TA IDEX Evergreen Health Care is determined based on comparisons to Lipper
Health/BioTech, Lipper Emerging Markets, Lipper International MultiCap Core,
Lipper International Small Cap, Lipper Global Small Cap Growth, Lipper Gold
Oriented Funds, and Callan Institutional International Equity composites.

The investment performance component of the bonus of the portfolio manager for
TA IDEX Evergreen International Small Cap is determined based on comparisons to
Lipper International Small Cap Growth, Lipper Global Small/Midcap Growth, Lipper
International MultiCap Core, Lipper Emerging Markets, Lipper Health Care, Lipper
Gold Oriented, and Callan International Equity composites.

Evergreen portfolio managers may also receive equity incentive awards
(non-qualified stock options and/or restricted stock) in Wachovia Corporation,
Evergreen's publicly traded parent company, based on their performance and/or
positions held. Equity incentive awards are made based on subjective review of
the factors that are considered in determining base salary and the annual bonus.

In addition, portfolio managers may participate, at their election, in various
benefits programs, including the following:

     -    medical, dental, vision and prescription benefits,

     -    life, disability and long-term care insurance,

     -    before-tax spending accounts relating to dependent care, health care,
          transportation and parking, and

     -    various other services, such as family counseling and employee
          assistance programs, prepaid or discounted legal services, health care
          advisory programs and access to discount retail services.

These benefits are broadly available to Evergreen employees. Senior level
employees, including many portfolio managers but also including many other
senior level executives, may pay more or less than employees that are not senior
level for certain benefits, or be eligible for, or required to participate in,
certain benefits programs not available to employees who are not senior level.
For example, only senior level employees above a certain compensation level are
eligible to participate in the Wachovia Corporation deferred compensation plan,
and certain senior level employees are required to participate in the deferred
compensation plan.

As of October 31, 2005, the portfolio manager did not beneficially own any
equity securities in the fund.

TA IDEX FEDERATED MARKET OPPORTUNITY

As of October 31, 2005, Steven J. Lehman, portfolio manager of the fund, also
managed two other registered investment companies with total assets of
approximately $3.113 billion. None of these had an advisory fee based on the
performance of the account.

As of October 31, 2005, as a general matter, certain conflicts of interest may
arise in connection with a portfolio manager's management of a fund's
investments, on the one hand, and the investments of other accounts for which
the portfolio manager is responsible, on the other. For example, it is possible
that the various accounts managed could have different investment strategies
that, at times, might conflict with one another to the possible detriment of the
fund. Alternatively, to the extent that the same investment opportunities might
be desirable for more than one account, possible conflicts could arise in
determining how to allocate them. Other potential conflicts might include
conflicts created by specific portfolio manager compensation arrangements, and
conflicts relating to selection of brokers or dealers to execute fund portfolio
trades and/or specific uses of commissions from fund portfolio trades ("soft
dollars"). The sub-adviser has adopted policies and procedures and has
structured the portfolio manager's compensation in a manner reasonably designed
to safeguard the fund from being negatively affected as a result of any such
potential conflicts.


                                      B-10



As of October 31, 2005, portfolio manager is paid a fixed base salary and a
variable annual incentive. Base salary is determined within a market competitive
position-specific salary range, based on the portfolio manager's experience and
performance. The annual incentive amount is determined based on multiple
performance criteria using a Balanced Scorecard methodology, and may be paid
entirely in cash, or in a combination of cash and stock of Federated Investors,
Inc. (Federated). There are four weighted performance categories in the Balanced
Scorecard. Investment Product Performance is the predominant factor. Of lesser
importance are: Leadership/Teamwork/Communication, Client Satisfaction and
Service, and Financial Success. The total Balanced Scorecard "score" is applied
against an annual incentive opportunity that is competitive in the market for
this portfolio manager role to determine the annual incentive payment.
Investment Product Performance is measured on a rolling 1, 3, and 5 calendar
year pre-tax total return basis vs. a designated benchmark, and on a rolling 3
and 5 calendar year pre-tax total return basis vs. a designated peer group of
comparable funds (e.g., funds in the same category as established by Lipper).
These performance periods are adjusted if the portfolio manager has been
managing the fund for less than five years; funds with less than one year of
performance history under the portfolio manager may be excluded. As noted above,
portfolio manager is also the portfolio manager for other accounts in addition
to the fund. Such other accounts may have different benchmarks. Mr. Lehman's
Investment Product Performance score is calculated based on the performance of
certain other accounts that he manages; included accounts are equally weighted.
Leadership/Teamwork/Communication is assessed by the Chief Investment Officer in
charge of the portfolio manager's group, with input from the portfolio manager's
co-workers. Client Satisfaction and Service is assessed by Federated's senior
management considering the quality, amount, and effectiveness of client support
activities, with input from sales management. Financial success is assessed to
tie the portfolio manager's bonus, in part, to Federated's overall financial
health. In making this assessment, Federated's senior management considers the
following factors: growth of the portfolio manager's funds (assets under
management and revenues), net fund flows relative to industry trends for the
product category, supporting the appropriate number of funds to improve
efficiency and enhance strong fund performance, growth in assets under
management and revenues attributable to the portfolio manager's Department, and
Departmental expense management. Although a number of these factors are
quantitative in nature, the overall assessment for this category is based on
management's judgment. The financial success score is lowered if Federated's
overall financial targets are not achieved.

As of October, 31, 2005, the portfolio manager did not beneficially own any
equity securities in the fund.

TA IDEX GREAT COMPANIES - AMERICA (SM), TA IDEX GREAT COMPANIES - TECHNOLOGY
(SM) AND TA IDEX TEMPLETON GREAT COMPANIES GLOBAL

As of October 31, 2005, James Huguet, Gerald Bollman, Matthew Stephani and Derek
Hong, the portfolio managers of the funds, also managed three other registered
investment companies with total assets of approximately $726 million, and 30
other accounts with total assets of approximately $13.8 million. None of these
accounts has an advisory fee based on the performance of the account.

As of October 31, 2005, the Investment Committee of Great Companies, L.L.C., the
sub-adviser for the funds, managed three different investment strategies.
Generally, the accounts with similar strategies are all managed by the committee
using the same objective, approach and philosophy. Great Companies has
procedures in place to minimize any conflicts of interest. There may be some
potential conflicts of interest that arise because of managing multiple
strategies and having different types of clients. Managing several portfolios
may lead to the committee concentrating on one strategy over another. While the
committee oversees all of the strategies, different portfolio managers spend the
majority of their time concentrating on different strategies. Each strategy
should receive an equal amount of attention. At times, there may be large
contributions to or large distributions from the funds. This will lead to
purchases or sales of securities within those funds. The separate accounts
managed by the portfolio managers with the same strategy as the funds may not
have these additional transactions. Therefore, these separate accounts may or
may not benefit from these additional transactions. Whenever possible, block
trades are placed an all clients receive an average price. There are some
accounts that have instructed the firm to direct trades through a particular
broker. In these instances, a separate, non-simultaneous transaction will be
placed. The account may or may not be receiving the best execution for these
directed trades.

As of October 31, 2005, portfolio manager James Huguet's compensation consisted
of profit sharing and portfolio managers Gerald Bollman's, Matthew Stephani's
and Derek Hong's compensation consisted of a salary and a bonus based on the
profitability of Great Companies, L.L.C.

As of October 31, 2005, portfolio managers James Huguet and Gerald Bollman did
not beneficially own any equity securities in the funds. As of October 31, 2005,
portfolio managers Matthew Stephani and Derek Hong each beneficially owned
between $1 and $10,000 in equity securities in the funds.


                                      B-11



TA IDEX TEMPLETON GREAT COMPANIES GLOBAL-

As of October 31, 2005, Tina Hellmer, the portfolio manager of the fund also
managed 10 other registered investment companies with total assets of
approximately $1218.8 million, 21 other pooled investment vehicles with total
assets of approximately $3505.8 million, and 19 other accounts with total assets
of approximately $6280.3 million

As of October 31, 2005, Tony Docal, the portfolio manager of the fund also
managed 9 other registered investment companies with total assets of
approximately $8000.4 million, 36 other pooled investment vehicles with total
assets of approximately $6252.7 million, and 23 other accounts with total assets
of approximately $3591.4 million

As of October 31, 2005, Gary Motyl, the portfolio manager of the fund also
managed 28 other registered investment companies with total assets of
approximately $8766.4 million, 28 other pooled investment vehicles with total
assets of approximately $4870.0 million, and 18 other accounts with total assets
of approximately $4400.2 million.

CONFLICTS OF INTEREST

The management of multiple funds and accounts may also give rise to potential
conflicts of interest if the funds and other accounts have different objectives,
benchmarks, time horizons, and fees as the portfolio manager must allocate his
or her time and investment ideas across multiple funds and accounts. The manager
seeks to manage such competing interests for the time and attention of portfolio
managers by having portfolio managers focus on a particular investment
discipline. Most other accounts managed by a portfolio manager are managed using
the same investment strategies that are used in connection with the management
of the Fund. Accordingly, portfolio holdings, position sizes, and industry and
sector exposures tend to be similar across similar portfolios, which may
minimize the potential for conflicts of interest. The separate management of the
trade execution and valuation functions from the portfolio management process
also helps to reduce potential conflicts of interest. However, securities
selected for funds or accounts other than the Fund may outperform the securities
selected for the Fund. Moreover, if a portfolio manager identifies a limited
investment opportunity that may be suitable for more than one fund or other
account, the Fund may not be able to take full advantage of that opportunity due
to an allocation of that opportunity across all eligible funds and other
accounts. The manager seeks to manage such potential conflicts by using
procedures intended to provide a fair allocation of buy and sell opportunities
among funds and other accounts.

The structure of a portfolio manager's compensation may give rise to potential
conflicts of interest. A portfolio manager's base pay and bonus tend to increase
with additional and more complex responsibilities that include increased assets
under management. As such, there may be an indirect relationship between a
portfolio manager's marketing or sales efforts and his or her bonus.

Finally, the management of personal accounts by a portfolio manager may give
rise to potential conflicts of interest. While the funds and the manager have
adopted a code of ethics which they believe contains provisions reasonably
necessary to prevent a wide range of prohibited activities by portfolio managers
and others with respect to their personal trading activities, there can be no
assurance that the code of ethics addresses all individual conduct that could
result in conflicts of interest.

The manager and the Fund have adopted certain compliance procedures that are
designed to address these, and other, types of conflicts. However, there is no
guarantee that such procedures will detect each and every situation where a
conflict arises.

PORTFOLIO MANAGER COMPENSATION STRUCTURE

Templeton Investment Counsel, LLC seeks to maintain a compensation program that
is competitively positioned to attract, retain and motivate top-quality
investment professionals. Portfolio managers receive a base salary, a cash
incentive bonus opportunity, an equity compensation opportunity, and a benefits
package. Portfolio manager compensation is reviewed annually and the level of
compensation is based on individual performance, the salary range for a
portfolio manager's level of responsibility and Franklin Templeton guidelines.
Portfolio managers are provided no financial incentive to favor one fund or
account over another. Each portfolio manager's compensation consists of the
following three elements:

     BASE SALARY Each portfolio manager is paid a base salary.

     ANNUAL BONUS Annual bonuses are structured to align the interests of the
     portfolio manager with those of the Fund's shareholders. Each portfolio
     manager is eligible to receive an annual bonus. Bonuses generally are split


                                      B-12



     between cash (50% to 65%) and restricted shares of Franklin Resources stock
     (17.5% to 25%) and mutual fund shares (17.5% to 25%). The deferred
     equity-based compensation is intended to build a vested interest of the
     portfolio manager in the financial performance of both Franklin Resources
     and mutual funds advised by the manager. The bonus plan is intended to
     provide a competitive level of annual bonus compensation that is tied to
     the portfolio manager achieving consistently strong investment performance,
     which aligns the financial incentives of the portfolio manager and Fund
     shareholders. The Chief Investment Officer of the manager and/or other
     officers of the manager, with responsibility for the Fund, have discretion
     in the granting of annual bonuses to portfolio managers in accordance with
     Franklin Templeton guidelines. The following factors are generally used in
     determining bonuses under the plan:

     -    Investment performance. Primary consideration is given to the historic
          investment performance over the 1, 3 and 5 preceding years of all
          accounts managed by the portfolio manager. The pre-tax performance of
          each fund managed is measured relative to a relevant peer group and/or
          applicable benchmark as appropriate.

     -    Research Where the portfolio management team also has research
          responsibilities, each portfolio manager is evaluated on the number
          and performance of recommendations over time, productivity and quality
          of recommendations, and peer evaluation.

     -    Non-investment performance. For senior portfolio managers, there is a
          qualitative evaluation based on leadership and the mentoring of staff.

     -    Responsibilities. The characteristics and complexity of funds managed
          by the portfolio manager are factored in the manager's appraisal.

     ADDITIONAL LONG-TERM EQUITY-BASED COMPENSATION Portfolio managers may also
     be awarded restricted shares or units of Franklin Resources stock or
     restricted shares or units of one or more mutual funds, and options to
     purchase common shares of Franklin Resources stock. Awards of such deferred
     equity-based compensation typically vest over time, so as to create
     incentives to retain key talent.

Portfolio managers also participate in benefit plans and programs available
generally to all employees of Templeton Investment Counsel, LLC.

TA IDEX JANUS GROWTH

As of October 31, 2005, Ed Keely, the portfolio manager of the fund, managed two
other registered investment companies with total assets of approximately $2.72
billion and seven other accounts with total assets of approximately $479
million. None of these accounts has an advisory fee based on the performance of
the account.

