SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE
SECURITIES EXCHANGE ACT OF 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary proxy statement. [ ] Confidential, for use of the Commissioner
[X] Definitive proxy statement. only (as permitted by Rule 14a-6(e)(2).
[ ] Definitive additional materials.
[ ] Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12.
TRANSAMERICA INCOME SHARES, INC.
--------------------------------------------------------------------------------
(Name of Registrant as Specified in its Charter)
N/A
--------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11.
(1) Title of each class of securities to which transaction
applies: N/A
(2) Aggregate number of securities to which transaction
applies: N/A
(3) Per unit price or other underlying value of transaction
computed pursuant to Rule 0-11 (Set forth the amount on
which the filing fee is calculated and state how it was
determined): N/A
(4) Proposed maximum aggregate value of transaction: N/A
(5) Total fee paid: $0
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the
offsetting fee was paid previously. Identify the previous filing
by registration statement number, or the Form or Schedule and the
date of its filing.
(1) Amount Previously Paid: N/A
(2) Form, Schedule or Registration Statement No.: N/A
(3) Filing Party: N/A
(4) Date Filed: N/A
TRANSAMERICA INCOME SHARES, INC.
570 CARILLON PARKWAY
ST. PETERSBURG, FL 33716
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To be Held July 22, 2004
To the Shareholders of Transamerica Income Shares, Inc.:
Notice is hereby given that the Annual Meeting of Shareholders of Transamerica
Income Shares, Inc. (the "Fund") will be held on July 22, 2004, at 570 Carillon
Parkway, St. Petersburg, FL 33716, beginning at 9:00 a.m., Eastern Time, or as
adjourned from time to time (the "Meeting"). At the Meeting, shareholders of the
Fund will be called upon to consider the following proposals:
PROPOSAL 1: Election of Directors. To re-elect the current Directors of the
Fund as set forth in the Proxy Statement: and
PROPOSAL 2: To conduct such other business as may properly come before the
Meeting.
After careful consideration, the Directors of the Fund unanimously approved and
recommend that you vote "For" Proposal 1. Shareholders of record as of the close
of business on April 28, 2004 are entitled to vote at the Meeting. Each share is
entitled to one vote, with fractional votes for fractional shares.
By Order of the Board of Directors of Transamerica Income Shares, Inc.,
John K. Carter, Esq.
Senior Vice President, Secretary
and General Counsel
June 4, 2004
YOUR VOTE IS VERY IMPORTANT REGARDLESS OF THE NUMBER OF SHARES THAT YOU OWNED ON
THE RECORD DATE. SHAREHOLDERS WHO DO NOT EXPECT TO ATTEND THE MEETING ARE
REQUESTED TO COMPLETE, SIGN, DATE AND RETURN THE ACCOMPANYING PROXY CARD IN THE
ENCLOSED ENVELOPE, WHICH NEEDS NO POSTAGE IF MAILED IN THE UNITED STATES, OR
FOLLOW THE ENCLOSED INSTRUCTIONS RELATING TO INTERNET OR TELEPHONE VOTING.
INSTRUCTIONS FOR THE PROPER EXECUTION OF THE PROXY CARD ARE SET FORTH IN THE
ENCLOSED MATERIALS. IT IS IMPORTANT THAT PROXIES BE RETURNED PROMPTLY. WHETHER
OR NOT YOU PLAN TO ATTEND THE MEETING, PLEASE COMPLETE THE ENCLOSED PROXY CARD,
OR VOTE USING THE INTERNET OR BY TELEPHONE. IF YOU VOTE VIA THE INTERNET OR BY
TELEPHONE, PLEASE DO NOT RETURN YOUR PROXY CARD UNLESS YOU LATER DECIDE TO
CHANGE YOUR VOTE.
PROXY STATEMENT
TRANSAMERICA INCOME SHARES, INC.
ANNUAL MEETING OF SHAREHOLDERS
July 22, 2004
INTRODUCTION
This Proxy Statement ("Proxy Statement") is furnished in connection with the
solicitation of proxies by the Board of Directors (the "Board" or "Directors")
of Transamerica Income Shares, Inc. (the "Fund"), a closed-end management
investment company organized as a Maryland corporation, for use at the Annual
Meeting of Shareholders of the Fund to be held at 9:00 a.m. on July 22, 2004, at
570 Carillon Parkway, St. Petersburg, FL 33716, and any adjournments thereof
(the "Meeting"). The Board is soliciting proxies from shareholders of the Fund
with respect to the proposals set forth in the accompanying notice. A proxy card
also accompanies this Proxy Statement. It is anticipated that proxies and proxy
statements will first be mailed to shareholders on or about June 4, 2004.
SHAREHOLDER REPORTS. The Fund's most recent annual report for the year ended
March 31, 2004, were mailed to Fund shareholders on May 25, 2004, and are
available to you upon request without charge from the Fund's transfer agent,
Mellon Investor Services, Inc., Overpeck Centre, 85 Challenger Road, Ridgefield
Park, NJ 07660; telephone toll free: 1-800-288-9541.
PROPOSAL I
ELECTION OF DIRECTORS
Shareholders are asked to consider the re-election of nine Directors to the
Fund. The nominees have indicated their willingness to serve as Directors, if
elected.
