[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