As of October 31, 2005, the portfolio manager may have managed other accounts
with investment strategies similar to the fund. Fees may have varied among these
accounts and the portfolio manager may personally invest in some but not all of
these accounts. These factors could create conflicts of interest because the
portfolio manager may have incentives to favor certain accounts over others,
resulting in other accounts outperforming the fund. A conflict may also exist if
the portfolio manager identified a limited investment opportunity that may be
appropriate for more than one account, but the fund is not able to take full
advantage of that opportunity due to the need to allocate that opportunity among
multiple accounts. In addition, the portfolio manager may execute transactions
for another account that may adversely impact the value of securities held by
the fund. However, these risks may be mitigated by the fact that accounts with
like investment strategies managed by the portfolio manager may be generally
managed in a similar fashion, subject to exceptions to account for particular
investment restrictions or policies applicable only to certain accounts,
portfolio holdings that may be transferred in-kind when an account is opened,
differences in cash flows and account sizes, and similar factors.

The following describes the structure and method of calculating, the portfolio
manager's compensation as of December 31, 2005. The portfolio manager is
compensated by Janus Capital for managing the fund and any other funds,
portfolios or accounts managed by the portfolio manager (collectively, the
"Managed Funds") through two components: fixed compensation and variable
compensation.

Fixed Compensation: Fixed compensation is paid in cash and is comprised of an
annual base salary and an additional amount calculated based on factors such as
the complexity of managing funds and other accounts, scope of responsibility
(including assets under management), tenure and long-term performance as a
portfolio manager.


                                      B-13



Variable Compensation: Variable compensation is paid in the form of cash and
long-term incentive awards (consisting of Janus Capital Group Inc. restricted
stock, stock options and a cash deferred award aligned with Janus fund shares).
Variable compensation is structured to pay the portfolio manager primarily on
individual performance, with additional compensation available for team
performance and a lesser component based on net asset flows in the Managed
Funds. Variable compensation is based on pre-tax performance of the Managed
Funds.

The portfolio manager's individual performance compensation is determined by
applying a multiplier tied to the Managed Funds' aggregate asset-weighted Lipper
peer group performance ranking for one- and three-year performance periods, if
applicable, with a greater emphasis on three year results. The multiplier is
applied against the portfolio manager's fixed compensation. The portfolio
manager is also eligible to receive additional individual performance
compensation if the Managed Funds achieve a certain rank in their Lipper peer
performance groups in each of three, four or five consecutive years. The
portfolio manager's compensation is also subject to reduction in the event that
the Managed Funds incur material negative absolute performance, and the
portfolio manager will not be eligible to earn any individual performance
compensation if the Managed Funds' performance does not meet or exceed a certain
ranking in their Lipper peer performance group. The portfolio manager is also
eligible to participate with other Janus equity portfolio managers in a team
performance compensation pool which is derived from a formula tied to the team's
aggregate asset-weighted Lipper peer group performance ranking for the one-year
performance period. Such compensation is then allocated among eligible
individual equity portfolio managers at the discretion of Janus Capital. No team
performance compensation is paid to any equity portfolio manager if the
aggregate asset-weighted team performance for the one-year period does not meet
or exceed a certain rank in the relevant Lipper peer group. The portfolio
manager may elect to defer payment of a designated percentage of fixed
compensation and/or up to all variable compensation in accordance with the Janus
Executive Income Deferral Program. The fund's Lipper peer group for compensation
purposes is the Large-Cap Growth Funds.

As of October 31, 2005, the portfolio manager beneficially owned 90,886.596
shares of the fund.

TA IDEX JENNISON GROWTH

As of October 31, 2005, Michael Del Balso, a portfolio manager of the fund, also
managed 16 other registered investment companies with total assets of
approximately $10.7 billion, five other pooled investment vehicles with total
assets of approximately $1.5 billion, and 17 other accounts with total assets of
approximately $1.37 billion. None of these had an advisory fee based on the
performance of the accounts. As of October 31, 2005, Spiros Segalas, another
portfolio manager of TA IDEX Jennison Growth, also managed 16 other registered
investment companies with total assets of approximately $19.4 billion, two other
pooled investment vehicles with total assets of approximately $290 million, and
nine other accounts with total assets of approximately $2.77 billion. None of
these had an advisory fee based on the performance of the accounts. As of
October 31, 2005, Blair A. Boyer, another portfolio manager of TA IDEX Jennison
Growth, also managed four other registered investment companies with total
assets of approximately $4.3 billion, four other pooled investment vehicles with
total assets of approximately $395 million, and 19 other accounts with total
assets of approximately $2.06 billion. None of these had an advisory fee based
on the performance of the accounts. In managing other portfolios (including
affiliated accounts) certain potential conflicts of interest may arise.

As of October 31, 2005, potential conflicts include, for example, conflicts
among investment strategies, conflicts in the allocation of investment
opportunities, or conflicts due to different fees. As part of its compliance
program, Jennison has adopted policies and procedures that seek to address and
minimize the effects of these conflicts. Jennison's portfolio managers typically
manage multiple accounts. These accounts may include, among others, mutual
funds, separately managed advisory accounts (assets managed on behalf of
institutions such as pension funds, colleges and universities, foundations),
commingled trust accounts, affiliated single client and commingled insurance
separate accounts, model nondiscretionary portfolios, and model portfolios used
for wrap fee programs. Portfolio managers make investment decisions for each
portfolio based on the investment objectives, policies, practices and other
relevant investment considerations that the managers believe are applicable to
that portfolio. Consequently, portfolio managers may recommend the purchase (or
sale) of certain securities for one portfolio and not another portfolio.
Securities purchased in one portfolio may perform better than the securities
purchased for another portfolio. Similarly, securities sold from one portfolio
may result in better performance if the value of that security declines.
Generally, however, portfolios in a particular product strategy (e.g., large cap
growth equity) with similar objectives are managed similarly. Accordingly,
portfolio holdings, industry and sector exposure tend to be similar across a
group of accounts in a strategy that have similar objectives, which tend to
minimize the potential for conflicts of interest. While these accounts have many
similarities, the investment performance of each account will be different
primarily due to differences in guidelines, fees, expenses and cash flows. In
addition, Jennison has adopted trade aggregation and allocation procedures that
seek to treat all clients (including affiliated accounts) fairly and equitably.
These policies and procedures address the allocation of


                                      B-14



limited investment opportunities, such as IPOs and the allocation of
transactions across multiple accounts. Currently, while no equity accounts under
Jennison's management have performance fees, some accounts have higher fees than
others. These differences may give rise to a potential conflict that a portfolio
manager may allocate more time to the management of one account over another.
While Jennison does not monitor the specific amount of time that a portfolio
manager spends on a single portfolio, senior Jennison personnel periodically
review the performance of Jennison's portfolio managers as well as periodically
assess whether the portfolio manager has adequate resources to effectively
manage the accounts assigned to that portfolio manager. Jennison also believes
that its compensation structure tends to mitigate this conflict.

As of October 31, 2005, the portfolio managers' compensation consisted of a base
salary and a discretionary cash bonus. In general, the cash bonus comprises the
majority of the compensation for investment professionals. The portfolio
managers' total compensation is determined through a substantive process that
evaluates numerous qualitative and quantitative factors. There is no particular
weighting or formula for considering the factors. Some portfolio managers may
manage or contribute ideas to more than one product strategy and are evaluated
accordingly. The following factors will be reviewed for all of the fund
portfolio managers: one and three year pre-tax investment performance of
groupings of accounts (a "Composite") relative to pre-determined passive indices
and industry peer group data for the product strategy (e.g., large cap growth,
large cap value) for which the portfolio manager is responsible; historical and
long-term business potential of the product strategies; qualitative factors such
as teamwork and responsiveness; and other factors such as experience and other
responsibilities such as being a team leader or supervisor may also affect an
investment professional's total compensation.

As of October 31, 2005, the portfolio managers did not beneficially own any
equity securities in the fund.

TA IDEX JPMORGAN INTERNATIONAL BOND

As of October 31, 2005, Julian Le Beron, portfolio manager of the fund, manages
two other registered investment companies with total assets of approximately
$1.2 billion, seven other pooled investment vehicles with total assets of
approximately $1.7 billion and six other accounts with total assets of
approximately $685 million. None of these had an advisory fee based on the
performance of the account.

As of October 31, 2005, the potential for conflicts of interest exists when
portfolio managers manage other accounts with similar investment objectives and
strategies as the fund ("Similar Accounts"). Potential conflicts may include,
for example, conflicts between investment strategies and conflicts in the
allocation of investment opportunities. Responsibility for managing the
sub-adviser's clients' portfolios is organized according to investment
strategies within asset classes. Generally, client portfolios with similar
strategies are managed by portfolio managers in the same portfolio management
group using the same objectives, approach and philosophy. Therefore, portfolio
holdings, relative position sizes and industry and sector exposures tend to be
similar across similar portfolios, which minimizes the potential for conflicts
of interest. The sub-adviser may receive more compensation with respect to
certain Similar Accounts than that received with respect to the fund or may
receive compensation based in part on the performance of certain Similar
Accounts. This may create a potential conflict of interest for the sub-adviser
or its portfolio managers by providing an incentive to favor these Similar
Accounts when, for example, placing securities transactions. In addition, the
sub-adviser could be viewed as having a conflict of interest to the extent that
the sub-adviser or an affiliate has a proprietary investment in Similar
Accounts, the portfolio managers have personal investments in Similar Accounts
or the Similar Accounts are investment options in the sub-adviser's employee
benefit plans. Potential conflicts of interest may arise with both the
aggregation and allocation of securities transactions and allocation of limited
investment opportunities. Allocations of aggregated trades, particularly trade
orders that were only partially completed due to limited availability, and
allocation of investment opportunities generally, could raise a potential
conflict of interest, as the sub-adviser may have an incentive to allocate
securities that are expected to increase in value to favored accounts. Initial
public offerings, in particular, are frequently of very limited availability.
The sub-adviser may be perceived as causing accounts it manages to participate
in an offering to increase the sub-adviser's overall allocation of securities in
that offering. A potential conflict of interest also may be perceived to arise
if transactions in one account closely follow related transactions in a
different account, such as when a purchase increases the value of securities
previously purchased by another account, or when a sale in one account lowers
the sale price received in a sale by a second account. If the sub-adviser
manages accounts that engage in short sales of securities of the type in which
the fund invests, the sub-adviser could be seen as harming the performance of
the fund for the benefit of the accounts engaging in short sales if the short
sales cause the market value of the securities to fall. The sub-adviser has
policies and procedures designed to manage these conflicts described above such
as allocation of investment opportunities to achieve fair and equitable
allocation of investment opportunities among its clients over time. For example:
Orders for the same equity security are aggregated on a continual basis
throughout each trading day consistent with the sub-adviser's duty of best
execution for its clients. If aggregated trades are fully executed, accounts


                                      B-15


participating in the trade will be allocated their pro rata share on an average
price basis. Partially completed orders generally will be allocated among the
participating accounts on a pro-rata average price basis, subject to certain
limited exceptions. For example, accounts that would receive a de minimis
allocation relative to their size may be excluded from the order. Another
exception may occur when thin markets or price volatility require that an
aggregated order be completed in multiple executions over several days. If
partial completion of the order would result in an uneconomic allocation to an
account due to fixed transaction or custody costs, the sub-adviser may exclude
small orders until 50% of the total order is completed. Then the small orders
will be executed. Following this procedure, small orders will lag in the early
execution of the order, but will be completed before completion of the total
order. Purchases of money market instruments and fixed income securities cannot
always be allocated pro-rata across the accounts with the same investment
strategy and objective. However, the sub-adviser attempts to mitigate any
potential unfairness by basing non-pro rata allocations upon an objective
predetermined criteria for the selection of investments and a disciplined
process for allocating securities with similar duration, credit quality and
liquidity in the good faith judgment of the sub-adviser so that fair and
equitable allocation will occur over time.

As of October 31, 2005, the portfolio manager's total compensation program
includes a base salary fixed from year to year and a variable performance bonus
consisting of cash incentives and restricted stock and, in some cases, mandatory
deferred compensation. These elements reflect individual performance and the
performance of the sub-adviser's business as a whole. Each portfolio manager's
performance is formally evaluated annually based on a variety of factors
including the aggregate size and blended performance of the portfolios such
portfolio manager manages. Individual contribution relative to client goals
carries the highest impact. Portfolio manager compensation is primarily driven
by meeting or exceeding clients' risk and return objectives, relative
performance to competitors or competitive indices and compliance with firm
policies and regulatory requirements. In evaluating each portfolio manager's
performance with respect to the mutual funds he manages, the funds' pre-tax
performance is compared to the appropriate market peer group and to each fund's
benchmark index listed in the fund's prospectus over one, three and five year
periods (or such shorter time as the portfolio manager has managed the fund).
Investment performance is generally more heavily weighted to the long-term.
Stock awards are granted as part of an employee's annual performance bonus and
comprise from 0% to 35% of a portfolio manager's total award. As the level of
incentive compensation increases, the percentage of compensation awarded in
restricted stock also increases. Certain investment professionals may also be
subject to a mandatory deferral of a portion of their compensation into
proprietary mutual funds based on long-term sustained investment performance.

As of October 31, 2005, the portfolio manager did not beneficially own any
equity securities in the fund.