The persons named as proxies intend to vote to re-elect the nine persons
currently serving as Directors, unless authority to vote for the election of all
or specified individuals is withheld by so marking the proxy card. If any
nominees are unable to serve, the persons named as proxies may vote for other
persons or vote to fix the number of directors at less than nine. Election is by
a majority vote of the shares represented at the Meeting.
The term "fund complex" in the tables below consists of the Fund (TIS),
AEGON/Transamerica Series Fund, Inc. (ATSF), Transamerica IDEX Mutual Funds (TA
IDEX), and Transamerica Index Funds, Inc. (TIF). The mailing address of each
nominee is 570 Carillon Parkway, St. Petersburg, Florida 33716. The name, age
and principal occupation for the past five years of the nominees are:
1
INDEPENDENT DIRECTOR NOMINEES:
NUMBER OF
PORTFOLIOS IN
TERM OF FUND COMPLEX OTHER
OFFICE AND OVERSEEN BY DIRECTOR-SHIPS
POSITION(S) LENGTH OF PRINCIPAL OCCUPATION OR EMPLOYMENT NOMIMEE FOR HELD BY NOMINEE
NAME AND AGE HELD WITH FUND TIME SERVED IN THE PAST 5 YEARS DIRECTOR FOR DIRECTOR
------------ -------------- ------------ ---------------------------------- ------------- ---------------
Peter R. Brown Nominee, N/A Chairman & Trustee, TA IDEX; 77 N/A
(DOB 5/10/28) Director Chairman & Director, ATSF, TIS &
TIF; Rear Admiral (Ret.) U.S. Navy
Reserve, Civil Engineer Corps.;
Chairman of the Board, Peter Brown
Construction Company (1963- 2000)
Charles C. Harris Nominee, N/A Trustee, TA IDEX; Director, ATSF & 76 N/A
(DOB 1/15/30) Director TIS.
Russell A. Kimball, Jr. Nominee, N/A Trustee, TA IDEX; Director, ATSF & 76 N/A
(DOB 8/17/44) Director TIS; General Manager, Sheraton
Sand Key Resort (1975 - present).
William W. Short, Jr. Nominee, N/A Vice Chairman & Trustee, TA IDEX; 76 N/A
(DOB 2/25/36) Director Vice Chairman & Director, ATSF &
TIS; Retired Corporate CEO &
Chairman of the Board.
Daniel Calabria Nominee, N/A Trustee, TA IDEX; Director, ATSF & 76 N/A
(DOB 3/05/36) Director TIS; Trustee (1993-present) &
President (1993-1995), Florida Tax
Free Funds.
Janice B. Case Nominee, N/A Trustee; TA IDEX; Director, ATSF & 76 Central Vermont
(DOB 9/27/52) Director TIS; Director, Central Vermont Public Service
Public Service Co. (Audit Co.
Committee); Director, Western
Electricity Coordinating Council
(Chairman, Human Resources and
Compensation Committee); Senior
Vice President (1996-2000), Vice
President (1990-1996), Director of
Customer Service & Marketing
(1987-1990), Florida Power
Corporation.
Leo J. Hill Nominee, N/A Trustee, TA IDEX; Director, ATSF & 76 N/A
(DOB 3/27/56) Director TIS; Owner & President, Prestige
Automotive Group
(2001 - present);
Market President
(1997-1998),
NationsBank;
President & CEO
(1994-1998),
Barnett Bank of the
Treasure Coast, FL.
2
INTERESTED DIRECTOR NOMINEES:
NUMBER OF
PORTFOLIOS IN
TERM OF FUND COMPLEX OTHER
OFFICE AND OVERSEEN BY DIRECTOR-SHIPS
POSITION(S) LENGTH OF PRINCIPAL OCCUPATION OR EMPLOYMENT NOMIMEE FOR HELD BY NOMINEE
NAME AND AGE HELD WITH FUND TIME SERVED IN THE PAST 5 YEARS DIRECTOR FOR DIRECTOR
------------ -------------- ----------- ---------------------------------- ------------- ---------------
Thomas P. O'Neill (1) Nominee, N/A President, AEGON Financial 76 N/A
(DOB 3/11/58) Director Services Group, Inc., Financial
Institution
Division; Trustee,
TA IDEX; Director,
ATSF & TIS;
Director, National
Aquarium of
Baltimore.
Brian C. Scott (1) Nominee, N/A Trustee, President and Chief 77 N/A
(DOB 1/19/44) Director Executive Officer, TA IDEX;
Director, Chairman & President,
TIF; Director, President & CEO,
ATSF & TIS; Manager, TIM;
President, Director & Chief
Executive Officer,
AEGON/Transamerica Fund Advisers,
Inc. (ATFA), AEGON/Transamerica
Investor Services, Inc. (ATIS) &
AEGON/Transamerica Fund Services,
Inc. (ATFS); Chief Executive
Officer, Transamerica Investors,
Inc. (TII); Director, President &
CEO, Endeavor Management Co.
(2001-2002).
(1) SUCH NOMINEE IS AN "INTERESTED PERSON" OF THE FUND AS DEFINED IN THE
INVESTMENT COMPANY ACT OF 1940 ACT ("1940 ACT") AND AN AFFILIATED
PERSON OF ATFA, THE FUND'S INVESTMENT ADVISER; TRANSAMERICA INVESTMENT
MANAGEMENT, LLC, THE FUND'S SUB-ADVISER; ATSF, TA IDEX AND TIF, ALL OF
WHICH MAY BE DEEMED TO BE AFFILIATES OF THE FUND. SUCH DIRECTOR
RECEIVED NO COMPENSATION DIRECTLY FROM THE FUND.
