Federal Register / Vol. 63, No. 76 /Tuesday, April 21, 1998 / Notices 19771

investors. The Commission, based on

the information submitted to it, will

issue an order granting the application

after the date mentioned above, unless

the Commission determines to order a

hearing on the matter.

For the Commission, by the Division of

Market Regulation, pursuant to delegated

authority.

Jonathan G. Katz,

Secretary.

[FR Doc. 98–10423 Filed 4–20–98; 8:45 am]

BILLING CODE 8010–01–M

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’’).

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
19772 Federal Register / Vol. 63, No. 76 /Tuesday, April 21, 1998 / Notices

1 15 U.S.C. 78s(b)(1).

2The Commission has modified the text of the

summaries prepared by DTC.

3Securities Exchange Act Release Nos. 33958

(April 22, 1994); 59 FR 22879 (order approving

proposal on temporary basis); and 35655 (April 28,

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

SECURITIES AND EXCHANGE

COMMISSION

[Release No. 34–39861; SR–DTC–97–21]

Self-Regulatory Organizations; the

Depository Trust Company; Notice of

Filing of Proposed Rule Change

Relating to Modification of Processing

Bankers’ Acceptances

April 14, 1998.

Pursuant to Section 19(b)(1) of the

Securities Exchange Act of 1934

(‘‘Act’’),1 notice is hereby given that on

October 14, 1997, the Depository Trust

Company (‘‘DTC’’) filed with the

Securities and Exchange Commission

(‘‘Commission’’), and on November 6,

1997, and February 23, 1998, amended

the proposed rule change as described

in Items I, II, and III below, which items

have been prepared primarily by DTC.

The Commission is publishing this

notice to solicit comments from

interested persons on the proposed rule

change.

I. Self-Regulatory Organization’s

Statement of the Terms of Substance of

the Proposed Rule Change

The proposed rule change will modify

DTC’s plan for processing bankers’

acceptances (‘‘BAs’’) to provide for

fungibility of an accepting bank’s issues

that are issued at a discount and that

mature on the same day.

II. Self-Regulatory Organization’s

Statement of the Purpose of, and

Statutory Basis for, the Proposed Rule

Change

In its filing with the Commission,

DTC included statements concerning

the purpose of and basis for the

proposed rule change and discussed any

comments it received on the proposed

rule change. The text of these statements

may be examined at the places specified

in Item IV below. DTC has prepared

summaries, set forth in sections (A), (B),

and (C) below, of the most significant

aspects of such statements.2

(A) Self-Regulatory Organization’s

Statement of the Purpose of, and

Statutory Basis for, the Proposed Rule

Change

In 1994, the Commission approved an

expansion of DTC’s money market

instruments (‘‘MMI’’) settlement

program to include, among other things,

BAs,3 which allowed DTC to process