TA IDEX J.P. MORGAN MID-CAP VALUE

As of October 31, 2005, Jonathan K.L. Simon, portfolio manager of the fund,
managed 13 other registered investment companies with total assets of
approximately $10.64 billion, 2 other pooled investment vehicles with total
assets of approximately $2.58 billion and 27other accounts with total assets of
approximately $3.26 billion. Lawrence Playford, also a portfolio manager of the
fund, managed 7other registered investment companies with total assets of
approximately $9.07billion, 0 other pooled investment vehicles with total assets
of approximately $0 billion and 27other accounts with total assets of
approximately $ 3.40 billion. None of these had an advisory fee based on the
performance of the account.

As of October 31, 2005, the potential for conflicts of interest exists when
portfolio managers manage other accounts with similar investment objectives and
strategies as the fund ("Similar Accounts"). Potential conflicts may include,
for example, conflicts between investment strategies and conflicts in the
allocation of investment opportunities. Responsibility for managing the
sub-adviser's clients' portfolios is organized according to investment
strategies within asset classes. Generally, client portfolios with similar
strategies are managed by portfolio managers in the same portfolio management
group using the same objectives, approach and philosophy. Therefore, portfolio
holdings, relative position sizes and industry and sector exposures tend to be
similar across similar portfolios, which minimizes the potential for conflicts
of interest. The sub-adviser may receive more compensation with respect to
certain Similar Accounts than that received with respect to the fund or may
receive compensation based in part on the performance of certain Similar
Accounts. This may create a potential conflict of interest for the sub-adviser
or its portfolio managers by providing an incentive to favor these Similar
Accounts when, for example, placing securities transactions. In addition, the
sub-adviser could be viewed as having a conflict of interest to the extent that
the sub-adviser or an affiliate has a proprietary investment in Similar
Accounts, the portfolio managers have personal investments in Similar Accounts
or the Similar Accounts are investment options in the sub-adviser's employee
benefit plans. Potential conflicts of interest may arise with both the
aggregation and allocation of securities transactions and allocation of limited
investment opportunities. Allocations of aggregated trades, particularly trade
orders that were only partially completed due to limited availability, and
allocation of investment opportunities generally, could raise a potential
conflict of interest, as the sub-adviser may have an incentive to allocate
securities that are expected to increase in value to favored accounts. Initial
public offerings, in particular, are frequently of


                                      B-16



very limited availability. The sub-adviser may be perceived as
causing accounts it manages to participate in an offering to increase the
sub-adviser's overall allocation of securities in that offering. A potential
conflict of interest also may be perceived to arise if transactions in one
account closely follow related transactions in a different account, such as when
a purchase increases the value of securities previously purchased by another
account, or when a sale in one account lowers the sale price received in a sale
by a second account. If the sub-adviser manages accounts that engage in short
sales of securities of the type in which the fund invests, the sub-adviser could
be seen as harming the performance of the fund for the benefit of the accounts
engaging in short sales if the short sales cause the market value of the
securities to fall. The sub-adviser has policies and procedures designed to
manage these conflicts described above such as allocation of investment
opportunities to achieve fair and equitable allocation of investment
opportunities among its clients over time. For example: Orders for the same
equity security are aggregated on a continual basis throughout each trading day
consistent with the sub-adviser's duty of best execution for its clients. If
aggregated trades are fully executed, accounts participating in the trade will
be allocated their pro rata share on an average price basis. Partially completed
orders generally will be allocated among the participating accounts on a
pro-rata average price basis, subject to certain limited exceptions. For
example, accounts that would receive a de minimis allocation relative to their
size may be excluded from the order. Another exception may occur when thin
markets or price volatility require that an aggregated order be completed in
multiple executions over several days. If partial completion of the order would
result in an uneconomic allocation to an account due to fixed transaction or
custody costs, the sub-adviser may exclude small orders until 50% of the total
order is completed. Then the small orders will be executed. Following this
procedure, small orders will lag in the early execution of the order, but will
be completed before completion of the total order. Purchases of money market
instruments and fixed income securities cannot always be allocated pro-rata
across the accounts with the same investment strategy and objective. However,
the sub-adviser attempts to mitigate any potential unfairness by basing non-pro
rata allocations upon an objective predetermined criteria for the selection of
investments and a disciplined process for allocating securities with similar
duration, credit quality and liquidity in the good faith judgment of the
sub-adviser so that fair and equitable allocation will occur over time.

As of October 31, 2005, the portfolio manager's total compensation program
includes a base salary fixed from year to year and a variable performance bonus
consisting of cash incentives and restricted stock and, in some cases, mandatory
deferred compensation. These elements reflect individual performance and the
performance of the sub-adviser's business as a whole. Each portfolio manager's
performance is formally evaluated annually based on a variety of factors
including the aggregate size and blended performance of the portfolios such
portfolio manager manages. Individual contribution relative to client goals
carries the highest impact. Portfolio manager compensation is primarily driven
by meeting or exceeding clients' risk and return objectives, relative
performance to competitors or competitive indices and compliance with firm
policies and regulatory requirements. In evaluating each portfolio manager's
performance with respect to the mutual funds he manages, the funds' pre-tax
performance is compared to the appropriate market peer group and to each fund's
benchmark index listed in the fund's prospectus over one, three and five year
periods (or such shorter time as the portfolio manager has managed the fund).
Investment performance is generally more heavily weighted to the long-term.
Stock awards are granted as part of an employee's annual performance bonus and
comprise from 0% to 35% of a portfolio manager's total award. As the level of
incentive compensation increases, the percentage of compensation awarded in
restricted stock also increases. Certain investment professionals may also be
subject to a mandatory deferral of a portion of their compensation into
proprietary mutual funds based on long-term sustained investment performance.

As of October 31, 2005, the portfolio manager did not beneficially own any
equity securities in the fund.

TA IDEX MARSICO GROWTH
TA IDEX MARSICO INTERNATIONAL GROWTH

As of October 31, 2005, Tom Marsico, portfolio manager of the funds, also
managed approximately 29 registered accounts with assets of over $21.8 billion
other funds, approximately 11 pooled accounts with assets of over $1 billion and
approximately 167 other accounts with assets of over $17 billion. None of these
had an advisory fee based on the performance of the accounts.

As of October 31, 2005, Jim Gendelman, portfolio manager of TA IDEX Marsico
International Growth, also managed approximately 14 other registered investment
companies with total assets of $4,110,913,000, 0 accounts for other pooled
investment vehicles with total assets of $0, and 2 other accounts with total
assets of $143,777,000, managed other funds. None of these had an advisory fee
based on the performance of the accounts.

As of October 31, 2005, the portfolio managers typically managed multiple
accounts. These accounts may include, among others, mutual funds, separate
accounts (assets managed on behalf of institutions such as pension funds,
colleges and universities, foundations, and accounts managed on behalf of
individuals), and commingled trust accounts.


                                      B-17



Portfolio managers make investment decisions for each portfolio, including the
fund, based on the investment objectives, policies, practices and other relevant
investment considerations that the managers believe are applicable to that
portfolio. Consequently, portfolio managers may purchase (or sell) securities
for one portfolio and not another portfolio, or may take similar actions for
different portfolios at different times. Consequently, the mix of securities
purchased in one portfolio may perform better than the mix of securities
purchased for another portfolio. Similarly, the sale of securities from one
portfolio may cause that portfolio to perform better than others if the value of
those securities decline. Potential conflicts of interest may also arise when
allocating and/or aggregating trades. The fund's sub-adviser often aggregates
into a single trade order several individual contemporaneous client trade orders
in a single security. Under the sub-adviser's trade management policy and
procedures, when trades are aggregated on behalf of more than one account, such
transactions will be allocated to all participating client accounts in a fair
and equitable manner. With respect to IPOs and other syndicated or limited
offerings, it is the sub-adviser's policy to seek to assure that over the long
term, accounts with the same or similar investment objectives will receive an
equitable opportunity to participate meaningfully and will not be unfairly
disadvantaged. To deal with such situations, the sub-adviser has adopted
policies and procedures for allocating such transactions across multiple
accounts. The sub-adviser's policies also seek to ensure that portfolio managers
do not systematically allocate other types of trades in a manner that would be
more beneficial to one account than another. The sub-adviser's compliance
department monitors transactions made on behalf of multiple clients to seek to
assure adherence to its policies. As discussed above, the sub-adviser has
adopted and implemented policies and procedures that seek to minimize potential
conflicts of interest that may arise as a result of a portfolio manager advising
multiple accounts. In addition, the sub-adviser monitors a variety of areas,
including compliance with primary fund guidelines, the allocation of securities,
and compliance with its Code of Ethics.

As of October 31, 2005, the portfolio managers are generally subject to the
compensation structure applicable to all the sub-adviser's employees. As such,
the portfolio managers' compensation consists of a base salary (reevaluated at
least annually), and periodic cash bonuses. Bonuses are typically based on two
primary factors: (1) the sub-adviser's overall profitability for the period, and
(2) individual achievement and contribution. Portfolio manager compensation
takes into account, among other factors, the overall performance of all accounts
for which the manager provides investment advisory services. Portfolio managers
do not receive special consideration based on the performance of particular
accounts. Exceptional individual efforts are rewarded through greater
participation in the bonus pool. Portfolio manager compensation comes solely
from the sub-adviser. Although the sub-adviser may compare account performance
with relevant benchmark indices, portfolio manager compensation is not directly
tied to achieving any pre-determined or specified level of performance. In order
to encourage a long-term time horizon for managing portfolios, the sub-adviser
seeks to evaluate the portfolio manager's individual performance over periods
longer than the immediate compensation period. In addition, portfolio managers
are compensated based on other criteria, including effectiveness of leadership
within the sub-adviser's Investment Team, contributions to the sub-adviser's
overall investment performance, discrete securities analysis, and other factors.
In addition to his salary and bonus, Mr. Marsico may participate in other
sub-adviser benefits to the same extent and on the same basis as other employees
of the sub-adviser.

As of October 31, 2005, neither of the portfolio managers beneficially owned
equity securities in the fund.

TA IDEX MERCURY GLOBAL ALLOCATION

As of October 31, 2005, Dennis W. Stattman and Dan Chamby, portfolio managers of
the fund, also managed three other registered investment companies with total
assets of approximately $16.05 billion (none of which had an advisory fee based
on the performance of the account) and two other pooled investment vehicles with
total assets of approximately $3.51 billion (one of which with total assets of
approximately $213 million had an advisory fee based on the performance of the
account).

As of October 31, 2005, certain conflicts of interest may arise in connection
with the management of multiple portfolios. Potential conflicts could include,
for example, conflicts in the allocation of investment opportunities and
aggregated trading. The sub-adviser has adopted policies and procedures that are
designed to minimize the effects of these conflicts.

As of October 31, 2005, the elements of total compensation for the portfolio
managers are base salary, annual performance-based cash and stock compensation
(cash and stock bonus) and other benefits. Portfolio manager compensation levels
fluctuate - both up and down - with the relative investment performance of the
portfolios that they manage. The portfolio managers' fixed base salaries
represent a relatively small portion of their total compensation. This approach
serves to enhance the motivational value of the performance-based (and therefore
variable) compensation elements of the compensation program. The sub-adviser
believes that the best interests of investors are served by recruiting and
retaining exceptional asset management talent and managing their compensation
with a consistent and disciplined framework that emphasizes pay for performance
in the context of an intensely competitive market for talent. To


                                      B-18



that end, the portfolio managers' incentive compensation is based on a formulaic
compensation program which includes investment performance relative to
appropriate competitors or benchmarks over 1-, 3- and 5-year performance periods
and a measure of operational efficiency. If a portfolio manager's tenure is less
than 5-years, performance periods will reflect time in position. Portfolio
managers are compensated based on products that they manage. With respect to the
competitive universe for the fund, the sub-adviser intends to review the fund's
performance in comparison to the various Lipper global equity fund
classifications. A smaller discretionary element of planning and implementation,
quality of client service, market share, corporate reputation, capital
allocation, compliance and risk control, leadership, workforce diversity,
supervision, technology and innovation. The sub-adviser also considers the
extent to which individuals exemplify and foster Merrill Lynch's principles of
Client Focus, Respect for the Individual, Teamwork, Responsible Citizenship and
Integrity. All factors are considered collectively by the sub-adviser's
management. Performance-based compensation is distributed to portfolio managers
in a combination of cash and stock. Typically, the cash bonus, when combined
with base salary, represents more than 60% of total compensation for portfolio
managers. A portion of the dollar value of the total annual performance-based
bonus is paid in restricted shares of Merrill Lynch & Co., Inc. (herein, the
"Company") stock. Paying a portion of annual bonuses in stock puts compensation
earned by a portfolio manager for a given year "at risk" based on the Company's
ability to sustain and improve its performance over future periods. The ultimate
value of stock bonuses is dependent on future Company stock price performance.
As such, the stock bonus aligns each portfolio manager's financial interests
with those of the Company's shareholders and encourages a balance between
short-term goals and long-term strategic objectives. The sub-adviser strongly
believes that providing a significant portion of competitive performance-based
compensation in stock is in the best interests of investors and shareholders.
This approach ensures that portfolio managers participate as shareholders in
both the "downside risk" and "upside opportunity" of the Company's performance.
Portfolio managers therefore have a direct incentive to protect the Company's
reputation for integrity. Portfolio managers who meet relative investment
performance and financial management objectives during a performance year are
eligible to participate in a deferred cash program. Awards under this program
are in the form of deferred cash that may be benchmarked to a menu of the
sub-adviser's funds (including their own fund) during a five-year vesting
period. The deferred cash program aligns the interests of participating
portfolio managers with the investment results of the sub-adviser's products and
promotes continuity of successful portfolio management teams. Portfolio managers
are also eligible to participate in broad-based plans generally to Company
employees, including broad-based retirement, 401(k), health, and other
management teams.