The Board of Directors met 4 times during the last fiscal year ended March 31,
2004.
NOMINEE OWNERSHIP OF EQUITY SECURITIES
As of December 31, 2003, the Nominees beneficially owned shares of the Fund and
any of the funds overseen by the Nominee in the same family of investment
companies as set forth in the following table:
Aggregate Dollar Range of Equity
Securities in All Funds Overseen by
Dollar Range of Equity Director or Nominee in Family of
Name of Director or Nominee Securities in the Fund Investment Companies*
--------------------------- ---------------------- -----------------------------------
Peter R. Brown............................. -0- Over $100,000
Daniel Calabria............................ -0- Over $100,000
Janice B. Case............................. -0- Over $100,000
Charles C. Harris.......................... -0- Over $100,000
Leo J. Hill................................ -0- Over $100,000
Russell A. Kimball, Jr..................... -0- Over $100,000
Thomas P. O'Neill (1)...................... -0- Over $100,000
Brian C. Scott (1)......................... -0- Over $100,000
William W. Short, Jr....................... -0- Over $100,000
* THE FAMILY OF INVESTMENT COMPANIES CONSISTS OF ATSF, TA IDEX AND TIF.
(1) SUCH NOMINEE IS AN "INTERESTED PERSON" OF THE FUND AS DEFINED IN THE
1940 ACT, AS DISCUSSED ABOVE.
3
COMMITTEES.
THE AUDIT COMMITTEE. The Fund has a standing Audit Committee, that currently
consists of Peter R. Brown, Charles C. Harris, Russell A Kimball, Jr., and
William W. Short. Messrs. Brown, Harris, Kimball and Short are not "interested
persons" of the Fund as defined in the 1940 Act ("Independent Director"), and
are "independent" directors for purposes of New York Stock Exchange Listing
Standards. The functions performed by the Audit Committee include the
recommendation of the independent public accountants for the Fund to be selected
by the Board, the review of the scope and results of audit services, the review
of the adequacy of internal accounting and financial controls, the review of
material changes in accounting principals and practices and other matters when
requested from time to time by the Board. The Audit Committee met twice in 2003.
The Board has adopted a written charter for the Fund's Audit Committee, which
appears as Appendix B to this proxy statement.
THE NOMINATING COMMITTEE. The Nominating Committee recommends nominations for
membership on the Board of Directors. It evaluates candidates' qualifications
for Board membership and, with respect to nominees for positions as Independent
Directors, their independence from the Fund's investment adviser and other
principal service providers. The Committee generally meets annually to identify
and evaluate nominees for director and to make its recommendations to the Board
at the time of the Board's March meeting, and at such other times as a
nomination be required. The Committee also periodically reviews director
compensation and will recommend any appropriate changes to the Board as a group.
The members of the Fund's Nominating Committee are Messrs. Brown, Harris and
Kimball, each an "independent" director for the purposes of the New York Stock
Exchange Listing Standards.
The Nominating Committee does not have a policy with regard to the consideration
of director candidates recommended by shareholders as it does not currently
contemplate adding Board members or otherwise changing the Board's composition.
Potential Nominees are recommended and evaluated based on certain criteria
relating to their background, education, understanding and experience in the
financial and investment industry; as well as character, integrity and
commitment. The Board of Directors does not currently have a Nominating
Committee charter. However, in light of the SEC's recent adoption of enhanced
nominating committee disclosure requirements, and proposed rules regarding
security holder director nominations, the Board may adopt a Nominating Committee
charter and a policy regarding the consideration of director candidates
recommended by stockholders in the future.
REMUNERATION OF DIRECTORS.
The Fund pays each Independent Director an annual retainer of $1,500 plus $1,000
for each regular Board meeting attended in person and $1,000 for each such
meeting attended telephonically. The Fund also reimburses each Director for
reasonable expenses incurred in connection with such meetings. For the fiscal
year ended March 31, 2004, the Independent Directors, as a group, received
compensation in the amount of $ 41,250.00.
The following table sets forth the compensation paid to each Independent
Director of the Fund for the fiscal year ended March 31, 2004. Directors who are
"interested persons" of the Fund do not receive any compensation from the Fund.
Aggregate Compensation from Total Compensation from Fund
Name Fund and Fund Complex
---- --------------------------- ----------------------------
Peter R. Brown $ 6,250 $ 170,375
Charles C. Harris $ 6,250 $ 162,375
Russell A. Kimball, Jr. $ 6,250 $ 153,375
William W. Short, Jr. $ 5,750 $ 161,875
Daniel Calabria $ 5,750 $ 155,875
Janice B. Case $ 5,500 $ 152,625
Leo J. Hill $ 5,500 $ 152,625
4
FUND OFFICERS.
