[Federal Register Volume 63, Number 76 (Tuesday, April 21, 1998)]
[Notices]
[Pages 19771-19772]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-10501]
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SECURITIES AND EXCHANGE COMMISSION
[Rel. No. IC-23115; File No. 812-11000]
Transamerica Investors, Inc., et al.; Notice of Application
April 14, 1998.
AGENCY: Securities and Exchange Commission (the ``Commission'' or
``SEC'').
ACTION: Notice of application for an order under Section 17(b) of the
Investment Company Act of 1940 (the ``1940 Act'').
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SUMMARY OF APPLICATION: Applicants seek an order to permit the
Transamerica High-Yield Bond Fund separate account (the ``Separate
Account'') of Transamerica Life Insurance and Annuity Company
(``Transamerica Life''), to transfer its portfolio of assets to the
Transamerica Premier High-Yield Bond Fund (the ``Fund''), a series of
Transamerica Investors, Inc. (``Transamerica Investors''), in exchange
for shares of the Fund.
APPLICANTS: Transamerica Investors and Transamerica Life (collectively,
the ``Applicants'').
FILING DATE: The application was filed on February 9, 1998.
HEARING OR NOTIFICATION OF HEARING: An order granting the application
will be issued unless the SEC orders a hearing. Interested persons may
request a hearing by writing to the Secretary of the SEC and serving
the Applicants with a copy of the request, personally or by mail.
Hearing requests must be received by the SEC by 5:30 p.m. on May 11,
1998, and must be accompanied by proof of service on the Applicants in
the form of an affidavit or, for lawyers, a certificate of service.
Hearing requests should state the nature of the requester's interest,
the reason for the request and the issues contested. Persons may
request notification of a hearing by writing the Secretary of the SEC.
ADDRESSES: Secretary, Securities and Exchange Commission, 450 Fifth
Street, N.W., Washington, D.C. 20549. Applicants, c/o Reid A. Evers,
Transamerica Investors, Inc., 1150 South Olive, Suite 2100, Los
Angeles, California 90015.
FOR FURTHER INFORMATION CONTACT: Keith Carpenter, Senior Counsel, or
Kevin M. Kirchoff, Branch Chief, Office of Insurance Products, Division
of Investment Management, at (202) 942-0670.
SUPPLEMENTARY INFORMATION: The following is a summary of the
application. The complete application is available for a fee from the
SEC's Public Reference Branch, 450 5th Street, N.W., Washington, D.C.
20549 (tel. (202) 942-8090).
Applicants' Representations
1. Transamerica Investors is registered under the 1940 Act as an
open-end management investment company of the series type.
2. Transamerica Life is a life insurance company incorporated under
the laws of North Carolina which is principally engaged in writing
individual and group life insurance policies and annuity contracts.
Transamerica Life is wholly owned by Transamerica Occidental Life
Insurance Company, which is wholly owned by Transamerica Insurance
Corporation of California, which is wholly owned by Transamerica
Corporation.
3. The Separate Account is a segregated asset account of
Transamerica Life to which assets are allocated to support benefits
payable under certain group annuity contracts issued by Transamerica
Life (the ``Separate Account Contracts''). The Separate Account is
excepted from the definition of investment company pursuant to Section
3(c)(11) of the 1940 Act and interests in the Separate Account are
exempt securities pursuant to Section 3(a)(2) of the Securities Act of
1933. The owners of Separate Account Contracts (the ``Separate Account
Contractholders'') own the Separate Account Contracts as funding
vehicles for employee benefit plans. The Separate Account consists of a
single portfolio of assets. The investment objective of the Separate
Account is to seek to achieve a high total return (income plus capital
changes) from high yield fixed income securities.
4. Transamerica Investment Services, Inc. (the ``Adviser'') serves
as the investment adviser to Transamerica Investors and is a wholly-
owned subsidiary of Transamerica Corporation. The Adviser also serves
as an investment adviser to the Separate Account.
5. The Fund is being added as a new series to Transamerica
Investors. Because the investment objectives, policies and restrictions
of the Fund would mirror those of the Separate Account, the assets of
the Separate Account will, if the exemptive relief sought in the
application is granted, be transferred to the Fund (the ``Proposed
Transfer'') in exchange for institutional class shares of the Fund. The
Separate Account would, in effect, be converted to a unit investment
trust-type separate investment account that would invest in a
corresponding series of Transamerica Investors.
6. On the effective date of the Proposed Transfer, Transamerica
Life, on behalf of the Separate Account, would transfer the portfolio
of assets of the Separate Account in exchange for institutional class
shares of the Fund. Transamerica Life would record shares issued by the
Fund as assets of the Separate Account. The Proposed Transfer would be
carried out in compliance with Section 22(c) of the 1940 Act and Rule
22c-1 thereunder. The value of the net assets of the Separate Account
would be determined as of the business day immediately preceding the
effective date of the Proposed Transfer. The number of shares of the
Fund to be issued to the Separate Account would be determined by
dividing the value of the net assets to be transferred from the
Separate Account by the current per share value of the Fund's shares.