As of October 31, 2005, neither portfolio manager beneficially owned any equity
securities in the fund.

TA IDEX MERCURY LARGE CAP VALUE

As of October 31, 2005, Robert Doll, portfolio manager of the fund, also managed
17 other registered investment companies with total assets of approximately $8
billion (none of which had an advisory fee based on the performance of the
account), 6 other pooled investment vehicles with total assets of approximately
$3.6 billion, and 4 separate accounts with assets of over $770 million.

PORTFOLIO MANAGER COMPENSATION OVERVIEW

The portfolio manager compensation program of Merrill Lynch Investment Managers
and its affiliates (collectively, herein "MLIM") is critical to MLIM's ability
to attract and retain the most talented asset management professionals. This
program ensures that compensation is aligned with maximizing investment returns
and it provides a completive pay opportunity for competitive performance.

Compensation Program

The elements of total compensation for MLIM portfolio managers are: fixed base
salary, annual performance-based cash and stock compensation (cash and stock
bonus) and other benefits. MLIM has balanced these components of pay to provide
portfolio managers with a powerful incentive to achieve consistently superior
investment performance. By design, portfolio manager compensation levels
fluctuate - both up and down - with the relative investment performance of the
portfolios that they manage.

Base Salary

Under the MLIM approach, like that of many asset management firms, base salaries
represent a relatively small portion of a portfolio manager's total
compensation. This approach serves to enhance the motivational value of the
performance-based (and therefore variable compensation elements of the
compensation program.


                                      B-19



Performance-Based Compensation

MLIM believes that the best interests of investors are served by recruiting and
retaining exceptional asset management talent and managing their compensation
within a consistent and disciplines framework that emphasizes pay for
performance in the context of an intensely competitive market for talent. To
that end, the portfolio manager incentive compensation is based on a formulaic
compensation program.

MLIM's formulaic portfolio manager compensation program includes: pre-tax
investment performance relative to appropriate competitors or benchmarks over
1-, 3-, and 5-year performance periods and a measure of operational efficiency.
If a portfolio manager's tenure is less than 5-years, performance periods will
reflect time in position. For these purposes, the investment performance of the
Growth Fund is compared to the Lipper Multi-Cap Growth classification and the
performance of the Value Fund is compared to the Lipper Multi-Cap Value
classification and the performance of the Core Fund is compared to the Lipper
Multi-Cap Core. Portfolio managers are compensated based on products they
manage. Due to Mr. Doll's unique position (as Portfolio Manager, President and
Chief Investment Officer of MLIM, and Senior Vice President of Merrill Lynch &
Co.), his compensation does not solely reflect his role as portfolio manager of
the funds managed by him. The performance of his fund(s) is included in
consideration of his incentive compensation but, given his multiple roles and
the balance of the components of pay, the performance of his fund(s) is not the
primary driver of his compensation. In addition, a portfolio manager's
compensation can be based on MLIM's investment performance, financial results of
MLIM, expense control, profit margins, strategic planning and implementation,
quality of client service, market share, corporate reputation, capital
allocation, compliance and risk control, leadership, workforce diversity,
technology and innovation. MLIM also considers the extent to which individuals
exemplify and foster Merrill Lynch's principles of Client Focus, Respect for the
Individual, Teamwork, Responsible Citizenship and Integrity. All factors are
considered collectively by MLIM management.

Cash Bonus

Performance-based compensation is distributed to portfolio managers in a
combination of cash and stock. Typically, the cash bonus, when combined with
base salary, represents more than 60% of total compensation for the portfolio
managers.

Stock Bonus

A portion of the dollar value of the total annual performance-based bonus is
paid in restricted shares of stock of Merrill Lynch & Co., Inc (the "Company").
Paying a portion of annual bonuses in stock puts compensation earned by a
portfolio manager for a given year "at risk" based on the Company's ability to
sustain and improve its performance over future periods. The ultimate value of
stock bonuses is dependent on future Company stock price performance. As such,
the stock bonus aligns each portfolio manger's financial interests with those of
the Company's shareholders and encourages a balance between short-term goals and
long-term strategic objectives. Management strongly believes that providing a
significant portion of competitive performance-based compensation in stock is in
the best interests of investors and shareholders. This approach ensures that
portfolio managers participate as shareholders in both the "downside risk" and
"upside opportunity" of the Company's performance. Portfolio managers,
therefore, have a direct incentive to protect the Company's reputation for
integrity.

Other Compensation Programs

Portfolio managers who meet relative investment performance and financial
management objectives during a performance year are eligible to participate in a
deferred cash program. Awards under this program are in the form of deferred
cash that may be benchmarked to a menu of MLIM mutual funds (including their own
fund) during five-year vesting period. The deferred cash program aligns the
interests of participating portfolio managers with the investment results of
MLIM products and promotes continuity of successful portfolio management teams.

TA IDEX NEUBERGER BERMAN INTERNATIONAL

As of October 31, 2005, Benjamin Segal, portfolio manager of the fund, also
managed three other registered investment companies with total assets of
approximately $91 million. None of these had an advisory fee based on the
performance of the account.

As of October 31, 2005, certain conflicts of interest may arise in connection
with the management of multiple portfolios. Potential conflicts could include,
for example, conflicts in the allocation of investment opportunities and
aggregated trading. The sub-adviser has adopted policies and procedures that are
designed to minimize the effects of these conflicts.


                                      B-20



As of October 31, 2005, a portion of the compensation paid to the portfolio
manager is determined by comparisons to pre-determined peer groups and
benchmarks, as opposed to a system dependent on a percent of management fees.
The portfolio manager is paid a base salary that is not dependent on
performance. The portfolio manager also has a "target bonus," which is set each
year and can be increased or decreased prior to payment based in part on
performance measured against the relevant peer group and benchmark. Performance
is measured on a three-year rolling average in order to emphasize longer-term
performance. There is also a subjective component to determining the bonus,
which consists of the following factors: (i) the individual's willingness to
work with the marketing and sales groups; (ii) his effectiveness in building a
franchise; and (iii) client servicing. Senior management determines this
component in appropriate cases. There are additional components that comprise
the portfolio manager's compensation packages, including: (i) whether the
manager was a partner/principal of NB prior to Neuberger Berman Inc.'s initial
public offering; (ii) for more recent hires, incentives that may have been
negotiated at the time the portfolio manager joined the Neuberger Berman
complex; and (iii) the total amount of assets for which the portfolio manager is
responsible.

As of October 31, 2005, the portfolio manager did not beneficially own any
equity securities in the fund.

TA IDEX OPPENHEIMER DEVELOPING MARKETS

As of October 31, 2005, Mark Madden, portfolio manager of the fund, also managed
two other registered investment companies with total assets of approximately
$5.899 billion and two other pooled investment vehicles with total assets of
approximately $156.5 million. None of these had an advisory fee based on the
performance of the account.

As of October 31, 2005, and as indicated above, the portfolio manager also
manages other funds and accounts. Potentially, at times, those responsibilities
could conflict with the interests of the fund. That may occur whether the
investment strategies of the other funds or accounts are the same as, or
different from, the fund's investment objectives and strategies. For example the
portfolio manager may need to allocate investment opportunities between the fund
and another fund or account having similar objectives or strategies, or they may
need to execute transactions for another fund or account that could have a
negative impact on the value of securities held by the fund. Not all funds and
accounts advised by the portfolio manager have the same management fee. If the
management fee structure of another fund or account is more advantageous to the
portfolio manager than the fee structure of the fund, the portfolio manager
could have an incentive to favor the other fund or account. However, the
sub-adviser's compliance procedures and Code of Ethics recognize the portfolio
manager 's fiduciary obligations to treat all of his clients, including the
fund, fairly and equitably, and are designed to preclude the portfolio manager
from favoring one client over another. It is possible, of course, that those
compliance procedures and the Code of Ethics may not always be adequate to do
so. At various times, the fund's portfolio manager may manage other funds or
accounts with investment objectives and strategies that are similar to those of
the fund, or may manage funds or accounts with investment objectives and
strategies that are different from those of the fund.

As of October 31, 2005, the portfolio manager is employed and compensated by the
sub-adviser, not the fund. Under the sub-adviser's compensation program for its
portfolio managers and portfolio analysts, their compensation is based primarily
on the investment performance results of the funds and accounts they manage,
rather than on the financial success of the sub-adviser. This is intended to
align the portfolio managers and analysts' interests with the success of the
funds and accounts and their shareholders. The portfolio manager's compensation
consisted of three elements: a base salary, an annual discretionary bonus and
eligibility to participate in long-term awards of options and appreciation
rights in regard to the common stock of the sub-adviser's holding company
parent. Senior portfolio managers may also be eligible to participate in the
sub-adviser's deferred compensation plan. To help the sub-adviser attract and
retain talent, the base pay component of each portfolio manager is reviewed
regularly to ensure that it reflects the performance of the individual, is
commensurate with the requirements of the particular portfolio, reflects any
specific competence or specialty of the individual manager, and is competitive
with other comparable positions. The annual discretionary bonus is determined by
senior management of the sub-adviser and is based on a number of factors,
including a fund's pre-tax performance for periods of up to five years, measured
against an appropriate Lipper benchmark selected by management. The Lipper
benchmark with respect to the fund is Lipper - Emerging Markets funds. Other
factors considered include management quality (such as style consistency, risk
management, sector coverage, team leadership and coaching) and organizational
development. The portfolio manager's compensation is not based on the total
value of the fund's portfolio assets, although the fund's investment performance
may increase those assets. The compensation structure is also intended to be
internally equitable and serve to reduce potential conflicts of interest between
the fund and other funds and accounts managed by the portfolio manager. The
compensation structure of the other funds and accounts managed by the portfolio
manager is the same as the compensation structure of the fund, described above.


                                      B-21



As of October 31, 2005, the portfolio manager did not beneficially own any
equity securities in the fund.

TA IDEX PIMCO REAL RETURN TIPS

As of October 31, 2005, John B. Brynjolfsson, the portfolio manager of the fund,
managed 17 other registered investment companies with total assets of
approximately $35 million, 13 other pooled investment vehicles with assets of
approximately $2 million, and 46 other accounts with assets of approximately
$8.5 million.

CONFLICTS OF INTEREST

From time to time, potential conflicts of interest may arise between a portfolio
manager's management of the investments of a Fund, on the one hand, and the
management of other accounts, on the other. The other accounts might have
similar investment objectives or strategies as the Funds, track the same index a
Fund tracks or otherwise hold, purchase, or sell securities that are eligible to
be held, purchased or sold by the Funds. The other accounts might also have
different investment objectives or strategies than the Funds.

Knowledge and Timing of Fund Trades. A potential conflict of interest may arise
as a result of the portfolio manager's day-to- day management of a Fund. Because
of their positions with the Funds, the portfolio managers know the size, timing
and possible market impact of a Fund's trades. It is theoretically possible that
the portfolio managers could use this information to the advantage of other
accounts they manage and to the possible detriment of a Fund.

Investment Opportunities. A potential conflict of interest may arise as result
of the portfolio manager's management of a number of accounts with varying
investment guidelines. Often, an investment opportunity may be suitable for both
a Fund and other accounts managed by the portfolio manager, but may not be
available in sufficient quantities for both the Fund and the other accounts to
participate fully. Similarly, there may be limited opportunity to sell an
investment held by a Fund and another account. PIMCO has adopted policies and
procedures reasonably designed to allocate investment opportunities on a fair
and equitable basis over time.

Under PIMCO's allocation procedures, investment opportunities are allocated
among various investment strategies based on individual account investment
guidelines and PIMCO's investment outlook. PIMCO has also adopted additional
procedures to complement the general trade allocation policy that are designed
to address potential conflicts of interest due to the side-by- side management
of the Funds and certain pooled investment vehicles, including investment
opportunity allocation issues.

Performance Fees. A portfolio manager may advise certain accounts with respect
to which the advisory fee is based entirely or partially on performance.
Performance fee arrangements may create a conflict of interest for the portfolio
manager in that the portfolio manager may have an incentive to allocate the
investment opportunities that he or she believes might be the most profitable to
such other accounts instead of allocating them to a Fund. PIMCO has adopted
policies and procedures reasonably designed to allocate investment opportunities
between such other accounts and the Funds on a fair and equitable basis over
time.

PORTFOLIO MANAGER COMPENSATION

PIMCO has adopted a "Total Compensation Plan" for its professional level
employees, including its portfolio managers, that is designed to pay competitive
compensation and reward performance, integrity and teamwork consistent with the
firm's mission statement. The Total Compensation Plan includes a significant
incentive component that rewards high performance standards, work ethic and
consistent individual and team contributions to the firm. The compensation of
portfolio managers consists of a base salary, a bonus, and may include a
retention bonus. Portfolio managers who are Managing Directors of PIMCO also
receive compensation from PIMCO's profits. Certain employees of PIMCO, including
portfolio managers, may elect to defer compensation through PIMCO's deferred
compensation plan. PIMCO also offers its employees a non-contributory defined
contribution plan through which PIMCO makes a contribution based on the
employee's compensation. PIMCO's contribution rate increases at a specified
compensation level, which is a level that would include portfolio managers.

Salary and Bonus. Base salaries are determined by considering an individual
portfolio manager's experience and expertise and may be reviewed for adjustment
annually. Portfolio managers are entitled to receive bonuses, which may be
significantly more than their base salary, upon attaining certain performance
objectives based on predetermined measures of group or department success. These
goals are specific to individual portfolio managers and are mutually


                                      B-22



agreed upon annually by each portfolio manager and his or her manager.
Achievement of these goals is an important, but not exclusive, element of the
bonus decision process.