The following table shows the executive officers of the Fund, other than shown
above, their ages, positions with the Fund and principal occupations during the
past five years:
Term of Office
and Length of Principal Occupation During the
Name Position(s) Held With Fund Time Served(1) Past Five Years
---- -------------------------- -------------- -------------------------------
John Carter Senior Vice President, From 2002 to General Counsel, Sr. Vice
(DOB 4/24/61) Secretary & General Counsel present President & Secretary, TA IDEX,
ATSF & TIF; Director, General
Counsel, Senior Vice President &
Secretary, ATFS, ATFA & ATIS;
Vice President & Senior Counsel,
Western Reserve Life Assurance
Co. of Ohio (WRL); Vice
President, AFSG Securities
Corporation (AFSG); Vice
President, Secretary &
Anti-Money Laundering Officer,
TII; Vice President of TIM; Vice
President & Counsel (1997 -
1999), Salomon Smith Barney.
Kim Day Senior Vice President, From 2002 to Senior Vice President, Treasurer
(DOB 8/2/55) Treasurer & Principal present & Principal Financial Officer,
Accounting Officer TA IDEX, ATSF & TIF;
Senior Vice President &
Treasurer, ATFS, ATFA, ATIS &
TII; Assistant Vice President,
WRL; Vice President, TIM.
(1) THE EXECUTIVE OFFICERS ARE ELECTED AND APPOINTED BY THE DIRECTORS AND
HOLD OFFICE UNTIL THEY RESIGN, ARE REMOVED OR ARE OTHERWISE
DISQUALIFIED TO SERVE.
THE BOARD OF DIRECTORS OF THE FUND, INCLUDING THE INDEPENDENT DIRECTORS,
RECOMMENDS THAT SHAREHOLDERS VOTE "FOR" PROPOSAL 1.
OTHER BUSINESS
The Board and Fund management know of no business to be presented to the Meeting
other than the matters set forth in this Proxy Statement, but should any other
matter requiring a vote of shareholders arise, the proxies will vote thereon
according to their best judgment.
OTHER INFORMATION
INFORMATION ON INDEPENDENT PUBLIC ACCOUNTANTS. PricewaterhouseCoopers LLP
("PwC") has been selected by the Board as independent public accountant to
examine the financial statements of the Fund for the fiscal year ended March 31,
2004 and again for the fiscal year ending March 31, 2005. Representatives from
PwC are not expected to attend the Meeting.
FEES. The following table sets forth the aggregate fees billed for professional
services rendered by PwC to the Fund during the most recent fiscal year, and by
Ernst & Young, LLP (E&Y), the previous auditor for fiscal year ended March 31,
2003:
Fiscal Year Ended Audit Fees Audit-Related Fees Tax Fees All Other Fees Totals
----------------- ---------- ------------------ -------- -------------- ------
March 31, 2004 $ 30,000 -0- $ 1,000 -0- $ 31,000
March 31, 2003 $ 39,000 -0- -0- -0- $ 39,000
5
All of the services described in the table above were approved by the Audit
Committee pursuant to its pre-approval policies and procedures listed below.
CHANGE OF INDEPENDENT PUBLIC ACCOUNTANT. As previously indicated, E&Y served as
independent public accountant for the fiscal year ended March 31, 2003. On June
10, 2003, upon recommendation by the Fund's Audit Committee, the Fund's Board
selected PwC to replace E&Y as the Fund's independent public accountant for the
fiscal year ended March 31, 2004. Because PwC serves as independent public
accountant for all other funds in the fund complex, this recommendation and
subsequent approval to select them as independent public accountant for the Fund
was based on economies of scale. The Fund had no disagreements with E&Y on any
matter of accounting principles or practices, financial statement disclosure, or
auditing scope of procedure that would have caused the Fund to dismiss E&Y, nor
were there any adverse opinions or disclaimer of opinion, modification, or
qualification. Similarly, there were no "reportable events" of the kind
described in Item 304(a)(1)(v) of Regulation S-K under the Securities Exchange
Act of 1934.
NON-AUDIT SERVICES.
For the fiscal years ended March 31, 2004 and March 31, 2003, PwC and E&Y, the
Fund's previous auditor, did not provide any non-audit services to the Fund
(other than $1,000 of tax services), the Fund's investment adviser (ATFA) or any
entity controlling, controlled by or under common control with ATFA.
PRE-APPROVAL POLICIES AND PROCEDURES.
The pre-approval policies and procedures of the Fund contained in the Fund's
Audit Committee Charter require that the Fund's Audit Committee pre-approve all
audit services and non-audit services provided by PwC or any other independent
public accountant engaged by the Fund (the "Auditor"). The Audit Committee must
pre-approve any engagement of the Auditor to provide non-audit services to (i)
the Fund's investment adviser, and (ii) any entity controlling, controlled by,
or under common control with the Fund's investment adviser that provides ongoing
services to the Fund (entities in (i) and (ii), hereinafter "Service
Affiliates") if the services directly relate to the operations and financial
reporting of the Fund ("Covered Non-Audit Services"). The policies and
procedures permit the Audit Committee to pre-approve the provision of types or
categories of non-audit services to the Fund and Covered Non-Audit Services to
the Service Affiliates.
The policies and procedures include an exception to the pre-approval requirement
for certain DE MINIMIS non-audit services, when (i) the aggregate fees and costs
of all non-audit services that, but for this limited exception, would require
pre-approval by the Audit Committee constitutes no more than 5% of the total
amount of revenues paid by the Fund to the Auditor during the last fiscal year
during which such non-audit services are provided; (ii) at the time of
engagement for such services, the Fund did not recognize that the services were
"non-audit services"; and (iii) each such service is promptly brought to the
attention of and approved by the Audit Committee prior to the completion of the
service. The exception to the pre-approval requirement was not invoked with
respect to any of the non-audit services described above.