Accordingly, the interests of the Separate Account Contractholders in
the Fund immediately following the Proposed Transfer would be
equivalent to their interests in the assets of the Separate Account
immediately prior to the Proposed Transfer.
Applicants' Legal Analysis
1. Section 17(a)(1) of the 1940 Act prohibits any affiliated person
of a registered investment company, or an affiliated person of an
affiliated person, from selling any security or other property to a
registered investment company. Section 17(a)(2) of the 1940 Act
prohibits any of the persons described above from purchasing any
security or other property from a registered investment company.
2. Each Applicant may be deemed to be an affiliated person of the
other Applicant or an affiliated person of an affiliated person of the
other Applicant under Section 2(a)(3) of the 1940 Act, and the Proposed
Transfer may require an exemption from Section 17(a) of the
[[Page 19772]]
1940 Act pursuant to Section 17(b) of the 1940 Act.
3. Section 17(b) of the 1940 Act provides that the Commission may
grant an order exempting a transaction prohibited by Section 17(a) of
that Act upon application if evidence establishes that: (a) The terms
of the proposed transaction, including the consideration to be paid or
received, are reasonable and fair and do not involve overreaching on
the part of any person concerned; (b) the proposed transaction is
consistent with the policy of each registered investment company
concerned, as recited in its registration statement or reports filed
under the 1940 Act; and (c) the proposed transaction is consistent with
the general purposes of the 1940 Act.
4. Applicants represent that the terms of the Proposed Transfer, as
described in the application, are reasonable and fair (including the
consideration to be paid and received), do not involve overreaching,
are consistent with the investment policies of the Fund, and are
consistent with the general purposes of the 1940 Act.
5. Applicants believe that the Proposed Transfer would benefit the
Fund in several ways. Usually, when a new series of an investment
company is established, expenses remain relatively high and investments
are limited until the asset size of the new series reaches a high
enough level to support expenses and permit the necessary latitude in
investment discretion. The Proposed Transfer of all of the assets of
the Separate Account (valued at approximately $68 million as of
December 31, 1997) to the Fund would avoid these problems. The Proposed
Transfer would be effected in conformity with Section 22(c) of the 1940
Act and Rule 22c-1 thereunder. Therefore, after the Proposed Transfer,
the Separate Account Contractholders would have interests that, in
practical economic terms, do not differ in any measurable way from such
interests immediately prior to the Proposed Transfer. The Proposed
Transfer would not require liquidation of any assets of the Separate
Account or Transamerica Investors because the transfer would take the
form of an exchange of portfolio securities of the Separate Account for
shares of the Fund. Because the investment policies and restrictions
under the Separate Account are in substance identical prior to and
following the Proposed Transfer, the only sales of the Separate Account
assets following the Proposed Transfer would be those arising in the
ordinary course of business. Therefore, neither the Separate Account
nor Transamerica Investors will incur any extraordinary costs, such as
brokerage commissions, in effecting the transfer of assets, as would be
the case if the Separate Account were required to liquidate its
portfolio in order to purchase shares of the Fund, and the Fund, in
turn, were to use such purchase proceeds for investment in portfolio
securities. Moreover, the Separate Account might be forced to sustain
losses caused by the untimely sale of one or more of its portfolio
securities. On the basis of the foregoing, the Applicants submit that
the terms of the Proposed Transfer are reasonable and fair and do not
involve overreaching, and that there is no inadequacy of consideration
to be received by any party to the transaction.
6. The investment objective of the Fund, the shares of which would
be issued to the Separate Account in exchange for assets of the
Separate Account, would be, in substance, identical to the investment
objectives of the Separate Account immediately preceding the Proposed
Transfer. Accordingly, the transfer of the assets of the Separate
Account to the Fund, which assets have been purchased under the
investment objectives, policies and restrictions identical to those of
the Fund, would be consistent with the objectives and policies of the
Fund.
7. Applicants submit that the Proposed Transfer would be consistent
with the general purposes of the 1940 Act by avoiding the possibility
that the Fund or the Separate Account would incur unnecessary expenses
or losses in connection with the Proposed Transfer.
Conclusion
Applicants, for the reasons summarized above, represent that the
terms of the Proposed Transfer meet all of the requirements of Section
17(b) of the 1940 Act and that an Order should be granted exempting the
Proposed Transfer from the provisions of Section 17(a), to the extent
requested.
For the Commission, by the Division of Investment Management,
under delegated authority.
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 98-10501 Filed 4-20-98; 8:45 am]
BILLING CODE 8010-01-M