In addition, the following non-exclusive list of qualitative criteria
(collectively, the "Bonus Factors") may be considered when determining the bonus
for portfolio managers:

     -    3-year, 2-year and 1-year dollar-weighted and account-weighted
          investment performance as judged against the applicable benchmarks for
          each account managed by a portfolio manager (including the Funds) and
          relative to applicable industry peer groups;

     -    Appropriate risk positioning that is consistent with PIMCO's
          investment philosophy and the Investment Committee/CIO approach to the
          generation of alpha;

     -    Amount and nature of assets managed by the portfolio manager;

     -    Consistency of investment performance across portfolios of similar
          mandate and guidelines (reward low dispersion);

     -    Generation and contribution of investment ideas in the context of
          PIMCO's secular and cyclical forums, portfolio strategy meetings,
          Investment Committee meetings, and on a day-to-day basis;

     -    Absence of defaults and price defaults for issues in the portfolios
          managed by the portfolio manager;

     -    Contributions to asset retention, gathering and client satisfaction;

     -    Contributions to mentoring, coaching and/or supervising; and

     -    Personal growth and skills added.

A portfolio manager's compensation is not based directly on the performance of
any portfolio or any other account managed by that portfolio manager. Final
award amounts are determined by the PIMCO Compensation Committee.

Retention Bonuses. Certain portfolio managers may receive a discretionary, fixed
amount retention bonus, based upon the Bonus Factors and continued employment
with PIMCO. Each portfolio manager who is a Senior Vice President or Executive
Vice President of PIMCO receives a variable amount retention bonus, based upon
the Bonus Factors and continued employment with PIMCO.

Investment professionals, including portfolio managers, are eligible to
participate in a Long Term Cash Bonus Plan ("Cash Bonus Plan"), which provides
cash awards that appreciate or depreciate based upon the performance of PIMCO's
parent company, Allianz Global Investors of America L.P. ("AGI"), and PIMCO over
a three-year period. The aggregate amount available for distribution to
participants is based upon AGI's profit growth and PIMCO's profit growth.
Participation in the Cash Bonus Plan is based upon the Bonus Factors, and the
payment of benefits from the Cash Bonus Plan, is contingent upon continued
employment at PIMCO.

Profit Sharing Plan. Instead of a bonus, portfolio managers who are Managing
Directors of PIMCO receive compensation from a non-qualified profit sharing plan
consisting of a portion of PIMCO's net profits. Portfolio managers who are
Managing Directors receive an amount determined by the Managing Director
Compensation Committee, based upon an individual's overall contribution to the
firm and the Bonus Factors. Under his employment agreement, William Gross
receives a fixed percentage of the profit sharing plan.

Allianz Transaction Related Compensation. In May 2000, a majority interest in
the predecessor holding company of PIMCO was acquired by a subsidiary of Allianz
AG ("Allianz"). In connection with the transaction, Mr. Gross received a grant
of restricted stock of Allianz, the last of which vested on May 5, 2005.

From time to time, under the PIMCO Class B Unit Purchase Plan, Managing
Directors and certain executive management (including Executive Vice Presidents)
of PIMCO may become eligible to purchase Class B Units of PIMCO. Upon their
purchase, the Class B Units are immediately exchanged for Class A Units of PIMCO
Partners, LLC, a California limited liability company that holds a minority
interest in PIMCO and is owned by the Managing Directors and certain executive
management of PIMCO. The Class A Units of PIMCO Partners, LLC entitle their
holders to distributions of a portion of the profits of PIMCO. The PIMCO
Compensation Committee determines which Managing Directors and executive
management may purchase Class B Units and the number of Class B Units that each
may purchase. The Class B Units are purchased pursuant to full recourse notes
issued to the holder. The base compensation of each Class B Unit holder is
increased in an amount equal to the principal amortization applicable to the
notes given by the Managing Director or member of executive management.

Portfolio managers who are Managing Directors also have long-term employment
contracts, which guarantee severance payments in the event of involuntary
termination of a Managing Director's employment with PIMCO.


                                      B-23



SECURITIES OWNERSHIP

As of October 31, 2005 the respective primary portfolio manager was not a
beneficial owner of shares of a Fund that he managed.

TA IDEX PIMCO TOTAL RETURN

As of October 31, 2005, Pasi Harmalainen, the portfolio manager for the fund,
managed 9 other registered investment companies with total assets of
approximately $6.9 million, 5 pooled investment vehicles with assets of
approximately $561,000, and 185 other accounts with assets of approximately
$38.2 million.

CONFLICTS OF INTEREST

From time to time, potential conflicts of interest may arise between a portfolio
manager's management of the investments of a Fund, on the one hand, and the
management of other accounts, on the other. The other accounts might have
similar investment objectives or strategies as the Funds, track the same index a
Fund tracks or otherwise hold, purchase, or sell securities that are eligible to
be held, purchased or sold by the Funds. The other accounts might also have
different investment objectives or strategies than the Funds.

Knowledge and Timing of Fund Trades. A potential conflict of interest may arise
as a result of the portfolio manager's day-to- day management of a Fund. Because
of their positions with the Funds, the portfolio managers know the size, timing
and possible market impact of a Fund's trades. It is theoretically possible that
the portfolio managers could use this information to the advantage of other
accounts they manage and to the possible detriment of a Fund.

Investment Opportunities. A potential conflict of interest may arise as result
of the portfolio manager's management of a number of accounts with varying
investment guidelines. Often, an investment opportunity may be suitable for both
a Fund and other accounts managed by the portfolio manager, but may not be
available in sufficient quantities for both the Fund and the other accounts to
participate fully. Similarly, there may be limited opportunity to sell an
investment held by a Fund and another account. PIMCO has adopted policies and
procedures reasonably designed to allocate investment opportunities on a fair
and equitable basis over time.

Under PIMCO's allocation procedures, investment opportunities are allocated
among various investment strategies based on individual account investment
guidelines and PIMCO's investment outlook. PIMCO has also adopted additional
procedures to complement the general trade allocation policy that are designed
to address potential conflicts of interest due to the side-by- side management
of the Funds and certain pooled investment vehicles, including investment
opportunity allocation issues.

Performance Fees. A portfolio manager may advise certain accounts with respect
to which the advisory fee is based entirely or partially on performance.
Performance fee arrangements may create a conflict of interest for the portfolio
manager in that the portfolio manager may have an incentive to allocate the
investment opportunities that he or she believes might be the most profitable to
such other accounts instead of allocating them to a Fund. PIMCO has adopted
policies and procedures reasonably designed to allocate investment opportunities
between such other accounts and the Funds on a fair and equitable basis over
time.

PORTFOLIO MANAGER COMPENSATION

PIMCO has adopted a "Total Compensation Plan" for its professional level
employees, including its portfolio managers, that is designed to pay competitive
compensation and reward performance, integrity and teamwork consistent with the
firm's mission statement. The Total Compensation Plan includes a significant
incentive component that rewards high performance standards, work ethic and
consistent individual and team contributions to the firm. The compensation of
portfolio managers consists of a base salary, a bonus, and may include a
retention bonus. Portfolio managers who are Managing Directors of PIMCO also
receive compensation from PIMCO's profits. Certain employees of PIMCO, including
portfolio managers, may elect to defer compensation through PIMCO's deferred
compensation plan. PIMCO also offers its employees a non-contributory defined
contribution plan through which PIMCO makes a contribution based on the
employee's compensation. PIMCO's contribution rate increases at a specified
compensation level, which is a level that would include portfolio managers.


                                      B-24



Salary and Bonus. Base salaries are determined by considering an individual
portfolio manager's experience and expertise and may be reviewed for adjustment
annually. Portfolio managers are entitled to receive bonuses, which may be
significantly more than their base salary, upon attaining certain performance
objectives based on predetermined measures of group or department success. These
goals are specific to individual portfolio managers and are mutually agreed upon
annually by each portfolio manager and his or her manager. Achievement of these
goals is an important, but not exclusive, element of the bonus decision process.

In addition, the following non-exclusive list of qualitative criteria
(collectively, the "Bonus Factors") may be considered when determining the bonus
for portfolio managers:

     -    3-year, 2-year and 1-year dollar-weighted and account-weighted
          investment performance as judged against the applicable benchmarks for
          each account managed by a portfolio manager (including the Funds) and
          relative to applicable industry peer groups;

     -    Appropriate risk positioning that is consistent with PIMCO's
          investment philosophy and the Investment Committee/CIO approach to the
          generation of alpha;

     -    Amount and nature of assets managed by the portfolio manager;

     -    Consistency of investment performance across portfolios of similar
          mandate and guidelines (reward low dispersion);

     -    Generation and contribution of investment ideas in the context of
          PIMCO's secular and cyclical forums, portfolio strategy meetings,
          Investment Committee meetings, and on a day-to-day basis;

     -    Absence of defaults and price defaults for issues in the portfolios
          managed by the portfolio manager;

     -    Contributions to asset retention, gathering and client satisfaction;

     -    Contributions to mentoring, coaching and/or supervising; and

     -    Personal growth and skills added.

A portfolio manager's compensation is not based directly on the performance of
any portfolio or any other account managed by that portfolio manager. Final
award amounts are determined by the PIMCO Compensation Committee.

Retention Bonuses. Certain portfolio managers may receive a discretionary, fixed
amount retention bonus, based upon the Bonus Factors and continued employment
with PIMCO. Each portfolio manager who is a Senior Vice President or Executive
Vice President of PIMCO receives a variable amount retention bonus, based upon
the Bonus Factors and continued employment with PIMCO.

Investment professionals, including portfolio managers, are eligible to
participate in a Long Term Cash Bonus Plan ("Cash Bonus Plan"), which provides
cash awards that appreciate or depreciate based upon the performance of PIMCO's
parent company, Allianz Global Investors of America L.P. ("AGI"), and PIMCO over
a three-year period. The aggregate amount available for distribution to
participants is based upon AGI's profit growth and PIMCO's profit growth.
Participation in the Cash Bonus Plan is based upon the Bonus Factors, and the
payment of benefits from the Cash Bonus Plan, is contingent upon continued
employment at PIMCO.

Profit Sharing Plan. Instead of a bonus, portfolio managers who are Managing
Directors of PIMCO receive compensation from a non-qualified profit sharing plan
consisting of a portion of PIMCO's net profits. Portfolio managers who are
Managing Directors receive an amount determined by the Managing Director
Compensation Committee, based upon an individual's overall contribution to the
firm and the Bonus Factors. Under his employment agreement, William Gross
receives a fixed percentage of the profit sharing plan.

Allianz Transaction Related Compensation. In May 2000, a majority interest in
the predecessor holding company of PIMCO was acquired by a subsidiary of Allianz
AG ("Allianz"). In connection with the transaction, Mr. Gross received a grant
of restricted stock of Allianz, the last of which vested on May 5, 2005.

From time to time, under the PIMCO Class B Unit Purchase Plan, Managing
Directors and certain executive management (including Executive Vice Presidents)
of PIMCO may become eligible to purchase Class B Units of PIMCO. Upon their
purchase, the Class B Units are immediately exchanged for Class A Units of PIMCO
Partners, LLC, a California limited liability company that holds a minority
interest in PIMCO and is owned by the Managing Directors and certain executive
management of PIMCO. The Class A Units of PIMCO Partners, LLC entitle their
holders to distributions of a portion of the profits of PIMCO. The PIMCO
Compensation Committee determines which Managing Directors and executive
management may purchase Class B Units and the number of Class B Units that each
may purchase. The Class B Units are purchased pursuant to full recourse notes
issued to the holder. The base compensation of each Class B Unit holder is
increased in an amount equal to the principal amortization applicable to the
notes given by the Managing Director or member of executive management.


                                      B-25



Portfolio managers who are Managing Directors also have long-term employment
contracts, which guarantee severance payments in the event of involuntary
termination of a Managing Director's employment with PIMCO.

SECURITIES OWNERSHIP

As of October 31, 2005 the respective primary portfolio manager was not a
beneficial owner of shares of a Fund that he managed.

TA IDEX PROTECTED PRINCIPAL STOCK

As of October 31, 2005, J. Patrick Rogers, the portfolio manager of the fund,
also managed five registered investment companies with total assets of
approximately $4.9 billion, one other pooled investment vehicle with total
assets of approximately $8 million, and 79 other accounts with total assets of
approximately $591 million. None of these had an advisory fee based on the
performance of the accounts.

As of October 31, 2005, Gateway Investment Advisers, L.P.("Gateway") did not
foresee any conflict of interest in the management of the fund.

As of October 31, 2005, the portfolio manager was compensated for his services
by Gateway, the fund's sub-adviser. His compensation consisted of a fixed
salary, bonuses related to the financial performance of Gateway (but not based
on the investment performance of the fund or any other managed account, either
absolutely or in relation to any benchmark), and a retirement plan.

As of October 31, 2005, the portfolio manager did not beneficially own any
equity securities in the fund.

TA IDEX SALOMON ALL CAP

As of October 31, 2005, John J. Goode and Peter J. Hable, the portfolio managers
of the fund, also managed 21 other registered investment companies with total
assets of approximately $9.6 billion and 3 other accounts with total assets of
approximately $12.9 billion. None of these had an advisory fee based on the
performance of the account.

As of October 31, 2005, the sub-adviser did not foresee any conflict of interest
in the management of the fund.