The Audit Committee approved 100% of the audit and non-audit fees listed in the
table above.
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934. Section
16(a) of the Securities Exchange Act of 1934 and Section 30(h) of the 1940 Act
require the Fund's officers, directors and investment adviser, the affiliated
persons of the investment adviser, and the beneficial owners of more than 10% of
the Fund's shares ("Reporting Persons") to file initial reports of ownership and
reports of changes in ownership with the SEC and the New York Stock Exchange,
and to provide copies of these reports to the Fund. Based solely on its review
of the copies of such forms received by it and written representations of
certain Reporting Persons, to the Fund's knowledge, no person owns beneficially
more than 10% of its shares and during the fiscal year ended March 31, 2004, and
Reporting Persons complied with all applicable filing requirements.
6
FUND SERVICE PROVIDERS. The Fund's investment adviser, AEGON/Transamerica Fund
Advisers, Inc., is located at 570 Carillon Parkway, St Petersburg, Florida,
33716. Investors Bank & Trust Company, the Fund's custodian, is located at 200
Clarendon Street, 16th Floor, Boston, Massachusetts 02116. Mellon Investor
Services, Inc., the Fund's transfer agent, is located at Overpeck Centre, 85
Challenger Road, Ridgefield Park, NJ 07660.
VOTING INFORMATION
PROXY SOLICITATION. In order to obtain the necessary quorum at the Meeting, in
addition to solicitations of proxies by mail, proxy solicitations may also be
made by telephone, e-mail or personal interviews conducted by officers of the
Fund; regular employees of AEGON/Transamerica Fund Advisers, Inc., the Fund's
investment adviser (the "Investment Adviser"), or other representatives of the
Fund. The Fund has retained ALAMO Direct as the Fund's proxy solicitor for the
Meeting of shareholders.
EXPENSES. The expense of preparing, printing and mailing the accompanying form
of proxy, the Notice and the Proxy Statement will be borne by the Fund. The cost
of retaining retained ALAMO Direct as the Fund's proxy solicitor for the Meeting
is expected to cost approximately $3,600.00.
SHAREHOLDER VOTING. The Board has fixed the close of business on April 28, 2004,
as the record date (the "Record Date") for the determination of Fund
shareholders entitled to notice of and to vote at the Meeting. Shareholders of
record, as to any matter on which they are entitled to vote, will be entitled to
one vote per share on all business of the Meeting and an appropriate fraction of
a vote for each fractional share. There were 69,318,771 shares outstanding on
the Record Date, representing a market value of $23.00 per share, of which 92.4%
are owned by shareholders, and 7.6% are owned by affiliates of the Fund.
Appendix A sets forth the shareholders entitled to cast 5% or more of the Fund's
votes. To the best of the Fund's knowledge, as of the Record Date, no
shareholder was entitled to cast 5% or more of the Fund's votes, except as
stated in Appendix A. As of the Record Date, the officers and the Directors of
the Fund as a group beneficially owned less than 1% of the Fund's shares.
A quorum constituting a majority of the Fund's shares outstanding as of the
Record Date represented in person or by proxy, must be present for the
transaction of business at the Meeting. If a quorum is not present at the
Meeting, or if a quorum is present but sufficient votes to approve the proposal
are not received, the persons named as proxies on the enclosed proxy card may
propose one or more adjournments of the Meeting to permit further solicitation
of proxies. In determining whether to adjourn the Meeting, the following factors
may be considered: the nature of the proposal that is the subject of the
Meeting, the percentage of votes actually cast, the percentage of negative votes
actually cast, the nature of any further solicitation and the information to be
provided to shareholders with respect to the reasons for the solicitation. Any
adjournment will require the affirmative vote of a majority of those shares
represented at the Meeting in person or by proxy. A shareholder vote may be
taken on the proposal in this Proxy Statement if sufficient votes have been
received for approval.
VOTING. In order that your shares may be represented at the Meeting, you are
requested to:
-- indicate your instructions on the enclosed proxy card;
-- date and sign the proxy card;
-- mail the proxy card promptly in the enclosed envelope, which
requires no postage if mailed in the United States; and
-- allow sufficient time for the proxy card to be received on or
before 5:00 p.m., Eastern Time, June 30, 2004.
If the enclosed proxy is properly executed and returned in time to be voted at
the Meeting, the shares represented by
7
the proxy will be voted in accordance with the instructions marked therein.
Unless instructions to the contrary are marked on the proxy, it will be voted
FOR the matters listed in the accompanying Notice of Meeting and proxy. Any
shareholder who has given a proxy has the right to revoke it at any time prior
to its exercise either by attending the Meeting and voting his or her shares in
person, or by submitting a letter of revocation or a later-dated proxy to the
Fund at the above address prior to the date of the Meeting.
You may also vote via the Internet, by telephone or by facsimile. Instructions
are enclosed in these materials. If you elect to vote using one of these
methods, DO NOT return your proxy card unless you later elect to change your
vote.
REQUIRED VOTE. Approval of Proposal 1, re-election of the Directors, requires an
affirmative vote of a majority of shares present at the Meeting in person or by
proxy. Fund shareholders will vote together as a single class on the election of
nominees for the Fund.
Abstentions and broker nonvotes will not be counted in favor of or against the
proposal. Broker "nonvotes" occur when the Fund receives a proxy from a broker
or nominee who does not have discretionary power to vote on a particular matter
and the broker or nominee has not received instructions from the beneficial
owner or other person entitled to vote the shares represented by the proxy.
Pursuant to rules and policies of the New York Stock Exchange, members of the
exchange who exercise investment discretion pursuant to an advisory contract for
the beneficial owner may vote on Proposal I without instructions from the
beneficial owners of the Fund's shares.
SHAREHOLDERS' PROPOSALS. Shareholders wishing to submit proposals for inclusion
in a proxy statement for a subsequent shareholders' meeting should send their
written proposals to the Secretary of the Fund at 570 Carillon Parkway, St.
Petersburg, Florida 33716 no later than January 30, 2005 in order to be included
in the Fund's proxy statement and form of proxy relating to that meeting. Notice
of a proposal will be considered untimely if it is submitted after January 30,
2005. However, timely submission of a proposal does not necessarily mean that
the proposal will be included in the Fund's proxy statement. If a shareholder
fails to give timely notice, then the persons named as proxies in the proxies
solicited by the Board for the Fund's annual meeting of shareholders in 2005 may
exercise discretionary voting power, to the extent permitted by NYSE rules, with
respect to any such proposal.
THE FUND IS REQUIRED TO HOLD ANNUAL MEETINGS OF SHAREHOLDERS. TO ENSURE THE
PRESENCE OF A QUORUM AT THE MEETING AND HELP SAVE THE COST OF FOLLOW-UP
MAILINGS, PROMPT EXECUTION AND RETURN OF THE PROXY CARD IS REQUESTED.
By Order of the Board of Directors,
Transamerica Income Shares, Inc.
St. Petersburg, FL
8
APPENDIX A
SHAREHOLDERS ENTITLED TO CAST 5% OR MORE
OF FUND VOTES
Name and Address of Shareholder Number of Shares % of Fund
------------------------------- ---------------- ---------
Wilmington Trust Company 479,575 7.6%
1100 N. Market Street
Wilmington, DE 19801
CEDE & Co. 4,780,832 75.7%
P.O. Box 20
Bowling Green Station
New York, NY 10274-0020
A-1
APPENDIX B
AUDIT COMMITTEE CHARTER
TRANSAMERICA INCOME SHARES, INC. ("THE FUND")
1. COMPOSITION. The Audit Committee (the "Committee") shall be composed of
a minimum of three members, each of whom must be (i) a member of the
Board and (ii) independent.
INDEPENDENCE. To be an "independent" director, the Board must
affirmatively determine that the director has no material relationship
with the Fund complex (and disclose these determinations).
In general, former employees of the company, individuals affiliated
with or employed by a current or former auditor and certain other
individuals may not be independent until five years after the
employment, affiliation or the auditing relationship has ended.
2. PURPOSES. The purposes of the Committee are:
a. assist Board oversight of:
(i) the integrity of the company's financial statements;
(ii) the company's compliance with legal and regulatory
requirements;
(iii) the independent auditor's qualifications and
independence;
(iv) the performance of the company's internal audit
function and independent auditors; and
b. prepare the report that SEC rules require to be included in
the company's annual proxy statement.
3. DUTIES AND RESPONSIBILITIES. To carry out its purposes, the Committee
shall have the following duties and responsibilities:
a. to ensure that the outside auditor submits, on a periodic
basis to the Audit Committee, a formal written statement
delineating all relationships between the auditor and the
company;
b. to actively engage in a dialogue with the outside auditor with
respect to any disclosed relationships or services that may
impact the objectivity and independence of the outside
auditor;
c. to recommend that the Board take appropriate action in
response to the outside auditor's report to satisfy itself of
the outside auditor's independence.
d. to have the sole authority to retain and terminate the
company's independent auditors;
e. to at least annually, obtain and review a report by the
independent auditor describing: (1) the firm's internal
quality-control procedures; (2) any material issues raised by
the most recent internal quality-control review, or peer
review, of the firm, or by any inquiry or investigation by
governmental or professional authorities, within the preceding
five years, respecting one or more independent audits carried
out by the firm, and any steps taken to deal with any such
issues; and (3) all relationships between the independent
auditor and the company (to assess the auditor's
independence);
f. to discuss the annual audited financial statements and
periodic financial statements with management and the
independent auditor, including the company's disclosures under
"MD&A";
g. to discuss earnings press releases (if applicable), as well as
financial information and earnings guidance provided to
analysts and rating agencies;
h. as appropriate, may consult, obtain advice and assistance from
outside legal, accounting and other advisers;
i. to discuss policies with respect to risk assessment and risk
management;
j. to meet separately, periodically, with management, with
internal auditors (or other personnel responsible for the
internal audit function) and with independent auditors;
k. to review with the independent auditor any audit problems or
difficulties and management's response (including resolution
of disagreements between management and the auditor regarding
financial reporting);
l. to set clear hiring policies for employees or former employees
of the independent auditors; and
m. report regularly to the Board.