Citigroup Asset Management ("CAM") investment professionals receive base salary
and other employee benefits and are eligible to receive incentive compensation.
Base salary is fixed and typically determined based on market factors and the
skill and experience of individual investment personnel.

CAM has implemented an investment management incentive and deferred compensation
plan (the "Plan") for its investment professionals, including the fund's
portfolio manager(s). Each investment professional works as a part of an
investment team. The Plan is designed to align the objectives of CAM investment
professionals with those of fund shareholders and other CAM clients. Under the
Plan a "base incentive pool" is established for each team each year as a
percentage of CAM's revenue attributable to the team (largely management and
related fees generated by funds and other accounts). A team's revenues are
typically expected to increase or decrease depending on the effect that the
team's investment performance as well as inflows and outflows have on the level
of assets in the investment products managed by the team. The "base incentive
pool" of a team is reduced by base salaries paid to members of the team and
employee benefits expenses attributable to the team.

The investment team's incentive pool is then adjusted to reflect its ranking
among a "peer group" of non-CAM investment managers and the team's pre-tax
investment performance against the applicable product benchmark (e.g. a
securities index and, with respect to a fund, the benchmark set forth in the
fund's prospectus to which the fund's average annual total returns are compared
or, if none, the benchmark set forth in the fund's annual report). CAM may also
measure the team's pre-tax investment performance against additional benchmarks,
as it determines appropriate. Longer-term (5- year) performance will be more
heavily weighted than shorter-term (1- year) performance in the calculation of
the performance adjustment factor. The incentive pool for a team may also be
adjusted to reflect other factors (e.g., severance pay to departing members of
the team, and discretionary allocations by the applicable CAM chief investment
officer from one investment team to another). The incentive pool will be
allocated by the applicable CAM chief investment officer to the team leader and,
based on the recommendations of the team leader, to the other members of the
team.


                                      B-26



Up to 20% of an investment professional's annual incentive compensation is
subject to deferral. Of that principal deferred award amount, 50% will accrue a
return based on the hypothetical returns of the investment fund or product that
is the primary focus of the investment professional's business activities with
the Firm, and 50% may be received in the form of Legg Mason restricted stock
shares.

TA IDEX SALOMON INVESTORS VALUE

As of October 31, 2005, Mark McAllister and Robert Feitler, the portfolios
manager of the fund, also managed 16 other registered investment companies with
total assets of approximately $8.2 billion and 2 other accounts with total
assets of approximately $5.0 billion. None of these had an advisory fee based on
the performance of the account.

As of October 31, 2005, the sub-adviser did not foresee any conflict of interest
in the management of the fund.

Citigroup Asset Management ("CAM") investment professionals receive base salary
and other employee benefits and are eligible to receive incentive compensation.
Base salary is fixed and typically determined based on market factors and the
skill and experience of individual investment personnel.

CAM has implemented an investment management incentive and deferred compensation
plan (the "Plan") for its investment professionals, including the fund's
portfolio manager(s). Each investment professional works as a part of an
investment team. The Plan is designed to align the objectives of CAM investment
professionals with those of fund shareholders and other CAM clients. Under the
Plan a "base incentive pool" is established for each team each year as a
percentage of CAM's revenue attributable to the team (largely management and
related fees generated by funds and other accounts). A team's revenues are
typically expected to increase or decrease depending on the effect that the
team's investment performance as well as inflows and outflows have on the level
of assets in the investment products managed by the team. The "base incentive
pool" of a team is reduced by base salaries paid to members of the team and
employee benefits expenses attributable to the team.

The investment team's incentive pool is then adjusted to reflect its ranking
among a "peer group" of non-CAM investment managers and the team's pre-tax
investment performance against the applicable product benchmark (e.g. a
securities index and, with respect to a fund, the benchmark set forth in the
fund's prospectus to which the fund's average annual total returns are compared
or, if none, the benchmark set forth in the fund's annual report). CAM may also
measure the team's pre-tax investment performance against additional benchmarks,
as it determines appropriate. Longer-term (5- year) performance will be more
heavily weighted than shorter-term (1- year) performance in the calculation of
the performance adjustment factor. The incentive pool for a team may also be
adjusted to reflect other factors (e.g., severance pay to departing members of
the team, and discretionary allocations by the applicable CAM chief investment
officer from one investment team to another). The incentive pool will be
allocated by the applicable CAM chief investment officer to the team leader and,
based on the recommendations of the team leader, to the other members of the
team.

Up to 20% of an investment professional's annual incentive compensation is
subject to deferral. Of that principal deferred award amount, 50% will accrue a
return based on the hypothetical returns of the investment fund or product that
is the primary focus of the investment professional's business activities with
the Firm, and 50% may be received in the form of Legg Mason restricted stock
shares.

TA IDEX T. ROWE PRICE SMALL CAP
TA IDEX T. ROWE PRICE TAX-EFFICIENT GROWTH

As of October 31, 2005, Paul Wojcik, portfolio manager of TA IDEX T. Rowe Price
Small Cap, also managed four other registered investment companies with total
assets of approximately $792 million and one other account with total assets of
approximately $29 million. None of these had an advisory fee based on the
performance of the account.

As of October 31, 2005, Donald Peters, the portfolio manager of TA IDEX T. Rowe
Price Tax-Efficient Growth, also managed 14 other registered investment
companies with total assets of approximately $2.5 billion and 32 other accounts
with total assets of approximately $1.9 billion. None of these had an advisory
fee based on the performance of the account.

As of October 31, 2005, portfolio managers at T. Rowe Price typically manage
multiple accounts. These accounts may include, among others, mutual funds,
separate accounts (assets managed on behalf of institutions such as pension
funds, colleges and universities, foundations), and commingled trust accounts.
Portfolio managers make investment decisions for each portfolio based on the
investment objectives, policies, practices and other relevant investment
considerations that the managers believe are applicable to that portfolio.
Consequently, portfolio managers may purchase (or sell) securities for one
portfolio and not another portfolio. T. Rowe Price has adopted brokerage and
trade allocation policies and


                                      B-27


procedures which it believes are reasonably designed to address any potential
conflicts associated with managing multiple accounts for multiple clients.

As of October 31, 2005, the portfolio managers' compensation consists primarily
of a base salary, a cash bonus, and an equity incentive that usually comes in
the form of a stock option grant. Occasionally, portfolio managers will also
have the opportunity to participate in venture capital partnerships.
Compensation is variable and is determined based on the following factors.
Investment performance over one-, three-, five- and 10-year periods is the most
important input. The sub-adviser evaluates performance in absolute, relative,
and risk-adjusted terms. Relative performance and risk-adjusted performance are
determined with reference to the broad based index (e.g., S&P 500) and an
applicable Lipper index (e.g., Large-Cap Growth), though other benchmarks may be
used as well. Investment results are also compared to comparably managed funds
of competitive investment management firms. Performance is primarily measured on
a pre-tax basis though tax-efficiency is considered and is especially important
for tax efficient funds. It is important to note that compensation is viewed
with a long term time horizon. The more consistent a portfolio manager's
performance over time, the higher the compensation opportunity. The increase or
decrease in a fund's assets due to the purchase or sale of fund shares is not
considered a material factor. Contribution to our overall investment process is
an important consideration as well. Sharing ideas with other portfolio managers,
working effectively with and mentoring the sub-adviser's younger analysts, and
being good corporate citizens are considered by the sub-adviser to be important
components of its long term success and are highly valued by the sub-adviser.
All employees of T. Rowe Price, including portfolio managers, participate in a
401(k) plan sponsored by T. Rowe Price Group. In addition, all employees are
eligible to purchase T. Rowe Price common stock through an employee stock
purchase plan that features a limited corporate matching contribution.
Eligibility for and participation in these plans is on the same basis as for all
employees. Finally, all vice presidents of T. Rowe Price Group, including all
portfolio managers, receive supplemental medical/hospital reimbursement
benefits. This compensation structure is used for all portfolios managed by the
portfolio managers.

As of October 31, 2005, neither of the portfolio managers beneficially owned any
equity securities in the fund.

TA IDEX TRANSAMERICA BALANCED

As of October 31, 2005, Heidi Hu and Gary Rolle, portfolio managers of the fund,
also managed 16 registered investment company accounts with a combined value of
$3.1 billion, no pooled investment accounts and 47 other accounts with a
combined value of $5.3 billion. None of these accounts has an advisory fee based
on the performance of the account.

As of October 31, 2005, Transamerica Investment Management, LLC ("TIM") did not
foresee any conflict of interest in the management of the fund.

As of October 31, 2005, the portfolio managers' compensation consisted of a
combination of base salary, performance bonus and profit sharing or ownership
interest. Each portfolio manager's performance-based bonus equals as much as
300% of his or her base salary. Approximately 80% of the value of such bonus is
based on relative rankings of track record and return formulas. A portion of the
objective component is necessarily subjective taking into account items
including co/multi-management responsibilities, portfolio performance upon
assignment, length of time managing the portfolio, and customized client
benchmarks when determining each portfolio manager's relative ranking. Up to 20%
of such bonus is determined subjectively by a member of the senior management of
TIM based on the individual's contribution to company initiatives and the
quality of investment ideas he or she generates. A third component of each
portfolio manager's overall compensation involves an equity ownership interest
in TIM purchased by the individual portfolio manager.

As of October 31, 2005, the portfolio managers beneficially owned 5,180 shares
of equity securities in the fund.

TA IDEX TRANSAMERICA CONVERTIBLE SECURITIES

As of October 31, 2005, Kirk Kim, portfolio manager of the fund, also managed 2
registered investment company accounts with a combined value of $395.0 million,
no pooled investment accounts and 4 other accounts with a combined value of $1.6
billion. None of these accounts has an advisory fee based on the performance of
the account.

As of October 31, 2005, Transamerica Investment Management, LLC ("TIM") did not
foresee any conflict of interest in the management of the fund.

As of October 31, 2005, the portfolio manager's compensation consisted of a
combination of base salary, performance bonus and profit sharing or ownership
interest. The portfolio manager's performance-based bonus equals as much as


                                      B-28



300% of his base salary. Approximately 80% of the value of such bonus is based
on relative rankings of track record and return formulas. A portion of the
objective component is necessarily subjective taking into account items
including co/multi-management responsibilities, portfolio performance upon
assignment, length of time managing the portfolio, and customized client
benchmarks when determining the portfolio manager's relative ranking. Up to 20%
of such bonus is determined subjectively by a member of the senior management of
TIM based on the individual's contribution to company initiatives and the
quality of investment ideas he or she generates. A third component of the
portfolio manager's overall compensation involves an equity ownership interest
in TIM purchased by the individual portfolio manager.

As of October 31, 2005, the portfolio manager did not beneficially own any
equity securities in the fund.

TA IDEX TRANSAMERICA EQUITY

As of October 31, 2005, Gary Rolle, portfolio manager of the fund, also managed
9 registered investment company accounts with a combined value of $2.2 billion,
no pooled investment accounts and 23 other accounts with a combined value of
$2.6 billion. None of these accounts has an advisory fee based on the
performance of the account.

As of October 31, 2005, Transamerica Investment Management, LLC ("TIM") did not
foresee any conflict of interest in the management of the fund.

As of October 31, 2005, the portfolio manager's compensation consisted of a
combination of base salary, performance bonus and profit sharing or ownership
interest. The portfolio manager's performance-based bonus equals as much as 300%
of his base salary. Approximately 80% of the value of such bonus is based on
relative rankings of track record and return formulas. A portion of the
objective component is necessarily subjective taking into account items
including co/multi-management responsibilities, portfolio performance upon
assignment, length of time managing the portfolio, and customized client
benchmarks when determining the portfolio manager's relative ranking. Up to 20%
of such bonus is determined subjectively by a member of the senior management of
TIM based on the individual's contribution to company initiatives and the
quality of investment ideas he or she generates. A third component of the
portfolio manager's overall compensation involves an equity ownership interest
in TIM purchased by the individual portfolio manager.

As of October 31, 2005, the portfolio manager beneficially owned 4,380 shares of
equity securities in the fund.

TA IDEX TRANSAMERICA FLEXIBLE INCOME

As of October 31, 2005, Peter Lopez, portfolio manager of the fund, also managed
2 registered investment company accounts with a combined value of $261.0
million, no pooled investment accounts and 4 other accounts with a combined
value of $66.0 million. None of these accounts has an advisory fee based on the
performance of the account.

As of October 31, 2005, Transamerica Investment Management, LLC ("TIM") did not
foresee any conflict of interest in the management of the fund.

As of October 31, 2005, the portfolio manager's compensation consisted of a
combination of base salary, performance bonus and profit sharing or ownership
interest. The portfolio manager's performance-based bonus equals as much as 300%
of his base salary. Approximately 80% of the value of such bonus is based on
relative rankings of track record and return formulas. A portion of the
objective component is necessarily subjective taking into account items
including co/multi-management responsibilities, portfolio performance upon
assignment, length of time managing the portfolio, and customized client
benchmarks when determining the portfolio manager's relative ranking. Up to 20%
of such bonus is determined subjectively by a member of the senior management of
TIM based on the individual's contribution to company initiatives and the
quality of investment ideas he or she generates. A third component of the
portfolio manager's overall compensation involves an equity ownership interest
in TIM purchased by the individual portfolio manager.

As of October 31, 2005, the portfolio manager did not beneficially own any
equity securities in the fund.