B-1
n. APPOINTMENT & TERMINATION OF AUDITOR AND PRE-APPROVAL OF AUDIT
SERVICES. The outside auditor for the Fund is ultimately
accountable to the Board and the Audit Committee; and the
Audit Committee and Board have the sole authority and
responsibility to select, evaluate, and where appropriate,
replace the outside auditor (or to nominate the outside
auditor to be proposed for shareholder approval in any proxy
statement).
o. NON-AUDIT SERVICES. The Audit Committee shall have sole
authority to approve any significant non-audit relationship
with the independent auditors. The auditor may provide to the
Fund certain permissible non-audit services if they are
pre-approved by the Audit Committee. The auditors are
prohibited from providing the following non-audit services:
(i) bookkeeping or other services related to the
accounting records or financial statements of the
Company;
(ii) financial information systems design and
implementation;
(iii) appraisal or valuation services, fairness opinions,
or contribution-in-kind reports;
(iv) actuarial services;
(v) internal audit outsourcing services;
(vi) management functions or human resources;
(vii) broker/dealer, investment adviser, or investment
banking services;
(viii) legal services and expert services unrelated to the
audit; and
(ix) any other service that the Public Company Accounting
Oversight Board ("PCAOB") determines, by regulation,
is impermissible.
p. PERMISSIBLE NON-AUDIT SERVICES. All permissible non-audit
services provided to the company by its auditor must be
pre-approved by the Audit Committee. The Audit Committee may
delegate to one or more designated members of the Audit
Committee the authority to grant pre-approvals of services
permitted by the Sarbanes-Oxley Act of 2002.
The per-approval requirements are waived for certain de
minimis, non-audit services. Non-audit services are de minimus
if: (i) the aggregate amount of all such non-audit services
provided to the company constitute not more than 5% of the
total amount of revenues paid by the company to its auditor
during the fiscal year in which the services are provided;
(ii) such services were not recognized by the company at the
time of the engagement to be non-audit services; and (iii)
such services are promptly brought to the attention of the
Audit Committee of the company and approved prior to the
completion of the audit by either the Audit Committee or
delegee.
q. PRE-APPROVAL OF NON-AUDIT SERVICES FOR RELATED ENTITIES. The
Audit Committee must also pre-approve not only the non-audit
services provided to the Fund, but also non-audit services
provided to (i) the Fund's investment adviser and (ii) any
entity controlling, controlled by, or under common control
with the investment adviser (if that entity provides ongoing
services to the Fund), if such services relate directly to the
operations and financial reporting of the Fund.*
Such pre-approval would not be required as to audit or
non-audit services provided to:
(i) another fund registrant within the Fund's complex;
(ii) a sub-adviser that primarily provides portfolio
management services and is under the direction of
another investment adviser; or
(iii) other entities within the Fund complex that do not
provide services to the Fund.
The Fund's Audit Committee may establish procedures and
policies for pre-approving non-auditing services provided to
the Fund, and to its investment adviser and other entities
that provides services to the Fund.
B-2
The 5% de minimis amount, as described above, is determined by
aggregating the total amount of revenues paid to the Fund's
auditor for services that were subject to the pre-approval
requirements during the fiscal year in which the services were
provided.
The auditor must report to the Audit Committee ALL non-audit
services provided by the auditor to the Fund complex, and the
associated fees, even where pre-approval is not required.
r. TAX SERVICES. Tax services are non-audit services which may be
provided to an audit client subject to pre-approval by the
Committee. The auditor may continue to provide tax compliance,
tax planning and tax advice to audit clients, subject to the
pre-approval requirements. In certain situations, such as tax
court representation or other situations involving public
advocacy, these services may not be provided.
s. ROTATION. The Audit Committee shall review and evaluate the
lead audit partner, assure regular rotation of the lead audit
partner as required by law, and consider whether there should
be regular rotation of the auditing firm itself.
t. REPORTS TO THE AUDIT COMMITTEE. The Audit Committee must, at
least annually, obtain and review a report by the independent
auditor describing: (i) the firm's internal quality-control
procedures; (ii) any material issues raised by the most recent
internal quality-control review, or peer review, of the firm,
or by any inquiry or investigation by governmental or
professional authorities, within the preceding five years,
respecting one or more independent audits carried out by the
firm, and any steps taken to deal with any such issues; and
(iii) all relationships between the independent auditor and
the company (to assess the auditor's independence).
After reviewing this report, the Audit Committee should
evaluate the auditor's qualifications, performance and
independence and report to the Board. This review includes an
evaluation of the lead partner of the auditor and should
address whether the company should require rotation of the
audit firm itself.
u. COMPLAINTS. The Audit Committee shall establish procedures
for:
(i) the receipt, retention and treatment of complaints
received by the company regarding accounting,
internal accounting controls or auditing matters; and
(ii) the confidential, anonymous submission by employees
of the company of concerns regarding questionable
accounting or auditing matters.
v. FINANCIAL EXPERTISE. Each member of the Committee must be
financially literate, as determined by the Board (or must
become so in a reasonable amount of time after his appointment
to the Committee.) At least one member of the Committee must
have accounting or related financial management expertise, as
determined by the Board. Companies must disclose whether their
Audit Committee includes an "audit committee financial
expert." If it does not include an audit committee financial
expert, the company must disclose the reason why not. Such
person must possess the following attributes:*
(i) an understanding of GAAP and financial statements;
(ii) an ability to assess the general application of such
principles in connection with the accounting for
estimates, accruals and reserves;
(iii) experience preparing, auditing, analyzing or
evaluating financial statements that present a
breadth and level of complexity of accounting issues
that are generally comparable to the breadth and
complexity of issues that can reasonably be expected
to be raised by the company's financial statements,
or experience actively supervising one or more
persons engaged in such activities;
(iv) an understanding of internal controls and procedures
for fund reporting; and
(v) an understanding of audit committee functions.
B-3
Such attributes of a Committee member must have been acquired:
(a) through education and experience as a public
accountant or auditor, or a principal financial
officer, controller, or principal accounting officer
of a company;
(b) through experience actively supervising a principal
financial officer, principal accounting officer,
controller, public accountant, auditor or person
performing similar functions, or experience
overseeing or assessing the performance of companies
or public accountants; or
(c) through other experience.
w. CODE OF ETHICS. The Fund must adopt and disclose a code of
business conduct and ethics for directors, officers and
employees, and promptly disclose any waivers of the code for
directors or executive officers.
The Committee shall confirm that the Fund has met the Code
requirements.**
x. DISCLOSURE OF AUDIT SERVICES AND FEES IN SEC FILINGS. The
Committee shall determine that the Fund has met disclosure of
audit services and fees in the information as required by Form
N-CSR, and in proxy and information statements.***
y. CERTIFICATIONS. The Audit Committee shall require certifying
officers disclose to the Committee the following information
if applicable:
(i) all significant deficiencies in the internal controls
which could adversely affect the Fund's ability to
record, process, summarize and report financial data
and any material weaknesses in the Fund's internal
controls; and
(ii) any fraud, whether or not material, that involves
management or other employees who play a significant
role in the Fund's internal controls.
4. The Committee shall meet at least semi-annually and is empowered to
hold special meetings, as circumstances require.
5. The Committee shall meet with the Treasurer of the Fund at least
semi-annually and any other Officer as the Committee pleases.
6. COMPENSATION. Directors fees are the only compensation an Audit
Committee member may receive from the Fund (receipt of deferred
compensation is permitted, provided the "independence" definition is
met and the deferred compensation is not contingent on continued
service).
7. The Committee must evaluate its own performance and review and reassess
its charter, at least on an annual basis, with respect to its duties
and responsibilities.
8. The Committee shall have the resources and authority appropriate to
discharge its responsibilities, including the authority to retain
special counsel and other experts or consultants at the expense of the
Fund.
*Disclosure regarding the status of an Audit Committee's financial expert status
will be required on annual reports on Form N-CSR for fiscal years ending on or
after July 15, 2003.
**Disclosure of the Fund's code of ethics, if any, as well as any waivers
thereof or amendments thereto, under the new Sarbanes-Oxley rules will be
required on annual reports on Form N-CSR for fiscal years ending on or after
July 15, 2003. Only amendments and/or waivers occurring after the date on which
the first annual report requiring disclosure of the code of ethics itself need
be disclosed.
***Certain disclosures must be provided per Sarbanes-Oxley in applicable filings
for the first fiscal year ending after December 15, 2003.
B-4
TRANSAMERICA INCOME SHARES, INC. (THE "FUND")
570 CARILLON PARKWAY
ST. PETERSBURG, FL 33716
The undersigned hereby appoints each of John K. Carter and Brian C. Scott as
attorney and proxy with full power of substitution to vote, as designated below,
all shares of the above Fund that the undersigned is entitled to provide
instructions for at the Annual Meeting of Shareholders to be held July 22, 2004
at 9:00 a.m., at 570 Carillon Parkway, St. Petersburg, FL 33716, and at any and
all adjournments thereof, and instructs him to vote as indicated with respect to
the matters set forth below and described in the Notice of Meeting and Proxy
Statement.
VOTE VIA THE INTERNET: https://vote.proxy-direct.com
VOTE VIA THE TELEPHONE: 1-866-241-6192
OR:
Please mark boxes in blue or black ink.
Proposal 1: To re-elect the current Directors of the Fund as listed below:
For All [ ] Against All [ ] For All Except __________
(1) Peter R. Brown
(2) Daniel Calabria
(3) Janice B. Case
(4) Charles C. Harris
(5) Leo J. Hill
(6) Russell A. Kimball, Jr.
(7) William W. Short, Jr.
(8) Brian C. Scott
(9) Thomas P. O'Neill
In their discretion, John K. Carter and/or Brian C. Scott, on behalf of the
Fund, may transact such other business as may properly come before the meeting
and any adjournment(s) thereof.
THIS PROXY IS SOLICITED BY THE FUND'S BOARD OF DIRECTORS AND WILL BE VOTED FOR
THE ABOVE PROPOSAL UNLESS OTHERWISE INDICATED. The Board recommends that you
vote "For" the proposal.
Signature(s) should be exactly as name or names appearing on this proxy. If
shares are held jointly, each holder should sign. If signing is by attorney,
executor, administrator, trustee or guardian, please give full title.
Dated:
----------------------------------
-----------------------------------------
Signature(s)
-----------------------------------------
Signature(s)
SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED ENVELOPE.