TA IDEX TRANSAMERICA GROWTH OPPORTUNITIES

As of October 31, 2005, Ed Han and John Huber, portfolio managers of the fund,
also managed 5 registered investment company accounts with a combined value of
$575.4 million, no pooled investment vehicles and 9 other accounts with a
combined value of $679 million. None of these accounts has an advisory fee based
on the performance of the account.

As of October 31, 2005, Transamerica Investment Management, LLC ("TIM") did not
foresee any conflict of interest in the management of the fund.


                                      B-29



As of October 31, 2005, the portfolio managers' compensation consisted of a
combination of base salary, performance bonus and profit sharing or ownership
interest. Each portfolio manager's performance-based bonus equals as much as
300% of his or her base salary. Approximately 80% of the value of such bonus is
based on relative rankings of track record and return formulas. A portion of the
objective component is necessarily subjective taking into account items
including co/multi-management responsibilities, portfolio performance upon
assignment, length of time managing the portfolio, and customized client
benchmarks when determining each portfolio manager's relative ranking. Up to 20%
of such bonus is determined subjectively by a member of the senior management of
TIM based on the individual's contribution to company initiatives and the
quality of investment ideas he or she generates. A third component of each
portfolio manager's overall compensation involves an equity ownership interest
in TIM purchased by the individual portfolio manager.

As of October 31, 2005, the portfolio managers did not beneficially own any
equity securities in the fund.

TA IDEX TRANSAMERICA HIGH-YIELD BOND

As of October 31, 2005, David Halfpap, a portfolio manager of the fund, managed
four other accounts with a total value of approximately $12.1 billion. As of
October 31, 2005, Bradley J. Beman, a portfolio manager of the fund, managed 13
other accounts with a total value of approximately $4.2 billion. None of these
accounts has an advisory fee based on the performance of the account.

As of October 31, 2005, a conflict of interest could arise in that the portfolio
manager could be motivated to favor other accounts because of certain
performance incentive compensation arrangements which are tied more closely to
the performance of those accounts and business units. Transamerica Investment
Management, LLC ("TIM") believes that the implementation of appropriate
compliance policies and procedures effectively monitors this potential conflict
of interest.

As of October 31, 2005, Mr. Halfpap's compensation is provided directly by the
funds sub-adviser and not by the fund. The portfolio manager's compensation
consists of a fixed base salary, a variable performance incentive and certain
stock options. The performance incentive is based on the following factors:
business results for the AEGON business unit for which the portfolio manager
manages an account, total return results for all accounts managed by the
portfolio manager, performance in asset-liability management process for the
AEGON business unit, performance on developing profitable investment strategy
for AEGON, various projects undertaken during the year and AEGON USA annual
earnings results. The portfolio manager participates in AEGON USA's
stock-settled stock option plan which typically grants a specified number of
options annually.

As of October 31, 2005, Mr. Beman's compensation is provided directly by the
funds sub-adviser and not by the fund. The portfolio manager's compensation
consists of a fixed base salary, a variable performance incentive and certain
stock options. The performance incentive is based on the following factors: the
economic performance of the overall high yield asset class, including the
performance of the fund's assets; leadership and communication with clients;
assisting with the sub-adviser's strategic goals; and AEGON USA's earnings
results. The portfolio manager participates in AEGON USA's stock-settled stock
option plan which typically grants a specified number of options annually. The
portfolio manager participates in the sub-adviser's deferred compensation plan,
which is based on the same performance factors as the variable performance
incentive compensation but payment of which is spread over a three-year period.

As of October 31, 2005, the portfolio managers did not beneficially own any
equity securities in the fund.

TA IDEX TRANSAMERICA SHORT-TERM BOND

As of October 31, 2005, Heidi Hu, portfolio manager of the fund, also managed 7
registered investment company accounts with a combined value of $526.4 million,
no pooled investment accounts and 24 other accounts with a combined total of
$2.7 billion. None of these accounts has an advisory fee based on the
performance of the account.

As of October 31, 2005, Transamerica Investment Management, LLC ("TIM") did not
foresee any conflict of interest in the management of the fund.

As of October 31, 2005, portfolio manager's compensation consisted of a
combination of base salary, performance bonus and profit sharing or ownership
interest. The portfolio manager's performance-based bonus equals as much as 300%
of her base salary. Approximately 80% of the value of such bonus is based on
relative rankings of track record and return formulas. A portion of the
objective component is necessarily subjective taking into account items
including co/multi-management responsibilities, portfolio performance upon
assignment, length of time managing the portfolio, and


                                      B-30



customized client benchmarks when determining each portfolio manager's relative
ranking. Up to 20% of such bonus is determined subjectively by a member of the
senior management of TIM based on the individual's contribution to company
initiatives and the quality of investment ideas she generates. A third component
of the portfolio manager's overall compensation involves an equity ownership
interest in TIM purchased by the individual portfolio manager.

TA IDEX TRANSAMERICA SMALL/MID CAP VALUE

As of October 31, 2005, Michelle Stevens, portfolio manager of the fund, also
managed 2 registered investment company accounts with a combined value of
approximately $426.7 million, no pooled investment accounts and 0 other
accounts. None of these accounts has an advisory fee based on the performance of
the account.

As of October 31, 2005, Transamerica Investment Management, LLC ("TIM") did not
foresee any conflict of interest in the management of the fund.

As of October 31, 2005, the TIM portfolio managers' compensation consisted of a
combination of base salary, performance bonus and profit sharing or ownership
interest. Each portfolio manager's performance-based bonus equals as much as
300% of his or her base salary. Approximately 80% of the value of such bonus is
based on relative rankings of track record and return formulas. A portion of the
objective component is necessarily subjective taking into account items
including co/multi-management responsibilities, portfolio performance upon
assignment, length of time managing the portfolio, and customized client
benchmarks when determining each portfolio manager's relative ranking. Up to 20%
of such bonus is determined subjectively by a member of the senior management of
TIM based on the individual's contribution to company initiatives and the
quality of investment ideas he or she generates. A third component of each
portfolio manager's overall compensation involves an equity ownership interest
in TIM purchased by the individual portfolio manager.

As of October 31, 2005, the portfolio manager beneficially owned 1.200 shares of
equity securities in the fund.

TA IDEX TRANSAMERICA VALUE BALANCED

As of October 31, 2005, Heidi Hu and John Riazzi, portfolio managers of the
fund, also managed 9 registered investment company accounts with a combined
value of $1.1 billion, 0 pooled investment vehicles and 27 other accounts with a
combined value of $2.7 billion. None of these accounts has an advisory fee based
on the performance of the account.

As of October 31, 2005, Transamerica Investment Management, LLC ("TIM") did not
foresee any conflict of interest in the management of the fund.

As of October 31, 2005, the portfolio managers' compensation consisted of a
combination of base salary, performance bonus and profit sharing or ownership
interest. Each portfolio manager's performance-based bonus equals as much as
300% of his or her base salary. Approximately 80% of the value of such bonus is
based on relative rankings of track record and return formulas. A portion of the
objective component is necessarily subjective taking into account items
including co/multi-management responsibilities, portfolio performance upon
assignment, length of time managing the portfolio, and customized client
benchmarks when determining each portfolio manager's relative ranking. Up to 20%
of such bonus is determined subjectively by a member of the senior management of
TIM based on the individual's contribution to company initiatives and the
quality of investment ideas he or she generates. A third component of each
portfolio manager's overall compensation involves an equity ownership interest
in TIM purchased by the individual portfolio manager.

As of October 31, 2005, the portfolio managers did not beneficially own any
equity securities in the fund.

TA IDEX UBS LARGE CAP VALUE

As of October 31, 2005, John Leonard, Thomas M. Cole, Thomas Digenan and Scott
Hazen, portfolio managers of the fund, also managed 14 other registered
investment companies with total assets of approximately $1.8 billion, 60 other
pooled investment vehicles with assets of approximately $12.4 billion, and
approximately 23 other accounts with total assets of approximately $1.3 billion.
None of these had an advisory fee based on the performance of the account.

As of October 31, 2005, the management of a fund and other accounts by a
portfolio manager could result in potential conflicts of interest if the fund
and other accounts have different objectives, benchmarks and fees because the
portfolio manager and his team must allocate time and investment expertise
across multiple accounts, including the fund. The


                                      B-31



portfolio manager and his team manage the fund and other accounts utilizing a
model portfolio approach that groups similar accounts within a model portfolio.
The sub-advisor manages accounts according to the appropriate model portfolio,
including where possible, those accounts that have specific investment
restrictions. Accordingly, portfolio holdings, position sizes, and industry and
sector exposures tend to be similar across accounts, which may minimize the
potential for conflicts of interest. If a portfolio manager identifies a limited
investment opportunity that may be suitable for more than one account or model
portfolio, the fund may not be able to take full advantage of that opportunity
due to an allocation of filled purchase or sale orders across all eligible model
portfolios and accounts. To deal with these situations, the sub-advisor has
adopted procedures for allocating portfolio trades across multiple accounts to
provide fair treatment to all accounts. The management of personal accounts by a
portfolio manager may also give rise to potential conflicts of interest. The
sub-advisor has adopted Codes of Ethics that govern such personal trading but
there is no assurance that the Codes will adequately address all such conflicts.

As of October 31, 2005, The compensation received by portfolio managers at UBS
Global Asset Management, including the funds' portfolio managers, includes a
base salary and incentive compensation based on their personal performance. UBS
Global Asset Management's compensation and benefits programs are designed to
provide its investment professionals with incentives to excel, and to promote an
entrepreneurial, performance-oriented culture. They also align the interests of
the investment professionals with the interests of UBS Global Asset Management's
clients. Overall compensation can be grouped into four categories: competitive
salary, benchmarked to maintain competitive compensation opportunities; annual
bonus, tied to individual contributions and investment performance; UBS equity
awards, promoting company-wide success and employee retention; and the
Partnership Incentive Program (PIP), a phantom-equity-like program for key
senior staff. The PIP is designed to promote an entrepreneurial culture and
drive long-term thinking. By tying compensation to overall firm performance over
the mid-to longer-term, the program offers significant compensation
opportunities for UBS Global Asset Management's senior staff. Each portfolio
manager of the fund is eligible for this program. The portfolio manager's base
salary is fixed compensation used to recognize the experience, skills and
knowledge that the investment professionals bring to their roles. Salary levels
are monitored and adjusted periodically in order to remain competitive within
the investment management industry. The portfolio managers' annual bonuses are
strictly and rigorously correlated with performance. As such, annual incentives
can be highly variable, and are based on three components: 1) the firm's overall
business success; 2) the performance of the respective asset class and/or
investment mandate; and 3) an individual's specific contribution to the firm's
results. UBS Global Asset Management strongly believes that tying bonuses to
both long-term (3-year) and shorter-term (1-year) portfolio pre-tax performance
closely aligns the investment professionals' interests with those of UBS Global
Asset Management's clients. A portion of each portfolio manager's bonus is based
on the performance of each fund the portfolio manager manages as compared to the
fund's broad-based index over a three-year rolling period. Senior investment
professionals, including each portfolio manager of the fund, may receive a
portion of their annual performance-based incentive in the form of deferred or
restricted UBS AG shares or employee stock options. UBS Global Asset Management
believes that this reinforces the critical importance of creating long-term
business value and also serves as an effective retention tool as the equity
shares typically vest over a number of years. Broader equity share ownership is
encouraged for all employees through "Equity Plus." This long-term incentive
program gives employees the opportunity to purchase UBS stock with after-tax
funds from their bonus or salary. Two UBS stock options are given for each share
acquired and held for two years. UBS Global Asset Management feels this engages
its employees as partners in the firm's success, and helps to maximize its
integrated business strategy.

As of October 31, 2005, none of the portfolio managers beneficially owned any
equity securities in the fund.

TA IDEX VAN KAMPEN EMERGING MARKETS DEBT

As of October 31, 2005, Abigail McKenna, Eric Baurmeister, and Federico Kaune,
the portfolio managers of the TA IDEX Van Kampen Emerging Markets Debt Fund did
not own any shares in the Fund.

As of October 31, 2005, Abigail McKenna, a portfolio manager of the TA IDEX Van
Kampen Emerging Markets Debt Fund, managed 7 mutual funds with a total of
$1,158,287,688 in assets; 9 pooled investment vehicles other than mutual funds
with a total of $985,222,695 in assets; and 2 other accounts with a total of
approximately $378,704,808 in assets. None of these had an advisory fee based on
the performance of the account.

As of October 31, 2005, Eric Baurmeister, a portfolio manager of the TA IDEX Van
Kampen Emerging Markets Debt Fund, managed 4 mutual funds with a total of
$537,666,191 in assets; no pooled investment vehicles other than mutual funds;
and 2 other accounts with a total of approximately $416,966,369 in assets. None
of these had an advisory fee based on the performance of the account.


                                      B-32



As of October 31, 2005, Federico Kaune, a portfolio manager of the TA IDEX Van
Kampen Emerging Markets Debt Fund, managed 4 mutual funds with a total of
$537,666,191 in assets; no pooled investment vehicles other than mutual funds;
and no other accounts. None of these had an advisory fee based on the
performance of the account.

ATFA pays MSIM Inc. a fee based on the assets under management of each Fund as
set forth in an investment sub-advisory agreement between MSIM Inc. and ATFA.
MSIM Inc. pays its investment professionals out of its total revenues and other
resources, including the sub-advisory fees earned with respect to each Fund. The
following information relates to the period ended October 31, 2005.

PORTFOLIO MANAGER COMPENSATION STRUCTURE

Portfolio managers receive a combination of base compensation and discretionary
compensation, comprising a cash bonus and several deferred compensation programs
described below. The methodology used to determine portfolio manager
compensation is applied across all funds/accounts managed by the portfolio
manager.

BASE SALARY COMPENSATION. Generally, portfolio managers receive base salary
compensation based on the level of their position with the Investment Adviser.

DISCRETIONARY COMPENSATION. In addition to base compensation, portfolio managers
may receive discretionary compensation.

Discretionary compensation can include:

- -    CASH BONUS;

- -    MORGAN STANLEY'S EQUITY INCENTIVE COMPENSATION PROGRAM (EICP) AWARDS -- a
     mandatory program that defers a portion of discretionary year-end
     compensation into restricted stock units or other awards based on Morgan
     Stanley common stock that are subject to vesting and other conditions;

- -    INVESTMENT MANAGEMENT DEFERRED COMPENSATION PLAN (IMDCP) AWARDS -- a
     mandatory program that defers a portion of discretionary year-end
     compensation and notionally invests it in designated funds advised by the
     Investment Adviser or its affiliates. The award is subject to vesting and
     other conditions. Portfolio Managers must notionally invest a minimum of
     25% to a maximum of 50% of the IMDCP deferral into a combination of the
     designated funds they manage that are included in the IMDCP fund menu,
     which may or may not include the Fund;

- -    VOLUNTARY DEFERRED COMPENSATION PLANS -- voluntary programs that permit
     certain employees to elect to defer a portion of their discretionary
     year-end compensation and directly or notionally invest the deferred
     amount: (1) across a range of designated investment funds, including funds
     advised by the Adviser or its affiliates; and/or (2) in Morgan Stanley
     stock units.

Several factors determine discretionary compensation, which can vary by
portfolio management team and circumstances. In order of relative importance,
these factors include:

- -    Investment performance. A portfolio manager's compensation is linked to the
     pre-tax investment performance of the funds/accounts managed by the
     portfolio manager. Investment performance is calculated for one-, three-
     and five-year periods measured against a fund's/account's primary benchmark
     (as set forth in the fund's prospectus), indices and/or peer groups, where
     applicable. Generally, the greatest weight is placed on the three- and
     five-year periods.

- -    Revenues generated by the investment companies, pooled investment vehicles
     and other accounts managed by the portfolio manager.

- -    Contribution to the business objectives of the Investment Adviser.

- -    The dollar amount of assets managed by the portfolio manager.

- -    Market compensation survey research by independent third parties.

- -    Other qualitative factors, such as contributions to client objectives.

- -    Performance of Morgan Stanley and Morgan Stanley Investment Management, and
     the overall performance of the


                                      B-33



     Global Investor Group, a department within Morgan Stanley Investment
     Management that includes all investment professionals.

Because the portfolio managers manage assets for other investment companies,
pooled investment vehicles, and/or other accounts (including institutional
clients, pension plans and certain high net worth individuals), there may be an
incentive to favor one client over another resulting in conflicts of interest.
For instance, the Investment Adviser may receive fees from certain accounts that
are higher than the fee it receives from the Fund, or it may receive a
performance-based fee on certain accounts. In those instances, the portfolio
managers may have an incentive to favor the higher and/or performance-based fee
accounts over the Fund. The Investment Adviser has adopted trade allocation and
other policies and procedures that it believes are reasonably designed to
address these and other conflicts of interest.

TA IDEX VAN KAMPEN SMALL COMPANY GROWTH

As of October 31, 2005, Dennis Lynch, David Cohen, Sam Chainani, and Alexander
Norton, the portfolio managers of the TA IDEX Van Kampen Small Company Growth
Fund, did not own any shares in the Fund.

As of October 31, 2005, Dennis Lynch, portfolio manager of the TA IDEX Van
Kampen Small Company Growth Fund, managed 33 mutual funds with a total of
$14,495,151,626 in assets; 4 pooled investment vehicles other than mutual funds
with a total of $981,786,658 in assets; and 11,381 other accounts with a total
of approximately $2,738,365,768 in assets. None of these had an advisory fee
based on the performance of the account.

As of October 31, 2005, David Cohen, a portfolio manager of the TA IDEX Van
Kampen Small Company Growth Fund, managed 21 mutual funds with a total of
$12,702,732,728 in assets; 1 pooled investment vehicle other than mutual funds
with a total of $189,003,865 in assets; and 2 other accounts with a total of
approximately $612,266,318 in assets. None of these had an advisory fee based on
the performance of the account.

As of October 31, 2005, Sam Chainani, a portfolio manager of the TA IDEX Van
Kampen Small Company Growth Fund, managed 21 mutual funds with a total of
$12,702,732,728 in assets; 1 pooled investment vehicle other than mutual funds
with a total of $189,003,865 in assets; and no other accounts. None of these had
an advisory fee based on the performance of the account.

As of October 31, 2005, Alexander Norton, a portfolio manager of the TA IDEX Van
Kampen Small Company Growth Fund, managed 33 mutual funds with a total of
$14,495,151,626 in assets; 4 pooled investment vehicles other than mutual funds
with a total of $981,786,658 in assets; and 11,381 other accounts with a total
of approximately $2,738,365,768 in assets. None of these had an advisory fee
based on the performance of the account.

ATFA pays MSIM Inc. a fee based on the assets under management of the Fund as
set forth in an investment sub-advisory agreement between MSIM Inc. and ATFA.
MSIM Inc. pays its investment professionals out of its total revenues and other
resources, including the sub-advisory fees earned with respect to the Fund. The
following information relates to the period ended October 31, 2005.

PORTFOLIO MANAGER COMPENSATION STRUCTURE

Portfolio managers receive a combination of base compensation and discretionary
compensation, comprising a cash bonus and several deferred compensation programs
described below. The methodology used to determine portfolio manager
compensation is applied across all funds/accounts managed by the portfolio
manager.

BASE SALARY COMPENSATION. Generally, portfolio managers receive base salary
compensation based on the level of their position with the Investment Adviser.

DISCRETIONARY COMPENSATION. In addition to base compensation, portfolio managers
may receive discretionary compensation.

Discretionary compensation can include:

- -    CASH BONUS;

- -    MORGAN STANLEY'S EQUITY INCENTIVE COMPENSATION PROGRAM (EICP) AWARDS -- a
     mandatory program that defers a portion of discretionary year-end
     compensation into restricted stock units or other awards based on Morgan
     Stanley common stock that are subject to vesting and other conditions;


                                      B-34



- -    INVESTMENT MANAGEMENT DEFERRED COMPENSATION PLAN (IMDCP) AWARDS -- a
     mandatory program that defers a portion of discretionary year-end
     compensation and notionally invests it in designated funds advised by the
     Investment Adviser or its affiliates. The award is subject to vesting and
     other conditions. Portfolio Managers must notionally invest a minimum of
     25% to a maximum of 50% of the IMDCP deferral into a combination of the
     designated funds they manage that are included in the IMDCP fund menu,
     which may or may not include the Fund;

- -    VOLUNTARY DEFERRED COMPENSATION PLANS -- voluntary programs that permit
     certain employees to elect to defer a portion of their discretionary
     year-end compensation and directly or notionally invest the deferred
     amount: (1) across a range of designated investment funds, including funds
     advised by the Adviser or its affiliates; and/or (2) in Morgan Stanley
     stock units.

Several factors determine discretionary compensation, which can vary by
portfolio management team and circumstances. In order of relative importance,
these factors include:

- -    Investment performance. A portfolio manager's compensation is linked to the
     pre-tax investment performance of the funds/accounts managed by the
     portfolio manager. Investment performance is calculated for one-, three-
     and five-year periods measured against a fund's/account's primary benchmark
     (as set forth in the fund's prospectus), indices and/or peer groups, where
     applicable. Generally, the greatest weight is placed on the three- and
     five-year periods.

- -    Revenues generated by the investment companies, pooled investment vehicles
     and other accounts managed by the portfolio manager.

- -    Contribution to the business objectives of the Investment Adviser.

- -    The dollar amount of assets managed by the portfolio manager.

- -    Market compensation survey research by independent third parties.

- -    Other qualitative factors, such as contributions to client objectives.

- -    Performance of Morgan Stanley and Morgan Stanley Investment Management, and
     the overall performance of the Global Investor Group, a department within
     Morgan Stanley Investment Management that includes all investment
     professionals.

Because the portfolio managers manage assets for other investment companies,
pooled investment vehicles, and/or other accounts (including institutional
clients, pension plans and certain high net worth individuals), there may be an
incentive to favor one client over another resulting in conflicts of interest.
For instance, the Investment Adviser may receive fees from certain accounts that
are higher than the fee it receives from the Fund, or it may receive a
performance-based fee on certain accounts. In those instances, the portfolio
managers may have an incentive to favor the higher and/or performance-based fee
accounts over the Fund. The Investment Adviser has adopted trade allocation and
other policies and procedures that it believes are reasonably designed to
address these and other conflicts of interest.

TA IDEX VAN KAMPEN MID-CAP GROWTH

The TA IDEX Van Kampen Mid-Cap Growth Fund commenced operations on January 3,
2006; as of January 31, 2006, Dennis Lynch, David Cohen, Sam Chainani, and
Alexander Norton, the portfolio managers of the TA IDEX Van Kampen Mid-Cap
Growth Fund, did not own any shares in the Fund.

The TA IDEX Van Kampen Mid-Cap Growth Fund commenced operations on January 3,
2006; the following information is as of January 31, 2006.

As of January 31, 2006, Dennis Lynch, David Cohen, Sam Chainani, and Alexander
Norton, the portfolio managers of the TA IDEX Van Kampen Mid-Cap Growth Fund,
together managed 34 mutual funds with a total of $16,479,654,748 in assets; 4
pooled investment vehicles other than mutual funds with a total of
$1,390,162,759 in assets; and 10,711 other accounts with a total of
approximately $3,007,097,848 in assets. None of these had an advisory fee based
on the performance of the account.

ATFA pays MSIM Inc. a fee based on the assets under management of the Fund as
set forth in an investment sub-advisory agreement between MSIM Inc. and ATFA.
MSIM Inc. pays its investment professionals out of its total revenues


                                      B-35



and other resources, including the sub-advisory fees earned with respect to the
Fund. The following information relates to the period ended October 31, 2005.

PORTFOLIO MANAGER COMPENSATION STRUCTURE

Portfolio managers receive a combination of base compensation and discretionary
compensation, comprising a cash bonus and several deferred compensation programs
described below. The methodology used to determine portfolio manager
compensation is applied across all funds/accounts managed by the portfolio
manager.

BASE SALARY COMPENSATION. Generally, portfolio managers receive base salary
compensation based on the level of their position with the Investment Adviser.

DISCRETIONARY COMPENSATION. In addition to base compensation, portfolio managers
may receive discretionary compensation.

Discretionary compensation can include:

- -    CASH BONUS;

- -    MORGAN STANLEY'S EQUITY INCENTIVE COMPENSATION PROGRAM (EICP) AWARDS -- a
     mandatory program that defers a portion of discretionary year-end
     compensation into restricted stock units or other awards based on Morgan
     Stanley common stock that are subject to vesting and other conditions;

- -    INVESTMENT MANAGEMENT DEFERRED COMPENSATION PLAN (IMDCP) AWARDS -- a
     mandatory program that defers a portion of discretionary year-end
     compensation and notionally invests it in designated funds advised by the
     Investment Adviser or its affiliates. The award is subject to vesting and
     other conditions. Portfolio Managers must notionally invest a minimum of
     25% to a maximum of 50% of the IMDCP deferral into a combination of the
     designated funds they manage that are included in the IMDCP fund menu,
     which may or may not include the Fund;

- -    VOLUNTARY DEFERRED COMPENSATION PLANS -- voluntary programs that permit
     certain employees to elect to defer a portion of their discretionary
     year-end compensation and directly or notionally invest the deferred
     amount: (1) across a range of designated investment funds, including funds
     advised by the Adviser or its affiliates; and/or (2) in Morgan Stanley
     stock units.

Several factors determine discretionary compensation, which can vary by
portfolio management team and circumstances. In order of relative importance,
these factors include:

- -    Investment performance. A portfolio manager's compensation is linked to the
     pre-tax investment performance of the funds/accounts managed by the
     portfolio manager. Investment performance is calculated for one-, three-
     and five-year periods measured against a fund's/account's primary benchmark
     (as set forth in the fund's prospectus), indices and/or peer groups, where
     applicable. Generally, the greatest weight is placed on the three- and
     five-year periods.

- -    Revenues generated by the investment companies, pooled investment vehicles
     and other accounts managed by the portfolio manager.

- -    Contribution to the business objectives of the Investment Adviser.

- -    The dollar amount of assets managed by the portfolio manager.

- -    Market compensation survey research by independent third parties.

- -    Other qualitative factors, such as contributions to client objectives.

- -    Performance of Morgan Stanley and Morgan Stanley Investment Management, and
     the overall performance of the Global Investor Group, a department within
     Morgan Stanley Investment Management that includes all investment
     professionals.

Because the portfolio managers manage assets for other investment companies,
pooled investment vehicles, and/or other accounts (including institutional
clients, pension plans and certain high net worth individuals), there may be an
incentive to favor one client over another resulting in conflicts of interest.
For instance, the Investment Adviser may receive fees from


                                      B-36



certain accounts that are higher than the fee it receives from the Fund, or it
may receive a performance-based fee on certain accounts. In those instances, the
portfolio managers may have an incentive to favor the higher and/or
performance-based fee accounts over the Fund. The Investment Adviser has adopted
trade allocation and other policies and procedures that it believes are
reasonably designed to address these and other conflicts of interest.


                                      B-37